strategic human resource management

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MANAGEMENT SCIENCE - THEORY AND APPLICATIONS

STRATEGIC HUMAN RESOURCE MANAGEMENT

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MANAGEMENT SCIENCE - THEORY AND APPLICATIONS

STRATEGIC HUMAN RESOURCE MANAGEMENT

CAM CALDWELL AND

VERL ANDERSON EDITORS


Copyright © 2018 by Nova Science Publishers, Inc. All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher. We have partnered with Copyright Clearance Center to make it easy for you to obtain permissions to reuse content from this publication. Simply navigate to this publication’s page on Nova’s website and locate the “Get Permission” button below the title description. This button is linked directly to the title’s permission page on copyright.com. Alternatively, you can visit copyright.com and search by title, ISBN, or ISSN. For further questions about using the service on copyright.com, please contact: Copyright Clearance Center Phone: +1-(978) 750-8400 Fax: +1-(978) 750-4470 E-mail: [email protected]. NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book. The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers’ use of, or reliance upon, this material. Any parts of this book based on government reports are so indicated and copyright is claimed for those parts to the extent applicable to compilations of such works. Independent verification should be sought for any data, advice or recommendations contained in this book. In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication. This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein. It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services. If legal or any other expert assistance is required, the services of a competent person should be sought. FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS. Additional color graphics may be available in the e-book version of this book.

Library of Congress Cataloging-in-Publication Data ISBN: H%RRN

Published by Nova Science Publishers, Inc. † New York


CONTENTS Preface

vii

Chapter 1

Strategic Human Resource Management: Why It Matters Cam Caldwell

Chapter 2

Strategic Human Resource Management: An Ethical Stewardship Obligation Cam Caldwell

13

Leadership and Human Resource Management: Insights and Applications Cam Caldwell and Verl Anderson

27

Job Analysis: The Building Block of Human Resource Management Cam Caldwell

43

Ethical Responsibilities of Human Resource Management: A Framework for Moral Conduct Cam Caldwell and Verl Anderson

57

Recruitment, Testing, and Selection: Strategic Essentials for Successful Performance Cam Caldwell

75

Compensation and Benefits: Attracting and Retaining Top Talent Cam Caldwell

93

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Performance Management: A Strategic Perspective Cam Caldwell, Verl Anderson and Sarah Smith


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109

vi Chapter 9

Contents Organization Change and Organization Analysis: The Strategic Human Resources Role Cam Caldwell

127

Chapter 10

Career and Organizational Development: The Win-Win Priority Cam Caldwell and Sylivia Atwijuka

Chapter 11

High Performance Organizations and Human Resource Management Cam Caldwell and Verl Anderson

159

Wellness and Managing Risk: The Strategic Role of Human Resources Cam Caldwell

177

Honoring Employee Relationships: Employee Relations and Employee Law Cam Caldwell and Verl Anderson

195

International Human Resource Management: Strategic Application of Core Principles Cam Caldwell

211

The Future of Human Resource Management: Responding to a New Context Cam Caldwell and Verl Anderson

231

Chapter 12

Chapter 13

Chapter 14

Chapter 15

145

About the Editors

251

Index

253


PREFACE Human Resource Management (HRM) could very well be the key contributor to organization profitability and competitive advantage in the 21st century. That claim is a startling reality with a growing body of supporting evidence that affirms its truth. In a world where less than 15% of all employees acknowledge that they are positively engaged at work, the opportunity to capture and inspire the minds and hearts of tomorrow’s work force is immense. Thus, there are multiple reasons for this book about the strategic contribution of HRM in the third millennium economy. The bad news is that the history of HRM has been disappointing, Human Resource Professionals (HRPs) have been largely unprepared, and organization leaders have been focused on technology and innovation – rather than the people who create value for their companies. The good news is that there is a growing number of outstanding companies and enlightened leaders who have recognized that people are the key to better customer service, greater innovation, improved productivity, and higher profits. This book serves four significantly different types of readers. First, and most importantly, this book offers insights for top management teams who are served by the HRPs and provides a template to hold those professionals accountable. Each of the chapters of this book provides strategic insights into the purpose and function of HRM systems in supporting the top management team and its organization mission. Second, this book provides clear guidelines for HRPs in helping them to realize their key roles and the accountability expected from them. Third, this book is a useful foundation for students seeking to understand how HRM systems function. Fourth, the book provides scholars and academics with fundamental principles upon which to build as they explore the practical world of business. The consistent theme of this book is that HRM matters and HRPs can make a significant strategic difference in contributing to an organization’s success! The modern organization of the 21st century has already begun to change – and those changes must be effective if organizations are to successfully compete in a world that has become increasingly global and complex in its focus. However, HRM and the role of HRPs have


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not always been fully appreciated, and top management teams can exponentially improve the effectiveness of their organizations by rethinking HRM’s strategic roles. This book offers a wealth of information about the contribution that HRM can make to help organizations improve their economic and financial prospects. This book explains how and why organizations can benefit from treating their employees as valued assets and by honoring duties owed to those employees by helping them to fulfill their ultimate potential. As organizations honor those responsibilities to their employees, they also serve their own best interests and the interests of a society that desperately needs to effectively utilize its available resources to solve its current and future problems.


In: Strategic Human Resource Management Editors: Cam Caldwell and Verl Anderson

ISBN: 978-1-53613-198-7 © 2018 Nova Science Publishers, Inc.

Chapter 1

STRATEGIC HUMAN RESOURCE MANAGEMENT: WHY IT MATTERS Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

ABSTRACT The unfortunate reality in many organizations – and probably in most organizations – is that the Human Resource Management (HRM) function is not performed very well. More than thirty years ago, the California Management Review published a thoughtful and scholarly article entitled, “Why the Human Resources Management Function Fails 1.” That article enumerated a compelling list of explanations that continue to exist in many organizations today. Despite the efforts of business schools, organization leaders, and individuals who receive academic degrees in HRM, the roles played by most Human Resource Professionals (HRPs) in today’s organizations fail to contribute to enabling employees to create added value in assisting Top Management Teams to accomplish their strategic goals. There are three important purposes to this chapter in introducing this book and in clarifying why HRM matters as an important staff function. The first purpose is to identify common challenges to the success of the HRM function by citing management experts and practitioners. The second is to present seven myths or misconceptions about HRM and the characteristics of the HRPs who serve organizations. The third is to set forth the contents of this book as it introduces the chapters which explain the strategic HRM role. By summarizing the contents of each chapter, we empower those who have a specific HRM interest to decide where they wish to begin in their reading.

1

This interesting and insightful article is Harish, J., and Murray, V., (1984). “Why the Human Resources Management Function Fails”. California Management Review, Vol. 26, Iss. 4, pp. 95-110.


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CHALLENGES TO THE SUCCESS OF HRM Research and commentaries about HRM provide many insights as to why HRM systems are ineffective in helping organizations to be successful. Although the Society of Human Resource Management has been an advocate for “best practices” in HRM since it was originally founded as the American Society for Personnel Administration seventy years ago2, the HRM field has historically been inconsistent in the application of those practices, HRPs have consistently underperformed, and many organizations have opted to contract out their HRM services in an often fuzzy-headed attempt to save money3. HRPs struggle to make a meaningful contribution to their organizations’ mission and purpose for a common set of reasons which make up the problems or challenges that many incumbents in HRM departments are unable to overcome. Perhaps the most significant of those challenges are the five issues summarized briefly below. 



HRM is underestimated in its complexity. As the profession has evolved in scope and as the business environ has become increasingly competitive, members of the Top Management Team in organizations have frequently misread the important role of HRPs. Because HRM is a staff support function, it is sometimes looked upon in terms of technical tasks and activities that it performs and those specialized skills are not always equated with an organization’s overall success. The role of HRM is not spelled out clearly. As leaders frame their mission and purpose for organizations, they frequently generalize about the HRM function and do not communicate what they expect HRPs to contribute to the organization. The reality is that organizational leaders and Top Management Team members have an extremely difficult task in governing their organizations and communicating the interrelationships of the many variables upon which success is dependent. The assumption often is that “everyone knows what HRM is all about” – but, unfortunately, that assumption is incorrect.

Society for Human Resource Management, (2016). “2015-2016 SHRM Annual Report”. Washington, D. C.: Society for Human Resource Management found online on October 22, 2017 at https://www.shrm.org/aboutshrm/PublishingImages/Pages/default/2015-2016%20Annual%20Report.pdf. 3 Mathis, R. L., Jackson, J. H., Valentine, S. R., and Meglish, P., (2016). Human Resource Management (15th ed.). Boston, MA: Cengage. 2


Strategic Human Resource Management: Why It Matters

Although the Society of Human Resource Management has been an advocate for “best practices” in HRM since it was originally founded as the American Society for Personnel Administration seventy years ago, the HRM field has historically been inconsistent in the application of those practices, Human Resource Professionals have consistently underperformed, and many organizations have opted to contract out their HRM services in an often fuzzy-headed attempt to save money.

Figure 1.

As organizations struggle to compete in an international marketplace, global competition has motivated many organization leaders to adopt a “lean and mean” approach to people management that pushes people to perform without providing them with the resources that they often need to succeed. HRM becomes an underfunded organizational unit that lacks the capacity to properly perform.

Figure 2.


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Cam Caldwell 





The impact of global competition. As organizations struggle to compete in an international marketplace, global competition has motivated many organization leaders to adopt a “lean and mean” approach to people management that pushes people to perform without providing them with the resources that they often need to succeed. HRM becomes an underfunded organizational unit that lacks the capacity to properly perform. The pressures of constant change. Organizations face disruptive innovation, constant turmoil, and ongoing change in today’s fast-moving business environment. HRM programs and policies must keep pace with the demands of that change yet those who serve in HRM departments typically play a reactive role in responding to organizational demands. HRPs often lack the ability to articulate to the Top Management Team why and how HRM policies and structures need to change in the hustle-bustle of a constantly busy work environ and those changes are often overlooked. A 2014 study conducted by IBM reported that only 40% of respondents believed that they possessed the skills required to effectively manage change4. The evolving workforce. HRPs must work effectively within a demographically changing work force composed of job candidates from different generations, diverse ethnicities, and ever-widening expectations about work and careers. The nature of contingent employment and the reality that 40 percent of employees already work in part-time, contract, and temporary positions makes it exponentially more difficult to identify, hire, and retain employees and get “the right people on the bus” and in “the right seats’’5.

These five challenges affect virtually every organization and make succeeding in today’s volatile, uncertain, complex, and ambiguous environment both challenging and frustrating – but also exciting. It is by overcoming these challenges that HRPs are able to make a meaningful contribution that assists their organizations to achieve a competitive advantage – and only by maintaining such an advantage can organizations survive6.

See IBM Corporation, (2014). “Making Change Work. While the Work Keeps Changing.” Armonk, New York: IBM Institute for Business Value. found online on October 23, 2017 at http://public.dhe.ibm.com/common/ssi/ ecm/gb/en/gbl03021usen/GBL03021USEN.PDF. 5 The importance of staffing organizations with highly skilled talent is emphasized in the best-selling book, Good to Great. See Collins, J., (2001). Good to Great – Why Some Companies Make the Leap and Others Don’t. New York: HarperCollins. 6 This point about the importance of achieving and maintaining a competitive advantage is clearly made in Caldwell, C. and Anderson, V., (2017). Competitive Advantage: Strategies, Management, and Performance. Hauppauge, New York: NOVA Publishing. 4



5

HRM programs and policies must keep pace with the demands of that change yet those who serve in HRM departments typically play a reactive role in responding to organizational demands. HRPs often lack the ability to articulate to the Top Management Team why and how HRM policies and structures need to change in the hustle-bustle of a constantly busy work environ and those changes are often overlooked and underemphasized.

Figure 3.

MYTHS ABOUT HRM HRM is often underappreciated as a contributing source of organization success and is often the victim of dangerous myths and misconceptions about its role in the modern organization. Despite compelling evidence to the contrary, these myths persist and are often the cause of common errors that plague the “conventional wisdom” that is the source of most organizational failures7. In an effort to clarify the damning misconceptions that frequently undermine the importance of HRM, we offer seven myths that Top Management Teams would be wise to avoid as they consider the role of HRM in their organizations.

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The dangers of “conventional wisdom,” the importance of creating aligned HRM systems, and the keys to establishing an organizational culture that effectively engages employees are the major themes in Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, M. A.: Harvard Business Review Press and Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass.


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HRM is often underappreciated as a contributing source of organization success and is often the victim of dangerous myths and misconceptions about its role in the modern organization. Despite compelling evidence to the contrary, these myths persist and are often the cause of common errors that plague the “conventional wisdom” that is the source of most organizational failures.

Figure 4.

1) Because HRM is about people, any intelligent person can be an HRP. A common error made by many organizations is to promote a clerical person or another bright and friendly individual to a major position in HRM – assuming that the individual can “quickly pick up” the HRM responsibilities and be successful. That error has been made so many times that fewer than one-third of individuals currently in HRM roles have ever had academic training in HRM8 and only 12% have been professional certified by the organization responsible for professional HRM certification9. The HRM role is technically and interpersonally complex and requires high levels of skill and understanding about organizations and HRM systems. 2) HRPs who implement “best practices” from other companies’ HRM systems help their companies achieve a competitive advantage. Implementing “best practices” simply enables an HRP to help his or her company to catch up to industry standards and achieves no incremental competitive advantage. 8

9

According to one highly regarded HRM text, only 27% of HRPs have even had a course in the discipline. See Gomez-Mejia, L. R., Balkin, D. B. and Cardy, R. L., (2015). Managing Human Resources (8 th ed.). Essex, UK: Pearson Education. See Greengard, S., (2016). “HR Credentials: Evaluating Their Value.” Workforce June 13, 2016 found online on October 23, 2017 at http://www.workforce.com/2016/06/13/hr-credentials-evaluating-their-value/. The Human Resource Certification Institute (HRCI) is the professional testing and certification body that certifies HRPs for and in behalf of the Society for Human Resource Management.



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3) HRM is responsible for and in charge of employee hiring. HRM staff never should make a hiring decision but can assist departments in their hiring process and advise them about HRM standards and legal requirements. Extensive evidence also suggests that HRPs often are not fully aware of the most important criteria for employee selection. 4) HRPs are experts in setting up performance appraisal and performance measurement systems. Measuring performance is an elusive process and most performance appraisal systems are poorly administered and ineffective. Coaching employees and helping them to be successful is a far better approach than judging and critiquing employees. 5) HRPs should be considered advocates and sounding boards for employees. As a staff function, HRPs work for their Top Management Team. They may communicate employee concerns, attitudes, and issues to Top Management and make recommendations for improving the organization – but their role is to support the organization and to help it to succeed and be profitable long-term. 6) HRM is responsible for creating an organization’s culture and work climate. The role of the Top Management Team is to articulate the values and mission of an organization and to lead out in establishing an organization’s culture10. 7) Because people are so important, HRM plays a key role in the strategic management of most companies. In fact, HRPs have struggled to be recognized as contributors to the successful operation of organizations and to be considered active participants in the strategic management of their companies. Each of these misconceptions about HRM systems and the HRPs who work in them need to be understood by Top Management Team members and the personnel who staff HRM departments. This book provides a clear understanding of the responsibilities and obligations of HRM, its role in organizations, and opportunities for HRPs to contribute to their organizations’ strategic success.

SUMMARY OF CHAPTERS This book provides a strategic perspective to the role of HRM in the modern organization and each of its chapters focuses on a key responsibility of HRPs as they

10

For a clear statement about the responsibilities of organization leaders in creating organization cultore, please see Schein, E. H. and Schein, P., (2016). Organizational Culture and Leadership (5 th ed.). San Francisco, CA: Jossey-Bass.


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support the Top Management Team, individual departments, and the employees of their organization. The following is a brief summary of each of the chapters of this book.

Chapter 2: Strategic Human Resource Management: An Ethical Stewardship Approach This chapter identifies the importance of HRM as an ethically-based obligation fraught with duties and responsibilities that affect the success of individuals, teams, and the entire organization. The chapter defines the obligations of HRPs as ethical stewards and offers value-based suggestions for strategic success.

Chapter 3: Leadership and Human Resource Management – Insights and Applications Chapter 3 identifies the role of HRPs as leaders – noting that leadership is much more than a position of authority. The chapter identifies ten different leadership perspectives and equates each perspective to the HRP role. It then suggests twelve caveats to guide HRPs in serving the organization.

Chapter 4: Job Analysis: The Building Block of Human Resource Management This chapter explains the important role of the job analysis, identifies common errors made in conducting that important function, and provides information about how the job analysis is vital to so many HRM responsibilities.

Chapter 5: Ethical Responsibilities of Human Resource Management: A Format for Moral Conduct Chapter 5 identifies the Hosmer model for ethical decision-making and identifies why that model is so important in explaining HRM and management decisions. The chapter also identifies the broad range of ethical duties associated with Transformative Ethics and describes that model.



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Chapter 6: Recruitment, Testing, and Selection: Strategic Essentials for Successful Performance Recruitment, testing, and selection are critical functions in a knowledge, wisdom-, and information-based economy. The chapter identifies errors commonly made in the selection and testing process and suggests opportunities to improve the quality of employee selection decisions.

Chapter 7: Compensation and Benefits – Strategies for Attracting and Retaining Talent Chapter 7 identifies the varying philosophies used for determining employee compensation and describes many of the employee benefit options available to organizations. Attracting and retaining key employees and creating fair and equitable compensation plans that reward performance are emphasized.

Chapter 8: Performance Management: A Strategic Perspective Four of the major issues associated with performance management are the primary focus of this chapter. The chapter suggests specific ways to improve performance management and explain why each of the four major issues is so important to an organization’s strategic success.

Chapter 9: Organization Change and Organization Analysis – The Strategic Human Resources Role For a world that is constantly changing, this chapter identifies three important models for understanding the nature of change. The chapter also identifies ten highly practical principles to keep in mind in managing change.

Chapter 10: Career and Organizational Development: The Win-Win Priority This chapter explains the importance of creating a win-win commitment to employees that not only views them as critical assets but “owners and partners” in the success of their organizations. The chapter also identifies the roles that HRPs play in helping to create great organizations.


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Chapter 11: High Performance Organizations and Human Resource Management Chapter 11 identifies the importance of High Performance Work Systems, High Trust Organizations and the role of HRPs in creating organizational systems and programs that generate extra-mile performance and high commitment. Information is provided about the many reasons why HRPs should understand the importance of creating organizations that treat employees as valued partners.

Chapter 12: Wellness and Managing Risk – The Strategic Role of Human Resources Employee wellness has become not only a responsibility of organizations but an important economic issue for organizations as health care costs have continued to increase. This chapter identifies key elements of employee wellness programs and also addresses employee safety and risk management. The chapter also explains programs offered in Employee Assistance Programs.

Chapter 13: Honoring Employee Relationships – Employee Relations and Employee Law Chapter 13 emphasizes the importance of creating an organizational culture that builds high trust and honors employee relationships. The chapter also identifies specific action steps for improving those relationships and for rethinking the role of HRPs and the role of attorneys in preparing employee policies and manuals.

Chapter 14: International Human Resource Management – Strategic Application of Core Principles This chapter revisits the six strategic HRM roles and emphasizes their international context. The chapter then identifies eight challenging issues that are commonly related to international business and offers suggestions for addressing those issues.

Chapter 15: The Future of Human Resources: Responding to a New Context Chapter 15 briefly summarizes the history of HRM, identifies both predictive and prescriptive ideas about the future of HRM, and explains the importance of organizations



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and HRPs raising the bar in meeting the demanding needs of a new global business context. The consistent theme of this book is that “Human Resource Management matters and Human Resource Professionals can make a significant strategic difference in contributing to an organization’s success!” The modern organization of the 21st Century has already begun to change – and those changes must be effective if organizations are to successfully compete in a world that has become increasingly global and complex in its focus. Although HRM and the role of HRPs has not always been fully appreciated and Top Management Teams can exponentially improve the effectiveness of their organizations by rethinking HRM’s strategic roles. This book offers a wealth of information about the contribution that HRM can make to help organizations improve their economic and financial prospects. As importantly, this book explains how and why organizations can benefit by treating their employees as valued assets and by honoring duties owed to those employees by helping them to become their best. As organizations honor those responsibilities to their employees, they also serve their own best interests and the interests of a society that desperately needs to effectively utilize its available resources to solve its current and future problems.

Questions to Ponder 1) What is the most important priority for you in reading this new book? What do you hope to understand and what motivates your decision? 2) How have the organizations where you have worked viewed the strategic contribution of HRM? Are HRPs active participants in the leadership circle or do they perform important but less significant contributing roles? 3) Which of the chapter summaries of this book most attract your interest? Where do you want to begin?

REFERENCES Caldwell C. & Anderson, V., (2017). Competitive Advantage: Strategies, Management, and Performance. Hauppauge, New York: NOVA Publishing. Collins, J., (2001). Good to Great – Why Some Companies Make the Leap . . . And Others Don’t. New York: HarperCollins. Gomez-Mejia, L. R., Balkin, D. B., and Cardy, R. L., (2015). Managing Human Resources (8th ed.). Essex, UK: Pearson Education.


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Greengard, S., (2016). “HR Credentials: Evaluating Their Value.” Workforce June 13, 2016 found online on October 23, 2017 at http://www.workforce.com/2016/06/13/hrcredentials-evaluating-their-value/. Harish, J., & Murray, V., (1984). “Why the Human Resources Management Function Fails.” California Management Review, Vol. 26, Iss. 4, pp. 95-110. IBM Corporation, (2014). “Making Change Work . . . . .. While the Work Keeps Changing.” Armonk, New York: IBM Institute for Business Value. found online on October 23, 2017 at http://public.dhe.ibm.com/common/ssi/ecm/gb/en/ gbl03021usen/GBL03021USEN.PDF. Mathis. R. L., Jackson, J. H., Valentine, S. R., & Meglish, P., (2016). Human Resource Management (15th ed.). Boston, MA: Cengage. Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press and Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Schein, E. H. & Schein, P., (2016). Organizational Culture and Leadership (5th ed.). San Francisco, CA: Jossey-Bass. Society for Human Resource Management, (2016). “2015-2016 SHRM Annual Report.” Washington, D. C.: Society for Human Resource Management found online on October 22, 2017 at https://www.shrm.org/about-shrm/PublishingImages/Pages/ default/2015-2016%20Annual%20Report.pdf.




Chapter 2

STRATEGIC HUMAN RESOURCE MANAGEMENT: AN ETHICAL STEWARDSHIP OBLIGATION Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

Strategic Human Resource Management (SHRM) is about people – selecting the right individuals who can achieve outstanding organizational results and providing support systems to help them not only succeed but to thrive as individuals. Effective SHRM focuses on supporting an organization at all levels to achieve those results. A strategy addresses the processes through which the mission of an organization is achieved, its objectives are determined, and how it will apply resources to achieve those objectives11. Strategy articulates policies that position an organization within its external environment as it responds to customers; fights for competitive advantage12; and coordinates operational systems and activities which acquire, allocate, and develop resources in the quest for excellence. SHRM is effective to the degree that its policies, programs, and systems fully align with an organization’s values, mission, and objectives. Without a competitive advantage every private sector organization is vulnerable to its competitors; and every organization has the moral obligation to create value for society13. Although leaders, managers, and supervisors acknowledge that value creation is ultimately achieved by an organization’s employees, misguided executives and Top

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This point is made by many scholars. See, for example, Devanna, M. A., Fombrun, C., & Tichy, N. (1981). “Human Resources Management: A Strategic Perspective.” Organizational Dynamics, Vol. 9, Iss. 3, pp. 5761. 12 See Porter, M. E., (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. 13 Ibid.


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Management Teams view employees as “cost centers” to be minimized rather than the means by which customers are served and profits are generated14. The purpose of this chapter is to identify six key strategic roles of Human Resource Professionals (HRPs) and the Human Resource Management (HRM) function in helping organizations to achieve their missions. We begin by defining Strategic Human Resource Management (SHRM) and explaining its role as a staff support function for the multiple stakeholders of an organization. Incorporating insights from HRM scholars, we then identify six strategic roles of HRM and explain how HRPs can more effectively contribute to their organizations in 1) empowering employees; 2) assisting individual departments to achieve their goals; 3) enhancing the effectiveness of an organization’s unique capabilities; and 4) creating a culture that builds trust, facilitates change, and pursues constant improvement. We explain why the SHRM roles constitute an “ethical stewardship” obligation for HRPs that needs to be understood both by the HRPs and by their organization’s Top Management Team. We conclude the chapter with commentary about why so many HRPs and HRM systems fail to achieve their stewardship obligations.

SHRM AND SIX CRITICAL ROLES SHRM is a staff function focused on assisting individuals and organizational units to achieve their missions through the optimal utilization of people. Although organization missions vary by organizational type, sector of society, economic conditions, and other factors, virtually every organization exists to fulfill an enduring and meaningful purpose that simultaneously meets the needs of and creates value for society while meeting the broad range of economic, psychological, and social needs of its member participants and employees. Whatever the specific mission of an organization may be, SHRM’s entire purpose is to support the organization in the efficient and effective achievement of goals, objectives, and activities furthering that mission. Although an HR Department’s staff requires a specialized set of technical skills and knowledge, and though individual members may have their own career or organizational goals and objectives, the mission of every HR Department is to assist individuals, departments, and the Top Management Team in the achievement of their organization’s strategic purposes. Phrased another way, “As a staff function, HRM is ‘on tap’ to facilitate achieving an organization’s goals but never ‘on top’ as the decision-maker that actually determines those goals.”

14

Ibid.


Strategic Human Resource Management

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Figure 1.

The following are six strategic roles of HRM that contribute to optimal organization success. 1. Create and sustain an organizational culture aligned with the mission and strategy. HRPS assist an organization’s Top Management Team to integrate aligned policies, systems, procedures, rules, and guidelines that establish the norms, values, and priorities that define an organization’s culture. The most effective organizations create cultures in which artifacts, core values, and systems reinforce the achievement of values, goals, and mission15. When its culture is aligned with an organization’s mission and strategy, an organization reinforces the focus of goal achievement. Without alignment organizations send a mixed message that creates uncertainty and undermines organization efforts. 2. Demonstrate excellence in performing technical and operational tasks requiring the specialized skills and knowledge of HRM. As a formal discipline HRM requires an understanding of best practices, methods, tools, technical information, principles of organization behavior, and human relations that are the building blocks of the discipline. HRPs assist other organizational units by skillfully performing technical and operational HRM tasks that sustain competitive advantage, comply with appropriate legal requirements, and pursue the best interests of the organization and its membership. Incorporating best HRM practices in technical HRM tasks provides an organization with the foundation for efficient and effective performance.

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This leadership role is identified in Schein, E. H. & Schein, P. (2016). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass.


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Cam Caldwell 3. Perform as business partners for each organizational department to assist them in identifying how to most effectively achieve operating efficiencies in accomplishing tasks that support the organization’s mission. Being an effective internal business partner or in-house consultant is a multi-faceted role that requires HRPs to develop profound knowledge and expertise about the goals, operations, and objectives of the many departments that they serve. This consulting role requires HRPs to become subject matter experts about the most effective ways for managing change, engaging employees, and efficiently achieving organizational goals. HRPs who help departments improve their operations not only enable their organizations to constantly improve but develop high trust. Failing to develop this strategic capability requires that organizations call upon external resources that result in delays and expense that could otherwise be avoided. 4. Listen to and provide an effective voice for the work-related needs of employees to enable and empower employees to be contributors to improving the organization. HRPs built trust when they understand and communicate employee needs and concerns to the Top Management Team and assist the organization to address those issues. HRPs can help organizations create high trust organizational cultures 1) enable their organizations to enhance quality, improve productivity, and increase profitability while they 2) build relationships with employees that encourage those employees to innovate, grow, and thrive. Responsive organizations with HRPs who understand and communicate employee needs see employees respond with greater commitment and ownership while organizations that fail to make their employees partners in the process of improvement fail to create work environments that build trust and generate extramile efforts. 5. Create organizational systems that support continuous improvement, organizational and individual learning, the creation of new knowledge and innovation, and the acquisition of critical information associated with outside stakeholders. Organizational alignment, constant improvement, continuous learning, and effectively integrating organizational information are necessities for the optimization of successful goal achievement in today’s fast-changing world. Effective HRPs help a constantly learning organization anticipate and respond to constant change and build an organization-wide learning culture that encourages innovation and creativity. Building a constantly learning organization makes it possible for organizations to keep up with evolving customer requirements, industry innovations, and new opportunities. Failing to invest in constant learning and improvement makes an organization immediately vulnerable. 6. Monitor the organization climate and assist the organization to make timely and effective changes, as required by constantly changing environmental



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conditions. Tracking the evolution of the employee work climate, constantly identifying opportunities for improving quality of life and organizational systems, and engaging employees in change processes demonstrate a commitment to the best interests of all of an organization’s stakeholders. HRPs that build effective relationships throughout their organization have a clear understanding of the internal work climate and are aware of opportunities for making productive changes.

SHRM AS ETHICAL STEWARDSHIP The moral obligation of leaders is to pursue long-term organizational wealth while honoring duties owed to all its stakeholders. Stewardship is a pro-organizational commitment to the best interests of all parties, rather than opportunistic or self-serving behavior16. Ethical stewardship imposes upon leaders and organizations a virtuous obligation that transcends doing that which is moral and requires the pursuit of optimal outcomes that best serve society, benefit stakeholders, and minimize waste. As a philosophy of governance, ethical stewardship is concerned with 1) optimizing both performance and accountability, 2) integrating values and goals within organizational systems and structures, 3) maintaining relationships that increase commitment and cooperation, and 4) applying principles of management and leadership to achieve desired results17. As a theory of governance and leadership, ethical stewardship adopts six virtue-based leadership characteristics18: 1. It is dyadic in creating individualized relationships with each follower. By treating each individual as a valued end, rather than as a means to organizational ends, ethical stewardship builds individual commitment and cooperation. 2. It is both transformational and transactional. Ethical stewardship seeks to improve the status quo through productive change but also protects exchange relationships that benefit individual stakeholders.

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The nature of opportunism and self-interest are explained in Williamon, O., (1985). The Economic Institutions of Capitalism. New York: Free Press. Stewardship as a governance theory is introduced by Davis, J. H., Schoorman & Donaldson, (1997). “Toward a Stewardship Theory of Management.” Academy of Management Review, Vol. 22, Iss. 1, pp. 20-47. 17 The purposes of governance theory are identified by McClusky, J. E., (2002). “Rethinking Non-Profit Organization Governance: Implications for Management and Leadership.” International Journal of Public Administration, Vol. 25, Iss. 4, pp. 539–559 and in Steinberg, R. M. and D. Pojunis. (2000). “Corporate Governance: The New Frontier.” Internal Auditor, Vol. 57, Iss. 6, pp. 34–39 and summarized in Caldwell, C., Hayes, L., Karri, R., and Bernal, P., (2008). “Ethical Stewardship: The Role of Leadership Behavior and Perceived Trustworthiness.” Journal of Business Ethics, Vol. 78, Iss. 1/2, pp. 153-164. 18 These six leadership elements are explained in greater detail in Caldwell, et al., 2008, op. cit.


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Figure 2.

3. It honors the often unspoken social contract between leaders and followers. Ethical stewardship recognizes that the expectations of followers are often implicit and impose duties and obligations. Leaders who function as ethical stewards seek to understand and honor those perceived obligations and to clarify expectations to enhance trust. 4. It is subjectively perceived by each individual. Recognizing the subjective nature of perceptions, ethical stewards seek to understand those perceptions and acknowledge that interpersonal relationships are both subtle and individual in their nature. 5. It is long-term rather than short-term in focus. Ethical stewards seek to optimize wealth creation and recognize that short-term profits often undermine long-term value creation. These stewards pursue options that emphasize longterm benefits to all stakeholders in optimizing the creation of value. 6. It constantly emphasizes the management of meaning. Ethical stewardship focuses on the values and outcomes that are virtuous and pursues adherence to correct principles. In seeking best possible outcomes and honoring relationships, ethical stewardship create a constantly learning relationship with others. Stewards focus on understanding new insights, increasing mutual understanding, and pursuing of truth.



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These six elements of the leadership relationship reflect the ethical steward’s commitment to the worth and importance of each stakeholder and the steward’s commitment to the organization’s best interests. As ethical stewards, HRPs have the responsibility to help organizations create work cultures that are both human and humane and that “emphasize inclusion, shared partnership, empowerment, and leadership trustworthiness19.” HRPs demonstrate a broad combination of ethical insights and honor the obligations of Transformative Leadership as they pursue the highest and best possible outcomes for their organizations in accomplishing the mission of their organizations20. As leaders at all levels demonstrate their commitment to the principles of ethical stewardship, they create relationships that motivate extra-role behavior, increased commitment, increased creativity, and increased profitability21. Although HRPs function as “servant leaders” in their staff support role, they seek outcomes that honor relationships, keep commitments, and add value for others.

BARRIERS TO STRATEGIC SUCCESS Despite the potential of SHRM to contribute to an organization’s success, there are commonly occurring barriers that inhibit the ability of HRPs to contribute to the strategic success of a firm. The following is a list of ten barriers that may arise in organizations of all types. 1. Management paradigms about the HRM role. One of the more common reasons why HRM systems fail to contribute to strategic success is the perception of Top Management Team members about the ineffectiveness of HRM as a contributor to organizational goals22. Those perceptions may result from prior personal experience in other organizations which had ineffective HRPs, or it may be

This quote comes from page 174 of Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182 but the nature of effective leadership is articulated in greater detail in Kanter, R. M.: 2008, “Transforming Giants.” Harvard Business Review, Vol. 86, Iss. 1, pp. 43–52. 20 The transformative roles of HRPs as ethical stewards is identified in Caldwell, et al. (2011) op. cit. and the nature of Transformative Leadership is explained in Caldwell, C., Dixon, R. D., Floyd, L., Chaudoin, J., Post., J., and Cheokas, G. 2012. “Transformative Leadership: Achieving Unparalleled Excellence.” Journal of Business Ethics, Vol 109, Iss. 2, pp. 175-187. 21 These outcomes are identified in Xu, F., Caldwell, C., and Anderson, V., 2016. “Moral Implications of Leadership—Transformative Insights.” International Journal of Business and Social Research, Vol 3, Iss. 6, pp. 75-85 and are consistent with the findings of Cameron, K., (2011). “Responsible Leadership as Virtuous Leadership.” Journal of Business Ethics, Vol. 98, pp. 25-35, and Caldwell, C., (2015). “Six Insights for Transformative Leaders.” Graziadio Business Review published by Pepperdine University and available online at http://gbr.pepperdine.edu/tag/transformative-leaders. 22 This perception is commonly held. See Ulrich, D., Allen, J., Brockband, W. Younger, J., & Nyman M. (2009). HR Transformation: Building Human Resoruces from the Outside In. New York: McGraw-Hill. 19


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2.

3.

4.

5.

6.

simply the inability of managers or leaders to recognize the important role of employees in contributing to organizational success. Selecting HRM staff who lack appropriate qualifications. Unfortunately, it is not uncommon for individuals to be assigned responsibility for HRM functions who lack the requisite training or insight. Only about one in four HRPs are actually academically trained in HRM and many who function in professional positions lack a clear understanding of basic HRM principles23. Contracting out the HRM function. In an effort to avoid financial costs and to minimize many human resource tasks, some organizations contract out HRM functions to third parties. Although front-end cost savings may accrue in some cases, those financial benefits are at the expense of being able to create and manage employee relationships, establish integrated HRM systems, and develop and monitor an organizational culture that fits a firm’s values, goals, and priorities24. Top Management failure to understand value creation. Viewing employees as cost centers, commodities, or human resources rather than the source of organizational value creation is a common problem25. Effective HRM systems that empower employees to create value and engage employees as full partners are more profitable than organizations that overlook the value of such systems26. Misaligned HRM systems and policies. When an organization’s HRM systems, policies, and practices are not aligned with each other or with its values and goals, the result is that employees are sent a mixed message about priorities and performance27. In contrast, extensive empirical evidence documents the value of aligned HRM systems in increasing employee productivity and organization profitability28. Ineffective organizational leadership. Leadership focused on “command and control” relationships with employees is increasingly considered to be less effective than organizational relationships based upon creating high commitment and trust29. Competence is a critical factor in generating organizational

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According to Gomez-Mejia, L. B., and Balkin, D. B., (2015). Managing Human Resources (8th ed.), New York: Pearson, only 27% of HRPs have actually been academically trained in the discipline. See Chapter One. 24 This point is clearly made in Pfeffer, J., (1998) op. cit. 25 Ibid. 26 Smith, S., Peters, R., and Caldwell, C., 2016. “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80. 27 This theme is the focus of Holbeche, L., (2009). Aligning Human Resources and Business Strategy (2nd ed.) New York: Routledge. 28 This point is well documented in Pfeffer, J., (1998) op. cit. 29 The importance of creating organizations based upon high commitment and trust is well documented in Beer, M. (2009). High Commitment, High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass.



7.

8.

9.

10.

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commitment and creating wealth – in addition to treating employees as valued organizational assets30. Failure to honor organization values. Organizational leaders are responsible for not only articulating the values of their organizations but for honoring those same values31 – and it is by honoring those values that leaders establish their reputation for integrity . . . or the lack thereof32. Embracing the past, the status quo and “best practice.” Change is the constant in every organization. Underinvesting in learning and continuous improvement, relying on ‘common knowledge,’ and copying other companies’ methods and processes can never create competitive advantage and doom organizations to mediocrity and ultimate decline33. Accepting and settling for mediocre. Satisficing, or settling for solutions that are readily available but meet short-term needs, is not optimizing opportunities for improvement. Good is never good enough34. Overlooking moral responsibilities. Organizations owe a broad spectrum of duties to their stakeholders35. Failing to honor those duties is a recipe for the loss of public trust, the decline in customer satisfaction, the erosion of employee commitment, and ultimate organizational collapse36.

This list of barriers to organization success is certainly not new . . . but organizations fall prey to these causes of failure and many others. SHRM is effective only when its leaders avoid making strategic errors that are common to many organizations. Effective leadership requires great attention to detail, a clear understanding of a multitude of internal and external success factors, and an uncompromising commitment to excellence37.

This insight is provided in Caldwell, C. and Ndalamba, K. K. (In Press). “Trust and Being ‘Worthy’ – Barriers to Wealth Creation.” Paper accepted for publication in the Journal of Management Development. 31 The role of leaders in creating organizational culture is the key theme of Schein, E. H. & Schein, P. (2016) Organizational Culture and Leadership (5th ed.). San Francisco, CA: Jossey-Boss. 32 Pfeffer, J., 1998, op. cit. 33 Ibid. 34 This vital message is the key point of the best selling book Collins, J., (2001). Good to Great: Why Some Companies Make the Leap . . . . And Others Don’t. New York: HarperBusiness. 35 The moral duties of organizations have been repeatedly addressed. See, for example, DePree, M., (2004). Leadership is an Art. New York: Crown Publishing. 36 The moral duties of organizations have been well defined by Stephen R. Covey. See Hasan, Z. and Caldwell,, C. 2016. “’Live Your Life in Crescendo’ – Moral Insights from Stephen R. Covey.” Graziadio Business Review. Vol. 19, Iss. 1. Available on line at http://gbr.pepperdine.edu/2016/04/live-your-life-in-crescendo/. 37 Collins, J., (2001), op. cit. 30


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CONCLUSION HRPs owe their organizations the dedication which makes up ethical stewardship and a commitment to unflagging excellence38. Aristotle reminded us that our commitment to excellence must become a habit if we are to achieve worthy goals and personal victories39. HRM systems that function effectively as a contributing resource to their organizations demand HRPs who understand their role, are committed to organizational excellence, and who have a rare combination of interpersonal and technical skills developed by hard work and constant study. Ethical stewardship also requires a deep internal awareness of one’s own capabilities, a commitment to moral excellence, and the perseverance and passion to go the extra-mile on behalf of others. As HRPs examine their qualifications to serve, as they reflect on the needs of their organizations, and as they acquire the competencies to become ethical stewards they demonstrate their worthiness to serve their organizations and to benefit a society that increasingly demands excellence. When HRPs perform as ethical stewards they earn the right to contribute to the strategic success of their organizations and to serve on its Top Management Team40.

Questions to Ponder 1. What is your definition of leadership? What are its outcomes? What relationships must leaders establish to earn the followership of others? 2. The six roles of SHRM are comprehensive and challenging. Which of these roles do you consider to be most important – and why? Which role requires the greatest preparation? 3. How does the concept of ethical stewardship relate to your definition of leadership that you developed in responding to Question 1? Are you an ethical steward? In what areas might you improve to become a better steward?

Not at the Table – Case Study – By Dr. Sarah J. Smith Kate worked in an industry that employed 90% male to 10% female employees. The company did not attempt to avoid diversity and attract this high level of male to female workers. The majority of jobs were in manufacturing and required long hours during spring and fall. Most employees were expected to work outside during the heat of 38

Caldwell, C., et al., (2010) op. cit. Aristotle’s famous quote that excellence is a habit can be found at https://www.brainyquote.com/ quotes/authors/a/aristotle.html. 40 Ulrich, D., et al., (2009) op. cit. 39



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summer as well as add value when their jobs were located in the refrigerated warehouses. A Fortune 200 company, this organization operated 28 production plants across the continental US. Three HRPs at the corporate office were expected to provide support for all 28 production facilities, their employees, and the onsite management team. The plant manager at one of the largest facilities realized the level of support from the HRPs was less than it needed to be to support strategic goals and to build a culture of trust. The area plant employees and management team were fortunate to see one of the corporate HRPs once per year. The plant made a strategic decision: convert one of the full-time salary positions from production duties to provide for an HRP for this location alone. When Kate arrived for her first day as the newly hired HRP, neither her computer nor her phone extension was ready. The management team and employees wondered where their performance was lacking to justify hiring an onsite HRP. Thus, trust was low. Management held deeply rooted paradigms about the HRPs importance onsite as well as what duties the HRP should fulfill. When the first management meeting was conducted in the board room, Kate was not invited. HR was not present around the large, oval strategy table. One long, thin sidewalk connected the warehouses and employee break room to the front office. Two workers could not walk side by side and the majority of employees were intimidated to make the walk up to the front office building which housed the management team. It wasn’t’ long until Kate realized this phenomenon. She did not feel trusted by some of the management team and she barely had a pulse on the employees’ perceptions. Kate decided to park in the employee parking lot each day, versus the office lot, in order to network with employees. Upon arrival, she would see people who were leaving from third shift and arriving for first shift. Kate timed her workday so when she left the plant at the end of the day, she would see first shift employees as they went home and second shift employees as they arrived to begin their workday. It wasn't long until the employees began to feel more comfortable around Kate and the idea of having an HRP onsite. Kate ended up taking a notebook as she traveled through the plant because employees would voice questions and concerns. Despite her progress with the workforce, Kate never was invited to attend a management meeting, around the large oval table in the conference room. 1. How would you describe the employees’ and managements’ perceptions of the HRP function when Kate arrived? 2. Kate had the credentials and experience to be an effective HRP. However, before her arrival, payroll and employee life cycle data was input by someone in the office without HR knowledge and experience. Payroll errors were common and created frustration with the employees. Would you classify this situation as a


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Cam Caldwell barrier to strategic success? What could Kate do to restore trust about payroll with the employees? 3. The warehouse manager had a strong command and control leadership style, whereas the plant manager realized employees added value to the organization. Turnover in the warehouse area was high. Of the two leaders, which person would be best able to create high commitment and trust within the organization? Which barrier to strategic success does success does this situation illustrate?

Who is the HRP Today? – Case Study – By Dr. Sarah J. Smith Ann and Joan worked for a non-for-profit agency. The office and its staff had its issues, however, for the most part employees tried to do the best they could for the clients. Resources were limited and at times funding for programs diminished. The agency’s HRP was quite effective: she was able to build individual commitment and cooperation which in turn seemed to help keep turnover to a minimum. Working for the agency was viewed as a long-term opportunity and most employees completed 20 years to achieve a fully vested pension. This HRP realized the importance of monitoring the agency’s culture as well as encouraging effective communication to enhance mutual understanding. When program shifts occurred, the HRP would gather a focus group of employees to help make suggestions about integrating the change within the agency. The employees who participated became change agents within the agency and would encourage others as changes were implemented. In addition to the positive work environment, Ann and Joan had returned for degree completion at the area college. The tuition reimbursement program was quite unusual for a non-for-profit agency, however, the HRP worked creatively and diligently to have funds available to promote lifelong learning. Educational assistance helped ease the financial burden of school as well as encouraged employees to be continuous learners. One day, Ann and Joan walked into class. They were not their usual happy selves. Fellow students asked why they seemed sad. Ann and Joan were consistent contributors to class discussions. They were upbeat and positive. However, on this day, they sat in class mysteriously quiet and removed from interaction with others. Finally, after class, some of their colleagues asked why Ann and Joan seemed ‘down’. They explained when they went to work the day after the last class, the HRP had been replaced with a contract organization. Ann and Joan said the employees did not know who their HRP was supposed to be, and HR did not answer their phone nor return messages. 1. What do you think the agency employees missed most about their trusted HRP? Which strategic role(s) of HRM does this represent?



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2. Thinking forward, how will the contractor situation affect the culture of the agency? What could happen to employee morale? 3. How could upper management implement a policy, procedure, or strategy to salvage the decision to outsource HR?

REFERENCES Beer, M. (2009). High Commitment, High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Caldwell, C., (2015). “Six Insights for Transformative Leaders.” Graziadio Business Review published by Pepperdine University and available online at http://gbr.pepperdine.edu/tag/transformative-leaders. Caldwell, C. and Ndalamba, K. K. (In Press). “Trust and Being ‘Worthy’ – Barriers to Wealth Creation.” Paper accepted for publication in the Journal of Management Development. Caldwell, C., Dixon, R. D., Floyd, L., Chaudoin, J., Post., J., and Cheokas, G. 2012. “Transformative Leadership: Achieving Unparalleled Excellence.” Journal of Business Ethics, Vol 109, Iss. 2, pp. 175-187. Caldwell, C., Hayes, L., Karri, R., and Bernal, P., (2008). “Ethical Stewardship: The Role of Leadership Behavior and Perceived Trustworthiness.” Journal of Business Ethics, Vol. 78, Iss. 1/2, pp. 153-164. Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Cameron, K., (2011). “Responsible Leadership as Virtuous Leadership.” Journal of Business Ethics, Vol. 98, pp. 25-35. Collins, J., (2001). Good to Great: Why Some Companies Make the Leap . . . . And Others Don’t. New York: HarperBusiness. DePree, M., (2004). Leadership is an Art. New York: Crown Publishing. Devanna, M. A., Fombrun, C., & Tichy, N. (1981). “Human Resources Management: A Strategic Perspective.” Organizational Dynamics, Vol. 9, Iss. 3, pp. 57-61. Gomez-Mejia, L. B., and Balkin, D. B., (2015). Managing Human Resources (8th ed.), New York: Pearson. Hasan, Z. and Caldwell,, C. 2016. “’Live Your Life in Crescendo’ – Moral Insights from Stephen R. Covey.” Graziadio Business Review. Vol. 19, Iss. 1. Available on line at http://gbr.pepperdine.edu/2016/04/live-your-life-in-crescendo/. Holbeche, L., (2009). Aligning Human Resources and Business Strategy (2nd ed.) New York: Routledge.


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Kanter, R. M.: 2008, “Transforming Giants.” Harvard Business Review, Vol. 86, Iss. 1, pp. 43–52. McClusky, J. E., (2002). “Rethinking Non-Profit Organization Governance: Implications for Management and Leadership.” International Journal of Public Administration, Vol. 25, Iss. 4, pp.539–559. Porter, M. E., (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. Schein, E. H. & Schein, P. (2016). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. Smith, S., Peters, R., and Caldwell, C., 2016. “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80. Steinberg, R. M. and D. Pojunis. (2000). “Corporate Governance: The New Frontier.” Internal Auditor, Vol. 57, Iss. 6, pp.34–39. Ulrich, D., et al., (2009) op. cit. Ulrich, D., Allen, J., Brockband, W. Younger, J., & Nyman M. (2009). HR Transformation: Building Human Resoruces from the Outside In. New York: McGraw-Hill. Williamon, O., (1985). The Economic Institutions of Capitalism. New York: Free Press. Stewardship as a governance theory is introduced by Davis, J. H., Schoorman & Donaldson,(1997). “Toward a Stewardship Theory of Management.” Academy of Management Review, Vol. 22, Iss. 1, pp. 20-47. Xu, F., Caldwell, C., and Anderson, V., 2016. “Moral Implications of Leadership— Transformative Insights.” International Journal of Business and Social Research, Vol 3, Iss. 6, pp. 75-85.




Chapter 3

LEADERSHIP AND HUMAN RESOURCE MANAGEMENT: INSIGHTS AND APPLICATIONS Cam Caldwell1 and Verl Anderson2 1

Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman 2 Dixie State University, St. George, UT, US

Many would suggest that “Human Resource Management (HRM) leadership” is as oxymoronic or self-contradictory as “jumbo shrimp.” As a staff function that exists to 1) carry out a Top Management Team’s vision, 2) provide business partner support to line managers, and 3) help employees to achieve their highest potential, the HRM role can assist an organization to thrive and flourish – but some critics would argue that its role does not truly encompass “leadership.” While conceding that a Vice President of Human Resources or Human Resource Director may lead his or her staff, these critics would explain that the HRM role is a support function that violates its fundamental purpose when it “leads” in the traditional sense of “command and control.” The purpose of this chapter is to affirm and acknowledge the fact that Human Resource Professionals (HRPs) play a support function but to suggest that HRPs can nonetheless play a powerful leadership role, based upon the evolving definition of leadership in the modern organization. We begin by defining leadership and citing the insights of widely recognized scholars and experts about the nature of leadership and the leader’s responsibilities.


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Figure 1.

The chapter compares the HRM role with ten different leadership perspectives in identifying how the duties of HRPs fit with the unique characteristics of all ten of these perspectives. We then suggest twelve caveats for HRPs as they carry out the HRM role and conclude with a challenge to HRPs to become powerful contributors to their organizations in fulfilling their many leadership roles.

UNDERSTANDING LEADERSHIP Although leadership includes the ability to influence others in the pursuit of shared goals, the definition of leadership often assumes that a leader acts in a role where (s)he is an acknowledged formal authority. Eight decades ago, however, Chester Barnard observed that “authority” was more accurately a function of a follower’s willingness to comply and cooperate with the would-be leader’s requests – rather than the formal right of a leader to assume command. Thus, Barnard emphasized that authority is actually a


Leadership and Human Resource Management

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decision made by a follower to relinquish his or her control to accept the leader’s guidance41. Although the leadership role can include positional responsibility, evolving thinking about leaders and organizations has suggested that leadership possesses diverse characteristics that perform a common set of functions42. In their award-winning summation of the key roles of leaders, James Kouzes and Barry Posner summarized the roles of outstanding leaders as consistently including five key functions43.

Figure 2.

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Challenging the process. Leaders are willing to confront past practices and the status quo and challenge previously held assumptions – recognizing that constant improvement is required to succeed. Defining a shared vision. Leaders articulate, communicate, and define in precise terms their vision of what the future can be – and they involve other stakeholders in developing that vision to ensure that others are engaged and committed partners. Enabling others to act. Leaders play a supportive role and assist others to accomplish critical tasks – providing resources, suggesting guidelines, and eliminating barriers that make success difficult to achieve.

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Barnard clearly affirmed this point in Barnard, C. I., (1938). The Functions of the Executive. Cambridge, MA: Harvard College. 42 For a comprehensive review of the five key roles of leaders, see Kouzes, J. M. & Posner, B. Z., (2017). The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations(6th ed.). San Francisco, CA: Jossey-Bass. 43 Ibid.


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Cam Caldwell and Verl Anderson 

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Modeling the way. Leaders live what they espouse, demonstrate by example, and serve as role models for others – recognizing that it is by doing what they ask others to do that they establish trust, build commitment, and earn credibility. Encouraging the heart. Leaders establish effective personal relationships with others and treat people as individuals rather than commodities – acknowledging that employees are valued “Yous” rather than as “Its”44.

Each of these five leadership functions is critical to the success of every organization and each of these functions is performed by effective HRPs. In their studies of what people most want as the personal traits of leaders, Kouzes and Posner obtained feedback about the qualities that followers considered to be most important. From a list of dozens of traits, the top four traits were identified as most essential in establishing leadership credibility45. 

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Honesty: Nearly 90 per cent of respondents rated honesty as the most important trait of leaders. People admire ethical leaders who know where they stand on important principles and keep their commitments. Forward thinking: More than two-thirds of people want a leader with a clear vision, an understanding of what needs to be accomplished, and how to do it. Competency: Followers need to know that their leader is knowledgeable and can get the job done. Competent leaders understand the nature of their organization, its context in a larger world, and the needs of those whom their organization serves. Inspiration: Leaders make the context of work far more meaningful if they are able to inspire people to become their best and to do their best.

Each of these traits enables leaders to accomplish the functions so important for leadership success and organizational effectiveness. HRPs must demonstrate these traits if they are to be perceived as credible in performing their work and in contributing to the success of others. By honoring their relationships with employees at all levels of the organization, HRPs demonstrate their personal trustworthiness and their understanding of their HRM role.

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This distinction and its valuing of each individual is the profound message of Buber, M. & Kaufmann, W. (1971). I and Thou. New York: Touchstone. 45 The research of hundreds of thousands of respondents identified the important features of leader credibility in Kouzes, J. M. & Posner, B. Z., (2011). Credibility: How Leaders Gain and Lose It Why People Demand It. San Francisco, CA: Jossey-Bass.



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TEN LEADERSHIP PERSPECTIVES HRPs demonstrate behaviors of ten important leadership perspectives that contribute to a leader’s ability to bring out the best in organizations and in individual employees46. Table 1 lists these ten leadership perspectives, identifies their defining characteristics, and indicates the application of each leadership perspective to the HRM function and the HRPs contributions to individual growth and organization success. Each of the ten leadership perspectives in Table 1 has practical application for HRPs – and each of those applications are fraught with a profoundly ethical implicit obligation because leadership and ethics are inevitably interconnected47. Each ethical duty owed to others is part of the HRM role48. Honoring those duties enables HRPs to be thought of as stewards who serve the interests of all stakeholders, promote long-term value creation, and assist the organization and its members to become their best version of themselves49. Ultimately, HRPs best lead others by incorporating the ethical steward’s commitment to helping both individuals and organizations to fulfill their highest potential50. Leaders are most effective in achieving optimal results when motivated by a genuine love for others and a passionate commitment to achieving their organization’s mission and purpose51. In writing of the nature of leadership and the leader’s commitment, Stephen Covey explained that “(l)eadership is treating others so well that they come to recognize their greatness and strive to achieve it52.” Similarly, Covey explained that the universal leadership mission involved optimizing organizational success by helping each employee to become their very best53.

TWELVE LEADERSHIP CAVEATS As the Father of Total Quality Management, W. Edwards Deming, often observed, “There is no ‘instant pudding’ pathway to success.” For HRPs, the leadership roles that

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Stephen R. Covey identified these two priorities as the universal responsibilities of leaders on page 99 of Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. 47 The ethical nature of leadership is confirmed repeatedly by experts like Hosmer, L. T., (2010). The Ethics of Management (6th ed.). New York: McGraw-Hill and Burns, J. M., (2010) op. cit. 48 The ethical nature of HRM is clearly articulated in Hosmer, L. T., (1987). “Ethical Analysis and Human Resource Management.” Human Resource Management, Vol. 26, Iss. 3, pp. 313-330 and in Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. 49 Ibid. 50 Ibid. 51 The application of this commitment is clearly identified in Caldwell, C., and Dixon, R. D. 2010. “Love, Forgiveness, and Trust: Critical Values of the Modern Leader.” Journal of Business Ethics, Vol. 93, Iss. 1, pp. 91-101 and in Caldwell, et al., (2011) op. cit. 52 See Covey, S. R., (2004) op. cit., p. 98. 53 Ibid., p. 99.


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Cam Caldwell and Verl Anderson Table 1. Leadership Perspectives Applied to HRM

Leadership Perspective Level 5

Perspective’s Defining Characteristic Personal humility and fierce resolve54

Covenantal

Commitment to creating new meanings55 Adherence to correct principles and universal truths56 Managing change benefiting the individual and the organization57 Sense of calling and personal charisma58

Principle-Centered

Transformational

Charismatic

Servant

Placing service to others over personal self-interest59

Transformative

Creating long-term value as ethical stewards60 Exchanging employee benefits for services rendered61

Transactional

Application to HRM Leadership Giving credit to others for their accomplishments, taking responsibility for mistakes, and demonstrating an unyielding commitment to organization success. Creating an organization-wide learning culture, helping employees to learn, innovating, and seeking new insights. Seeking to understand and apply correct principles and honoring those principles in relationships and obligations. Seeking optimal outcomes for the organization and helping individuals excel while effectively responding to change. Treating others as valued partners and viewing the organization’s work as a worthy purpose to achieve. Viewing the relationship with employees as a sacred responsibility while seeking optimal organization outcomes. Honoring duties owed to all stakeholders by striving to achieve optimal long-term results. Creating a fair exchange of compensation and benefits for work performed and dealing fairly with employees.

54

Level 5 leadership is described in Collins, J., (2001). Good to Great: Why Some Companies Make the Leap and Others Don’t. New York: HarperCollins and in Caldwell, C., Ichiko, R., and Anderson, V., (2017). “Understanding Level 5 Leaders -- The Ethical Perspective of Leadership Humility.” Journal of Management Development, Vol. 36, Iss. 5, pp. 724-732. 55 Covenantal leadership is explained in Pava, M., (2003). Leading with Meaning: Using Covenantal Leadership to Build a Better Organization. New York: St. Martin’s Press and in Caldwell, C, and Hasan Z. (2016). “Covenantal Leadership and the Psychological Contract – Moral Insights for the Modern Leader.” Journal of Management Development, Vol. 35, Iss. 10, pp. 1302-1312 and Caldwell, C., and Hasan, Z. (2016), “The Covenantal Leader – Honoring Implicit Relationships with Employees.” Graziadio Business Review, Vol. 19, Iss. 2 and available online at http://gbr.pepperdine.edu/2016/10/the-covenantal-leader. 56 For a review of Principle-Centered Leadership, see Covey, S. R. (1992). Principle-Centered Leadership. New York: Fireside. 57 For a review of Transformational Leadership, please see Burns, J. M., (2010). Leadership. New York: Harper & Row. 58 For a summary of Charismatic Leadership, please read Conger, J. A. & Kanungo, R. N., (1998). Charismatic Leadership in Organizations. Thousand Oaks, CA: Sage. 59 Servant Leadership is explained beautifully in DePree, M., (2004). Leadership is an Art. New York: Crown Publishing. 60 For a summary of Transformative Leadership, please see Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press. 61 For a summary of Transactional Leadership, see Mountain, A. & Davidson, C., (2015). Working Together: Organizational Transaction Analysis and Business Performance. New York: Routledge.


Leadership and Human Resource Management Leadership Perspective Authentic Values-Based

Perspective’s Defining Characteristic Demonstrating legitimacy, honesty, and sincerity62 Exemplifying selfreflection, balance, selfconfidence, and humility63

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Application to HRM Leadership Establishing relationships based upon transparency, genuineness, and responsibility. Honoring responsibilities and pursuing outcomes that consistently reflect the organization and its values.

they play and the qualities that they display require a clear understanding of themselves, the organization, their roles, and the needs of others. Becoming a great HRP requires extensive knowledge-based preparation, impeccable character, a genuine concern for others, and the rare ability of being able to incorporate these qualities in a vital organization support role.

Figure 3.

The path to outstanding leadership is a journey that requires dedication, commitment, and unflagging persistence in becoming one’s best self coupled with the willingness to unselfishly help others to also become their very best64. Perhaps that unusual combination is why there are so many leaders that struggle to earn the trust and followership of those whom they seek to lead65. For HRPs, we suggest twelve caveats, or advisory suggestions, that have practical application and that are worth considering for all who wish to serve their organizations and its employees.

62

For a review of Authentic Leadership, please read George, B. & Sims, P., (2007). True North: Discovering Your Authentic Leadership. San Francisco, CA: Jossey-Bass. 63 For a review of Values-Based Leadership, please see Kraemer, H. M., (2007). From Values to Action: The Four Principles of Values-Based Leadership. San Francisco, CA: Jossey-Bass. 64 Burns, J. M., (2010) op. cit. 65 The failure of leaders to earn the trust of followers is reported in dozens of surveys. See, for example, Gallup, (2017). “Confidence in Institutions” found online on October 22, 2017 at http://news.gallup.com/poll/1597/ confidence-institutions.aspx.


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Cam Caldwell and Verl Anderson 1. Remember that leadership is always a relationship. Honor that relationship by treating others the way that they wish to be treated (aka, “The Platinum Rule”) whenever possible66. The Platinum Rule exceeds the standard of treating others as you wish to be treated – as articulated by the Golden Rule67. Understand the difference. 2. Adopt a Transformative Ethics perspective. Recognize and acknowledge the broad range of duties owed to others. Use the Transformative Ethics model as a tool by which to understand those many ethical duties and recognize the importance of the subjective perceptions of others68. 3. To be trusted, first be “worthy.” Trustworthiness requires character, competence, caring and capacity. Leaders who are trustworthy understand and demonstrate each of these qualities69. Developing these qualities is a life-time growth process. 4. Think long-term as well as short-term. Optimal value creation requires “sharpening the saw” as well as “cutting the wood70.” A common error made by many would-be leaders is to focus short-term and compromise the long-term implications of their choices71. 5. Honor your commitments. If -- due to unforeseeable circumstance -- you ever find yourself in a position where you cannot honor a promise, immediately communicate what has changed, why you need to amend your obligation, and how you will make things right72. 6. Explain your rationale when making a decision. Clarify your basis for decision making, how you assessed alternatives, and why you decided as you did73. This important part of decision-making enables leaders to communicate their ethical assumptions and their respect for the rights of others74. 7. Keep your personal mission in mind. Be clear about what matters most and do not let your priorities be diverted by less important distractions. Carefully

See Economy, P., (2016). “How the Platinum Rule Trumps the Golden Rule Every Time.” Inc. March 17, 2016 found online on October 22, 2017 at https://www.inc.com/peter-economy/how-the-platinum-rule-trumps-thegolden-rule-every-time.html. 67 Ibid. 68 For a review of the twelve ethical perspectives that encompass Transformative Ethics, see Caldwell, C., and Anderson, V. “Transformative Ethics: An Integrative Model of Ethical Stewardship.” Paper presented at the International Academy of Management and Business Conference in New Orleans, Louisiana on January 20, 2017 or Caldwell, C., 2017. “Transformative Ethics and Trust – Keys to Competitive Advantage” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing or “Ethical Responsibilities of Human Resource Management: A Format for Moral Conduct” in this book. 69 See Caldwell, C., and Ndalamba, K. K., 2017. “Trust and Being ‘Worthy’ – The Keys to Creating Wealth.” Journal of Management Development, Vol. 36, Iss. 8, pp. 1076-1086. 70 The importance of this metaphor was developed in Covey, S. R., (2013). The Seven Habits of Highly Effective People: Powerful Lessons in Personal Change. New York: Simon & Schuster. 71 See Pfeffer, J., (1998) op. cit. 72 This philosophy is clearly articulated in Thorstensen, O., (2018). Making Things Right: The Simple Philosophy of a Working Life. New York: Penguin Books. 73 To fully understand why this principle is so important for those who seek to lead, please see Chapter 1 of Hosmer, L. T., (2010) op. cit. 74 Ibid. 66



8.

9.

10.

11.

12.

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identify your personal mission and purpose and do not let what matters most be sabotaged by that which is less important75. Develop a passion that matters. Be certain that you have carefully assessed the costs and the sacrifices required to achieve what you think matters most. Make sure that your passion considers those whom you love and your personal mission – including your relationship to the divine76. Honor the community. Acknowledge the fact that you owe duties to others – including others of future generations. By honoring duties to long-term results and the world of tomorrow, you demonstrate your understanding of your moral obligation to create a sustainable world77. Rely upon others. You cannot do everything yourself and you can do much, much more with others who share your passion and who love you. Cooperation is the key to successful collaborative effort and building a coalition of supportive and dedicated team members who follow correct principles allows you to expand your influence78. Balance your work and your other realities. Your family should be precious to you and their needs must also be met. Maintain an appropriate balance in your life and recognize the importance of the four key areas which make up your voice: the spiritual, the intellectual, the emotional, and the physical79. Live with no regrets. Learn from the past and appreciate its lessons – even the ones that were horrific and painful. Then flourish from what you learn. Trials teach powerful lessons, build character, and generate compassion80.

For HRPs, as with all leaders, there are no “guarantees” that following these twelve principles will ensure success81. . . but we nonetheless advocate these principles as guidelines for living more productive, fulfilling, and honorable lives82.

75

Covey, S. R., (1992) op. cit. Covey, S. R., (2013) op. cit. 77 For insights about social responsibility and duties owed to future generations, please read Friedman, T. F., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution -- And How it Can Renew America, Release 2.0. New York: Picador and Anderson, V., Ndalamba, K. K., and Caldwell, C., (2017). “Social Responsibility in a Troubled World: A Virtuous Perspective.” International Journal of Public Leadership, Vol, 13, Iss. 2, pp 98115. 78 For a review of the effective utilization of united teams, please see Fussell, C. & Goodyear, C. W., (2017). One Mission: How Leaders Build a Team of Teams. New York: Penguin. 79 To understand the importance of true balance and its impact on personal fulfillment, please see Covey, S. R., (2004) op. cit. 80 For a review of this important advice, please read Joseph, S., (2013). What Doesn’t Kill Us: The New Psychology of Posttraumatic Growth. New York: Basic Books. 81 Robert E. Quinn emphasizes that there are no guarantees for success. See Quinn, R. E., (1996). Deep Change: Discovering the Leader Within. San Francisco, CA: Jossey-Bass. 82 For an explanation of the worth of these suggestions, consult Hasan, Z. and Caldwell,, C. 2016. “’Live Your Life in Crescendo’ – Moral Insights from Stephen R. Covey.” Graziadio Business Review. Vol. 19, Iss. 1. Available on line at http://gbr.pepperdine.edu/2016/04/live-your-life-in-crescendo/. 76


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A CHALLENGE TO HRPS The nature of HRM, the complexity of its roles, its demands on those who serve in organizations, and the moral obligations implicit in HRM responsibilities make the task of being an effective HRP daunting and difficult83. Effective HRM service requires a profound understanding of a diverse set of facts, the skill to wisely apply information, and the ability to serve others with energy and persistence84. There are no easy answers for today’s organization in today’s competitive global world85. Leading people, serving them, and helping them and the organization to achieve the best possible results are difficult but exciting challenges86. Those who wish to become successful HRPs in the truest sense need to carefully develop a strategic understanding of the six roles of HRM. They must develop the competencies to serve their organization and its individual departments. They must command respect as business partners capable of assisting managers and employees to achieve greater results. They must demonstrate a genuine commitment to the success of their organization and its many members. And they must honor duties by the organization owed to present and future stakeholders as well. The challenge for HRPs is to raise the bar, increase their capabilities, and demonstrate by their daily actions that they are committed partners and ethical stewards who understand their role and who willingly and enthusiastically assist others as servant leaders87. By developing the best attributes of the ten leadership perspectives, by improving their ability to perform the five leadership functions, and by demonstrating the key leadership traits desired by others, HRPS have the ability to make a profound difference and to become valued leaders – not by their formal position but through their contribution in helping others to achieve worthy goals.

Leadership Perspectives and the New HRP – Case Study – By Dr. Sarah J. Smith Sherry recently completed a Masters in Business Administration (MBA) with a concentration in Human Resource Management. Upon employment with a local manufacturer, she seemed as if she would be an effective leader. She studied leadership while completing her advanced degree. Sherry was outgoing and seemed to be authentic. 83

This point is clearly made in Ulrich, D., Younger, J., Brockbank, W., & Ulrich, M. (2012). HR from the Outside In. New York: McGraw-Hill. 84 Ibid. 85 Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. 86 Ulrich, D., Allen, J., Brockbank, W., Younger, J., & Nyman, M., (2009). HR Transformation: Building Human Resources from the Outside In. New York: McGraw-Hill. 87 See DePree, M., (2004) op. cit.



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At the plant, Sherry was struggling with a transactional leadership situation. The office manager was earning less than one of the office team members. Time on the job was about the same, and the office manager's position required additional skills and abilities not required for the office team member. The office manager brought this situation to Sherry's attention on several occasion, but there seemed to be no movement nor hope for resolution. Rumors about Sherry and the plant manager began. When traveling out of town for business both would leave the day prior and stay a day later than necessary. Corporate HR began to question key managers to ask if they had any evidence or knowledge of an inappropriate relationship. This was a high-risk industry, and Sherry did roll out a modular-style training program that was selected by corporate HRPs. The nature of the modules covered mandatory required annual safety and environmental training. When asked where previous training records were located, none could be found. Sherry voiced that she did not want to maintain the safety training records and saw this as ‘not her job.’ At times, Sherry would network with other HRPs in the region from various employers. She discovered some of the HRPs were making more than she earned and brought this issue to the corporate HRPs and plant manager. A pay increase was granted. Within the same year, Sherry again went to the corporate HRPs and plant manager stating she had another job offer which paid more than her current salary. This time, corporate HR wished her well in her new endeavor. 1. Of the Ten Leadership Perspectives, as applied to HRM select two describe perspectives that Sherry's actions compromised. Explain how her choices or approaches met or failed to meet the respective perspectives. 2. Do you agree with upper management’s decision to deny Sherry’s second request for additional compensation and to pursue other career opportunities? Why or why not? 3. Aside from possible ethical or moral breaches, what might Sherry do differently at her next position to encourage organizational success?

Leadership Perspectives: CEO Versus Vice President of Human Resources – Case Study – By Dr. Sarah J. Smith In a city of 22,000 residents, the local hospital was its largest employer. While many of the employees appeared to enjoy working at the hospital, others met their demise in what seemed to be for mysterious reasons. One example: a nurse was terminated for missing work. When she examined her schedule, she discovered that she was not actually scheduled to be on duty that day. Another example: a director was sent for a psychiatric evaluation when employees complained she was too introverted. Although the results of


38


the examination did not find justification, she was nonetheless escorted out of the facility with her box of belongings and terminated. The CEO seemed by many measures to be a pillar of the community. He was active in civic clubs, politics, and a leader at church. The CEO was personally charismatic but was weak with regards to his long-term commitment and had decided to sell the hospital. The Vice President of HRM had been promoted from the office pool and had no prior HR experience. She was known within the organization as 'the hatchet woman'. When something distasteful was to happen, such as a questionable termination, she would be person to execute the CEO's request. Upon the sale of the hospital, which transformed the facility from non-for-profit to for-profit, the hospital’s leadership changed. The new CEO had been a nurse and thus, had previously worked in clinical settings hands-on. This experience provided him with a high level of personal credibility with the clinical staff. He was not, however, charismatic and in contrast to the previous CEO, was quite introverted. With his own style, he nonetheless sincerely cared about the organization and the employees. The new Vice President of HRM was also a stark contrast to her predecessor. As previous director of staff development, she heavily promoted a learning culture a commitment to constant learning and improvement. She was also personally charismatic and showed passion for her role and the direction of the organization. Some employees welcomed the new beginning and leadership changes with high hopes for the future. Others, naturally, were uncertain as to how the changes would affect them. 1. If the first Vice President of HRM had been more of a charismatic leader, would this leadership style have helped improve her acceptance by the hospital’s employees? Why or why not? 2. For the employees who seemed to enjoy working at the hospital, do you think some were merely happy to be gainfully employed? What would be an approach an HRP in leadership could initiate in order to gain insight on the organization's environment and culture? 3. At times when morale was low and the environment was changing, which of the Leadership Perspectives would best support and encourage the employees? Do you believe leaders can enhance their leadership capacities in certain areas, or, are those qualities naturally predetermined?

REFERENCES Anderson, V., Ndalamba, K. K., and Caldwell, C., (2017). “Social Responsibility in a Troubled World: A Virtuous Perspective.” International Journal of Public Leadership, Vol, 13, Iss. 2, pp 98-115.



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Barnard clearly affirmed this point in Barnard, C. I., (1938). The Functions of the Executive. Cambridge, MA: Harvard College. Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Buber, M. & Kaufmann, W. (1971). I and Thou. New York: Touchstone. Burns, J. M., (2010). Leadership. New York: Harper & Row. Caldwell, C., 2017. “Transformative Ethics and Trust – Keys to Competitive Advantage” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing. Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press. Caldwell, C., and Anderson, V. “Transformative Ethics: An Integrative Model of Ethical Stewardship.” Paper presented at the International Academy of Management and Business Conference in New Orleans, Louisiana on January 20, 2017. Caldwell, C., and Dixon, R. D. 2010. “Love, Forgiveness, and Trust: Critical Values of the Modern Leader.” Journal of Business Ethics, Vol. 93, Iss. 1, pp. 91-101 Caldwell, C, and Hasan Z. (2016). “Covenantal Leadership and the Psychological Contract – Moral Insights for the Modern Leader.” Journal of Management Development, Vol. 35, Iss. 10, pp. 1302-1312 Caldwell, C., and Hasan, Z. (2016), “The Covenantal Leader – Honoring Implicit Relationships with Employees.” Graziadio Business Review, Vol. 19, Iss. 2 and available online at http://gbr.pepperdine.edu/2016/10/the-covenantal-leader. Caldwell, C., and Ndalamba, K. K., 2017. “Trust and Being ‘Worthy’ – The Keys to Creating Wealth.” Journal of Management Development, Vol. 36, Iss. 8, pp. 10761086. Caldwell, C., Ichiko, R., and Anderson, V., (2017). “Understanding Level 5 Leaders -The Ethical Perspective of Leadership Humility.” Journal of Management Development, Vol. 36, Iss. 5, pp. 724-732. Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Collins, J., (2001). Good to Great: Why Some Companies Make the Leap . . .And Others Don’t. New York: HarperCollins. Conger, J. A. & Kanungo, R. N., (1998). Charismatic Leadership in Organizations. Thousand Oaks, CA: Sage. Covey, S. R., (2013). The Seven Habits of Highly Effective People: Powerful Lessons in Personal Change. New York: Simon & Schuster. Covey, S. R. (1992). Principle-Centered Leadership. New York: Fireside. Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press.


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DePree, M., (2004). Leadership is an Art. New York: Crown Publishing. Economy, P., (2016). “How the Platinum Rule Trumps the Golden Rule Every Time.” Inc. March 17, 2016 found online on October 22, 2017 at https://www.inc.com/petereconomy/how-the-platinum-rule-trumps-the-golden-rule-every-time.html. Friedman, T. F., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution -And How it Can Renew America, Release 2.0. New York: Picador Gallup, (2017). “Confidence in Institutions” found online on October 22, 2017 at http://news.gallup.com/poll/1597/confidence-institutions.aspx. Fussell, C. & Goodyear, C. W., (2017). One Mission: How Leaders Build a Team of Teams. New York: Penguin. George, B. & Sims, P., (2007). True North: Discovering Your Authentic Leadership. San Francisco, CA: Jossey-Bass. Hasan, Z. and Caldwell,, C. 2016. “’Live Your Life in Crescendo’ – Moral Insights from Stephen R. Covey.” Graziadio Business Review. Vol. 19, Iss. 1. Available on line at http://gbr.pepperdine.edu/2016/04/live-your-life-in-crescendo/. Hosmer, L. T., (2010). The Ethics of Management (6th ed.). New York: McGraw-Hill and Burns, J. M., (2010) op. cit. Hosmer, L. T., (1987). “Ethical Analysis and Human Resource Management.” Human Resource Management, Vol. 26, Iss. 3, pp. 313-330. Joseph, S., (2013). What Doesn’t Kill Us: The New Psychology of Posttraumatic Growth. New York: Basic Books. Kouzes, J. M. & Posner, B. Z., (2017). The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations (6th ed.). San Francisco, CA: JosseyBass. Kouzes, J. M. & Posner, B. Z., (2011). Credibility: How Leaders Gain and Lose It Why People Demand It. San Francisco, CA: Jossey-Bass. Kraemer, H. M., (2007). From Values to Action: The Four Principles of Values-Based Leadership. San Francisco, CA: Jossey-Bass. Mountain, A. & Davidson, C., (2015). Working Together: Organizational Transaction Analysis and Business Performance. New York: Routledge. Pava, M., (2003). Leading with Meaning: Using Covenantal Leadership to Build a Better Organization. New York: St. Martin’s Press. Quinn, R. E., (1996). Deep Change: Discovering the Leader Within. San Francisco, CA: Jossey-Bass. Thorstensen, O., (2018). Making Things Right: The Simple Philosophy of a Working Life. New York: Penguin Books.



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Ulrich, D., Allen, J., Brockbank, W., Younger, J., & Nyman, M., (2009). HR Transformation: Building Human Resources from the Outside In. New York: McGraw-Hill. Ulrich, D., Younger, J., Brockbank, W., & Ulrich, M. (2012). HR from the Outside In. New York: McGraw-Hill.





Chapter 4

JOB ANALYSIS: THE BUILDING BLOCK OF HUMAN RESOURCE MANAGEMENT Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

The technical skills of Human Resource Management (HRM) are logical and straight forward, but rarely fully understood by individual employees, managers and supervisors, the Top Management Team--or even by some Human Resource Professionals (HRPs). Although it is generally understood that the job analysis is a critical foundation element of HRM, errors are frequently made in conducting a job analysis, documenting job requirements, and using that information to insure that an organization is able to accomplish outcomes that are critical to an organization’s success. As the building block for many organizational systems and HRM programs, the job analysis not only defines critical job elements but is an important resource in generating management information used to guide an organization as it accomplishes its mission88. The purpose of this chapter is to explain key elements that make up a job analysis, to identify how and why the job analysis is so critical to organizational outcomes, and to enumerate common errors made in conducting a job analysis. We begin the chapter by defining the job analysis and identifying eight key steps in the job analysis process. The chapter identifies twelve important organizational and HRM elements that utilize job analysis information to achieve vital outcomes. We then identify seven errors that occur in conducting a job analysis and suggest how to mitigate those errors. The chapter concludes with a summary of the contributions of this chapter to HRM. 88

This key role of the job analysis is identified in Mathis, R. L., Jackson, J. H, Valentine, S. R., & Meglish. P. A.., (2014). Human Resource Management (15th ed.) pp. 144-147.


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Cam Caldwell

DEFINING THE JOB ANALYSIS A job analysis has been described as the essential element for virtually all of the HRM functions89 and “the basis for the solution of virtually every human resource problem”90. The job analysis provides a means for understanding the Knowledge, Skills, Abilities, and Other requirements (KSAOs) essential to the performance of each organizational position Job analysis is defined as the systematic process for identifying the nature and outcomes of a position by determining the specific tasks and activities performed to achieve desired results and the context in which work is performed91.

Figure 15 Typical outcomes of the job analysis include identifying the most efficient ways of performing work tasks, the enhancement of employee job satisfaction, opportunities to improve training, development of performance measurement systems, and matching job requirements with individual qualifications as part of employee selection and development92. Conducting a job analysis begins by first understanding the purpose of an organization, its structure and design, its context within its external environment, and its available resources93. 89

Many texts confirm this key fact. See, for example, Prien, E. P., Goodstein, L. D., Goodstein, J., and Gamble, L. G. Jr., (2009). A Practical Guide to Job Analysis. San Franciso, CA: Pfeiffer. 90 This profound statement is found on page 1 of Brannick, M. T., & Levine, E. L., (2007). Job Analysis: Methods, Research, and Application. Thousand Oaks, CA: Sage. 91 This definition incorporates insights from other scholars. See, for example, Brannick, M. T., & Levine, E. L., (2007), op. cit. page 9. 5 See the Business Dictionary definition of job analysis found online on August 5, 2017 at http://www.businessdictionary.com/definition/job-analysis.html. 93

Ibid.


Job Analysis

45

Figure 2.

CONDUCTING A JOB ANALYSIS Although there are differing perspectives about the steps involved in conducting a job analysis, the job analysis typically includes eight important steps: 1) Determine the Job to be Analyzed and its Contribution to Organization Mission. Every position in an organization exists to further the mission and objectives of an organization. The outcomes and results of each position must be defined in measurable terms94. 2) Identify Subject Matter Experts and Participants to Include in the Process. A job analysis is best conducted by individuals who have a clear understanding of the expectations, requirements, and outcomes associated with the position being analyzed. Internal and external “customers” of the position have valuable insights, as do colleagues who work with and are interdependent with the position. Relationships developed are often critical to the effective performance of any position and should be considered, along with task-related outcomes and expectations95.

94 95

Ibid. Many varied studies have been conducted about participants participating in generating job analysis information. One such study is Truxillo, D. M., Paronto, M. E., & Collins, M., (2004). “Effects of Subject Matter Expert Viewpoint on Job Analysis Results.” Public Personnel Management, Vol. 33, Iss. 1, pp. 33-46,


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Cam Caldwell 3) Systematically Collect Information about the Job. There are many sources of job information, ranging from such resources as a previously developed job description, classification standards, established performance measures, and specialized job audits96. Identifying job tasks, relationships, performance outcomes, required skills, specialized abilities, necessary knowledge, and other job-related criteria form the foundation of the job analysis97. 4) Matching Job Content with Competencies and Requirements. Each source of job information can be useful in identifying the factors that are necessary in the successful achievement of job outcomes. Carefully matching job content with those competencies and requirements results in a detailed list of qualities essential for performing successfully98. 5) Identifying Critical Tasks and Results. Subject Matter Experts and other stakeholders who are involved should rank the importance of those tasks and results which are most important and essential for achieving organizational priorities for the position being analyzed99. Often these critical tasks and outcomes require collaborative effort with other organizational personnel and the nature of that cooperation should be clearly described and included100. 6) Identify Competencies Matching Tasks and Results. Ranking critical competencies is essential in order to identify the most important capabilities required to achieve desired outcomes101. The ability to translate KSOAs into specific competencies demands that each of those outcomes and their antecedents be clearly enumerated. 7) Formally Confirm the Overall Job Elements. Compile and review all of the information generated in the job analysis process and reaffirm that the job tasks and competencies accurately match the purposes of the position and their contribution to desired organizational outcomes102. 8) Document the Final Result. Publish the job analysis, identify and document when it was conducted, and formally adopt it as a summary of the purposes, tasks, and requirements of the position being analyzed103.

96

See Prien, E. P., et al., (2009) op. cit. for examples of various methods of generating job content information. Brannick, M. T. & Levine. E. L., (2007) op. cit. 98 rien, E. P., et al., (2009) op. cit. 99 Truxillo, D. M., et al., (2004) op. cit. 100 he importance of behavioral skills and relationship competencies are documented in sources such as Van Scotter, J. R., & Motowidlo, S. J. (1996). “Interpersonal Facilitation and Job Dedication as Separate Facets of Contextual Performance. Journal of Applied Psychology, Vol. 81, Iss. 5, pp. 525-531. 101 Prien, E. P., et al., (2009) op. cit. 102 Involve stakeholders, managers and supervisors, and Subject Matter Experts, as noted in Truxillo, D. M., et al., (2004) op. cit. 103 Documentation and formalization of the process provides a formal record which can be used as an organization resource. See Brannick, M. T. & Levine. E. L., (2007) op. cit. 97


Job Analysis

47

Although there are several ways of conducting a job analysis in the process of gathering and verifying job content information and job requirements, these eight steps are applicable and necessary in order to confirm that job analysis information generated is both complete and correct104.

Figure 3.

HRM SYSTEMS AND PROCESSES Utilizing the information generated by the job analysis, many HRM functions depend upon that information in serving the organization. Brannick and Levine have identified twelve distinct HRM systems and processes, which they describe as HRM “purposes or uses,” that are directly affected by the job analysis105. 1) Preparing Job Descriptions. The job analysis enables HRPs to prepare a job description which includes a job title, an overall job summary, duties and tasks, and job qualifications. 2) Establishing Job Classifications. A job classification is a cluster or family of related jobs based upon similar duties, responsibilities, and authority. The job analysis provides information then confirms or disconfirms the linkage between positions.

104 105

Ibid. These twelve important technical HRM tasks are all accomplished more effectively with the aid of a high quality job analysis. See Ibid., pp. 3-5.


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Cam Caldwell 3) Job Evaluation. Because a job analysis documents the work to be performed and the qualifications required for a position, it enables an organization to establish a pay range for that position and to help insure internal equity of compensation among positions within an organization. 4) Job, Team, and System Design, and Redesign. Job design bundles tasks into a position. Team design bundles an integrated set of tasks to a team. Systems design assigns tasks to equipment and people associated with the same organizational system. Redesign is about improving job, team, or system efficiency. 5) Human Resource Requirements and Job Specifications. The job analysis identifies the KSAOs required that are necessary for the effective performance of a position. Job specifications refer to the years of required experience. This information is essential for hiring, promotion, and compensation issues. 6) Performance Appraisal. Performance appraisal identifies the standards of quantitative and qualitative performance of positions in achieving organizational goals. Performance reviews are conducted by managers and supervisors to communicate expectations, coach employees, and provide regular feedback. 7) Training. The job analysis enables an organization to identify types of training needed by employees in various positions. Training improves individual performance, stimulates workplace learning, and facilitates constant improvement. 8) Worker Mobility. The job analysis can aid organizations in identifying qualified candidates as positions change, as promotional opportunities arise, and as employees consider career opportunities beyond their current positions. 9) Workforce Planning. Information about employee qualifications and capabilities can assist organizations as they consider the impacts of organization growth, succession planning, and technological impacts on the organization. 10) Efficiency Identification. The job analysis can be a useful tool in identifying the need for better tools, eliminating tasks which add little or no value, and developing quality-related work aids. 11) Safety. The job analysis can help to identify opportunities to reduce risk or the causes of accidents or injuries. Work tools, the work environment, and work processes can be improved using job analysis data. 12) Legal and Quasilegal Requirements. Several HRM functions and processes must comply with legal guidelines and the job analysis can play a major role in confirming the legal nature of many of those functions and processes. For example, a job analysis can identify Bona Fide Occupational Qualifications required in selection and testing candidates.


Job Analysis

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All twelve of these HRM functions, systems, and processes are directly benefited by the information generated by the job analysis, confirming its importance as the fundamental building block of HRM106.

JOB ANALYSIS ERRORS TO AVOID Despite the fact that the job analysis is a vital part of every HRM system, a recurring set of errors are frequently made in conducting a job analysis. The consequences of making one or more of these mistakes not only undermine the ability of an organization to perform the twelve HRM functions listed herein but challenge the credibility of HRPs and the entire organization. Nonetheless, these errors recur from time to time in organizations of all types. 1) Failure to Focus on Contribution to Mission. Each organizational position exists to contribute to the organization’s mission and purposes. The focus of a job analysis requires identifying tasks performed but those tasks sometimes get out of balance with the organization’s fundamental goals. Conducting the job analysis must always be done with the organization’s mission and purpose clearly in mind107. 2) Overlooking Key Stakeholders. The value and credibility of the job analysis demands that key stakeholders -- both internal and external customers – have input in either developing the job analysis or reviewing the final product. Inviting departmental or union employees into job analysis development meetings and explaining the process for developing the job analysis can increase employee trust in the HRM role and build credibility108. 3) Imposing Unnecessary Job Requirements. Occasionally, managers and supervisors who participate in a job analysis make the mistaken but wellmeaning assumption that it is in the interest of their organization to establish higher standards for job qualifications than are actually needed to perform the required job tasks. Imposing such qualifications that are not required is in conflict with the law and job requirements must be validated as Bona Fide Occupational Qualifications. HRPs must sometimes be especially tactful in explaining the difference between legal requirements and qualifications that a

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Prien, E. P., et al., (2009) op. cit. Ibid. 108 One of the co-authors of this chapter chose to involve union employees as both observers and participants in the development of a job analysis in an organization rife with political conflict and a history of employee dissatisfaction. The outcome was that the employees in that union bought into the testing and selection process ultimately developed for the first time in the organization’s ten-year history 107


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Cam Caldwell

4)

5)

6)

7)

supervisor views as “desirable” to include as a requirement for performing a position109. Failing to Update Old Analyses. Jobs change over time. Technology evolves. Yet organizations continue to act as if job requirements and job content are unchanging. It is not unusual for organizations to pull out an old job description or job analysis and “short-cut” the job analysis by substituting old information that no longer applies110. Overlooking Team Collaboration and Interpersonal Skills. Focusing on technical job requirements can help insure that individuals are qualified to perform job functions that are absolutely necessary for successful performance. At the same time, individuals in organizations must also work effectively as members of a team and must cooperate effectively with others within their department and within their organization. Overlooking key interpersonal skills can be an expensive mistake in conducting a job analysis and can result in hiring technically skilled individuals who are ineffective in working with others111. Missing Critical “Flair Factors”. Flair factors are those difficult-to-define qualities that individuals possess that make the difference between a performer that “looks good on paper” and one that is able to get a job done extraordinarily well112. Although individual personal factors, like perseverance and passion, are often difficult to articulate in a job analysis, those factors are often critical differentiating qualities of a successful versus an unsuccessful performer113. Skipping Steps. Although conducting a job analysis may seem to be a detailoriented and time consuming process, with effective planning the process can be conducted both quickly and correctly. Unfortunately, a common error made in many organizations is the skipping of steps in the process due to the press of time and other responsibilities. The result of skipping steps is often the costly error of developing an inaccurate job analysis – a mistake which can create a negative domino effect throughout many parts of an organization114.

109

The Griggs vs. Duke Power Case clearly identified the importance of Bona Fide Occupational Qualifications and struck down an artificial and discriminatory requirement that employees needed a high school degree to perform job tasks. See Mathis, R. L., (2014) op. cit. 110 This common mistake was made by a large municipality in which the Police Chief wanted to utilize a thirty yearold job analysis as the basis for developing a selection process for new police officers. 111 Increasingly, organizations have recognized the importance of team collaboration and interpersonal qualifications for many positions which involve cooperative effort to achieve vital tasks. See Goleman, D., (2007) Social Intelligence: The New Science of Human Relationships. New York: Bantam. 112 The concept of “flair factors” was written about in Irish, R. K., (2011). “Focusing on the Flair Factor.” America’s Civil War Magazine. Sept. 22, 2011 found online on August 7, 2017 at http://www.slideshare.net/Talentplus/the-flair-factor, 113 This powerful truth is the subject of Duckworth, A., (2016). GRIT: The Power of Passion and Perseverance. New York: Scribner. 114 This point is powerfully made in the outstanding book, Russo, J. E., & Shoemaker, P. J. H., (2001). Winning Decisions: Getting it Right the First Time. New York: Currency.


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As with any important task, conducting a job analysis requires a thorough understanding of its key components, thoughtful attention to detail, and a commitment to excellence in producing a product that has profound implications throughout every organization.

CONTRIBUTIONS OF THE CHAPTER The job analysis is a building block of HRM because it focuses on the important tasks upon which competitive advantage, service to customers, and constant improvement are based. Although there are many useful methods for conducting a job analysis, the focus of this chapter has been on understanding the job analysis role, identifying its organizational significance, and articulating errors to avoid in the job analysis process. Thus, there are three major contributions of this chapter. 1) Explaining the importance of the job analysis. As we have noted, the job analysis has ramifications organization-wide and can be a powerful tool for HRPs in serving other departments. 2) Clarifying the scope and significance of the job analysis. Identifying twelve important functions that are dependent upon the job analysis help to clarify the need to conduct a job analysis that is accurate, valid, and complete. The significance of a job analysis is profoundly personal for each employee because, when done correctly, it provides the organization with information that properly frames the expectations for each employee’s performance. 3) Cautioning regarding common job analysis errors. The seven common errors identified in this chapter are important for HRPs, Subject Matter Experts, managers, and supervisors to review as they prepare to participate in the job analysis process. Avoiding these errors enables participants to create an end product that will truly add value to the organization. The job analysis, like so many key foundational tasks, must be done correctly and efficiently if it is to be a valuable tool for effective HRM. As HRPs review the key steps required in conducting a job analysis, the insights from this chapter are a helpful resource with ramifications organization-wide.

Questions to Ponder 1) As you reflect on the key steps required in conducting a job analysis, which of these steps do you consider to be most critical? Which step do you think is most frequently overlooked?


52

Cam Caldwell 2) In what way is preparing a job analysis a task that requires extensive preparation? How should the importance of job requirements and job outcomes be decided? 3) How do you think HRPs should resolve questions about differences of opinion regarding the contents of a job analysis and the requirements for a position?

A Shocking Termination – Case Study – by Dr. Sarah J. Smith At a manufacturing corporation, Ben was hired as the new Vice President of Operations. During the interview process the C-level suite was impressed with his credentials and experience. They felt comfortable with selecting Ben and looked forward to his arrival. One of the technical units Ben would be responsible for was New Product Development. The team included highly capable, well educated subject matter experts. This team had a long history of product development success through innovation and formulated powerful suggestions for new creative solutions to today's and future challenges. Michael had worked in product development for ten years. He was revered for his work ethic, coupled with a high level of intelligence and creativity. Michael was known to work six hours at the home plant and then drive two hours to another facility. He worked into the night and put in long hours. Coworkers on the New Product Development team were under the impression Michael's work was well respected and had value. What happened next shocked the conscience of members on Michael's team. Everyone in the organization received an email that Michael had been terminated, effective immediately. With the number of hours he dedicated to the company and the creative solutions he contributed, this seemed to be an irrational decision on the part of Ben. After all, Ben had only served as Vice President of Operations for three weeks. The nature of a sudden and unanticipated termination left many organizational members with questions. 1) What role could the HRM staff have played in this process? Would HRM staff have been able to assist the Vice President of Operations in only three weeks? 2) When matching job content with competencies and requirements, Michael definitely met the requirements of the job. Do you think Michael could have been perceived as overqualified or overzealous? 3) Could Ben have gone back to Michael's job description or performance review for more information about Michael's roles, responsibilities, and job expectations? If he did not do so, do you think Ben assumed organization risk with Michael's seemingly sudden termination?


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Outdated Job Descriptions Lead to a Creative Solution – Case Study – by Dr. Sarah J. Smith In a growing organization that does not have its own in-house HRM staff, the decision was made to reevaluate the budget. With cooperation from various department heads, budgets were rearranged and Julie was hired. She came to the organization with a proven track record for successful HR office start-ups and everyone was happy to have an HRP full-time, on staff. Prior to the decision to create an HRP position, the company’s HR functions were outsourced. This outsourcing created several issues because, although the relationship with the vendor began positively and company representatives visited the location frequently, over time this relationship changed. Department heads saw an HR vendor representative only about once per year. Simultaneous with decreased service, the vendor consistently increased the billing price for services. When Julie came on board as Director of Human Resources, she was surprised how outdated many HR functions had become. There was a 4 inch red binder in Julie's office containing the organization's job descriptions. Unfortunately, the job descriptions were ten years old. There were no records to clarify if and how job analysis was conducted. Further, the performance review form was a template that did not 'fit' many of the jobs within the organization. The department head for transportation asked Julie to place an ad for a new driver. Knowing how outdated the job descriptions were, along with the sheer number of job descriptions which were in need of review and likely revision, Julie formulated a plan. She was a one-person office and knew it would take time to gather input from key stakeholders and structure a review of all job descriptions. Julie also felt uncomfortable posting an open position without an accurate job description in place. Julie decided prior to posting an open position, she would assist the department head to create a focus group and review the needed knowledge, skills, abilities and other conditions necessary for job success. This process worked well because a) Julie inched toward the ultimate goal: quality job analysis producing accurate job descriptions, and b) The hiring department head did not want to leave an open position for an extended period of time. The organization was lean, and every worker was important to fulfillment of the mission and delivery of services. From the updated job description, Julie drafted a job posting and had the department head approve what would be advertised. When it came time for interviews, Julie used the revised job description to formulate an interview guide of job-related questions for the interview panel.


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Cam Caldwell 1) If you were the transportation department head, how would you decide who to involve in the job analysis? (Your department runs three shifts and in addition to drivers, dispatch personnel are employed at the facility) 2) Who would be key external stakeholder participants? This department provides much needed transportation in an area without other public transportation. Riders travel to various destinations. Fares are based on ridership and input costs of operation. 3) How should Julie work with the department heads to design a system for the job analysis and job description revision process? 4) If employees feel they are not equitably compensated for their work, could they look at the job description to see if the knowledge, skills, and abilities indicated still describe what is needed to successfully achieve the job duties? What other indicators could be helpful for a strategic compensation review? 5) Upon revision of the job descriptions, how would you proceed with updating the performance review process?

REFERENCES Brannick, M. T., & Levine, E. L., (2007). Job Analysis: Methods, Research, and Application. Thousand Oaks, CA: Sage. Duckworth, A., (2016). GRIT: The Power of Passion and Perseverance. New York: Scribner. Goleman, D., (2007) Social Intelligence: The New Science of Human Relationships. New York: Bantam. Irish, R. K., (2011). “Focusing on the Flair Factor.” America’s Civil War Magazine. Sept. 22, 2011 found online on August 7, 2017 at http://www.slideshare.net/Talentplus/theflair-factor. Mathis, R. L., Jackson, J. H, Valentine, S. R., & Meglish. P. A.., (2014). Human Resource Management (15th ed.) pp. 144-147. Ployhar, R. E., and Moliterno, T. P., (2011). “Emergence of the Human Capital Resource: A Multilevel Model.” Academy of Management Review, Vol. 36, No. 1, pp. 127-150. Prien, E. P., et al., (2009) op. cit. for examples of various methods of generating job content information. Prien, E. P., Goodstein, L. D., Goodstein, J., and Gamble, L. G. Jr., (2009). A Practical Guide to Job Analysis. San Franciso, CA: Pfeiffer. Russo, J. E., & Shoemaker, P. J. H., (2001). Winning Decisions: Getting it Right the First Time. New York: Currency.


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Truxillo, D. M., Paronto, M. E., & Collins, M., (2004). “Effects of Subject Matter Expert Viewpoint on Job Analysis Results.” Public Personnel Management, Vol. 33, Iss. 1, pp. 33-46, Van Scotter, J. R., & Motowidlo, S. J. (1996). “Interpersonal Facilitation and Job Dedication as Separate Facets of Contextual Performance. Journal of Applied Psychology, Vol. 81, Iss.5, pp. 525-531.





Chapter 5

ETHICAL RESPONSIBILITIES OF HUMAN RESOURCE MANAGEMENT: A FRAMEWORK FOR MORAL CONDUCT Cam Caldwell1 and Verl Anderson2 1

Distinguished Visiting Scholar, Modern College of Business and Science, Muscat, Oman 2 Dixie State University, St. George, UT, US

Over thirty years ago, the University of Michigan’s LaRue Hosmer explained that Human Resource Management (HRM) involved a multitude of moral and ethical responsibilities that were both explicit and implicit in an organization’s obligations to its multiple stakeholders. Hosmer’s work at that university laid the foundation for the Ross School of Business’ commitment to ethics in leadership and the importance of values in the modern organization. Hosmer wrote, “All of the basic human resource processes have some ethical content.” Moreover, he added that Human Resource Professionals (HRPs) have a critical ethical role whenever organization policies can or do harm individual employees. The purpose of this chapter is to provide a framework for examining the nature of the ethical duties and benefits obtainable when leaders and organizations honor the responsibilities both explicit and implicit in the HRM relationships created in organizations. By the very nature of this subject, it is neither possible nor appropriate to attempt to articulate all of the ways in which organizations, leaders, and HRPs may misstep in failing to honor those ethical duties. Nonetheless, this chapter will focus on guiding principles which can aid leaders and professionals as they reflect on their ethical


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Figure 1.

and moral responsibilities. We begin the chapter by presenting a summary of the ethical and moral responsibilities owed by HRPs to their respective stakeholders. We provide a model for assessing ethical responsibilities which Hosmer developed and a virtuous moral continuum for examining individual and organizational conduct. We then introduce twelve ethical perspectives of Transformative Ethics and describe their importance in interpersonal relationships. After listing six principles which scholars have identified as HRM-related ethical guidelines, we conclude the chapter with a summary of the chapter’s contributions to the HRM literature.

Ethical Principles of Human Resource Management

Figure 2.


Ethical Responsibilities of Human Resource Management

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ETHICAL RESPONSIBILITIES OF HRPS In context with the six strategic roles of HRM identified in Chapter Two of this book, we suggest that organizations and HRPs owe a complex set of ethical responsibilities to a multitude of stakeholders115. Table 1 summarizes seven ethical responsibilities116 associated with those six strategic roles. There are multiple stakeholders to whom HRPs owe ethical obligations, and in many organizations these responsibilities are performed less than effectively. The following is a list of seven of those stakeholders and a description of obligations owed to each of them. New Employees – Special responsibilities are owed to newly hired employees to assist them in their transition into an organization117. The challenges facing new employees are properly addressed in a well-planned and administered onboarding process. The effective socialization of new employees benefits not only those individuals but also the colleagues with whom they work, as well as the productivity and profitability of their work divisions and the entire organization118. All Employees – HRPs have the obligation of helping employees to achieve their potential, within the framework of the organization’s mission and purpose119. Creating an environment that empowers and engages employees and providing opportunities for constant learning and growth enable employees to become their best and honor the covenantal obligations of leaders120. Top Management Team – As an important staff function, the HRM staff serves the mission of the organization and the goals and purposes defined by its Top Management Team. HRPs serve as valuable resources when they accomplish the six HRM roles outlined in Chapter Two of this text. 115

116

117

118

119

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The duties of HRPs to stakeholders have been addressed by many scholars and seven duties owed to stakeholders are addressed in Caldwell, C., Gruys, M. L. & Thornton. “Public Safety Assessment Centers: A Steward’s Perspective.” Public Personnel Management, Vol. 32, Iss. 2, pp. 229-249. These seven duties or responsibilities come directly from the previously cited article and have also been identified as key elements of organizational trustworthiness. See Caldwell, C. (2004). Organizational Trustworthiness: A Developmental Model. Pullman, WA: Washington State University and Caldwell, C. & Clapham, S., (2003). “Organizational Trustworthiness: An International Perspective.” Journal of Business Ethics, Vol. 47, Iss. 4, pp. 348-364. Unfortunately, these obligations and responsibilities are frequently overlooked in many organizations. See, for example, Caldwell, B. G., and Caldwell C., 2016. “Ten Classic Onboarding Errors: Violations of the HRM – Employee Relationship.” Business and Management Research, Vol. 5, No. 4, pp. 47-55 and available online at http://www.sciedu.ca/journal/index.php/bmr/article/view/ 10672/6501. See also Caldwell, C. and Peters, R. (In Press). “New Employee Onboarding – Psychological Contracts and Ethical Perspectives.” Paper accepted for publication in the Journal of Management Development. See DePree, M., (2004). Leadership is an Art. New York: Crown Publishing for an articulation of this moral responsibility. These obligations are set forth in Pava, M., (2003). Leading with Meaning: Using Covenantal Leadership to Build a Better Organization. New York: St. Martin’s Press and Caldwell, C., and Hasan, Z. (2016). “The Covenantal Leader – Honoring Implicit Relationships with Employees.” Graziadio Business Review, Vol. 19, Iss. 2 and available online at http://gbr.pepperdine.edu/ 2016/10/the-covenantal-leader.


Table 1. Ethical Responsibilities and Strategic HRM Roles Align Culture

Technical HRM Tasks Demonstrate skills in performing all.

Business Partnering

Listen & Empower

Constant Improvement

Responding to Change

Aid departments to address needs for improvement as internal resources. Help departments meet obligations.

Monitor and support employee concerns and help management best use employees. Balance employee and company interests.

Align training and learning and assist departments in achieving their goals. Go beyond what is legally required to honor covenantal duties. Identify and communicate learning opportunities.

Understanding and anticipating environmental factors.

Competence

Understand cultural factors and their impacts.

Legal Compliance

Honor the spirit of the law rather than just the letter. Clarify cultural elements to employees and their implications to management.

Understand all legal implications. Serve as technical resources for departments as needed.

Assist departments in understanding best practices available.

Share employee concerns with top management and advise management.

Establish policies and systems that reinforce values and that are communicated and fair. Treat all parties with dignity, courtesy, and respect.

Ensure that technical tasks are procedurally fair and communicated.

Assist departments to create procedurally fair improvements.

Clearly communicate and provide opportunity for input and discussion.

Provide opportunities for individuals and departments at all levels to become their best.

Implement changes by communicating clearly to parties affected and encourage input.

Ensure that HRM tasks performed achieve best interests of all.

Help departments to create win-win solutions.

Demonstrate a commitment to best interests of employees and the organization.

Seek to optimize the long-term stewardship interests of stakeholders.

Financial Balance

Establish realistic goals and provide adequate resources to achieve them.

Provide resources to perform tasks correctly.

Identify most effective ways to optimize return on investment.

Recognize the value of making employees partners in organization success.

Quality Assurance

Focus on creating a culture based upon excellence and model that standard.

Perform all HRM tasks at the optimal level and demonstrate expertise.

Assist departments in identifying best options rather than merely “satisficing.”

Help create systems and programs that treat employees as empowered partners.

Pursue solutions that create win-win opportunities for all parties by optimizing results. Assist in identifying behavioral implications of decisions and their long-term impacts financially. Focus training on opportunities to improve systems that reinforce values and ensure best results.

Need to Inform

Procedural Fairness

Interactional Courtesy


Identify and resolve legal issues related to changes. Explain how HRM can facilitate change management.

Assist in identifying realistic financial implications of options and decisions. Recognize the importance of creating and maintaining a competitive advantage.


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Figure 3.

The Human Resource Profession – As HRPs demonstrate high competence, personal integrity, and leadership insight they add value to the image of their profession and contribute to its ability to add value in a world where HRM is not always viewed as a strategic contributor to organization success1. Society at Large – HRPs and their organizations have the moral duty to create both short-term and long-term wealth, to add value to society, and to do no harm2. By honoring their responsibilities in helping their organizations to be globally competitive, HRPs simultaneously honor their obligations to a society struggling to deal with problems of environmental pollution and a host of other global problems3. Themselves and Their Families – HRPs owe a moral duty to discover their own greatness and to become the best possible version of themselves4. They owe this duty to their families for whom they are responsible economically, to themselves, and to their higher power – as well as to a world struggling to deal with difficult economic and social issues5.

1

See, for example, Mathis, R. L, Jackson, J. H., Valentine, S. R., & Meglish, P. A. (2016). Human Resource Management (15th ed.). Boston, MA: Cengage Learning for their insights about the important role of HRPs and the HRM function. 2 This obligation to society is clearly articulated in Lennick, D. & Kiel, F., (2011). Moral Intelligence 2.0: Enhancing Business Performance and Leadership Success in Turbulent Times. Boston, MA: Pearson Education. 3 This obligation is set forth in such highly regarded works as Friedman, T. L., (2009). Hot, Flat, and CrowdedWhy We Need a Green Revolution -- And How it Can Renew America Release 2.0. New York: Picador. 4 This set of personal obligations is clearly articulated in Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. 5 Social responsibility in today’s world is well articulated in Anderson, V., and Ndalamba, K. K., and Caldwell, C., 2017. “Social Responsibility in a Troubled World: A Virtuous Perspective.” International Journal of Public Leadership, Vol, 13, Iss. 2, pp 98-115 and by other well-regarded scholars such as Harvard’s Paine, L. S., (2003). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill.


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Recognizing and honoring each of these moral responsibilities and the stakeholders to whom they are owed is an ethical obligation of each HRP in serving others and in enabling their organizations to best serve society.

A MODEL FOR ETHICAL RESPONSIBILITY The University of Michigan’s LaRue Hosmer provided a model to assist individuals and organizations in the complex task of evaluating their responsibilities, and this model has direct application for HRPs and the HRM function. Diagram 1 portrays that model and its key elements6. Hosmer’s model is widely accepted as a rational model for explaining moral and ethical decisions and represents a leader’s obligation to others regarding the justification for decisions that have consequences on stakeholders7.

Diagram 1. Hosmer’s Decision Making Model.

Every decision that impacts stakeholders must be viewed based upon ethical and moral criteria and the benefits, harms, and rights associated with moral decision-making. Only by understanding these moral and ethical consequences and the legal and economic effects of decisions can leaders fully define and asses the moral problem to be addressed and propose a moral solution that addresses the consequences on affected stakeholders.

6

This model is found in Chapter 1 of Hosmer, L. T., (2010). The Ethics of Management (7th ed.). New York: McGraw-Hill. 7 See, for example, Anderson, V., Ndalamba, K. K., & Caldwell, (2017) op. cit.



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A VIRTUOUS CONTINUUM Assessing moral and ethical consequences requires that clear standards for ethical decision-making are understood by those who make decisions, as well as those who are affected by them. An ethical continuum has been defined by several authors over the past several decades which provides insights about the impacts and consequences of decisions that are made. Diagram 2 is a Virtuous Continuum which portrays four possible consequences along that ethical continuum8.

Diagram 2. The Virtuous Continuum.

For HRPs, the virtuous position on this continuum enables them to honor the moral duties of ethical stewardship in the pursuit of the long-term best interests of all stakeholders. Although the moral position does not violate ethical duties owed and complies with the letter of the law and professional standards, that position does not optimize value creation and duties owed. The amoral position may avoid illegalities but fails to honor duties and responsibilities in the pursuit of self-interest. The immoral position pursues self-interest, destroys trust, and fails to honor ethical obligations9.

8

This continuum reflects the work of several authors that were integrated by Caldwell, C., Carter, E., and Floyd, L. A., (2015). “Coaching for Improved Teaching: A Virtuous Model for Improving Performance and Increasing Commitment.” Business and Management Research, Vol. 4, No. 4, pp. 54-65 in their paper. The concept of an ethical or moral continuum was originally developed by Carroll, A. C. & Buchholtz, A. K., (2014). Business and Society: Ethics, Sustainability, and Stakeholder Management. Stamford, CT: Cengage Learning and addressed by David A. Whetten (1996) in a presentation made to the 25th Year Class Reunion at Brigham Young University in October of that year and later by Kim S. Cameron in Cameron, K. S., (2003). “Ethics, Virtuousness, and Constant Change” in N. M. Tichy & A. R. McGill (Eds.) The Ethical Challenge: How to Lead with Unyielding Integrity. San Francisco, CA: Jossey-Bass, pp. 185-194. 9 Ibid.


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HRPS AND TRANSFORMATIVE ETHICS The unfortunate reality of the modern organization is that trust and confidence in leaders is low and that ethical violations persist at all levels10. Employees report that they not only lack confidence in their leaders but that the organizations in which they work underutilize their potential, fail to honor commitments, and seem to lack a moral compass. Historically, nearly half of HRPs indicated that they had felt pressured to compromise professional ethical standards within their organizations11. The figure following depicts just a few of the dilemmas within the work environment. HRPs have the opportunity to help their organizations to change that perspective about organizations and their leaders12.

Figure 4.

The 2017 Gallup survey, “Confidence in Institutions,” reveals this lack of confidence in leaders and organizations of all types and was found online on August 24, 2017 at http://www.gallup.com/poll/ 1597/confidenceinstitutions.aspx . 11 These survey results were reported in Schumann, P. L., (2001). “A Moral Principles Framework for Human Resource Management Ethics.” Human Resource Management Review, Vol. 11, pp. 93-111. 12 According to research about employee engagement, 70% of US employees indicated that they were not engaged at their work and 23% reported that they were actually negatively engaged. See the Gallup (2017) study, “The Engaged Employee” found online on August 24, 2017 at http://www.gallup.com/services/190118/ engagedworkplace.aspx?gclid=Cj0KCQjw8vnMBRDgARIsACm_BhKW0Qy0FSiaj42l6xfLyR7Ley0iqPFglsq7ZC kovqUvOQbb3xHT8DsaAs-yEALw_wcB. 10



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TRANSFORMATIVE ETHICS AND ITS CONTRIBUTING PERSPECTIVES A new model of Transformative Ethics has recently been developed which expands the responsibilities of those who lead in organizations13. This model suggests that leaders owe others a broader set of ethical responsibilities than are found in narrower ethical perspectives and encompasses the ethical assumptions of twelve frequently cited ethical frameworks. Table 2 summarizes the ethical obligations of Transformative Ethics as it incorporates all twelve of these ethical frameworks. Transformative Ethics blends a commitment to relationships, ethical duties, individual rights, and moral principles that demonstrate the ability to meld with the ethical perspectives embraced by all twelve of the ethical models included in Table 2. Although Transformative Ethics is a challenging ethical standard of personal and moral integrity that demands that individuals treat others with the highest personal regard for their best interests, it is a standard which HRPs should seek to achieve if they hope to be trusted by employees, peers, and organizational leaders as they carry out their responsibilities. HRPs who adopt a Transformative Ethics perspective as they relate with all organizational stakeholders build relationships that earn the trust and support of all levels of their organizations.

SIX PRINCIPLES OF ETHICAL HRM Incorporating the concepts of Transformative Ethics enables HRPs to demonstrate their commitment to the highest standards of ethical stewardship in serving stakeholders throughout an organization. The following are six principles of ethical HRM that are a useful guide for HRPs as they strive to earn the trust of others. These principles incorporate standards articulated from a variety of sources, including the Society for Human Resource Management Code of Ethics, scholarly articles about ethical human resource management, and other HRM publications.

13

To read more about Transformative Ethics, we recommend Caldwell, C., (2017). “Transformative Ethics and Trust – Keys to Competitive Advantage ” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing and Caldwell, C., and Anderson, V. “Transformative Ethics: An Integrative Model of Ethical Stewardship.” Working paper presented at the International Academy of Management and Business Conference in New Orleans, Louisiana on January 20, 2017.



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Table 2. Twelve Contributing Ethical Perspectives to Transformative Ethics Ethical Perspective Ethic of SelfInterest

Virtue Ethics

Ethic of Religious Injunction

Ethic of Government Regulation Utilitarian Ethics

Ethic of Universal Rules

Ethic of Universal Rights

Ethic of Economic Efficiency

Ethic of Distributive Justice

Ethic of Contributing Liberty

Contributing Ideal “Pursue outcomes which have the greatest positive benefit for oneself and one’s organization without infringing upon the rights of others.” “Constantly pursue excellence, make that pursuit a habit, and treat others with integrity.” “Always treat others with dignity, respect, and kindness – as valued ‘Yous’ and never as anonymous ‘Its.’” “Live by both the letter and the spirit of the law in honoring duties owed to others, but remember that the law by itself is a minimal moral standard.” “No actions should be engaged in which do not result in the greatest good for that community of which you are a part.” “Act according to universal principles and rules which you would have others apply if they were in your similar situation and your positions were reversed.” “No one, including governments, may take action that infringes upon the legitimate rights of any other individual.” “Achieving an efficient use of resources to create value for society is a virtuous goal.”

Ethical Virtue Balanced SelfInterest

Commitment to Excellence Authentic Understanding

Genuine Compliance

Value Optimization

Just Action

Guaranteed Rights

Efficient Use

“Act only in ways that acknowledge Honor Everyone the rights, liberty, and equality of all and take no actions that harm the least among us.” “Take no actions which impede the Self-fulfillment self-development or self-fulfillment of others.”

Ethic of SelfActualization

“Seek to discover your innate greatness and fulfill that potential to create a better world.”

Ethic of Care

“Respect others as valued Care individuals, share concern for their Authentically welfare, and honor the responsibility to treat each person with empathy and compassion.”

Discovered Greatness

Value to Transformative Ethics Acknowledges that value creation is important and self-interest is beneficial, but that others have rights that must also be honored. Confirms that to be honorable and to develop habits of excellence are requisites as personal standards. Demands that others be treated with kindness, compassion, and empathy at all times. Confirms that the purpose of rules must always be taken into account and that the intent of those rules is as critical as or more important than the letter. Affirms that this greatest good is both outcome-oriented and rights-oriented in creating value – with an obligation to minimize any possible harm. Treats others as they wish to be treated and complies with universallyunderstood principles that benefit mankind. Honors basic human rights and ensures that those rights may not be infringed upon – even under color of claim for a public benefit. Conserves and efficiently uses scarce resources and acknowledges that efficient and effective value creation benefits society. Recognizes that, though justice is a multi-faceted construct, no actions should be taken that harm those who are disadvantaged in society. Promotes the liberty which allows all individuals to pursue self-development and self-fulfillment and acknowledges that society benefits thereby. Emphasizes the innate talents, gifts, and highest potential of individuals and their responsibility to use those talents productively to make a better world. Affirms the responsibility to care for others’ best interests and to treat them with love and with demonstrated concern for their welfare and wholeness.



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1) Always honor commitments. Do what you say you will do. If you are uncertain about the ability to keep a commitment, be cautious in making a promise. If conditions change after you commit yourself, immediately contact the party to whom the commitment was made, explain what has happened, and honor the spirit of what you committed to do to the best of your ability14. 2) Never break a confidence. The role of HRPs often requires honoring confidential information provided by or about employees, job candidates, or the organization. The Code of Ethics of the Society for Human Resource Management (SHRM) requires HRPs to “consider and protect the rights of individuals, especially in the acquisition and dissemination of information while ensuring truthful communications and facilitating informed decision-making15,” 3) Treat others as valued “Yous” and never as anonymous “Its.” Trust and commitment are established and maintained when organizations treat employees as valued “owners and partners16.” Organizations owe others the moral duty of treating them as valued individuals or “Yous” rather than as objects or depersonalized “Its17.” HRPs build trust and commitment by treating each employee as important contributors to organization success. 4) Learn constantly and never stop improving. The SHRM Code of Ethics declares that HRPs “must strive to meet the highest standards of competence and commit to strengthen our competencies on a continuous basis18.” Creating a learning culture and setting an example of personal improvement is an obligation of HRPs19. 5) Always think “Win-Win.” As ethical stewards, HRPs should strive to achieve the best possible outcomes for all stakeholders20. Constantly striving for optimal outcomes enables organizations to best serve all of their stakeholders in the long term and also honors duties owed to society21.

14

This key principle is identified in Kouzes, J. M. & Posner, B. Z., (2017). The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations (6th ed.). San Francisco, CA: Jossey-Bass. 15 See the SHRM Code of Ethics (2014) found online on August 24, 2017 at https://www.shrm.org/aboutshrm/pages/code-of-ethics.aspx, 16 This key relationship is clearly enumerated in Block, Pl, (2013). Stewardship: Choosing Service Over SelfInterest. San Francisco, CA: Berrett-Koehler Publishers. 17 This differentiated relationship was identified by Buber, M. (Kaufman, W. [Translator]). (1971). I and Thou. New York: Touchstone. 18 SHRM Code of Ethics, (2014.) op. cit. 19 The obligation to create a learning culture and HRM systems that sustain continuous improvement are set forth in Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business School Press and Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. 20 The role of HRPs as ethical stewards is described in Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. 21 This obligation to society is addressed in five HRM-related ethical codes reviewed in Wiley, C., (2000). “Ethical Standards for Human Resource Management Professionals: A Comparative Analysis of Five Major Codes.” Journal of Business Ethics, Vol. 25, No. 2, pp. 93-114.


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Cam Caldwell and Verl Anderson 6) Honor both the letter and the spirit of applicable laws. HRPs have a moral responsibility to honor the letter of the law as it applies to HRM policies, procedures, and practices but their obligation also extends to honor the spirit and intent of those laws as well22. Building trust and commitment requires doing far more than simply complying with the law but requires that organizations treat employees with dignity and respect23.

HRM systems that incorporate these six principles demonstrate a concern for both the success of the organization and the obligations that organizations owe to their employees24. HRPs who honor these principles and treat employees with fairness and a commitment to their welfare, growth, and wholeness create the high trust cultures that have been empirically shown to generate increased employee commitment and ownership; greater innovation and creativity; and higher productivity, profit, and customer satisfaction25.

CONTRIBUTIONS OF THE CHAPTER As organizations develop aligned HRM systems and as HRPs interact with employees and managers, the ability of those organizations to compete in today’s complex global marketplace increases. This chapter contributes six important insights about the ethical nature of HRM. 1) It confirms the importance of seven ethical responsibilities and the six strategic roles of HRPs. As HRPs develop the skills associated with those roles and responsibilities, they create organizations that merit the trust of stakeholders at all levels of the organization. 2) It identifies the moral and ethical duties owed to seven important stakeholders. Identifying each of those stakeholders is important in enabling HRPs to constantly monitor the nature and breadth of their obligations. 3) It reinforces the importance of a comprehensive model for assessing ethical decision-making. The Hosmer model presented in this chapter emphasizes the importance of understanding the impacts, consequences, and rights of

22

The importance of legal compliance as a key element of organizational trustworthiness is clearly set forth in Caldwell, C., and Clapham, S., (2003). “Organizational Trustworthiness: An International Perspective,” Journal of Business Ethics, Vol. 47, Iss. 4, p. 349-364 and is confirmed in context with the Virtuous Continuum discussed herein in. Caldwell, C., Carter, E., & Floyd, L. A., (2015) op. cit. 23 See Pfeffer, J., (1998) op. cit. and Beer, M., (2009) op. cit. 24 As DePree, M., (2004) op. cit. has noted, these two responsibilities encompass covenantal obligations of organization leaders. 25 These outcomes are identified in many sources, including Pfeffer, J., (1998) op. cit. and Beer, M., (2009) op. cit.



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stakeholders as well as the value of clarifying and explaining the moral basis for actions taken by leaders and organizations. 4) It verifies the value of a Virtuous Continuum for evaluating ethical conduct. Striving to pursue the best possible long-term and short-term outcomes is morally superior and honors the responsibilities of ethical stewardship. 5) It identifies the complex duties in building relationships encompassed in Transformative Ethics. By incorporating Transformative Ethics as a personal standard for their conduct, HRPs can exponentially increased their ability to build trust and commitment. 6) It presents six principles of Ethical HRM. These six principles are a useful standard for HRPs as they monitor their own actions on a daily basis in the pursuit of an organization’s mission and purpose. Each of these contributions affirms the importance of understanding the ethical responsibilities, roles, and values which affect the HRM function and the roles of HRPs. Each contribution also merits thoughtful consideration by both practitioners and academics. As HRPs thoughtfully assess their ability to serve employees and their organization, as they reflect upon the importance of creating a culture of high trust, and as they examine the explicit and implicit assumptions of employees about duties owed to them, they come to appreciate the importance of raising their own ethical standards. The Virtuous Continuum and Transformative Ethics approach to HRP duties and the Hosmer model for decision making and for explaining management actions are powerful resources in helping organizations to build the employee commitment, the extra-mile behavior, and the dedication required for those organizations to create the competitive advantage essential for long-term survival, profitability, and economic success. Because so many of the HRM policies, practices, and programs have an ethically-related impact on employees, wise HRPs will seriously reflect on how they interact and the importance of being highly ethical if they wish to help their organizations achieve their intended purposes and if they seek to help their employees achieve their highest potential.

Questions to Ponder 1. How does the model of Transformative Ethics enable HRPs to build trust with stakeholders? 2. Why does the Hosmer model for moral decision-making make so much sense as a tool for leaders to use in explaining decisions? 3. Is the Virtuous Continuum a practical standard for ethical HRM? Why or why not?


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Legal Compliance at A municipality – Case Study – by Dr. Sarah J. Smith As the HRP for a city, Tom found himself challenged by the department managers. Tom had been studying OSHA regulations and gaining certifications. He had learned there were seven written required programs with an annual training requirement that applied to his organization. At a department managers' meeting, Tom informed everyone about his findings. The response was surprising: "We are a municipality and do not need to do OSHA". Tom debated as to his next steps and how to resolve this potential dilemma. He decided to ask for guidance from a trainer who was employed by OSHA. The trainer was shocked. He said, "Tom, why would the rest of employers have to provide a safe and healthy workplace for their employees, but it's acceptable for municipal workers to work in unsafe conditions?" In addition to designing and implementing the required safety modules and providing annual training, an environmental issue was brewing. Rob worked at the city’s wastewater treatment plant. He had recently witnessed a coworker, who had leaky boots. Management allowed this worker to continue his shift in the leaky boots, exposing him to wastewater. The employee developed a nasty case of impetigo and could not return to work for two weeks due to this skin condition. Rob also observed that run-off from the wastewater treatment plant was entering a nearby lake and popular beach area. When Rob reported the conditions to management, they suspended him and soon after terminated his employment. OSHA has a whistleblower protection rule: employees who report unsafe conditions cannot be terminated nor disciplined. Rob could not get local management to listen and to resolve the wastewater run-off situation, so he filed a whistleblower complaint with OSHA. He understood there are risks any time someone chooses to involve an authoritative agency, however, Rob felt this was the right thing to do. Rob was awarded the largest settlement for a whistleblower case in the state, $215,000 for being wrongfully dismissed. 1. What approach might have been most effective for Tom in serving his organization regarding OSHA compliance? 2. Do you agree or disagree with the whistleblower settlement this employee received? Explain your position. 3. How could aligning the organization's culture and being a business partner support legal compliance in this organization? What role could the HRP take in leading these initiatives?



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The Realistic Job Preview – Case Study – by Dr. Sarah J. Smith Ethical obligations of HRPs impact a variety of organizational stakeholders. The recruitment and hiring process are two examples of how important HRP ethical obligations can be for applicants, new hires, the company, and work colleagues. Jenny applied for an outside sales position with an innovative printing company. The job posting stated some travel was required. During the interview process, Jenny discovered 'some travel' included commuting to and from Chicago in order to promote and sell printing services in The Loop. Since the company was located two hours from Chicago, this travel requirement of the job was far more than Jenny had anticipated. As Jenny pondered the required travel requirement, she was met with an additional surprise. The HRP administered a math test to Jenny. She did not feel challenged by the test because she had strong math skills. However, not knowing this would happen on the initial interview day caused the day to be longer than Jenny had anticipated. Jenny had a young baby at home and knew she would be approaching the time when the sitter was supposed to be going home. Jenny also wondered how she would balance working in The Loop with care for her young son. Jenny was selected for the sales position. During her onboarding process, Jenny did not receive information which she had hoped to learn more about in that process. She had hoped to meet and become acquainted with other sales colleagues and had envisioned a supportive team environment. On the contrary, colleagues seemed to avoid having anything to do with the onboarding of a new sales representative as if they viewed any new person as a threat to their territory and profitability. The HRP mainly focused on completion of mandatory forms. The benefits information packet was not available and for the most part, the HRP spent a great deal of time talking about the benefits of the company swimming pool. Upon completion of her first day, onboarding, Jenny felt uninformed, frustrated with the HRPs lack of preparation, and the company's shortcomings in providing a realistic job preview. Certainly, Jenny had a lot to think over and decisions to make. 1. Jenny eventually changed her mind and decided not to work for this employer. What could the employer have done to more effectively prepare Jenny for the position? 2. How does a weak onboarding program affect an entire company? What are the ethical duties owed to incoming employees as part of any reasonable onboarding process? 3. As you reflect on your own onboarding process in your present position, how could it have been more effective in helping you to have been more successful as a new employee?


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REFERENCES Anderson, V., and Ndalamba, K. K., and Caldwell, C., 2017. “Social Responsibility in a Troubled World: A Virtuous Perspective.” International Journal of Public Leadership, Vol, 13, Iss. 2, pp 98-115. Block, Pl, (2013). Stewardship: Choosing Service Over Self-Interest. San Francisco, CA: Berrett-Koehler Publishers. Buber, M. (Kaufman, W. [Translator]). (1971). I and Thou. New York: Touchstone. Caldwell, B. G., and Caldwell C., 2016. “Ten Classic Onboarding Errors: Violations of the HRM – Employee Relationship.” Business and Management Research, Vol. 5, No. 4, pp. 47-55 and available online at http://www.sciedu.ca/journal/index.php/ bmr/article/view/10672/6501. Caldwell, C., (2017). “Transformative Ethics and Trust – Keys to Competitive Advantage ” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing and Caldwell, C., and Anderson, V. “Transformative Ethics: An Integrative Model of Ethical Stewardship.” Caldwell, C. (2004). Organizational Trustworthiness: A Developmental Model. Pullman, WA: Washington State University Caldwell, C., Gruys, M. L. & Thornton. “Public Safety Assessment Centers: A Steward’s Perspective.” Public Personnel Management, Vol. 32, Iss. 2, pp. 229-249. Caldwell, C., Thornton, G. C. III, and Gruys, M. 2003 “Ten Classic Assessment Center Errors: Challenges to Selection Validity.” Public Personnel Management, Vol. 32, Issue 1, pp 73-88. Caldwell, C., Carter, E., and Floyd, L. A., (2015). “Coaching for Improved Teaching: A Virtuous Model for Improving Performance and Increasing Commitment.” Business and Management Research, Vol. 4, No. 4, pp. 54-65. Caldwell, C. & Clapham, S., (2003). “Organizational Trustworthiness: An International Perspective.” Journal of Business Ethics, Vol. 47, Iss. 4, pp. 348-364. Caldwell, C., and Hasan, Z. (2016). “The Covenantal Leader – Honoring Implicit Relationships with Employees.” Graziadio Business Review, Vol. 19, Iss. 2 and available online at http://gbr.pepperdine.edu/2016/10/the-covenantal-leader. Caldwell, C. & Peters, R. (In Press). “New Employee Onboarding – Psychological Contracts and Ethical Perspectives.” Paper accepted for publication in the Journal of Management Development. Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182.



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Cameron, K. S., (2003). “Ethics, Virtuousness, and Constant Change” in N. M. Tichy & A. R. McGill (Eds.) The Ethical Challenge: How to Lead with Unyielding Integrity. San Francisco, CA: Jossey-Bass, pp. 185-194. Carroll, A. C. & Buchholtz, A. K., (2014). Business and Society: Ethics, Sustainability, and Stakeholder Management. Stamford, CT: Cengage Learning. Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. DePree, M., (2004). Leadership is an Art. New York: Crown Publishing for an articulation of this moral responsibility. Friedman, T. L., (2009). Hot, Flat, and Crowded Why We Need a Green Revolution -And How it Can Renew America Release 2.0. New York: Picador. Gallup (2017) study, “The Engaged Employee” found online on August 24, 2017 at http://www.gallup.com/services/190118/engaged-workplace.aspx?gclid=Cj0KCQ jw8vnMBRDgARIsACm_BhKW0Qy0FSiaj42l6xfLyR7LEy0iqPFglsq7ZCkovqUvO Qbb3xHT8DsaAs-yEALw_wcB. Gallup survey, “Confidence in Institutions,” reveals this lack of confidence in leaders and organizations of all types and was found online on August 24, 2017 at http://www.gallup.com/poll/1597/confidence-institutions.aspx . Goldstein, H. W., Pulakos, E. D., Passmore, J. & Semedo, C. (Eds.), (2017). The Wiley Blackwell Handbook of the Psychology of Recruitment, Selection, and Employee Retention. West Sussex, UK: Wiley & Sons. Hosmer, L. T., (2010). The Ethics of Management (7th ed.). New York: McGraw-Hill. Kouzes, J. M. & Posner, B. Z., (2017). The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations (6th ed.). San Francisco, CA: JosseyBass. Lennick, D. & Kiel, F., (2011). Moral Intelligence 2.0: Enhancing Business Performance and Leadership Success in Turbulent Times. Boston, MA: Pearson Education. Mathis, R. L, Jackson, J. H., Valentine, S. R., & Meglish, P. A. (2016). Human Resource Management (15th ed.). Boston, MA: Cengage Learning for their insights about the important role of HRPs and the HRM function. Paine, L. S., (2003). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. Pava, M., (2003). Leading with Meaning: Using Covenantal Leadership to Build a Better Organization. New York: St. Martin’s Press. Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business School Press and Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Schumann, P. L., (2001). “A Moral Principles Framework for Human Resource Management Ethics.” Human Resource Management Review, Vol. 11, pp. 93-111.


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SHRM Code of Ethics (2014) found online on August 24, 2017 at https://www.shrm.org/about-shrm/pages/code-of-ethics.aspx. Wiley, C., (2000). “Ethical Standards for Human Resource Management Professionals: A Comparative Analysis of Five Major Codes.” Journal of Business Ethics, Vol. 25, No. 2, pp. 93-114. Whetten, D. A., (1996) in a presentation made to the 25th Year Class Reunion at Brigham Young University in October of that year.




Chapter 6

RECRUITMENT, TESTING, AND SELECTION: STRATEGIC ESSENTIALS FOR SUCCESSFUL PERFORMANCE Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

Much has been written about the critical importance of identifying and hiring top talent as a key factor for organization success1. According to a Department of Labor Study, 30% of business failures are due to poor hiring decisions2. Yet understanding the importance of highly skilled, knowledgeable, and interpersonally effective individuals is not always fully appreciated and can be difficult to measure3. Moreover, Human Resource Management (HRM) staff may lack the requisite skills to 1) assess organization needs correctly, 2) identify factors critical for performance success, and/or 3) demonstrate the abilities to develop valid measures of those important factors4. Although it is increasingly acknowledged that “getting the right people on the bus” and “getting

1

See, for example, Edenborough, R., (2007). Assessment Guides in Recruitment, Selection, & Performance: A Manager’s Guide to Psychometric Testing, Interviews, and Assessment Centers. London, UK: Kogan Page Limited and Highhouse, S., Doverspike, D., & Guion, R. M. (2016). Essentials of Personnel Selection and Assessment. New York: Routledge. 2 This critical fact is cited in the Introduction on page one of Thompson, D., and Greif, B., (2010). No More Rotten Eggs: A Dozen Steps to Grade -AA Talent Management. Tucson, AZ: T & G Associates. A comprehensive empirical study conducted by Boselie, Dietz, and Boon identified “careful recruitment and selection” as one of the four most essential strategic functions of Human Resource Management. See Boselie, P., Dietz, G., and Boon, C., (2005). “Commonalities and Contradictions in HRM and Performance Research.” Human Resource Management Journal, Vol. 15, Iss. 3, pp. 67-94. Despite that fact, connecting HRM practices with performance outcomes can often be difficult. 4 See, for example, Guion, R. M., (1998). “Some Virtues of Dissatisfaction in the Science and Practice of Personnel Selection.” Human Resource Management Review, Vol. 8, Iss. 4, pp. 351-365.


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people in the right seats” are two critically essential factors for organization success5, it is nonetheless true that selecting the right employees is a difficult task that is often done far less well than necessary to ensure organization success – and ineffective recruitment, selection, and testing are often the root causes of organization decline and eventual failure6. The focus of this chapter is on the strategic tasks of recruitment, testing, and selection in HRM. The chapter begins with a discussion of current practices in recruitment in the digital age and identifies strengths and weaknesses associated with those practices. The chapter then identifies important issues associate with testing and selection and identifies ten common errors associated with selection. Incorporating a Resource-Based View of the firm the chapter identifies six important reasons why Top Management Teams (TMTs) and their Human Resource Professionals (HRPs) need to carefully reassess their recruitment, testing, and selection processes if they wish to compete successfully in an increasingly challenging world.

Figure 1.

RECRUITMENT IN THE DIGITAL AGE The purpose of recruiting is to identify and attract a group of well-qualified applicants for a position that an organization needs to fill to accomplish its mission7. The 5

This critical reality was declared in Collins, J., (2001). Good to Great: Why Some Companies Make the Leap . . . . And Others Don’t. New York: Harper Collins. 6 Ibid. 7 Noe., R. A.. Hollenbeck, J. R., Gerhart, B., and Wright, P. M., (2017). The Fundamentals of Human Resource Management (7th ed.). New York: Irwin Management.


Recruitment, Testing, and Selection

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advent of the World Wide Web has exponentially changed recruitment from a primarily local to a national and international process8. In their assessment of modern recruitment practices, Baum and Kabst declared unequivocally that “(s)uperior human resources are beneficial to the creation of competitive advantage” and that online personnel recruitment is more effective than traditional printed advertisements9. Digital recruitment enables employers to reach a far greater number of qualified applicants and international recruiting to fill vacancies is now commonplace for business and education10. Web sites for advertising and recruiting positions are virtually everywhere online and can be accessed with the use of nearly any computer. In addition, positions advertised in local newspapers may also be accessed via computer. Candidates can immediately access information to hundreds of potential job vacancies for which they are qualified and HRPs can recruit to literally thousands of potential applicants across the globe. The challenge for employers in the recruitment process is often in screening the large number of job candidates and accurately determining whether a potential match exists. Traditional recruitment sources continue to be utilized, especially by large companies with substantial HRM resources. Hiring from competitors often occurs in a world which is rife with aggressive competition.

TESTING CANDIDATES One of the realities of HRM is that the purpose of the testing and selection process is to eliminate every candidate for a position except for the person or persons actually hired. However, in that elimination process, HRPs sometimes overlook key factors that make an important difference in the selection process11. The unfortunate result is that the testing and selection process often rejects outstanding candidates that meet unique organizational needs – needs not always well understood but that are critical for an organization’s success12. A test is any job-related criterion used to screen candidates to determine whether they are properly qualified for a position. Testing validity is about whether a test measures the criteria or competencies--the purpose for which a test is actually intended13. Validity See Bondarouk, T. V., Ruel, H. J. M., (2009). “Electronic Human Resource Management: Challenges in the Digital Era.” International Journal of Human Resource Management, Vol. 20, Iss. 3, pp. 505-514. 9 Baum, M., and Kabst, R., (2014). “The Effectiveness of Recruitment Advertisements and Recruitment Websites: Indirect and Interactive Effects on Applicant Attraction.” Human Resource Management, Vol. 53, Iss. 3, pp. 353-378. 10 Ibid. 11 See for example, Irish, R. K., (2011). “Focusing on the Flair Factor.” America’s Civil War Magazine. Sept. 22, 2011 found online on September 25, 2017 at https://www.slideshare.net/Talentplus/the-flair-factor 12 Ibid. 13 The concepts of testing are essential elements of psychometrics, the field of study that covers test construction and measurement. For a complete discussion, see Furr, R. M. and Bacharach, V. R., (2013). Psychometrics: An Introduction (2nd ed.). Thousand Oaks, CA: Sage. 8


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should apply to the population to be tested and the scale used to measure the quality or criterion being assessed should differentiate the candidates based upon their relative ability to meet those standards. Test reliability is the degree to which a test produces a consistent result if administered multiple times. Validity and reliability are critical measures of testing in evaluating the qualifications of candidates for a position14.

Figure 2.

The job analysis enables HRPs to identify the relative importance of selection criteria and to design a testing process that improves the predictive ability to identify a qualified candidate15. When done properly, the job analysis will identify “flair factors,” or selection criteria that are especially important in filling a position16. Unfortunately, the concept of flair factors is not well understood by many HRPs and testing processes often fail to adequately identify Variance Accounted For, the measure of variance that a testing process can actually predict in identifying the probable success of a job candidate, based upon the candidate’s test performance17. From the job analysis process comes the identification of knowledges, skills, abilities, and other qualifications (KSAOs) that have been identified as important job factors. In formulating a valid testing process, HRPs have the responsibility to identify a process for evaluating these KSAOs and to provide hiring decision-makers with sound information for evaluating the respective job candidates. The validity of a testing process also involves confirming that successful incumbents of the position or positions filled possess the capabilities for which candidates are being tested18. 14

Ibid. See Brannick, M. T., & Levine, E. L., (2007). Job Analysis: Methods, Research, and Application. Thousand Oaks, CA: Sage. 16 Irish, R. K., (2011) op. cit. 17 Thornton III, G. C., Rupp, D. E. and Hoffman, B. J., (2014) op. cit.. Assessment Center Perspectives for Talent Management Strategies (2nd ed.). New York: Routledge. 18 Brannick, M. T., & Levine, E. L., (2007) op. cit. 15



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Assessment centers, or job simulations that match job content criteria that are evaluated by trained assessors, can significantly improve the quality of the testing and selection process – particularly for positions requiring interpersonal skills, decisionmaking qualities, and the ability to deal with stress and uncertainty19. Unfortunately, many HRPs choose not to utilize this valuable selection and testing tool, lack the skills to conduct an assessment center properly20, or apparently lack an understanding of the benefits that can accrue from using this important testing resource21.

Figure 3.

SELECTION AND HIRING Employee selection is far more complex than the answers to the two questions, 1) “Can the candidate do the job?” and 2) “Does the candidate fit the organization?22” The 19

Thornton III, G. C., Rupp, D. E. and Hoffman, B. J., (2014) op. cit. Caldwell, C., Thornton, G. C. III, and Gruys, M. 2003 “Ten Classic Assessment Center Errors: Challenges to Selection Validity.” Public Personnel Management, Vol. 32, Issue 1, pp 73-88. This paper is cited as a reference at the Office of Personnel Management website explaining the appropriate use of Assessment Centers for selection and testing and can be found at https://www.opm.gov/policy-data-oversight/assessmentand-selection/other-assessment-methods/assessment-centers/. 21 Thornton III, G. C., Rupp, D. E. and Hoffman, B. J., (2014) op. cit. 22 These two important questions are noted in Murphy, J. P. (2016). “Quality of Hire: Data Makes the Difference.” Employee Relations Today, Vol. 43, Iss. 2, pp. 5-15. 20


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selection and hiring process for positions involves incorporating information generated about the requirements of a position, comparing that information with the identified qualifications of the available candidates, and then using that information to determine whom to hire. According to a report by Korn Ferry, a major executive search firm, 90% of executives opined that retaining newly hired employees is a major concern in the selection and hiring process23. Although candidates who have the strongest qualifications ought to logically be appointed24, the selection and hiring process does not always result in that outcome – nor does it mean that a candidate who is hired will be successful, add value, and stay with the organization over time. Assessing whether a candidate can perform a job is a subjective determination based upon the selection criteria established25. Unfortunately, these criteria do not identify 1) whether an individual will use those skills and capabilities properly, 2) whether a candidate is highly committed and dependable in performing, or 3) whether the candidate has the passion and persistence to perform job tasks at a consistently high level – including in situations requiring an extra-mile commitment. The latter quality, often called “grit26,” is a measure of a person’s personal drive and his or her desire to engage as a full partner in achieving the success of an organization27. A relatively common error associated with candidate selection is related to what is known as “person-organization fit.” The term applies to the degree to which a candidate matches or does not match the cultural and environmental values and characteristics of an organization and includes the degree that an organization fulfills that candidate’s needs and/or matches his or her values28. One of the limits of this perceived fit is that hiring authorities may translate that fit means “hiring people like me.” For example, a hiring authority may opt to select the candidate who is most like himself or herself but who may not necessarily best meet the needs of the organization. Hiring based upon this perceived fit may result in excluding minority candidates or candidates who would offer a diverse perspective that can actually be extremely valuable29.

This report is available online. See Choo, S., (2017). “Motivation and Retention in the Gig Economy.” Korn Ferry Report found online on September 27, 2017 at http://focus.kornferry.com/employeeengagement/motivation-and-retention-in-the-age-of-the-gig-economy/. 24 See Dobos, N., (2017). “Networking, Corruption, and Subversion.” Journal of Business Ethics, Vol. 144, pp. 467478. 25 Unfortunately, psychometrics and the identification of Variance Accounted For only identifies a probability of success of a candidate and is not a perfect predictor of future job performance. See Furr, R. M. and Bacharach, V. R., (2013) op. cit. 26 The importance of grit for individual or organizational success is identified in Duckworth, A., (2016). GRIT: The Power of Passion and Perseverance. New York: Scribner. 27 The degree of personal commitment of individuals is explained in Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270-285. 28 Kristof-Brown, A. L., (2017). “Person-Organization Fit.” Encyclopedia of Industrial and Organizational Psychology (2nd ed.), S. G. Rogelberg (Ed.) Thousand Oaks, CA:Sage and found online on September 25, 2017 at http://sk.sagepub.com/reference/ organizationalpsychology/n254.xml. 29 Perryer, C. and Scott-Ladd, B., (2014). “Deceit, Misuse, and Favours: Understanding and Measuring Attitudes to Ethics.” Journal of Business Ethics, Vol. 121, Iss. 1, pp, 123-134. 23



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Hiring candidates whose personal style, adaptability, emotional intelligence, and attitudes match an organization’s culture can be vital to the success of the candidates as well as the persons with whom they would be working30. At the same time, psychometric testing and test construction is an imperfect science and can be misused when applied by decision-makers for purposes for which those tools were not intended31. The reality is that any individual test is but a single data point that needs to be triangulated by someone who understands the instrument used, how it should be applied, its limitations, and how its information fits with other job-related data32. The struggle to match job candidates with available positions is often viewed as difficult both for interested applicants and potential employers. According to a 2017 survey conducted by the Society for Human Resource Management, 68% of HRPs cited finding and recruiting qualified candidates was “a top priority33.” In addition, 78% of HRM leaders indicated that finding good people is harder today than it was a year ago34.

Figure 4.

TEN COMMON ERRORS IN RECRUITMENT, TESTING, AND SELECTION Despite the acknowledged importance of hiring and retaining good people, HRPs and organizational leaders tend to make a repeating set of errors in the recruitment, testing, 30

This key reality is addressed in Murphy, M., (2012). Hiring for Attitude: A Revolutionary Approach to Recruiting and Selecting People with Both Tremendous Skills and Superb Attitude. New York: McGraw-Hill. 31 For more information about this important topic, see Daltner, B. (2013). “How to Use Psychometric Testing in Hiring.” Harvard Business Review Digital Articles, 9/12/2013, pp. 2-4. 32 Ibid. 33 See SHRM, (2017). 2017 Employee Benefits: Remaining Competitive in a Challenging Talent Marketplace. Washington, D. C.: Society for Human Resource Management found online on September 27, 2017 at https://www.shrm.org/hr-today/trends-and-forecasting/research-andsurveys/Documents/2017%20Employee%20Benefits%20Report.pdf. 34 Ibid.


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and selection of new employees – especially in the light of the fact that replacing an employee commonly costs a company at least one-third of an employee’s annual salary in lost productivity and related replacement, supervision, and training expenses35. The following is a brief summary of ten of the common errors made in the recruitment, testing, and selection of new employees. 1. Failing to update the job analysis. Despite the fact that the job analysis is the single most critical element in determining the qualifications and job requirements of a position to be filled36, many organizations fail to update and confirm the important criteria to be included in hiring to fill an employee vacancy. For example, a city in Utah used a twenty-five year old job analysis in the development of a selection process for a Police Department promotional exam. 2. Failing to understand job validation. Candidate testing is often conducted by HRPs who are busy with many tasks. As a result of time pressures, or simply because they do not understand the importance of confirming the validity of testing, literally hundreds of municipal Police Departments continue to use a exam for testing entry-level police officers without reviewing that test’s validity study37. That study makes it absolutely clear that the test was not validated by gender or ethnicity – making the municipalities vulnerable if the test is challenged by women or minorities. 3. Misusing test scores in evaluating candidates. Often psychometric studies are conducted that validate a testing instrument for a specific purpose. For example, many tests are developed to establish a “hurdle score” or minimum passing score beyond which all candidates may be considered equally qualified. Using these scores to differentiate among candidates as more or less qualified is a misuse of the testing instrument, does not correctly differentiate the relative competitiveness of the candidates, and is unfair to candidates who pass the test but who are given fewer points in the selection process than candidates who scored higher on the test38. 4. Underrating interpersonal skills. The abilities of an individual to fit within an organizational culture, to work effectively with others, to craft a response to situations that demand emotional intelligence, and to work with others as part of

35

Ibid. See, for example, Prien, E. P., Goodstein, L. D., Goodstein, J., and Gamble, L. G. Jr., (2009). A Practical Guide to Job Analysis. San Franciso, CA: Pfeiffer. 37 Furr, R. M. and Bacharach, V. R., (2013) op. cit. 38 Ibid. 36



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a team are important for key positions in organizations but tend to be overlooked in the job analysis process39. 5. Overrating external applicants. Candidates from outside an organization are often rated more highly than equally qualified but known internal candidates40. However, Collins found that companies that successfully evolved from “good” to “great” had promoted internal candidates who understood the culture, were less flashy than external counterparts, but were deeply committed to the organization and its success41. 6. Overlooking “Flair Factors.” For many organizational positions, “flair factors” are critical to the performance of a position and are often the key to organization success or failure42. Recognizing the importance of flair factors requires a clear understanding of how these factors determine organizational outcomes – one of the key reasons for involving organizational subject matter experts in the job analysis process43. 7. Overrating technical qualifications. A common error made in employee selection is in assuming that a person with strong technical knowledge and experience is automatically better qualified than someone with less experience and a different combination of interpersonal skills44. HRPs must distinguish between requirements suggested by subject matter expert recommendations for hiring “people like me” and the needs of a specific position. 8. Incorrectly assessing related experience. Related work experience and years working within an industry are not always the same thing and must be clearly distinguished45. In addition, some people tend to actively learn from time served in a position while others simply perform the same tasks year after year with little incremental learning acquired. 9. Overrating formal education. Formal education can complement work experience but a graduate degree from an excellent school is no guarantee that a candidate is well qualified or able to perform in a new role46. 10. Relying on personal interviews. One of the classic errors made in the selection process is in the frequently held but empirically false assumption that interviewing a candidate improves the quality of the selection decision47. 39

This tendency is identified in Gatewood, R. D., Field, H. S., and Barrick, M. R., (2015). Human Resource Selection (8th ed.). Boston, MA: Cengage Learning. 40 Ibid. 41 Collins, J., (2001) op. cit. 42 Irish, R. K., (2011). See also Caldwell, C., Converse., P., and Beverage, M., 2017 “Selecting for ‘Flair Factors’ -Improving the Selection Process.” Paper accepted for publication in the Journal of Management Development. 43 See Truxillo, D. M., Paronto, M. E., & Collins, M., (2004). “Effects of Subject Matter Expert Viewpoint on Job Analysis Results.” Public Personnel Management, Vol. 33, Iss. 1, pp. 33-46. 44 Gatewood, R. D., Field, H. S., and Barrick, M. R., (2015) op. cit. 45 Ibid. 46 This insight is provided by Mintzberg, H., (2005). Managers Not MBAs: A Hard Look at the Soft Practice of Management and Management Development. 47 See Thompson, D., and Greif, B., (2010) op. cit.


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Cam Caldwell Carefully constructed structured interviews can improve the quality of interviewing, but managers and supervisors overestimate their ability to identify good candidates and the predictive value of most interviews is typically no better than flipping a coin48.

Improving the recruitment, testing, and selection process requires HRPs to become truly skilled about the nuances identifying the critical factors essential for effective performance – beginning with a well-crafted job analysis but including psychometrics, test construction, and validation49. Unfortunately, many HRPs lack both the professional training in HRM and an understanding of the strategic importance of human resources50.

Figure 5.

RETHINKING HRM Firms today compete in their markets based upon their ability to provide a product or service, a less expensive product or service, or a product or service that others are unable to provide as conveniently51. Increasingly, from a Resource-Based View of organizations, that superior performance is based upon the quality of a company’s employees and their See, for example, Miles, A. and Sadler-Smith, E. (2014). “’With Recruitment I Always Feel I Need to Listen to My Gut’: The Role of Intuition in Employee Selection.” Personnel Review, 2014 pp. 606-627. 49 See Edenborough, R., (2007) op. cit. 50 This point is clearly made in Gomez-Mejia, L. R., Balkin, D. B., and Cardy, R. L, (2015) Managing Human Resources (8th ed.). New York: Pearson. 51 This point is clearly made in Porter, M. E., (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. 48



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differentiated ability to understand customer needs and deliver services that more perfectly addresses those needs52. Essentially, then, all elements of an HRM system and the effectiveness of an organization are dependent upon the people who execute them53. It is the superiority of the people who make up an organization and their ability to perform their jobs that generally determines the success of a firm. This resource-based perspective of HRM makes recruiting, testing, and selecting incredibly important for virtually every organization – especially in the knowledge-, information-, and wisdom-based economy that typifies the current global marketplace54. With this resource-based view of managing today’s organizations clearly in mind, there are six compelling reasons why Top Management Teams and HRPs must carefully reexamine their organizations’ recruitment, testing, and selection systems. 1. The Demand for Excellence is Increasing. Customers are rarely dependent upon a single firm to provide them with quality products. As a result, customer expectations are increasing and will continue to raise the bar55. 2. The Speed of Change is More Rapid. The world is moving faster and will continue to do so. Employees with the comfortability to deal with change and a mindset of continuous improvement are necessities in the new economy56. 3. The Influence of Technology has Increased. That technology change demands that employees with much more sophisticated technical skills be hired, trained, and retained by their organizations57. 4. Disruptive Innovations Redefine Competition. Employees must demonstrate the commitment, the creativity, and the understanding of conditions in a constantly evolving marketplace to respond to innovation58. 5. Cooperation is Increasingly Necessary. The behavioral skills to move quickly, to adapt to change, and to work with others effectively has become a necessity in a world where teams are more common and collaboration is critical59. 6. Hiring for Values Is a Necessity. Although competence, cooperation, and capacity are necessary variables for success, character is equally important in wealth creation60. In today’s transparent world environment, employees must

This key point is emphasized by Toulson, P. K., (2016). “Recruitment and Talent Management.” Human Resource Magazine. Vol. 21, Iss. 2, pp. 34-35. 53 Ibid. 54 The changing economy demands this clear insight. See Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. 55 Christensen, C. M., (2016) op. cit. 56 See, for example, Mercer Bing, C., and Wingrove, C., (2012). “Mergers and Acquisitions: Increasing the Speed of Change.” Employee Relations, Vol. 39, Iss. 3, pp. 43-50. 57 Christensen, C. M., (2016) op. cit. 58 Pfeffer, J., (1998) op. cit. 59 Goleman, D., (2007). Social Intelligence: The New Science of Human Relations. New York: Bantam. 60 That is the message of Caldwell, C., and Ndalamba, K. K., 2017. “Trust and Being ‘Worthy’ – The Keys to Creating Wealth.” Journal of Management Development, Vol. 36, Iss. 8, pp. 1076-1086 and Harvard’s Lynn 52


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have a commitment to high personal standards and values and the integrity to be trusted by their peers, their customers, and their leaders. The organizations of today and tomorrow will be held accountable to a higher standard. They will navigate in a world fraught with challenges that have never before been encountered to the same degree.

Figure 6.

The reality of today and tomorrow is a world that will demand employees with commitment, loyalty, talent, and integrity. Wise employers will recognize that it is the people with whom they work who will determine their success or failure. Recruiting, assessing, and hiring the right people and then retaining them will be critical tasks that TMT members and HRPs must perform especially well in a world that will only become more difficult and more competitive.

Questions to Ponder 1. What do you consider to be the most common error made in assessing candidates for a vacant position? 2. Why is hiring the best possible employee for a vacancy increasingly important? 3. How should organizations assess candidates for qualities like commitment, loyalty, passion, persistence, and character?

Paine in Paine, L. S., (2002). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill.



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Did the HRP See My Application? -- Case Study – By Dr. Sarah J. Smith In a digital era, applicants typically are directed to a company’s website to apply online. The human resource information system (HRIS) which is used to collect and analyze applicant information has provided beneficial support for many HRPs. The HRIS can be configured so that the applicants who best fit the knowledge, skills, abilities and other conditions for the open position are selected from the applicant pool. The HRIS can also create challenges for the HRPs. At a large manufacturer, well known for its stability, growth, and outstanding benefits, the coordinating HRP was overwhelmed when 1,500 applicants submitted their information for twelve open positions. In his role as an HRP, Steve was responsible for the job postings. This task only required about an hour of Steve’s time, which he felt was quite efficient. Within two days, Steve realized the magnitude of applicants and felt overwhelmed. Would the hiring criteria selected be sufficient to identify the best applicants? How could he be sure that highly qualified applicants were not ignored by the system? One applicant who lived near the company decided to phone human resources to enquire as to the status of his application. The administrative assistant, thinking she was doing him a favor, said if she were him, she would not talk to an HRP. She had noticed when a call was received, the applicant moved down in the applicant pool ranking. Directions as to the preferred design of résumés for electronic submission was sparse. Steve did not specify a font nor size of font. Additionally, he did not specify if an electronic résumé or traditional design would be best. Some automated HRIS selection criteria read nouns rather than verbs. If a traditional résumé was submitted, key word searches could miss some of the desired KSAOs. An HRIS can also distort characters, such as lines, bullets, italics and indentations as often seen on a traditional résumé. Steve felt as if he would lose some sleep that night, thinking about all of the factors that could influence his HRIS selection and thus, applicant search. 1. What might have been the results of applicant analysis if Steve had more open communication with potential applicants? 2. Many organizations have turned to hiring from an intern pool in which interns work with colleagues in the actual work environment and become known to the organization and its members. Do you think hiring interns into full-time regular positions provides a feasible strategy for the HRPs in an era of technology? How could this approach be beneficial to the company, human resources, and the intern? 3. With 12 open positions and 1,500 applicants, what criteria do you think HR should use to make the ‘first cut’?


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The New HRP -- Case Study – By Dr. Sarah J. Smith Kari’s first job as an HRP included responsibilities for recruitment and selection. She had somehow successfully navigated through the company’s electronic application process; however, at times she wondered how she actually landed her job. She has now been requested to assist with the recruitment and selection for a technical position in the company. The company’s information services (IS) staff are quite efficient and knowledgeable. Thus, Kari feels comfortable with the design of the HRIS. Surely IS had configured the HRIS properly inasmuch as it has been in use for three years. Kari’s company is an employer of choice and thus, she assumes that she does not need to reach out to industry or trade organizations about the job opening. Job seekers generally monitor the company website to keep tabs on open positions that are available. The individual to be hired to flll this technical position will need to travel to Mexico on occasion to provide oversight and support for production there. The technical team is tight-knit and works in close proximity to each other. Kari must decide how to assess organizational fit of the applicant while balancing technical expertise. As a recent college graduate, Kari highly values education and the academic degrees that an applicant has achieved. 1. Could Kari’s affinity for education affect her decisions during the selection process? Is more education ‘better’? 2. If Kari recommends only the applicants who appear to be most technically qualified, what might she be leaving out of the selection decision process? 3. Some of the managers have expressed to Kari that they would prefer to hire someone who did not have experience and train them, rather than risk hiring a person who comes in with pre-conceived thoughts about ‘how things are done.’ Some applicants with work experience make statements in front of colleagues about the ‘way it was done’ at the other company. Do you think the managers’ concerns are valid? How should Kari respond to this request?

REFERENCES Baum, M., and Kabst, R., (2014). “The Effectiveness of Recruitment Advertisements and Recruitment Websites: Indirect and Interactive Effects on Applicant Attraction.” Human Resource Management, Vol. 53, Iss. 3, pp. 353-378. Bondarouk, T. V., Ruel, H. J. M., (2009). “Electronic Human Resource Management: Challenges in the Digital Era.” International Journal of Human Resource Management, Vol. 20, Iss. 3, pp. 505-514.



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Boselie, P., Dietz, G., and Boon, C., (2005). “Commonalities and Contradictions in HRM and Performance Research.” Human Resource Management Journal, Vol. 15, Iss. 3, pp. 67-94. Brannick, M. T., & Levine, E. L., (2007). Job Analysis: Methods, Research, and Application. Thousand Oaks, CA: Sage. Caldwell, C., Converse., P., and Beverage, M., 2017 “Selecting for ‘Flair Factors’ -Improving the Selection Process.” Paper accepted for publication in the Journal of Management Development. Caldwell, C., Thornton, G. C. III, and Gruys, M. 2003 “Ten Classic Assessment Center Errors: Challenges to Selection Validity.” Public Personnel Management, Vol. 32, Issue 1, pp 73-88. Caldwell, C., and Ndalamba, K. K., 2017. “Trust and Being ‘Worthy’ – The Keys to Creating Wealth.” Journal of Management Development, Vol. 36, Iss. 8, pp. 10761086 Choo, S., (2017). “Motivation and Retention in the Gig Economy.” Korn Ferry Report found online on September 27, 2017 at http://focus.kornferry.com/employeeengagement/motivation-and-retention-in-the-age-of-the-gig-economy/. Collins, J., (2001). Good to Great: Why Some Companies Make the Leap . . . . And Others Don’t. New York: Harper Collins. Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. Daltner, B. (2013). “How to Use Psychometric Testing in Hiring.” Harvard Business Review Digital Articles, 9/12/2013, pp. 2-4. Dobos, N., (2017). “Networking, Corruption, and Subversion.” Journal of Business Ethics, Vol. 144, pp. 467-478. Duckworth, A., (2016). GRIT: The Power of Passion and Perseverance. New York: Scribner. Edenborough, R., (2007). Assessment Guides in Recruitment, Selection, & Performance: A Manager’s Guide to Psychometric Testing, Interviews, and Assessment Centers. London, UK: Kogan Page Limited Furr, R. M. and Bacharach, V. R., (2013). Psychometrics: An Introduction (2nd ed.). Thousand Oaks, CA: Sage. Gatewood, R. D., Field, H. S., and Barrick, M. R., (2015). Human Resource Selection (8th ed.). Boston, MA: Cengage Learning. Goleman, D., (2007). Social Intelligence: The New Science of Human Relations. New York: Bantam. Gomez-Mejia, L. R., Balkin, D. B., and Cardy, R. L, (2015) Managing Human Resources (8th ed.). New York: Pearson.


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Guion, R. M., (1998). “Some Virtues of Dissatisfaction in the Science and Practice of Personnel Selection.” Human Resource Management Review, Vol. 8, Iss. 4, pp. 351365. Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270-285. Highhouse, S., Doverspike, D., & Guion, R. M. (2016). Essentials of Personnel Selection and Assessment. New York: Routledge. Irish, R. K., (2011). “Focusing on the Flair Factor.” America’s Civil War Magazine. Sept. 22, 2011 found online on September 25, 2017 at https://www.slideshare.net/ Talentplus/the-flair-factor Kristof-Brown, A. L., (2017). “Person-Organization Fit.” Encyclopedia of Industrial and Organizational Psychology (2nd ed.), S. G. Rogelberg (Ed.) Thousand Oaks, CA:Sage and found online on September 25, 2017 at http://sk.sagepub.com/reference/ organizationalpsychology/n254.xml. Mercer Bing, C., and Wingrove, C., (2012). “Mergers and Acquisitions: Increasing the Speed of Change.” Employee Relations, Vol. 39, Iss. 3, pp. 43-50. Miles, A. and Sadler-Smith, E. (2014). “’With Recruitment I Always Feel I Need to Listen to My Gut’: The Role of Intuition in Employee Selection.” Personnel Review, 2014 pp. 606-627. Mintzberg, H., (2005). Managers Not MBAs: A Hard Look at the Soft Practice of Management and Management Development. New York, Free Press. Murphy, J. P. (2016). “Quality of Hire: Data Makes the Difference.” Employee Relations Today, Vol. 43, Iss. 2, pp. 5-15. Murphy, M., (2012). Hiring for Attitude: A Revolutionary Approach to Recruiting and Selecting People with Both Tremendous Skills and Superb Attitude. New York: McGraw-Hill. Noe., R. A.. Hollenbeck, J. R., Gerhart, B., and Wright, P. M., (2017). The Fundamentals of Human Resource Management (7th ed.) . New York: Irwin Management. Paine, L. S., (2002). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. Perryer, C. and Scott-Ladd, B., (2014). “Deceit, Misuse, and Favours: Understanding and Measuring Attitudes to Ethics.” Journal of Business Ethics, Vol. 121, Iss. 1, pp, 123134. Porter, M. E., (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. Prien, E. P., Goodstein, L. D., Goodstein, J., and Gamble, L. G. Jr., (2009). A Practical Guide to Job Analysis. San Franciso, CA: Pfeiffer. SHRM, (2017). 2017 Employee Benefits: Remaining Competitive in a Challenging Talent Marketplace. Washington, D. C.: Society for Human Resource Management found



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online on September 27, 2017 at https://www.shrm.org/hr-today/trends-andforecasting/research-and-surveys/Documents/2017%20Employee%20Benefits%20 Report.pdf. Thompson, D., & Greif, B., (2010). No More Rotten Eggs: A Dozen Steps to Grade -AA Talent Management. Tucson, AZ: T & G Associates. Thornton III, G. C., Rupp, D. E. and Hoffman, B. J., (2014) op. cit.. Assessment Center Perspectives for Talent Management Strategies (2nd ed.). New York: Routledge. Toulson, P. K., (2016). “Recruitment and Talent Management.” Human Resource Magazine. Vol. 21, Iss. 2, pp. 34-35. Truxillo, D. M., Paronto, M. E., & Collins, M., (2004). “Effects of Subject Matter Expert Viewpoint on Job Analysis Results.” Public Personnel Management, Vol. 33, Iss. 1, pp. 33-46.





Chapter 7

COMPENSATION AND BENEFITS: ATTRACTING AND RETAINING TOP TALENT Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

Employee compensation has been the source of many disagreements as a critical motivator of human performance. Despite differing opinions about the significance of extrinsic rewards, there is little argument about the importance of an organization’s compensation and benefits philosophy as a key element of its strategic approach to attracting and retaining the employees who create organizational value. Compensation and benefit systems are widely recognized as important Human Resource Management (HRM) building blocks and are typically viewed in terms of their ability to fairly and equitably reward employees for their contribution to an organization’s successes. The purpose of this chapter is to address the importance of an organization’s compensation and benefits package and the underlying assumptions upon which a compensation system is based. The chapter begins by enumerating the basic elements which make up compensation and benefits and identifying commonly utilized methods to reward performance. The chapter then addresses why so many organizations have restructured their philosophy about the employer-employee relationship and assumptions about compensation due to the nature of a globally competitive marketplace. After presenting six cautionary caveats about compensation and benefits based upon the changing nature of the workplace, the chapter concludes with ten recommendations about employee compensation and benefit administration as organizations strive to achieve their strategic mission.


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COMPENSATION IN A “GIG” ECONOMY Today’s knowledge-, wisdom-, and information-based economy is far different from the economic world of yesteryear1. According to a 2015 article in Forbes magazine and the U.S. Government Accountability Office, 40.4% of U.S. workers work in the contingent economy – with the number rising at a rapid rate2. The “gig” economy (with a gig meaning a short-term project), has grown exponentially with 51% of all employers indicating that they intend to hire more temporary workers in 20173. At the same time, 68% of employers recently surveyed claim that they cannot find qualified people to fill positions4 - perhaps, in many cases, because those who are qualified are unwilling to work for low salaries and without benefits. Based upon the current growth rate of contingent jobs, by 2020 as many as 45% of the US workforce will be in part-time, temporary, or contract positions5. Despite the alarming nature of these statistics, they reflect the status of the economy that is not new and that has been acknowledged by business experts for the past twenty years. Plainly, the employer-employee relationship has changed and there has been a profound shift in the “contract” between employers and employees about the nature of work, the role of employees, and the philosophy of compensation that now drives many employers6. Essentially, the message of the new employment contract says to today’s worker, “You are a commodity providing me a service which I seek to obtain as cheaply as possible and with little regard to creating a relationship that suggests that I care about your long-term welfare.” Ironically, a growing body of empirical research has confirmed that employers who treat employees as trusted partners and who establish more permanent relationships with employees are more profitable than comparable organizations that lack this commitment to their employees7. Apparently, today’s organization leaders are badly conflicted –

1

See Covey, S. R. (2004). The 8th Habit: From Effectiveness to Greatness. New York: Simon & Schuster. Polfeldt, E., (2015).”Shocker: 40% of Workers Now Have ‘Contingent’ Jobs, Says Government.” Forbes May 25th found online on October 16, 2017 at https://www.forbes.com/sites/elainepofeldt/ 2015/05/25/shocker-40-of-workers-now-have-contingent-jobs-says-u-s-government/#6748695814be. 3 Braun, K., (2017). “Temporary Hiring Trends in 2017 and Beyond.” CareerBuilder, January 26th found online on October 16, 2017 at https://resources.careerbuilder.com/news-research/temporary-hiring-trends-in-2017-andbeyond. 4 Sipek, S., (2017). “68 Percent of Employers Can’t Fill Open Positions.” CareerBuilder, April 24 th found online on October 16, 2017 at https://resources.careerbuilder.com/news-research/employers-cant-fill-open-positions? ref=bomborec&recotrk=6883fZIEhEfVuoCvPXR. 5 Braun, K., (2017) op. cit. 6 These issues were addressed in detail by Stanford University’s Jeffrey Pfeffer in Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. 7 For a summary of this more effective approach to employee relations, see Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass or Caldwell, C., and Floyd, L. A., (2014). “High Performance Work Systems: Building Commitment to Increase Profitability.” Graziadio Business Review, Vol. 17, Iss. 3, found online at http://gbr.pepperdine.edu/2014/12/high-performance-work-systems/. 2


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Figure 1.

feeling pressure to reduce costs and minimize expenses by hiring employees to whom they are not willing to make a commitment, yet facing a growing body of research that suggests that their most effective long-term strategy is to create an organizational culture that treats employees as valued partners8. For many employers, the attempt to hire contingent employees to cut costs becomes a lose-lose relationship. Employers cut costs by hiring contingent employees to avoid paying for benefits like health insurance and employee training to lower their short-term costs of operation. . . but in doing so they lose employee loyalty and hire individuals who are likely to lack adequate skills to perform at a world class level. In turn, employees are unable to earn what they need to succeed financially, protect their families’ interests, and become truly proficient at their jobs. Short-term thinking and hiring contingent employees may save a company money temporarily but can mortgage a company’s long-term future and its ability to succeed in the competitive global marketplace9.

8

9

This conflict is addressed in many publications, including Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press and in Block, P., (2013). Stewardship: Choosing Service Over Self-Interest. San Francisco, CA: Jossey-Bass. This point was powerfully made in Pfeffer, J., (1998) op. cit. and in Beer, M. (2009) op. cit.


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In today’s highly competitive economic market the tendency for organizations is often to “low ball” job candidates, not fully acknowledging the value of wellqualified external candidates and offering salaries below the compensation rate for current employees – even when those external candidates have better skills than incumbents in the position being filled. The consequence, of course, is that top candidates choose to work for competitors who adopt a more realistic perspective about the relative work of highly qualified individuals.

Figure 2.

COMPENSATION PHILOSOPHIES The compensation systems that are used in determining salaries in organizations reflect implicit Top Management Team assumptions about the role and contribution of employees and the underlying philosophy of organization leaders. Compensation decisions also reflect perceptions about the comparable market rate, the availability of qualified applicants, the state of the economy, and the relative importance of individuals and/or positions in meeting the needs of an organization to ensure its success10. The following are commonly used compensation methods and the assumptions and philosophy that are the basis for each method. 1) Factor Assessment – Factor assessment assigns value to positions based upon the degree to which the person in the position possesses specific qualifications. For

10

For a comprehensive review of compensation systems and their foundations, see Milkovich, G., Newman, J., and Gerhart, B., (2013). Compensation (11th ed.). New York: McGraw-Hill.



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In developing a Compensation and Benefits program, HRPs should always focus on creating an action plan that aligns with the mission and goals of their organization – as articulated by the organization’s Top Management Team. That plan should also be aligned with other HRM policies and their organizations’ articulated values. Although compensation and benefits are not the primary motivator of most employees, a company’s compensation system is always considered to be a priority for employees – often because of employee concerns for internal and external equity.

Figure 3.

example, education or training completed is commonly considered as a determining factor. Other factor examples are the value of business or resources for which a person is responsible, variety of job tasks that a person can perform, and number of persons supervised. The assumption is that persons are capable of adding value and worthy of higher compensation based upon the amount of each factor that they possess. 2) Ranking – Ranking is a comparative method that measures the relative importance of each individual in the organization in contributing to accomplishing its mission and goals. This method ranks each employee according to his or her comparative contribution. The underlying assumption is that persons who are ranked higher should receive greater compensation than those ranked lower in relative contribution. 3) Benchmark – This method compares individual positions based upon job duties performed in comparison with pre-determined benchmark positions. An organization’s positions are then ordered in relative comparison with the benchmark positions and compensation is assigned relative to that ordering. The assumption is that the established benchmarks are fairly compensated in the market place and reflect the comparative worth of each job within the organization. 4) Guide Chart – A guide chart is a complex method of comparing individual employees and positions based upon a detailed set of behavioral descriptions for such general responsibilities as Know How, Problem Solving, Accountability,


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Cam Caldwell and Additional Compensable Elements11. The assumption is that these guide chart factors are the appropriate criteria for determining compensation, based upon the research of the company conducting the study. 5) Market Comparison – This method is used to identify the current range of salaries offered by what have been identified to be “comparable” organizations with similar positions. The assumptions of this method are that 1) the positions are comparable, 2) the organizations are actually similar, and 3) the market is a fair indicator of appropriate compensation. 6) Longevity and Seniority – This method is used to adjust compensation within a salary range, based upon length of time working within the organization. The assumptions are 1) that seniority and tenure equate with familiarity about the organization and 2) the capacity which that familiarity contributes adds value to an incumbent’s worth. 7) Productivity – Compensation based upon volume of sales, units of production, or significance of a specific accomplishment are often used. NUCOR Steel, for example, pays its employees a base wage with a bonus each quarter which is based upon the value created by the team with which the employee works12. The assumptions are that the team members have contributed evenly to the value added and that compensation is a function of the team contribution. 8) Contract-Based – When a union or employee negotiates a contract, that contract becomes the basis for the compensation paid. The assumptions are that the employees in positions all contribute equally and that the labor-management contractual relationship fairly determines what employee contributions are worth. 9) Gainsharing – Gainsharing is a compensation philosophy based upon the acknowledgement that value added is generated by achieving time-targeted goals. Profitability may not yet be fully achieved by a company but a firm may nonetheless make significant progress not measured by its profits. The assumption is that the value added can be accurately measured based upon goals achieved and that individual employee contributions to goals also may be identified. 10) Combined Methods – Compensation systems may integrate several of the methods of compensation listed herein to confirm that the respective methods achieve the same, or approximately the same, outcomes. The assumption of this approach is that determining compensation is an imperfect science but should be rational and reliable by generating multiple data points and integrating information obtained therefrom.

11

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These guide chart elements are commonly used in the Hay System and were found on October 18, 2017 at https://www.haygroup.com/downloads/au/Guide_Chart-Profile_Method_of_Job_Evaluation_Brochure _web.pdf. The NUCOR Steel compensation philosophy is well described in Anderson, S. C., Finley, R. L., & Sparks, W., (2009). “NUCOR: Values and Transition.” Business Case Journal. Vol. 16, Iss. 2, pp. 64-72.



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In today’s highly competitive economic market the tendency for many organizations is to “low ball” job candidates, not fully acknowledging the value of well-qualified external candidates and offering salaries below the compensation rate for current employees – even when those external candidates have better skills than incumbents in the position being filled. The consequence, of course, is that top candidates choose to work for competitors who adopt a more realistic perspective about the relative work of highly qualified individuals.

Treating employees as valued partners has been identified as an important priority in repairing distrust and lost confidence in employers. Although the trend to hire parttime, temporary, and contract employees is likely to continue in an attempt by many companies to reduce labor costs and save money, it has not yet been determined that such an approach actually helps those companies to increase their long-term profitability. Figure 4.

Organizations are increasingly recognizing the importance of compensation systems that that reflect the contribution of a team to organization results. This approach to compensation is often prevalent in organizations that establish High Performance Work Systems which seek to treat employees as trusted partners in the achievement of organizational goals13. A growing body of evidence has suggested that such systems result in greater employee innovation, increased customer satisfaction, higher productivity, and greater profitability14. Notwithstanding that evidence, the trend towards creating an “arms-length” relationship with employees, hiring contingent workers, and treating employees like commodities rather than people often occurs – resulting in high See Caldwell, C., and Floyd, L. A., 2014. “High Performance Work Systems: Building Commitment to Increase Profitability.” Graziadio Business Review, Vol. 17, Iss. 3, found online at http://gbr.pepperdine.edu/ 2014/12/high-performance-work-systems/. 14 See Beer, M., (2009) op. cit. 13


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turnover rates, low employee trust in management15, decreased employee engagement16, and questionable organizational results. Because of the challenges of competing in a global market, organizations have downsized, outsourced, offshored, and contracted out for employees in an effort to save dollars and improve their ability to compete. The rationale for such changes has been that labor costs are too high for many American businesses to compete successfully with foreign companies that pay their employees exponentially less than US employers.

THE STATUS OF EMPLOYEE BENEFITS Employee Benefits have been cut drastically with the rise of contingent workers, largely to avoid the costs of employee benefits. According to the Bureau of Labor Statistics, employee benefits for full-time private sector employees are about 30.4% of total compensation17. The substantial increase in permanent part-time, contract, and temporary employees generally enables employers to avoid the costs of health insurance which have risen faster than inflation and have increased the cost per hour of full-time employees. Forbes magazine reported in 2015 that “the average annual premiums for employer-sponsored health insurance were $6,251 for single coverage and $17,545 for family coverage” with that amount rising incrementally annually18. Because contingent employees rarely receive health insurance benefits, cost savings accrue when full-time employee positions are replaced with part-time, temporary, and contract employees who often struggle to become insured. According to the Bureau of Labor Statistics, part-time employees average only 37 cents per hour for retirement and savings benefits in private industry, compared to $1.73 per hour for full-time employees19. For other benefits, contingent employees are also typically excluded, whereas full-time employees cost private employers $2.30 per hour work for paid leave, $1.18 per hour for supplemental pay, and $2.66 per hour for insurance benefits20. Both part-time and full-time employees cost employers for legally required benefits (e.g., Social Security), although part-time employees typically cost employers less due to their lower salaries.

See Gallup, (2017). “Confidence in Institutions” found online on October 19, 2017 at http://news.gallup.com/poll/1597/confidence-institutions.aspx. 16 See Gallup, (2017). “Employee Engagement” found online on October 19, 2017 at http://news.gallup.com/ topic/employee_engagement.aspx, 17 Bureau of Labor Statistics, (2017). “Employer Costs for Employee Compensation – June 2017.” September 8, 2017 press release found online on October 20, 2017 at https://www.bls.gov/news.release/pdf/ecec.pdf. 18 See Evans, M. & Fleming, K., (2017). “What We Can All Do About Rising Healthcare Costs.” June 28, 2017 found online on October 20, 2017 at https://www.forbes.com/sites/allbusiness/2017/06/28/what-we-can-all-doabout-rising-healthcare-costs/#1bdf201c2f37. 19 Bureau of Labor Statistics, (2017) op. cit. 20 Ibid. 15



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Employee Benefits have been cut drastically with the rise of contingent workers, largely to avoid the costs of employee benefits. According to the Bureau of Labor Statistics, employee benefits for full-time private sector employees are 30.4% of total compensation. The substantial increase in permanent part-time, contract, and temporary employees generally enables employers to avoid the costs of health insurance which have risen faster than inflation and have increased the cost per hour of full-time employees.

Figure 5.

Roger Lowenstein’s profoundly important book, While America Aged, identified the impact of “defined benefit programs run amok” that have undermined major corporations like General Motors and put governmental units like the City of San Diego in “near bankruptcy” status21. Although many governmentally-related organizations and union companies still retain defined benefit programs, most organizations have evolved to defined contribution programs that cap financially-related pension liability costs. For those companies that continue to offer any pension benefits, the employer contribution to Individual Retirement Accounts (IRAs) is typically limited to an annual employer contribution that caps a company’s financial obligation. Benefit programs in organizations can encompass a broad variety of individual and/or group benefits. In acknowledgement of the fact that not all employees need the same combination of benefits, many firms have instituted what is often called “cafeteria” or “flexible” benefit plans. Such plans are able to determine the cost of benefits offered and allow employees to select from a menu of benefit options within a pre-determined percent or dollar amount – often based upon the employee’s salary. For example, cafeteria plans may offer reimbursement for gym memberships for an employee and his or her family, reimbursement for professional development or education, daycare for employees with young children, and/or parent care for employees with dependent parents with special needs. Flexible benefit plans acknowledge that a company or organization 21

For a review of this important topic, read Lowenstein, R., (2009). While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis. New York: Penguin Books.


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recognizes that each employee may be uniquely different and may prefer a different combination of benefits than others. Employers of all types have avoided hiring full-time staff to reduce costs. For example, many colleges and universities hire adjunct faculty who lack terminal degrees and limited teaching experience rather than hiring full-time faculty in an attempt to cut costs. The cost savings for these colleges or universities is a short-term savings. Meanwhile, students are taught by less qualified individuals and the overall quality of education provided by the hiring institution then erodes. The same loss in quality occurs in other organizations when less qualified and competent contingent employees are hired22.

RECOMMENDATIONS FOR COMPENSATION AND BENEFITS In developing a Compensation and Benefits program, HRPs should always focus on creating an action plan that aligns with the mission and goals of their organization – as articulated by the organization’s Top Management Team23. That plan should also be aligned with other HRM policies and their organizations’ articulated values24. Although compensation and benefits are not the primary motivator of most employees, a company’s compensation system is always considered to be a priority for employees – often because of employee concerns about internal and external equity25.

Figure 6.

22

This point is made in Pfeffer, J., (1998) op. cit. Caldwell, C., Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. 24 Ibid. 25 Pfeffer, J., (1998) op. cit. 23



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The following are ten general recommendations that HRPs should consider as they develop a new compensation and benefits plan, or as they assess their current plan26. 1) Develop a philosophy of total compensation that attracts the best available employees. The “best” employees, of course, are those that match the organization’s short-term and long-term needs in creating value, generating profit, and honoring duties owed to society. Focusing short-term is often a critical mistake that impairs the ability of an organization to succeed over time. 2) Compensate based upon team performance when value is created by teams. When value is created for an organization by collaborative effort, compensation should reflect that cooperation and should benefit all of the participants who contributed to achieving the desired outcome. 3) Create gainsharing programs when metrics are measurable. When an organization has developed the capacity to measure performance and the incremental value added by an employee group, the organization should consider creating a compensation system that recognizes the accomplishment. Rather than implementing an across-the-board increase in all employees’ compensation rate, it is often appropriate to institute a performance bonus tied to the achievement of specific outstanding result. 4) Discontinue longevity and seniority-based compensation and reward results. In today’s knowledge-, wisdom-, and information-based economy, determining compensation based upon years of service rather than other more performancerelated criteria is inconsistent with an organization’s needs and/or the ability to create added value for the organization. 5) Hire a core group of highly-committed full-time employees and use part-time employees only if workload is cyclical. Although cyclical work can justify hiring contingent employees, hiring a core group of skilled and highly-committed fulltime employees can not only reward that commitment but generate greater longterm profits for an organization. 6) Involve employees in identifying productivity improvements and reward teams for improved outcomes. Creating a highly engaged employee work force and involving them in constantly improving the organization enables an organization to share gains with the persons responsible for lowering costs, increasing productivity, or otherwise enabling the organization to increase short-term and/or long-term profits27.

26

These ten general recommendations are insights derived from three primary sources: Pfeffer, J., (1998) op cit., Beer, M., (2009) op. cit., and Covey, S. R., (2004) op. cit. 27 See, for example, Smith, S., Peters, R., and Caldwell, C., 2016. “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80 available online at http://www.sciedupress.com/journal/index.php/bmr/article/view/9734/5891.


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Cam Caldwell 7) Identify critical employee positions and pay employees in those positions well enough to retain them. Often there are extremely critical positions in organizations where an outstanding employee makes it possible for a company to exceed the performance of competitors in meeting the needs of customers or in performing certain value-creating tasks. HRPs should identify such positions and recognize the need to retain these key employees, even if doing so requires paying this employee in a manner that is otherwise inconsistent with a company’s pay plan28. 8) Avoid status barrier differentials for benefits and treat benefit recipients equally. Creating benefit differentials for a select group of employees has been identified as a counter-productive decision and is recommended against for organizations seeking to create a culture of high trust. Providing “special benefits” sends a message to employees that the organization is elitist in the way that employees in that select group are treated. 9) Avoid tying raises to performance evaluation systems if supervisors are not properly trained. Performance evaluation systems are notoriously ineffective and are often a cause of substantial discord in organizations. When salary increases are tied to performance evaluation, the credibility of an organization can be seriously impaired and trust can be undermined. Training supervisors effectively can remediate this problem, but performance evaluation systems are often perceived by employees as unfair and poorly administered29. 10) Provide “cafeteria” options for employee benefits to respond to unique employee needs. Cafeteria, or flexible benefit programs, empower employees to choose a benefit package within specific dollar limits that best meet their individual and family needs. Organizations should consider the advantages of such programs, consistent with the costs of benefits that they can afford to provide.

These ten recommendations should be considered in context with the mission and goals of an HRPs organization. The proper role of HRPs, of course, is to present their Top Management Teams with information about these recommendations – including their costs, benefits, advantages, and disadvantages – so that the Top Management Team can make the ultimate decisions. By taking the position that their role is to advise and assist the management team, HRPs strengthen their credibility in helping their organization to achieve its purposes and to optimize long-term value creation. 28

29

For a discussion of “flair factors” and the critical importance of key employees, see, for example, Caldwell, C., Converse., P., and Beverage, M., 2018. “Selecting for ‘Flair Factors’ - Improving the Selection Process.” Paper accepted for publication in the Journal of Management Development. W. Edwards Deming is particularly critical of performance evaluation systems and their inefficiencies and inaccuracies. As administered, many such systems generate ill will and are problematical. See Deming, W. E., (2000). Out of the Crisis. Cambridge, MA: MIT Press.



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CONCLUSION In the modern organization the employer-employee relationship has changed markedly. Unfortunately, that change has resulted in a decline in employee loyalty and trust and has redefined the employer-employee relationship as a transactional exchange. A growing body of research confirms that organizations need to thoughtfully reconsider the direction in which this relationship is headed. Scholars like Harvard’s Lynn Paine have emphasized the importance of organizations integrating social and financial values to succeed in tomorrow’s complex world30. Treating employees as valued partners has been identified as an important priority in repairing distrust and lost confidence in employers31. Although the trend to hire part-time, temporary, and contract employees is likely to continue in an attempt by many companies to reduce labor costs and save money, it has not yet been determined that such an approach actually helps those companies to increase their long-term profitability.

Questions to Ponder 1) What do you personally think are the biggest shortcomings of compensation and benefit programs? 2) What criteria do you think are most important in developing a compensation plan? 3) Why is compensation equity such an important issue for employees?

The Resource Pool - Case Study - by Dr. Sarah J. Smith An area employer who employs more than 1,300 employees had a problem. Hiring temporary workers to fill a void showed limited success. Although some safety training was provided by the temp agency, the nature of this industry required extensive safety and compliance training. Before an employee or temp worker is allowed to actually perform work, all of the additional training must be completed. When temporary workers arrive, significant time is required to acquaint the person with the culture, mission, vision, and goals of the organization. Even when this training is complete, coworkers knew this employment relationship would be temporary and team cohesiveness and productivity suffered. In an attempt to remedy this situation, the organization decided to develop its own temporary worker program: The Resource Pool. 30

Paine, L. S., (2002). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. 31 Block, P., (2013). Stewardship: Choosing Service Over Self-Interest. San Francisco, CA: Jossey-Boss.


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The Resource Pool workers are employees of the organization. Their paychecks come from the company, not a temp agency. Resource Pool workers do not receive benefits: Their primary benefit is the option to accept or reject an assignment request. The Resource Pool has been comparatively more successful. Some people who are in work/life balance situations can remain in the workplace environment, yet have more flexibility to attend to personal or family needs. A benefit to the organization of The Resource Pool is that participating employees were up to date on required training. There was no 'down time' to fill a training gap. The Resource Pool workers understood the organization's culture, mission, vision, and goals. 1) The Resource Pool employees were paid a higher hourly wage than similar fulltime benefits eligible colleagues. Do you think this was fair? Is this equitable? 2) The primary benefit for resource employees is the ability to ask for flexible scheduling and to accept or reject a work request, without repercussions. Should full-time benefits eligible employee be awarded the same opportunities? Why or why not? 3) When a company has a temporary employee they would like to hire, it must negotiate a contract buy out with the temporary agency. Do you think The Resource Pool helps alleviate this cost? What do you believe the likelihood would be for a resource employee to accept a full-time position offered?

The Three-Legged Stool - Case Study - by Dr. Sarah J. Smith In addition to the transition toward defined contribution plans from defined benefits plans, other retirement situations continue to evolve. In past years, retirement income was thought to consist of Social Security and income from the employer's retirement plan. Today, a “Three-Legged Stool” approach has added the employee's own personal savings to long-term retirement funding.

A two-legged stool, just like relying on Social Security and an employer's retirement plan alone, is not adequate for many employees facing retirement. To help HRPs better understand The Three-Legged Stool, local HRPs met together with a financial analyst.



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Diane, a member of that group attended this training session and confirmed some of what Diane already knew as well as provided some new ideas. One area, which she always thought was important, is that HRPs should refrain from offering employees financial advice. Poor advice from HRPS has at times had lasting effects for an employee or retiree. To help employees make their own best decisions, Diane decided she should encourage employees to meet with a financial advisor. Diane also learned there were several online retirement income calculators available. She decided she would also like to pass this information along to her employees. 1) What training, if any, should organizations offer their employees early in their careers about long-term financial planning? 2) If Diane promotes web sites that feature retirement income calculators is she overstepping the boundaries of her position as an HRP? Could such a recommendation be considered giving financial advice? 3) Diane learned that Americans, as a whole, are generally poor at generating personal savings. Many other countries workers have high rates of personal savings. How could a company effectively promote personal savings and longterm financial planning?

REFERENCES Anderson, S. C., Finley, R. L., & Sparks, W., (2009). “NUCOR: Values and Transition.” Business Case Journal. Vol. 16, Iss. 2, pp. 64-72. Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Block, P., (2013). Stewardship: Choosing Service Over Self-Interest. San Francisco, CA: Jossey-Bass. Braun, K., (2017). “Temporary Hiring Trends in 2017 and Beyond.” CareerBuilder, January 26th found online on October 16, 2017 at https://resources.careerbuilder.com/ news-research/temporary-hiring-trends-in-2017-and-beyond. Bureau of Labor Statistics, (2017). “Employer Costs for Employee Compensation – June 2017.” September 8, 2017 press release found online on October 20, 2017 at https://www.bls.gov/news.release/pdf/ecec.pdf. Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press Caldwell, C., and Floyd, L. A., (2014). “High Performance Work Systems: Building Commitment to Increase Profitability.” Graziadio Business Review, Vol. 17, Iss. 3.


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Caldwell, C., Converse., P., and Beverage, M., (2018). “Selecting for ‘Flair Factors’ -Improving the Selection Process.” Paper accepted for publication in the Journal of Management Development. Caldwell, C., Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Covey, S. R. (2004). The 8th Habit: From Effectiveness to Greatness. New York: Simon & Schuster. Deming, W. E., (2000). Out of the Crisis. Cambridge, MA: MIT Press. Evans, M. & Fleming, K., (2017). “What We Can All Do About Rising Healthcare Costs.” June 28, 2017 found online on October 20, 2017 at https://www.forbes.com/ sites/allbusiness/2017/06/28/what-we-can-all-do-about-rising-healthcarecosts/#1bdf201c2f37. Gallup, (2017). “Confidence in Institutions” found online on October 19, 2017 at http://news.gallup.com/poll/1597/confidence-institutions.aspx. Gallup, (2017). “Employee Engagement” found online on October 19, 2017 at http://news.gallup.com/topic/employee_engagement.aspx, Hay System and were found on October 18, 2017 at https://www.haygroup.com/ downloads/au/Guide_Chart-Profile_Method_of_Job_Evaluation_Brochure_web.pdf. Lowenstein, R., (2009). While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis. New York: Penguin Books. Milkovich, G., Newman, J., and Gerhart, B., (2013). Compensation (11th ed.). New York: McGraw-Hill. Paine, L. S., (2002). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. Polfeldt, E., (2015).”Shocker: 40% of Workers Now Have ‘Contingent’ Jobs, Says Government.” Forbes May 25th found online on October 16, 2017 at https://www.forbes.com/sites/elainepofeldt/2015/05/25/shocker-40-of-workers-nowhave-contingent-jobs-says-u-s-government/#6748695814be. Sipek, S., (2017). “68 Percent of Employers Can’t Fill Open Positions.” CareerBuilder, April 24th found online on October 16, 2017 at https://resources.careerbuilder.com/ news-research/employers-cant-fill-open-positions?ref=bomborec&recotrk= 6883fZIEhEfVuoCvPXR. Smith, S., Peters, R., and Caldwell, C., 2016. “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80 available online at http://www.sciedupress.com/journal/index.php/bmr/article/ view/9734/5891




Chapter 8

PERFORMANCE MANAGEMENT: A STRATEGIC PERSPECTIVE Cam Caldwell1, Verl Anderson2 and Sarah Smith3 1

Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman 2 Dixie State University, St. George, Utah, US 3 Purdue University Northwest, Hammond, Indiana, US

ABSTRACT Among the most challenging tasks of managers and supervisors is managing individual and departmental performance. Stephen R. Covey urged organization leaders and managers to “Treat your employees exactly as you want them to treat your best customers.” Although motivating others is often considered to be an important task of managers and supervisors, other research suggests that people are ultimately internally and intrinsically motivated if they are to achieve superior performance. The purpose of this chapter is to identify the critical task of performance management in the 21st century. We begin by defining performance management and identifying the four- factors which make up this vital organizational concept. Examining each of these four parts, we identify the difficulties associated with defining desired outcomes, identifying what to measure, coaching individuals and teams, and improving performance results. We conclude the chapter with suggestions for implementing aligned performance management systems.

DEFINING PERFORMANCE MANAGEMENT Performance management is the ongoing process of providing communication and guidance to employees to efficiently and effectively achieve strategic goals of an


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organization. Its fundamental purpose is to bring out the best in people while optimizing long-term value for the organization and its stakeholders1. Performance management is an iterative, or frequently repeated, process of shared learning, coaching, and support by which managers and supervisors engage and empower individuals and teams in the quest to add value that meets present and future customer needs2. Managing performance properly provides accountability, resources, documentation, and guidelines for tasks and projects that are essential for effective organizational and personal performance. As a management tool, performance management had its roots in scientific management, job design, and work studies in manufacturing chronicled by Frederick Winslow Taylor and Frank and Lillian Gilbreth at the turn of the 20th century3. Both Taylor and the Gilbreths examined improving manufacturing efficiency and both were also aware of the importance of human motivation and the psychology of teams4. Industrial organizational psychology and management have typically studied performance management with a focus on individual performance.

Figure 1.

1

2

3

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The goal of performance management is articulated in Daniels, A. C. & Bailey, J. S. (2014). Performance Management: Changing Behavior that Drives Organization Effectiveness (5th ed.). Atlanta, GA: Performance Management Publications. Compare the definition in Aguinis, H., (2014). Performance Management (3rd ed.). Essex, UK: Pearson International, p. 1. Taylor’s work is recorded in Taylor, F. W., (1911). Principles of Scientific Management. New York & London: Harper & Brothers. The Gilbreths wrote several books and among them is Gilbreth, F. B. & Gilbreth, L. M., (1917). Applied Motion Study: A Collection of Papers on the Efficient Method to Industrial Preparedness. New York: Sturgis & Walton. Although the scientific approach to efficiency is a primary focus of many who study Taylor and the Gilbreths, insights about their behavioral acumen are found in Kanigel, R., (1997). The One Best Way: Frederick Winslow Taylor and the Enigma of Efficiency. Boston, MA: MIT Press and in George, C. S., (1068). The History of Management Thought. New York: Prentice Hall.


Performance Management: A Strategic Perspective

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Despite a century of research about improving performance, a Deloitte survey identified nearly 60% of executives surveyed indicated that current performance management methods neither drove employee engagement nor resulted in higher performance5. In fact, performance improvement efforts have often been criticized as being counter-productive to achieving better organizational results and even for undermining relationships between supervisors and employees6. According to a 2017 Gallup survey, only 33% of US employees and 13% of employees worldwide feel engaged at work7 and only 15% of employees feel that their organization’s leadership makes them feel enthusiastic about the future. In contrast, 70% of employees at the world’s best organizations report that they are positively engaged at work8. This evidence confirms that Human Resource Management (HRM) systems that address performance management are a wise investment for the modern organization.

Figure 2.

FOUR COMPONENTS OF PERFORMANCE MANAGEMENT Performance management consists of four important components that enable organizations to achieve their strategic purposes.

These findings were reported in Deloitte Consulting LLP & Bersin by Deloitte, (2014). “Global Human Capital Trends: Engaging the 21st Century Workforce.” New York: Deloitte University Press. 6 For example, W. Edwards Deming strongly criticized traditional performance appraisal systems in Deming, W. E., (2000). Out of the Crisis. Boston, MA: MIT Press. 7 This figure is reported in Gallup, (2017). “The Engaged Workplace” found online on August 29, 2017 at http://www.gallup.com/services/ 190118/engaged-workplace.aspx?gclid=Cj0KCQjwoZTNBRCW ARIsAOMZHmFyv_6YWwIWiiG9EfCh0VHrE_dWow_A2KyarZHrbE9S7C9iFhcn0xMaAmcPEALw_wcB. 8 Gallup, (2017). State of the American Workplace. Washington, D. C.: Gallup Inc. 5


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Cam Caldwell, Verl Anderson and Sarah Smith 1) Defining Desired Outcomes – Organizational mission drives each organization and that mission can be defined according to increasingly specific results. Outcomes begin with a clear statement of an organization’s mission and purpose. That mission is articulated according to performance objectives which contain time-targeted results in measurable terms. Performance objectives are similarly established based upon specific implementation objectives consisting of tasks to be accomplished, resources provided, and accountability assigned9. The difficult part of defining desired outcomes is the challenge of dealing with unanticipated variables, such as economic factors, that impact hoped for results. For example, double-digit inflation substantially affected every organization during the early years of the 1980 decade, just as the 2008-2009 fiscal crisis impacted organizations as part of the crisis facing mortgage companies, financial institutions, and the stock market10. 2) Identifying What to Measure – A common error in measurement occurs when organizations measure the wrong indicators of performance11. Measurement errors often result by focusing on what can be easily counted, rather than on outcomes that are actually most important but that are more difficult to assess12. The result is that organizations later recognize that they “have their ladder leaning against the wrong wall” or are accomplishing the wrong objectives13. Factors that should be measured must align with goals associated with achieving the organizational mission14, but identifying measurable factors that accurately reflect mission accomplishment is often challenging – despite its absolute necessity15. 3) Coaching Individuals and Teams – HRM systems commonly rely on a variety of methods to assess individual performance, despite the fact that a growing body of evidence confirms that traditional performance appraisal systems are

9

This process of defining desired outcomes is summarized effectively in the work of George L. Morrisey. See, for example, Morrisey, G. L., (1976). Management by Objectives and Results in the Public Sector. New York: Basic Books. 10 Economic and other problems are addressed in Friedman, T. L., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution – And How it Can Renew America Release 2.0. New York: Picador Press. 11 This problem often results in achieving outcomes that are not true measures of the intended purpose. This frequently occurring error was beautifully articulated by the classic article, Kerr, S., (1995). “On the Folly of Rewarding A While Hoping for B.” Academy of Management Executive, Vol. 9, Iss. 1, pp. 7-14. 12 Stephen R. Covey cites this common mistake in Covey, S. R. (1992). Principle-Centered Leadership. New York: Fireside. 13 Ibid. 14 Morrisey, G. L., (1976) op. cit and Kerr, S., (1995) op. cit. 15 See Covey, S. R., (1992) op. cit.



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ineffective16. The following are typical reasons why performance appraisals are unsuccessful17. a. Employees are Skeptical – Their experiences with performance appraisals are typically negative18. As the 2017 Gallup report confirms, employees often have negative experiences in organizations and the majority do not feel engaged19. Those who have the responsibility to rate employees through performance appraisals are often not provided with adequate training in how to accomplish this task. Additionally, first-hand familiarity between the employees with the rating supervisor is expected, yet due to organizational change, inefficiencies, and lack of training or understanding by performance raters this dynamic is not always upheld20. b. Rater Bias – Employees who have experienced the performance appraisal have also experienced rater bias. Rater bias may be either positive or negative and typically occurs when raters show favoritism to individuals who are most like themselves. c. Tying Individual and Team Goals to Organizational Goals is Difficult. Often individual and department goals are only indirectly related to the organization’s ultimate mission. Supervisors, managers, and HRPs not only must understand how individual and team performance adds value in achieving organizational mission but must be able to convey that information to employees21. d. Goals are Rarely Reliable Long-term. Short-term performance goals rarely match long-term objectives. Measuring performance based upon the achievement of short-term performance can distort performance outcomes and emphasize factors that actually impair long-term success. For example, creating inventory that requires storage and handling conflicts with Just-inTime principles of efficiency and effectiveness22. e. Metrics Fail to Tell the Story. Few jobs have behaviors and outcomes that may be precisely measured and that correlate with organization outcomes.

16

This assessment is the message that management experts have addressed for more than fifty years and is reaffirmed by experts such as Deming, W. E., (2000) op. cit. See also Ferguson, R., (2013). Finally! Performance Assessment that Works: Big Five Performance Management. Seattle, WA: Amazon Digital Services. 17 Ibid. 18 See Deming, W. E., (2000) op. cit. for a summary of the detrimental effects of traditional performance appraisal. 19 Gallup, (2017) op. cit. 20 Kane, J., Bernardin, H., & Wiatrowski, M., (2013). Performance appraisal. In N. Brewer & C. Wilson (Eds.), Psychology and Policing (pp. 257-275). Hillsdale, NJ: Lawrence Earlbaum Associates, Inc. 21 Kerr, S., (1995) op. cit. 22 This point is clearly made in Monden, Y., (2012). Toyota Production System: An Integrated Approach to Just-inTime (4th ed.). Boca Raton, FL: Productivity Press.


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Cam Caldwell, Verl Anderson and Sarah Smith Only when employees and supervisors understand this relationship will they identify and focus on the correct measures of performance23. f. Metrics Can be Manipulated. Control over what is to be counted is often subjective and can be manipulated by both managers and employees. Understanding how metrics can best be used, recognizing both the value and the limits of statistical analysis, and monitoring metrics carefully can help an organization to identify true performance results24 – and identify manipulation that can distort real performance and impact goal setting25. g. Annual Feedback is Inappropriate and Out of Date. Tasks and goals often require much more timely feedback than is available from an annual performance review. Despite this fact, many organizations persist in the annual ritual of performance appraisal even when employees and supervisors recognize its limitations26. Despite these recurring problems, most organizations use traditional annual performance reviews which are often met with resentment, frustration, and the lowering of morale27. Performance coaching, wherein supervisors and managers become resources and advocates to help employees to achieve shared goals, has been identified as a superior process compared to traditional performance appraisal systems28. 4) Improving Performance Results – Continuous learning and constant improvement are essential for every organization in the global environment29. “Bottom-up” efforts to engage and empower employees have proven to be effective in increasing customer satisfaction, productivity30, and employee commitment31. Ultimately, performance management is a behavioral process involving employees in understanding and learning more about performance

23

Ferguson, R., (2013) op. cit. Deming, W. E., (2000) op. cit. 25 Kerr, S., (1995) op. cit. 26 Ferguson, R., (2013) op. cit. 27 Deming, W. E., (2000) op. cit. 28 For a well-written description of performance coaching, see Whitmore, J., (2009). Coaching for Performance: GROWing Human Potential and Purpose – The Principles and Practice of Coaching and Leadership (4th ed.). Boston, MA: Nicholas Brealey Publishing. 29 This message is the reality facing modern organizations, as explained in Christensen, C. M., (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press. 30 These improvements are documented in Terziovski, M., (2002). “Achieving Performance Excellence through an Integrated Strategy of Radical Innovation and Continuous Improvement.” Measuring Business Excellence, Vol. 6, Iss. 2, pp. 5 -14. 31 The correlation between engagement and employee commitment is explained in Vance, R. J. (2006). “Employee Engagement and Commitment: A Guide to Understanding, Measuring, and Increasing Engagement in Your Organization.” SHRM Foundation found online on August 29, 2017 at https://www.shrm.org/foundation /ourwork/initiatives/resources-from-past-initiatives/Documents/Employee% 20Engagement%20and%20Commitment.pdf. 24



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goals, causes of problems, and alternatives to the status quo32. In a world where global competition impacts virtually every private sector organization, the struggle to be competitive and to constantly learn and improve are challenges facing every organization33. Performance management is a constant and never-ending challenge to leaders and organizations and each of these four elements or components has difficult features to resolve – especially in a world that is constantly changing and where competition is increasing on a global scale.

SUGGESTIONS FOR IMPROVING PERFORMANCE MANAGEMENT There are no magic formulas for implementing organizational improvements, no instant solutions, and no dot-to-dot steps to follow that guarantee performance success34.

Figure 3.

However, we have identified twelve principles that we suggest are useful in implementing an aligned HRM-related performance management program. 1) Integrate the HRM system with the organization’s strategic goals. HRM’s most powerful contribution to performance management is its commitment to creating 32

The relationships and factors which impact performance improvement are identified in Hedde, R. T. & De Wall, B., (2015). “What Are the Relationships in Human Oriented Performance Management?” Proceedings of the European Conference on Management, Leadership, & Governance, pp. 150-159. 33 See Christensen, C. M., (2016) op. cit 34 This point is clearly made in Deming, W. E., (2000) op. cit.



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2)

3)

4)

5)

6)

an organizational climate and work culture that supports the organization’s strategic mission and purpose35. Clarify, formalize, emphasize, and exemplify organizational values. HRPs play a key role in modeling organizational values as they establish relationships with employees throughout an organization36. Those relationships confirm or disconfirm the validity of an organization’s commitment to employees37. Create empowered and engaged partnerships throughout the organization. HRPs have the opportunity to work with Top Management to establish policies and practices that engage and empower employees at all levels38 and make them true “owners and partners”39 and committed stewards40 of the organization’s best interests. Focus the entire organization on the creation of added value. The creation of value requires understanding how customer needs are met and how an organization’s products and services meet those needs better than competitors. When individuals and teams understand value added, the focus of the organization narrows and each individual is more aware of their role in creating that wealth41. Treat everyone with caring, courtesy, and respect – or like “Yous” rather than “Its.” The ability of organizations to treat people at all levels with caring, courtesy, respect, and trust is a commodity that is essential to improving performance, competitive advantage, and organization commitment42. People who are treated as valued individuals or “Yous”, rather than as commodities or “Its” demonstrate greater organization commitment and loyalty and are both more innovative and more prone to going the extra-mile43. Invest in win-win opportunities to increase the value of each employee. A Transformational or Transformative Leadership approach that honors the best

35

Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. 36 This relationship is emphasized in Caldwell, C. & Ndalamba, K., (2017). “Human Resource Professionals as Strategic Leaders – A Behavioral Opportunity for Improving Information Management.” Journal of ValuesBased Leadership, Vol. X, Iss. 1, pp. 44-53. 37 The importance of validating organizational values is explained in Schein, E. H. & Schein, P., (2016). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. 38 This important HRM role is described in described in Mitchell, R., Obeidat, S., & Bray, M. (2013). “The Effect of Strategic Human Resource Management on Organizational Performance: The Mediating Role of High Performance Human Resource Practices.” Human Resource Management, Vol. 52, Iss. 6, pp. 899-921 and in Caldwell, C., Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. 39 Block, P., (2013). Stewardship: Choosing Service Over Self-Interest. San Francisco, CA: Berrett-Koehler. 40 This point is clearly made in Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270-285. 41 Kuehnl, C., Furst, A., Homburg, C., & Startitz, M., (2017). “Toward a Differentiated understanding of the ValueCreation Chain.” British Journal of Management, Vol. 23, Iss. 3, pp. 444-463. 42 Mitchell, R., et al., (2013) op. cit. and Beer, M., (2009) op. cit. 43 Hayes, et al., (2015) op. cit.



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interests of the individuals and the organization has been proven to produce outstanding organizations like Herman Miller Furniture and NuCor Steel44. 7) Train everyone about decision-making, risk-taking, and experimenting. Empowered and engaged employees that are provided with training understand how they can use their talents to constantly improve the organization, contribute to innovation, and improve customer service45. The HRM role is a vital element in creating this learning and improvement culture through organization-wide training46. 8) Reward and hold supervisors and managers accountable for developing their people. Developing human capital is an ongoing obligation of HRPs, managers, and supervisors if an organization is to constantly learn and improve. Creating compensation systems that hold supervisors and managers accountable for employee development reframes the importance of the coaching role of supervisors, empowers employees, and creates increased commitment47. 9) Constantly monitor and share information about progress toward strategic goals. Creating management systems that track performance for individuals, teams, departments, and the entire organization is a critical part of the value chain and is a process that HRPs must fully understand and embrace as they perform their jobs. Sharing this information and creating a transparent organization helps keep employees aware of the value creation process and their role in creating wealth48. 10) Acknowledge and celebrate individuals and teams that excel in adding value. Building into organizations the recognition of outstanding performance builds organization commitment and morale and is recognized as a key HRM function49. This celebration should emphasize the contribution made to added value and wealth creation50. 11) Utilize project teams to study opportunities for improvement and ensure their success. Creating teams that are endorsed by Top Management and that are fully 44

This point is clearly made in Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business School Press. See also DePree, M. (2004). Leadership is an Art. New York: Crown Publishing and Caldwell, C., Dixon, R. D., Floyd, L., Chaudoin, J., Post., J., and Cheokas, G. 2012. “Transformative Leadership: Achieving Unparalleled Excellence.” Journal of Business Ethics, Vol 109, Iss. 2, pp. 175-187. 45 The importance of training focused on improving organizational results is explained in Baraldi, S. & Cifalino, A., (2015). “Delivering Training Strategies: The Balanced Scorecard at Work.” International Journal of Training and Development, Vol. 19, Iss. 3, pp. 179-198. 46 See Pfeffer, J., (1998) op. cit. and Mitchell, et al., (2013) op. cit. as examples of the HRM role in employee training to achieve organization mission. 47 The importance of employee development and a culture of engagement are addressed in Smith, S., Peters, R., and Caldwell, C., (2016). “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80. 48 The importance of creating this performance monitoring role and its relationship to HRM are addressed in Pfeffer, J., (1998) op. cit. and Caldwell, C. & Ndalamba, K., (2017)., op. cit. 49 This important point is fundamental to the HRM role but is also addressed in Sholtes, P., Joiner, B. L., & Streibel, B. J., (2003). The TEAM Handbook (3rd ed.). Madison, WI: Oriel, Inc. 50 Ibid.



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focused on specific opportunities to improve performance can be a major contributor to successful organization improvement. HRM plays a key role in helping these project teams to function effectively51. 12) Emphasize the demand for constant improvement and the reality of constant change. Modern organizations face pressures for constant improvement, continuous learning, and constant52. Creating a culture that supports this change enables organizations to keep pace with a global marketplace that is constantly evolving53.

Figure 4.

Managing performance is an ongoing challenge for every organization and requires the ability to manage technical, interpersonal, and financial skills that impact virtually every organization and every stakeholder54. As HRPs develop their competencies and their ability to assist their organizations in the performance management process, they demonstrate their strategic effectiveness and their potential as powerful resources in an organization’s success55.

51

Ibid. This reality is clearly addressed by Christensen, C. M., (2016) op. cit. 53 See Smith, S. et al., (2016) op. cit. 54 See Kuehnl, C. et al., (2017) op. cit. 55 To review the HRP roles in strategic HRM, see Mitchell, R., et al., (2013) op. cit., Caldwell, C., (2011) op. cit. and Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press. To review the HRP roles in strategic HRM. 52



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Figure 5.

Questions to Ponder 1) Based upon what you know, why do so few employees feel engaged at work? 2) What has your personal experience been with performance evaluations and performance appraisal? Why are performance appraisals often considered “the task everyone hates”? 3) What skills do HRPs most need to develop to improve their capacity to help their organizations to measure performance more effectively?

Disillusioned Case Study -- by Dr. Sarah J. Smith Assistant Managers Steve and Barry sat at their desks, each with a generous stack of manila folders in front of him. The organization's performance management system had derailed. Performance appraisals were to be completed twice a year, at 6 months and 12 months. According to company policy, the employee's immediate supervisor was


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responsible for coordinating the appraisal process and scheduling a review session twice a year with each of the employees he or she was to evaluate. The manager of this 90-person company was so frustrated with the current performance measurement system that he engaged the services of Shelly, a consultant well-versed in performance management. Shelly had successfully reinvigorated performance management for several area companies in the area. The manager was hopeful she could do the same for his organization. In order to better understand the situation at hand, Shelly decided to begin a conversation with the assistant managers. She asked what frustrated them about performance management at the current time. Both Steve and Barry shared that they did not like the fact that the department's performance appraisal folders ended up on their desks. Both were fine with putting in extra time if their efforts could improve the organization, but they told Shelly that the current performance management system seemed to add little value. The company had struggled this year, and everyone anticipated there would be no raises. With that performance a reality, any financial incentive for superior or satisfactory performance was not available to employees. As assistant managers, both Steve and Barry voiced concern to Shelly about the fact they had not worked on second or third shift for quite some time. Therefore, the assistant managers had not observed shift employee behavior at all during the past appraisal year. As their jobs were administrative in nature, the assistant manager's interaction with first shift production employees was also limited. 1. Should pay be tied to performance, as measured through performance appraisal at this company? What else could possibly motivate employees and their supervisors to set goals and make plans to add value to the organization? 2. Some employees change shifts or move in or out of a specialty assignment during the year. When work reassignments occur, the affected employee typically has more than one direct supervisor during the year. What approach could be taken to accurately represent the employee's performance in this situation? Who should coordinate the appraisal? 3. Some performance evaluations include goals while others do not. Should goals be included? How could performance goals be used to allocate training and development funds for employees who need additional training?

360 Degree Feedback, FMLA, and Termination -- Case Study -- by Dr. Sarah J. Smith Dave had been demoted from a plant manager position because the location he oversaw had exceeded its allocated budget. He was not well liked by the employees



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because he had limited continuous learning opportunities and halted a long-anticipated compensation equity study. Rather than terminating Dave, the parent corporation decided to reassign Dave to a sister facility as a safety manager. Prior to his promotion to plant manager, Dave had served as a safety manager within the organization and had performed that role effectively. Other personnel were also reassigned within the network of the corporation while some were terminated. Seeing a potential trend, corporate leadership decided to introduce a 360 degree feedback appraisal. Their thought was that if the organization did not rely strictly on one rating supervisor's opinion of the employee's performance, perhaps performance ratings would be different. At each location, for an employee's 360 degree performance review, five to seven coworkers, leaders, customers, or vendors were asked to rate the employee. Corporate leadership was somewhat surprised when even with a 360 degree evaluation, results of performance appraisal did not markedly affect the organization. When the performance evaluation form was reviewed by corporate, several organizational leaders commented about the ambiguous language from which to choose in order to rate a person's performance. In an effort to improve performance appraisal, the HRM Department asked five supervisors to use the form to rate personnel. Each person was asked on a scale of 0 to 100 to identify the percent of time an employee could perform to justify the rating. Five words indicated performance levels: Always, Usually, Sometimes, Rarely and Never. Since the evaluation included 360 degree feedback from various sources, skills and traits that transcended organizational silos were selected. An example for the trait 'Ability to work well with others' Focus Group Member Bob Betty Tom Laura Janet Range

Percent of Time for each descriptive word, 0 = low, 100 = high Always 99% 85% 75% 90% 87% 75-99%

Usually 78% 51% 40% 80% 65% 40-80%

Sometimes 50% 30% 25% 70% 43% 25-70%

Rarely 30% 15% 10% 60% 27% 10-60%

Never 0% 5% 2% 59% 10% 0-59%

Prior to reassignment, Dave's performance reviews were not favorable. Unfortunately, this trend continued even after his reassignment to safety manager. Dave needed a knee replacement and contacted his HRP to arrange for a Family Medical Leave Act (FMLA) leave of absence. Two days before his request, upper management had



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planned to terminate Dave due to his performance. The decision was made to allow Dave's FMLA request, however, the day after his return, his employment was terminated. 1. What suggestions would you offer this company to improve its performance management system? 2. What would you have done with regard to advising the corporate leadership about Dave’s situation? 3. Corporate leadership, the plant manager, and the HRP were concerned about the ambiguity discovered in identifying differences about rating categories. With such a large range of perceptions, how could 360 degree ratings be consistent? How could the organization address the situation of ambiguous terminology and consistency for future performance evaluation sessions?

Case: Rater Bias or Systems Failure? Case Study -- by Dr. Sarah J. Smith A performance management consultant arrived as scheduled at the C-suite offices for an organization who requested performance appraisal assistance. After meeting with the head of the department for a briefing, the consultant was introduced to two organization leaders. The first oversaw the shift workers (Manager 1). The second was responsible for office, clerical, special assignment employees and oversight of the department's budget (Manager 2). Manager 1 and Manager 2 each had a stack of manila folders, approximately 1 1/2 feet high, on their desk. They explained to the consultant how each file contained an employee's performance appraisal form for the year. The department head instructed Manager 1 and Manager 2 to complete all performance appraisals within the next two weeks, as the due date for the performance reviews had already passed by. The managers were uncomfortable with this request. Manager 1 stated he had not worked 2nd or 3rd shift all year and that he had no first-hand knowledge of performance of those employees. Manager 2 stated that he had been heavily tasked with budget issues and had not anticipated being the rating manager for any employees. Both managers said they would complete the employees' performance appraisals because their department head had asked them to do so. However, the level of frustration and discomfort was evident and permeated the office environment. Questions: 1. What is the proper time frame to provide feedback to employees? 2. What rating biases might be involved in this performance assessment?



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3. How could the lack of direct supervisory observation and input be corrected? 4. What suggestions do you have for an improved performance management policy in this organization?

REFERENCES Aguinis, H., (2014). Performance Management (3rd ed.). Essex, UK: Pearson International, p. 1. Baraldi, S. & Cifalino, A., (2015). “Delivering Training Strategies: The Balanced Scorecard at Work.” International Journal of Training and Development, Vol. 19, Iss. 3, pp. 179-198. Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Block, P., (2013). Stewardship: Choosing Service Over Self-Interest. San Francisco, CA: Berrett-Koehler. Caldwell, C., Dixon, R. D., Floyd, L., Chaudoin, J., Post., J., and Cheokas, G. 2012. “Transformative Leadership: Achieving Unparalleled Excellence.” Journal of Business Ethics, Vol 109, Iss. 2, pp. 175-187. Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press. to review the HRP roles in strategic HRM. Caldwell, C. & Ndalamba, K., (2017). “Human Resource Professionals as Strategic Leaders – A Behavioral Opportunity for Improving Information Management.” Journal of Values-Based Leadership, Vol. X, Iss. 1, pp. 44-53. Caldwell, C., Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Covey, S. R. (1992). Principle-Centered Leadership. New York: Fireside. Christensen, C. M., (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press. Daniels, A. C. & Bailey, J. S. (2014). Performance Management: Changing Behavior that Drives Organization Effectiveness (5th ed.). Atlanta, GA: Performance Management Publications. Deloitte, (2014). “Global Human Capital Trends: Engaging the 21st Century Workforce.” New York: Deloitte University Press. Deming, W. E., (2000). Out of the Crisis. Boston, MA: MIT Press. DeNisi, A. & Smith, C. (2014). Performance appraisal, performance management, and firm-level performance: A review, a proposed model, and new directions for future


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research. Academy of Management Annals January 2014, 8(1) 127-179; DOI: https://doi.org/10.1080/19416520.2014.873178 DePree, M. (2004). Leadership is an Art. New York: Crown Publishing. Ferguson, R., (2013). Finally! Performance Assessment that Works: Big Five Performance Management. Seattle, WA: Amazon Digital Services. Friedman, T. L., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution – And How it Can Renew America Release 2.0. New York: Picador Press. Gallup, (2017). State of the American Workplace. Washington, D. C.: Gallup Inc. Gallup, (2017). “The Engaged Workplace” found online on August 29, 2017 at http://www.gallup.com/services/190118/engaged-workplace.aspx?gclid=Cj0KCQj woZTNBRCWARIsAOMZHmFyv_6YWwIWiiG9EfCh0VHrE_dWow_A2KyarZHr bE9S7C9iFhcn0xMaAmcPEALw_wcB. George, C. S., (1068). The History of Management Thought. New York: Prentice Hall. Gilbreth, F. B. & Gilbreth, L. M., (1917). Applied Motion Study: A Collection of Papers on the Efficient Method to Industrial Preparedness. New York: Sturgis & Walton. Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270-285. Hedde, R. T. & De Wall, B., (2015). “What Are the Relationships in Human Oriented Performance Management?” Proceedings of the European Conference on Management, Leadership, & Governance, pp. 150-159. Kane, J., Bernardin, H., & Wiatrowski, M. (2013). Performance appraisal. In N. Brewer & C. Wilson (Eds.), Psychology and Policing (pp. 257-275). Hillsdale, NJ: Lawrence Earlbaum Associates, Inc. Kanigel, R., (1997). The One Best Way: Frederick Winslow Taylor and the Enigma of Efficiency. Boston, MA: MIT Press. Kerr, S., (1995). “On the Folly of Rewarding A While Hoping for B.” Academy of Management Executive, Vol. 9, Iss. 1, pp. 7-14. Kuehnl, C., Furst, A., Homburg, C., & Startitz, M., (2017). “Toward a Differentiated understanding of the Value-Creation Chain.” British Journal of Management, Vol. 23, Iss. 3, pp. 444-463. Mitchell, R., Obeidat, S., & Bray, M. (2013). “The Effect of Strategic Human Resource Management on Organizational Performance: The Mediating Role of High Performance Human Resource Practices.” Human Resource Management, Vol. 52, Iss. 6, pp. 899-921. Monden, Y., (2012). Toyota Production System: An Integrated Approach to Just-in-Time (4th ed.). Boca Raton, FL: Productivity Press. Morrisey, G. L., (1976). Management by Objectives and Results in the Public Sector. New York: Basic Books.



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Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business School Press. Schein, E. H. & Schein, P., (2016). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. Sholtes, P., Joiner, B. L., & Streibel, B. J., (2003). The TEAM Handbook (3rd ed.). Madison, WI: Oriel, Inc. Smith, S., Peters, R., and Caldwell, C., (2016). “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80. Taylor, F. W., (1911). Principles of Scientific Management. New York & London: Harper & Brothers. Terziovski, M., (2002). “Achieving Performance Excellence through an Integrated Strategy of Radical Innovation and Continuous Improvement.” Measuring Business Excellence, Vol. 6, Iss. 2, pp. 5 -14. Vance, R. J. (2006). “Employee Engagement and Commitment: A Guide to Understanding, Measuring, and Increasing Engagement in Your Organization.” SHRM Foundation found online on August 29, 2017 at https://www.shrm.org/ foundation/ourwork/initiatives/resources-from-past-initiatives/Documents/Employee %20Engagement%20and%20Commitment.pdf. Whitmore, J., (2009). Coaching for Performance: GROWing Human Potential and Purpose – The Principles and Practice of Coaching and Leadership (4th ed.). Boston, MA: Nicholas Brealey Publishing.





Chapter 9

ORGANIZATION CHANGE AND ORGANIZATION ANALYSIS: THE STRATEGIC HUMAN RESOURCES ROLE Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

Organization change is a constant reality in today’s challenging, competitive, and chaotic world. Strategic management has borrowed the acronym, VUCA, - the abbreviation originally developed by the U S Army War College in the 1990’s, labeling a world that is volatile, uncertain, complex, and ambiguous – to describe a business environ that constantly struggles to manage change. Despite the ever-present reality of change, leaders struggle today just as they did nearly six centuries ago when Machiavelli observed that “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things”1. The purpose of this chapter is to describe the role of strategic human resource management (SHRM) in the analysis and implementation of organization change in the modern organization. Although the relevance and importance of managing change is universally acknowledged, there is nonetheless a diversity of thinking about the most effective means of guiding organization transitions, as well as the contributing SHRM role in the change process. We begin the chapter by presenting three widely respected models for managing change, integrating those perspectives with the problems of

1

This famous quote comes from Machiavelli, N. & Marriott, W. K., (2017). The Prince. New York: CreateSpace.


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Cam Caldwell

Figure 1.

organization change in today’s business context. We identify six critical SHRM factors essential in the organization analysis process associated with managing change and explain how the SHRM role contributes to the entire organization in its staff support relationship. We conclude with a brief summary of change management principles to guide Human Resource Professionals (HRPs).

KOTTER’S CHANGE MODEL One of the most frequently cited models for managing organizational change is John Kotter’s eight-step change model. Kotter emphasized the importance of creating a culture in organizations that recognizes and embraces the importance of episodic change – the change associated with a specific project or innovation – and continuous change – the fact that we live in a world of constant turmoil that is rapidly evolving2. Beginning with the importance of creating such a culture, Kotter’s model is briefly summarized3.

2

The importance of creating a culture of change is found in the interview of John Kotter found in Kotter, J. P., (2008). “Developing a Change-Friendly Culture.” Leader to Leader, Vol. 2008, Iss. 48, pp. 33-38. 3 Kotter, J. P. (2012). Leading Change, With a New Preface by the Author. Boston, MA: Harvard Business Review Press.


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1) Create a Sense of Urgency. The need for constant change is rarely fully understood in organizations. Leaders must not only recognize this need but create a compelling story that convinces others4. People must be prepared to change and creating a sense of urgency is required for them to believe that change is necessary. 2) Build the Guiding Team. Team members of this team selected to oversee and guide change must be carefully chosen and must combine the ability to not only influence others with a commitment to constantly improving the organization and responding to the need to change. Top Management Team and employee leaders should be participants in this leadership process. 3) Develop the Change Vision and Strategy. Not only must leaders define the vision of what the future will be like but they must adopt a realistic and specific action plan – identifying the resources required to facilitate the change process and making the commitment to providing those resources throughout that process. Without that vision and strategy, change is unlikely to occur. 4) Communicate for Understanding and Buy-in. Employees at all levels must understand the change that is required, the rationale behind that change, its consequences for key stakeholders, and their role in the change process5. Communication must make it clear why changing is superior to the status quo and the direction that an organization is headed if the required change does not occur. 5) Empower Action. A plan without the accompanying resources to implement the required action is destined to not only fail but to create organizational resentment and frustration6. Change requires resources, commitment, and the ability to carry out a well-conceived plan of action. 6) Create Short-term Wins. Identifying areas in which change can be immediately successful inspires participants and creates credibility for the change process. Building in short-term wins requires an investment of resources but enables an organization to sustain morale and employee momentum. 7) Don’t Let Up. One of the classic errors in change management efforts is the premature assumption that the change has occurred. The Guiding Team must continue to reinforce the change process and insure that systems are in place to make the change permanent.

4

Kotter, J. P., (2008) op. cit. The importance of clearly communicating the moral and ethical implications of change and the options considered is explained well in Hosmer, L. T., (2010). The Ethics of Management (8th ed.). New York: McGraw-Hill. 6 Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. 5


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Figure 2.

8) Create a New Culture. Change requires new assumptions, new beliefs, and a new perspective about the organization and its identity7. The nature of organizational culture is that those underlying assumptions must be reinforced by sustained action for a culture to be adopted by organization members8. Guiding Team leaders must model the values and behaviors of that new change culture for it to take hold.

7

Schein, E. H. & Schein, P., (2016). Organizational Culture and Leadership (4 th ed.). San Francisco, CA: JosseyBass. 8 Ibid.



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Figure 3.

The SHRM role is to assist the Top Management Team at each step in the change process, in supporting organizational efforts, and in creating a culture that supports change. For each of these eight steps Kotter also identifies a common error that must be avoided in order to successfully implement his model9. To be successful, Kotter suggests that organizational leaders recognize the importance of avoiding each of those eight errors to enable their organizations to achieve each of the eight steps of the model10. Kotter’s model for change is both widely cited and highly respected and has been applied successfully in many organizations. Figure 3 identifies Kotter’s eight-step model.

KURT LEWIN’S ACTION RESEARCH Kurt Lewin, one of the pioneers of organizational development and organization psychology11, developed the concept of Action Research (AR) seventy years ago12, and 9

Kotter, J. P., (2012) op. cit. Ibid. 11 Lewin is cited as the eighteenth most eminent psychologists of the century In Haggbloom, S. J., Warnick, R., Warnick, J. E., Jones, V. K., Yarbrough, G. L., Russell, T. M., Borecky, C. M., McGahhey, R., Powell III, J. L., Beavers, J., Monte, E., (2002). “The 100 Most Eminent Psychologists of the 20 th Century.” Review of General Psychology. Vol. 6, No. 2, pp. 139–152. 12 Lewin, K., (1946). “Action Research and Minority Problems.” Journal of Social Issues, Vol. 2, Iss. 4, pp. 34-46. 10


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his model for managing organizational transitions has been adopted by the highlyregarded Peter Block as the consultants’ guide for organization change13. AR is an iterative cycle of planning an experimental change, implementing that change, observing its impact, and assessing its significance. Thus, the process involves both a purposerelated core action and a learning process in which an organization is able to assess the validity of its assumptions about planned change14. The repeating nature of the Plan-ActObserve-Reflect cycle of AR is the basis for constant learning and managing change15.

Figure 4.

Lewin had developed the concept of a force field in which both driving and restraining forces influence the balance which determines the current status quo. Managing change requires understanding each of those forces, determining which forces most influence current conditions, and identifying how reducing restraining forces or increasing driving forces can result in change to a desired state16. Figure 4 explains Lewin’s force field analysis concept. The SHRM role helps a Top Management Team to understand each of the driving and restraining forces and to identify how to successfully achieve the desired change in a manner that will be sustainable. Gardner identified twelve separate steps in the AR process, which he labeled “Action Training and Research.” Gardner described the process as highly participative and 13

Block, P., (2011). Flawless Consulting: A Guide for Getting Your Expertise Used (3rd ed.). San Francisco, CA: Pfeiffer. 14 This point about the two levels of Action Research is clarified in Zuber-Skerritt, O. and Perry, C. (2002). “Action Research within Organisations and University Thesis Writing.” The Learning Organization, 9(3), 171–179. 15 Coghlan, D. & Brannick, T., (2010). Doing Action Research in Your Own Organization (3rd ed.). London: Sage. 16 For a review of force field analysis see Swanson, D. J. & Creed, A. S., (2014). “Sharpening the Focus of Force Field Analysis.” Journal of Change Management, Vol. 14, Iss. 1, pp. 28-47.



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comprised of the ongoing training of participants17. The twelve steps of Gardner’s AR model include the following: 1) Orientation. This step involves the creation of a partnership between an organization’s Top Management Team and either an internal or an external consultant who will facilitate the change process. 2) Contract Setting. The contract setting process typically calls for the consultant to be neither “a pair of hands” working solely under the direction of the Top Management Team nor a “project leader” directing and taking responsibility for the change18. Block explained that a project worked most effectively when the consultant and the Top Management Team shared a partnership in the change process19. At this stage the parties agree to work together to gather data and learn more about change that is needed. 3) Reconnaissance. This step involves the identifying of important information associated with opportunities and threats facing the organization and narrowing the focus of the change project. Employees at multiple levels of the organization are typically asked to participate in this assessment. 4) Problem and Opportunity Identification. Based upon the previous step, information is gathered based upon perceived problems or opportunities. That information continues to focus the nature of the change project. Involving employees in this data collection process is of critical importance, particularly for those who are most affected by a potential change. 5) Aspirations. In the aspiration step the Top Management Team and consultant identify generalized goals that could be achieved by successfully instituting organizational change. Input from those who might be affected by a potential change is also sought and their aspirations are included. 6) Analysis. Using the data collected the specific nature of a problem to be resolved or opportunity to create is identified and factors germane to improving the status quo are determined. The analysis process provides the opportunity for the organization to improve its understanding of the root causes and the symptoms of problems or opportunities. 7) Experimentation. In this step an experimental change is implemented on a micro-level to determine whether assumptions are correct about the problem or opportunity being considered. Once again, key participants are asked to play a significant role in the design and implementation of this experiment. Neely Gardner’s training focus reflected his commitment to group ownership of the change process and is summarized in Gardner, N., (1974). “Action Training and Research: Something Old and Something New.” Public Administration Review, Vol. 34, Iss. 2., pp. 96-115. 18 This distinction is clearly articulated and emphasized as critical to the success of a change process in Block, P., (2011) op. cit. 19 Ibid. This partnership creates appropriate ownership for both parties. 17


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Cam Caldwell 8) Results Analysis. A careful review and assessment of the experiment is then conducted to measure the expected outcomes. Those outcomes are compared with the aspirations articulated in Step 5. Results are examined in enough detail to determine how and why changes occurred or did not occur. 9) Program Design. If the aspirations for the experiment prove to be on target and achieve an improved outcome, information is then used to develop the most effective means of implementing a proposed improvement. Those affected are involved in developing the nature and timing of this transition. 10) Implementation. In cooperation with those affected, the implementation of a change is then conducted within the organization according to the program design. The implementation includes clear communication to internal downline divisions affected and customers outside the organization about the anticipated change and how it will improve existing conditions. 11) Evaluation and Feedback. Careful documentation of expected results is made and feedback from all affected parties is obtained to confirm or disconfirm the expected outcomes and anticipated benefits. 12) Recycle. The process of identifying additional opportunities to improve or problems to resolve is again considered and the need for constant improvement is emphasized.

These twelve steps of AR expand and clarify the four-stage model initially developed by Lewin and provide an opportunity for change to occur organization-wide20. The focus of Gardner’s training approach to AR emphasizes the importance of sharing ownership, creating a culture of participation and partnership, and constantly improving the organization by empowering and engaging its participants at all levels – while maintaining ultimate control and direction provided by the Top Management Team21.

THE TEAM APPROACH A third model for managing change is the TEAM model developed by Scholtes, Joiner, and Streibel22. Incorporating a quality improvement approach to managing change, the TEAM model provides a framework for organizations that offers insights into the reasons why teams succeed or fail23. The following is a brief summary of the TEAM process for managing organizational changes24. 20

Gardner, N., (1974) op. cit. Ibid. 22 Scholtes, B. L., Joiner, P. R., & Streibel, B. J., (2003). The TEAM Handbook (3rd ed.). London: Oriel. 23 Ibid. 24 Ibid. These nine steps are incorporated in The TEAM Handbook and are well explained. This book is an outstanding resource for organizations that struggle with teams that are often ineffective. 21



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1) Top Management Team determines need for a project and appoints Guidance Team. The failure of many teams lies in the fact that they lack top management support and are created haphazardly. But when leaders formally create a “Guidance Team” to oversee and assist a team to accomplish a specific purpose, those teams are exponentially more effective. 2) Guidance Team prepares a Team Charter. With the support of the Top Management Team the Guidance Team creates a “charter” which defines what is expected to be accomplished by the newly formed team – including an expected timeframe for achieving desired results. 3) Guidance Team identifies and appoints a Sponsor, Team Leader, Coach, and Team Members. Key roles are identified to support each team. The Sponsor is typically a Guidance Team member who closely monitors the project team and is an advocate for its success – taking timely action and keeping the Guidance Team fully informed about resources needed for the project team to accomplish its goals. The Team Leader focuses on coordinating the agenda, seeing that members are informed of meetings, and providing minutes of the meeting that are published. The Coach focuses on the team’s process, follows up with members to assist them in accomplishing between-meeting assignments, and keeping the Team Leader informed if progress on assigned tasks is not being made. Team Members with requisite skills are appointed and supported – and their project team assignment becomes as important as the responsibilities of the position they were hired to fill. 4) Project Team Members meet and employ data collection, analysis, and research. Team members incorporate a fact-based approach to assess their assigned task, identify resources needed to complete their assignment, and engage others within the organization to obtain critical information about the Team assignment. Team Members formally report on between-meeting accomplishments and much of the Team’s work is performed outside of the meetings with the monitored support of the Coach who is often a technical expert. 5) Team Leader periodically reports progress to Guidance Team and obtains support as needed. The Team Leader works directly with the Guidance Team, keeping it informed about the Team’s progress in achieving time-targeted goals and identifies when the team needs additional resources to achieve its chartered responsibilities. If necessary, the Guidance Team is called upon to intervene on behalf of the project team to ensure that cooperation, resources, and support for the project are obtained within the organization. The Sponsor keeps the Top Management Team well informed if their action is required to keep the team on track in meeting the goals set forth in its charter.


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Cam Caldwell 6) Project Team proposes solutions, tests assumptions, and evaluates results. The project team typically will design an experiment to address a problem or opportunity. That experiment will test assumptions about the team’s purpose and goals. The team will evaluate results and assess the best course of action – including additional experiments, as necessary.

Figure 5.

7) Project Team reports results and recommendations formally to Guidance Team and Top Management Team. Throughout its tenure, the team’s progress is reported to the Guidance Team and Top Management Team so that immediate corrective action can be taken if the project team is not on track. Minutes of each team meeting – including a report of progress on time-targeted goals – are shared with the Guidance Team and Top Management Team every time the team meets.

Figure 6.



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8) Top Management Team evaluates report and recommendations and takes appropriate actions. With the assistance of the Guidance Team and the Sponsor, the Top Management Team keeps informed about project team progress and provides appropriate resources and support to keep the project on track to achieve its chartered purposes. 9) Project Team celebrates completed responsibilities. A formal celebration of the team’s achievements is built into the creation of each team, with the expectation that the team will complete its assignment within a specific timeframe and its team members will then return to their normal duties on a full-time basis. The reality about teams is that they are often ineffective25. The TEAM Handbook approach is nonetheless not only a much superior way of managing team activities and responsibilities but is useful as a resource for managing change. Each of these three models emphasizes the importance of having a clear vision of what is required in the change process. All three models are data driven, involve employees affected by change, and emphasize the critical importance of top management support. But all three models also acknowledge the behavioral nature of change and the importance of involving employees throughout an organization in the change process.

SIX SHRM ROLES IN ORGANIZATION ANALYSIS Because organization change encounters so much natural resistance, Human Resource Professionals (HRPs) play a key role in helping the Top Management Team to understand and design a change management process that engages and empowers employees. As HRPs contribute to the organization analysis process associated with managing change, they engage in six important roles. 1) Identifying and documenting employee attitudes. HRPs are not only attuned to the perceptions and priorities of employees at all levels but they monitor employee attitudes via periodic surveys of employee opinions. Employee surveys complement and provide detailed information about employee concerns and perspectives26.

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26

According to many scholars more than half of all teams should never have been created in the first place and as many as 75% of all teams are ineffective. See Whetten, D. A. & Cameron, K. S., (2015). Developing Management Skills (9th ed.). New York: Pearson. The importance of monitoring employee attitudes about an organization and its culture is well documented in Aragon, R., Basson, J., Burton, A., Schneider, J., Yang, W., Holman, R., & Downing, G. J., (2017). “Impact of Innovation Initiatives in a Federal Government Agency: Measuring and Understanding the Influence of Culture and Employee Attitudes.” Innovation Journal, Vol. 22, Iss. 1, pp. 1-51.


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Figure 7.

2) Serving as a resource in organization analysis training. Employees in organizations typically lack polished skills in knowing how to conduct organization analysis. Although these skills may be developed by employees throughout the organization, training in the process of carrying out an accurate assessment of organization conditions, the root causes of problems that occur, and the impact of those problems can exponentially improve the ability of employees and managers in analyzing systems, processes, and organization outcomes27. 3) Implementing programs enhancing employee empowerment and engagement. HRPs can play a major role in the development of employee empowerment and employee engagement programs that promote employee ownership, increase commitment, and support a change-oriented culture28. 4) Creating metrics for assessing driving and restraining forces. If they are to be valuable strategic resources for the organization, HRPs must develop the ability to accurately measure the value added by employees and departments and to assist the Top Management Team to assess the critical factors essential to create organizational change29. 27

Scholtes, B. L., Joiner, P. R., & Streibel, B. J., (2003) op. cit. The impact of empowerment on engagement and organization culture are addressed in Smith, S., Peters, R., and Caldwell, C., 2016. “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80. 29 The strategic role of HRM is well documented in Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. 28



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5) Providing research on best practices. To effectively assist an organization to manage change HRPs must become Subject Matter Experts about organization analysis and managing change. The nature of change can be ambiguous, uncertain, and difficult to achieve and HRPs must not only understand best practices but the underlying principles upon which they are achieved30. 6) Developing programs that support a culture of change. HRPs play an important role in the development of a productive and supportive work culture by developing aligned programs that support change31. Each of these six roles enable HRPs to establish credibility with employees at all levels of the organization, develop programs and policies that fit with the organization’s strategic mission and goals, and engage and empower employees to enable them to become full owners and partners in the ongoing processes of organization change, organization learning, and organization improvement.

PRINCIPLES OF CHANGE MANAGEMENT For successful organization improvements to occur, organizations must comply with the underlying principles associated with effective change management. Change demands aligned programs, a comprehensive approach, and a systematic framework that fits with a supportive organizational culture and that reinforces the organization’s mission and purpose. The following are ten highly practical principles of change management32. Address the “human side” systematically. Change is always a human issue. Start at the top. Organization change demands resources and financial support. Involve every layer. The entire organization is impacted by change. Make the formal case. Stakeholders deserve to know the rationale for change and its impacts. 5) Create ownership. Ownership comes when people are given input and participate in identifying problems, issues, and the implementation of change. 6) Communicate the message. The message must be timely, inspirational, practical, and repeated. 1) 2) 3) 4)

30

31

32

For a review of the important role of HRPs and HRM in contributing to organization successes associated with managing change, see Becker, B. & Gerhart, (1996). “The Impact of Human Resource Management on Organizational Performance: Progress and Prospects.” Academy of Management Journal, Vol.. 39, No. 4, pp. 779-801. Edmonds, S. C., (2017). “Crafting a Purposeful, Positive, Productive Work Culture: Why Don’t Leaders Make Culture a Priority?” Leadership Excellence Essentials, Vol. 34, Iss. 2, p. 47. Jones, J., Aguirre, D., & Calderone, M., (2004). “Ten Principles of Change Management.” Booz & Company Resilience Report found online on September 12, 2017 at https://www.k4health.org/ sites/default/files/10%20Principles%20of%20Change%20Mgmt-04-15-04.pdf.


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Cam Caldwell 7) Assess the cultural landscape. Analyzing the culture and identifying issues that must be addressed is crucial in understanding employee needs. 8) Address culture explicitly. Identify the behaviors, values, and assumptions that must be understood and reward those behaviors consistently. 9) Prepare for the unexpected. Recognize that no change process goes precisely as planned and develop contingency responses that may be required. 10) Speak to the individual. Acknowledge that change is a highly personal process and prepare managers and supervisors to respond to employees at the individual level.

CONCLUSION As HRPs develop their skills associated with organization analysis and organization change, they develop the ability to contribute to the strategic purpose of their companies. They demonstrate their value in helping their organizations to adapt to a constantly changing and chaotic world that demands resilience, competence, and the capacity to evolve quickly and effectively in meeting the needs of customers. The HRP roles in managing change enables organizations to effectively respond to external demands while building a culture that reinforces change-related values that sustain today’s organizations. The change models provided herein and the HRP’s roles described can be of great value as HRPs strive to demonstrate their ability to add value, to assist their organizations’ Top Management Teams to achieve their strategic objectives, and to maintain credibility at all levels of their organizations. Although managing change requires that HRPs develop a complex set of sophisticated skills, those skills are vital to the success of the modern organization.

Questions to Ponder 1) The resistance to change is paradoxical because we all acknowledge that change is a necessity. What ways do you think are most effective for helping people to change? 2) Which of the three change models resonates most with you? What about that model makes it seem superior to the other two? 3) One of the biggest issues associated with change is the struggle about control? How can organizations help employees to retain a sense of control and security during the course of change?



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Employee Benefits in Changing Times -Case Study -- by Dr. Sarah J. Smith For the past 15 years, MetLife has surveyed thousands of people in its US Employee Benefits Survey. Recently work-life balance has taken center stage; however, medical (health) benefits remains at the top as the highest rated 'must have' employee benefit. Prescription drug coverage ranked second, while dental and vision moved around some, yet remained consistently somewhere in the top 10 of must have benefits. Due to rising costs and increased government intervention, HRPs and company leaders face an ever-changing benefits environment. The changing nature of health care has been a focus for the Institute of Medicine's (IOM) annual conference. In addition to rising health care costs, the Institute named the following reasons for rapidly occurring changes: new diagnostic and treatment tools, emerging genetic insights, and developments in information technology. If the IOM is addressing changes in health care, certainly organizations are also experiencing change. One organization with 8,000 employees wanted to take a strategic approach to benefits redesign prior to the annual open enrollment in November. As a result of their research, it became evident changes were needed in order to protect the benefits available for the employees. The strategic team worked with SHRPs to evaluate how to shift cost of benefits to achieve this goal. As an example, dental and vision had historically been their own plans. The strategic evaluation placed these under the health care plan umbrella. The maximum amount to be reimbursed for dental and vision care dropped markedly to a minimum. With regards to prescription coverage, a new alliance with a national pharmacy chain was negotiated. The result was reduced costs for employees who chose to fill a three-month prescription via the pharmacy network's mail order option. Once health-related benefits changes were decided upon, the leadership team and SHRPs were charged with determining how to introduce new concepts to a steady, experienced workforce. 

 

Dates for open enrollment were shifted from their historic past. Some employee frustration was voiced; however, the intention was to encourage a new focus on the benefits enrollment process. Employee information sessions were increased in number and offered via HRPs at various times and locations. The frequency of email reminders was increased to remind employees to enroll and to invite attendance at the information sessions.

For the most part despite change, open enrollment went rather smoothly. 1) What is your opinion of the leadership and SHRPs' approach to change? What went well, and what could have been better?


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Cam Caldwell 2) Which steps of Kotter's change model were represented by this organization's approach to change? 3) What were steps not included from Kotter's change model? Would these steps have further assisted the employees with this organizational change?

They Moved My Cheese! -- Case Study -by Dr. Sarah J. Smith Two organizations merged as the result of a parent corporation mandate. The reason provided for this change was to conserve financial resources by eliminating upper administrative positions for both organization and operating under a model of one highranking administrator for the two locations. One organization was twice as big as the other. This caused concerns for the smaller entity: would this be a hostile takeover? Would all of 'their' policies, procedures, and forms be forced on the employees? Meanwhile, both organizations had very distinct organizational cultures and the larger organization perceived potential threats from their smaller counterpart and the merger itself. It seemed as if no one at either organization was embracing the idea of change. However, there was no choice: the merger decision had been made. There was no turning back. Employees were given little notice of the merger. Timelines for implementation were extremely aggressive and people felt pushed and rushed. Most programs differed and the two organizations would have to find common ground. Coming to consensus when the employees are deeply invested in their own programs would not be an easy task. Programs, policies and procedures also varied between the two organizations. Corporate chose not to introduce and mandate their version of policies and procedures but to empower employees from both merger locations to develop their own, yet mutual solutions. One year after the merger, not one job description had been reviewed and subsequently, employees did not have a current job description. Many people thought development of mission, vision, and goals were rushed and could have benefited from greater employee involvement. The smaller organization lost most of its social rituals and employees were forced to accept the traditions of the larger organization. Looking back at the merger, the SHRP team wondered what could have been done to make the change process more positive and palatable. Both organizations employed a high percentage of technical employees who had experience or had knowledge about the quality management TEAM approach. SHRPs from both organizations agreed to try the TEAM approach moving forward in order to increase employee involvement in subsequent changes that were to come.



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1) How could a team charter have assisted with the merger? Could this be a valuable tool moving forward? 2) Some changes seemed to have come from behind closed doors with only a few decision makers. Do you agree that the TEAM approach would be beneficial for navigating subsequent change in the merged organization? How could this be accomplished? 3) Identification and development of a merged organizational culture would be required. Thinking of the six SHRM roles in organization analysis, what suggestions could you make? Would all six roles apply to the merged entity? If not, which of the six do you think would be most effective?

REFERENCES Aragon, R., Basson, J., Burton, A., Schneider, J., Yang, W., Holman, R., & Downing, G. J., (2017). “Impact of Innovation Initiatives in a Federal Government Agency: Measuring and Understanding the Influence of Culture and Employee Attitudes.” Innovation Journal, Vol. 22, Iss. 1, pp. 1-51. Becker, B. & Gerhart, (1996). “The Impact of Human Resource Management on Organizational Performance: Progress and Prospects.” Academy of Management Journal, Vol..39, No. 4, pp. 779-801. Block, P., (2011). Flawless Consulting: A Guide for Getting Your Expertise Used (3rd ed.) . San Francisco, CA: Pfeiffer. Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Coghlan, D. & Brannick, T., (2010). Doing Action Research in Your Own Organization (3rd ed.). London: Sage. Edmonds, S. C., (2017). “Crafting a Purposeful, Positive, Productive Work Culture: Why Don’t Leaders Make Culture a Priority?” Leadership Excellence Essentials, Vol. 34, Iss. 2, p. 47. Gardner, N., (1974). “Action Training and Research: Something Old and Something New.” Public Administration Review, Vol. 34, Iss. 2., pp. 96-115. Haggbloom, S.J., Warnick, R., Warnick, J. E., Jones, V. K., Yarbrough, G. L., Russell, T. M., Borecky, C. M., McGahhey, R., Powell III, J. L., Beavers, J., Monte, E., (2002). “The 100 Most Eminent Psychologists of the 20th Century.” Review of General Psychology. Vol. 6, No. 2, pp. 139–152. Hosmer, L. T., (2010). The Ethics of Management (8th ed.). New York: McGrawHill.Kotter, J. P., (2008). “Developing a Change-Friendly Culture.” Leader to Leader, Vol. 2008, Iss. 48, pp. 33-38.


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Jones, J., Aguirre, D., & Calderone, M., (2004). “Ten Principles of Change Management.” Booz & Company Resilience Report found online on September 12, 2017 at https://www.k4health.org/sites/default/files/10%20Principles%20of%20 Change%20Mgmt-04-15-04.pdf Kotter, J. P. (2012). Leading Change, With a New Preface by the Author. Boston, MA: Harvard Business Review Press. Lewin, K., (1946). “Action Research and Minority Problems.” Journal of Social Issues, Vol. 2, Iss. 4, pp. 34-46. Machiavelli, N. & Marriott, W. K., (2017). The Prince. New York: CreateSpace. Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. Schein, E. H. & Schein, P., (2016). Organizational Culture and Leadership (4th ed.). San Francisco, CA: Jossey-Bass. Scholtes, B. L.,, Joiner, P. R., & Streibel, B. J., (2003). The TEAM Handbook (3rd ed.). London: Oriel. Smith, S., Peters, R., and Caldwell, C., 2016. “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80. Swanson, D. J. & Creed, A. S., (2014). “Sharpening the Focus of Force Field Analysis.” Journal of Change Management, Vol. 14, Iss. 1, pp. 28-47. Whetten, D. A. & Cameron, K. S., (2015). Developing Management Skills (9th ed.). New York: Pearson. Zuber-Skerritt, O. and Perry, C. (2002). “Action Research within Organisations and University Thesis Writing. “ The Learning Organization, 9(3), 171–179.




Chapter 10

CAREER AND ORGANIZATIONAL DEVELOPMENT: THE WIN-WIN PRIORITY Cam Caldwell1 and Sylivia Atwijuka2 1

Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman 2 Uganda Management Institute, Kampala, Uganda

ABSTRACT As Human Resource Professionals (HRPs) examine their priorities in the mindnumbing world in which their companies compete, a commitment to constant learning and continuous improvement is always in focus for the organization and its employees. Wise HRPs recognize that an organization is most likely to be successful long-term when its leaders are committed to the best interests of all its stakeholders in creating long-term wealth1. The ability of HRPs to serve the entire organization and to establish a culture of high trust is correlated with the mutually-beneficial objectives of achieving ongoing organizational development and personal growth2. This transformative priority3 has frequently been described as a “covenantal” duty by a number of scholars who have addressed the obligations of leadership4. The focus of this chapter is on the role of HRPs in striving to achieve both the development of the entire organization and the growth of its individual employees. The chapter begins with a brief review of the Human Resource Management (HRM) roles in honoring duties owed to an organization and its employees. The chapter then identifies 1

The foundations of ethical stewardship are discussed throughout this book and are fully described in Caldwell, C., Hayes, L., Karri, R., and Bernal, P., (2008). “Ethical Stewardship: The Role of Leadership Behavior and Perceived Trustworthiness.” Journal of Business Ethics, Vol. 78, Iss. 1/2, pp. 153-164. 2 This principle is the theme of Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. 3 The transformative nature of leadership is addressed in Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press. 4 See, for example, DePree, M., (2004). Leadership is an Art. New York: Crown Publishing and Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press.


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the importance of HRP’s commitment to the personal growth of its individual employees. Linking the success of employees with that of the organization, the chapter briefly describes the HRP role in achieving organizational development outcomes that enable the entire organization to improve. The chapter concludes by identifying four important factors associated with successful individual and organizational development.

Figure 1

COVENANTAL COMMITMENT AND HRP ROLES Organizations that honor their commitment to enhancing employee welfare and growth build trust, commitment, and loyalty and earn extra-mile performance and the enthusiastic employee ownership that inspires creativity and innovation5. In performing the six key roles of the HRM function, HRPs contribute to the constant learning and improvement of the organization. Table 1 briefly summarizes those six roles and their relationship to this individual and organizational improvement. As stewards of their organization’s improvement and progress, HRPs who address all six of these important roles enable their companies to demonstrate commitment to honoring duties owed to employees and to optimizing long-term wealth and value6.

5

See Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. 6 This stewardship role conforms with the strategic objectives of their organizations and enables HRPs to demonstrate their important contribution to the achievement of organization mission. See Mello, J. A., (2014) Strategic Human Resource Management (4th ed.). Boston, MA: Cengage Learning and Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182.


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Table 1. HRP Roles and Contribution to Improvement HRP Role Align Culture, Mission, and Strategy

Brief Summary Create policies, systems, and practices that support culture and promote the mission.

Organization Betterment Build high-trust relationships that promote extra-role behavior, innovation, and creativity.

Perform Technical HRM Tasks

Ensure that job analyses, selection and testing, compensation, and other HRM tasks and systems meet state-of-the-art standards. Serve as internal business consultants to help departments to achieve cost savings and productivity.

Select, hire, and provide training for employees based upon highest standards and compensate to retain employees who are key to adding value. Provide resources and analysis to identify opportunities for improvement and assist department improvement teams.

Identify employee needs and concerns, improve the work climate, and support employee development through financial investment as well as creating a supportive work environment. Supports improvement teams, creates learning programs, and identifies improvement opportunities.

Create a commitment to employees that responds to their concerns, builds trust, and engages and empowers employees,

Partner to Achieve Efficiencies

Advocate for and Empower Employees

HRM Systems Supporting Improvement

Monitor Climate to Support Needed Change

Gather information about competitive forces and provide resources supporting change.

Staffs department project teams as a facilitator and resource. Conducts training programs focused on organization as well as individual needs. Maintain an upbeat and positive relationship with departments and respond on a timely basis to their needs.

Individual Improvement Empower and engage employees as full owners and partners in achieving organization goals and promote their development. Identify training, coaching, mentoring opportunities and resources required to help employees to constantly learn and improve related to their job roles. Create cost savings that enable the organization to put resources into improving individual capacities. Align training and development opportunities to support employees and organizational goals. Listens to employees, surveys their attitudes and develops an appropriate response, and engages employees in improving the organization.

Assists individual employees to achieve their highest and best potential. Creates system improvements that build trust. Assist employees to discern how to make decisions about risk-related initiatives and support innovation.

COMMITMENT TO INDIVIDUAL EXCELLENCE By demonstrating their support of individual employee growth and development, organizations make an investment in their employees’ long-term ability to contribute to their firm. Wise organizations offer a broad range of job-related training opportunities in-


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house, support outside professional development, pay for their employees’ advanced education, and utilize assessment tools like assessment centers to provide their employees with opportunities to improve their skills and capabilities7. Effective employee training and development programs possess nine common characteristics8. 1) Centralized responsibility. They are directed by a champion or program manager for whom the responsibilities of training and development are his or her priority. 2) Based upon needs assessment. Needs are based upon identified gaps between desired performance and current performance and identify who needs to be trained in specific performance areas. 3) Aligned with organizational outcomes. The importance of those outcomes is communicated as part of the training and development activities that are created and focused on achieving the organization’s mission. 4) Identified with goals and metrics. Specifying the purposes of training and development increase the ability to establish clear and measurable results. 5) Supported by leadership. Training and development supported by the Top Management Team is not only provided with adequate resources but assures that participants know that leaders consider the activities to be important. 6) Application-oriented and relevant. Programs should be developed that have immediate application and that can be translated to current job responsibilities as well as for employees’ future development in order to support organizational success. 7) Attention getting and creative. Training programs capture the attention of participants and are interesting and attractive events, activities, or programs that spark participant interest. 8) Communicated and explained. Information about the programs is communicated effectively and details about the programs and events are clearly identified. Learning objectives are clear, concise, communicated, and measurable. 9) Reinforced and followed-up. The expectations to be achieved are carefully monitored and evaluated to ensure that the training and development achieves its intended purposes and information about results is shared throughout the organization. Assessment of performance in the workplace assures skills are transferred to the employee’s work and integrated within the organization. Each of these nine characteristics demonstrates a commitment to the growth and development of participating employees while delivering training and development that further an organization’s mission and purpose. Because only 32% of workers report that 7 8

Noe, R. A., (2016). Employee Training & Development. New York: McGraw-Hill. These nine characteristics are found in Kluczny, S., (2017). “9 Characteristics of Top Employee Training Programs.” Biz Library Blog found online on October 1, 2017 at https://www.bizlibrary. com/article/employee-training-9-characteristics-of-top-programs/.



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they are engaged at work most employers have much to do in order to unlock the full potential of their workforce9. Engagement and productivity can be affected when employees are supported by supervisor mentoring, social cohesion, common goals, information sharing, and personalized training. Investing in employee development helps employees to feel valued and respected, to know that their work is meaningful, and to identify their input and suggestions as an important assess in improving the organization10. Quantum Workplace – the research firm behind the “Best Places to Work” programs – has identified five key factors that set organizations with higher engagement scores apart from others11.     

Setting a clear, compelling direction that empowers each employee Encouraging open and honest communication Maintaining a focus on career growth and development Recognizing and rewarding high performance Providing employee benefits that demonstrate a strong commitment to employee well-being

Figure 2. Best Places to Work

Adkins, A., (2016). Employee Engagement in the U.S. Stagnant in 2015.” Gallup found online on October 1, 2017 at http://www. gallup.com/poll/188144/employee-engagement-stagnant-201.aspx. 10 Employee development and high commitment are related constructs, as noted in Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. 11 Hastings, R., (2009). “The ‘What’ and ‘Why’ of Employee Engagement.” Found online on October 1, 2017 at http://www.shrm. org/resourceandtools/hr-topics/employee-relations/pages/ whatandwhy.aspx. 9



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Developing employees and investing in their success increases the probability that employees will remain with the organization, particularly when that training is directly related to organization job requirements12. Creating individualized employee development plans, providing performance metrics, creating opportunities outside of the current job function, giving helpful personalized feedback, removing barriers that inhibit employee success, providing links to professional networks, and setting a personal example are all ways that HRPs can strengthen employee commitment and feelings of empowerment. By personally engaging in their own professional development behaviors, leaders also encourage employees to participate in professional development activities.

ACHIEVING AN ORGANIZATION’S POTENTIAL The HRM responsibility recognizes that the development of employees is an investment from which an organization also expects returns. When employees have the space to be creative and are free to focus on areas where they can be most valuable and can best contribute to creating a more successful and sustainable organization. Below are four ways that an organization’s contribution to employee success can positively impact an organization’s bottom line and make a business more sustainable. 1. Improve morale: When people feel good about going to work because it’s a place where they can grow and achieve, that feeling elevates the energy of the entire organization.

Figure 3.

12

Ibid.



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2. Increase retention: When employees are doing something they love, working with other creative people, and feeling supported to do their best work, retention automatically follows. Retention of employees can be an expensive challenge for an organization when individual employees feel isolated13. 3. Drive loyalty: Very few people perform well if they are in an unsafe or unsupportive environment. When employees feel unsafe, they revert to a more primitive and less productive mindset. When employees feel safe and supported, they become more adept problem solvers and team members. Additionally, when employees feel supported personally and professionally, they are more engaged and accountable. 4. Boost reputation: Being a “great place” to work is a significant accomplishment–and it also receives consistent word-of-mouth and media coverage. As word travels that an organization supports employee growth and fulfillment, that reputation attracts the most competitive candidates. Unfortunately, many managers have sought to improve employee productivity and job satisfaction by addressing problems in a negative manner14. Beer explained that organizations seeking high performance and high employee commitment create organizational systems that valued employees as the source of value creation – and demonstrate that perception by establishing integrated high performance and high trust systems, policies, and practices that affirm each employee’s individual worth15. Because change is occurring at an exponential rate, a key task of every HRM department is to create a culture that supports constant change16. The changing dynamics of the workforce, the exponential increase in data, and the innovative ways that companies are organizing work have created five important trends. 



Emphasis on Dynamic Structures over Products. Organizations are focusing on being flexible and adaptive, rather than focusing primarily on products. For example, eBay emphasizes its internet space as its customer interface, rather than the specific products that it sells. Movement to a Digital World. The evolution of digital technology provides organizations with more information faster and requires companies to require their employees to become more knowledgeable and competent in the use of digital information. Federal Express is an example of a company that has

13

Waggoner, J., (2013). Do happy workers mean higher profit?, USA Today. Retrieved from http:// www.usatoday.com/story/money/personalfinance/2013/02/19/treating-employeeswell-stock-price/1839887/. 14 Beheshtifar, M., & Nazarian, R., (2013). Role of Occupational Stress in Organizations. Interdisciplinary Journal of Contemporary Research in Business. Vol. 4, pp. 648-657. 15 Beer, M., (2009) op. cit. 16 Church, A. H., and Burke, W. W., (2017). “Four Trends Shaping the Future of Organizations and Organization Development.” OD Practitioner, Vol. 49, Iss. 3, pp. 14-22.



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



increasingly developed this capability and has used it to improve communications with customers about the status of packages. Interpreting Information Correctly. Developing the ability to correctly identify the meaning of data and digital information is increasingly an Organizational Development priority. 3M is known for its ability to innovate new products and focuses on not only giving its employees free time for that purpose but creates support systems that provide them with consumer information which they can use in those innovations. Identifying Talent Competencies. Organization development efforts that implement programs like 360 degree feedback to enable people to improve have become a priority rather than simply selecting top quality employees. According to the Society of Human Resource Management (SHRM) Foundation, succession planning is a high priority at 3M. Keeping key talent in the pipeline and providing opportunities to develop tomorrow’s leaders today ensures fluid transfer when key employees retire or assume a new leadership role for the organization17. Providing employees with positive feedback, coaching, and specialized training based upon individual needs enables top performers and potential future decision-makers to constantly improve. Companies like IBM have also used tools like assessment centers as a training and assessment resource to provide that feedback to high potential employees.

Integrating efforts to help organizations to excel and working to assist individuals to become their best are complementary priorities for the modern organization. Stephen R. Covey noted that the universal purpose of every organization was to optimize the ability of the organization to achieve its best possible results by enabling its members to achieve their highest potential18.

HRP CONTRIBUTIONS In honoring their roles as strategic partners, HRPs contribute specialized knowledge that substantially impact employee and organizational improvement. Some of those contributions include designing or selecting effective training programs, suggesting redefined work roles to fit changes in technology, identifying quality improvement programs, conducting precise job analyses to ensure the best possible hiring and

17

See Society of Human Resource Management, (2015). Engaging in Succession Planning. Washington, D. C: Society of Human Resource Management and found online on October 18, 2017 at https://www. shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/ engaginginsuccessionplanning.aspx. 18 This universal mission is articulated in Covey, S. R., (2004) op. cit. p. 99.



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promotion decisions, and consulting with department members to make other organizational improvements. Decisions about who to hire, promote, and train; the compensation philosophy and its application; and the most effective way to assist employees who are struggling in their roles must be made with fairness in mind. As specialized staff resources whose primary role is to help individuals and organizations to achieve their highest potential, HRPs become experts about the organization, its members, and its mission. The organizational development role becomes an opportunity to help both employees and the organization to become their best possible versions of their potential. By helping the organization to constantly learn and to improve, HRPs create win-win opportunities that serve employees, stakeholders, and society.

FOUR ESSENTIAL FACTORS For organizational development programs to be optimally effective, four essential factors must be present that directly affect the HRM function and the roles of HRPs. 1) Top Management Commitment – Although HRPs are resources for their organizations, it is the Top Management Team that not only identifies the direction of the organization but that define its mission, goals, and priorities – and the ongoing changes necessary for the organization to compete in a competitive world19. 2) HRPs with Technical Competence – The evolving nature of today’s rapidly changing world demand that HRPs be not only extremely skilled in areas of HRM specialization but must also be highly effective team facilitators, superb at analyzing statistical information, and effective at understanding the nuances of organization effectiveness20. The complex nature of organizational development at both the individual and organizational levels demands that HRPs raise the bar in their technical and behavioral expertise. 3) Willingness to Adapt – The pressures of a constantly changing world demand that HRPs support a culture of flexibility, adaptiveness, and a willingness to change21. Creating a work climate and culture that supports change, that promotes innovation, and that empowers employees at all levels is essential for success in a global marketplace22.

19

The importance of this role is clearly established in Caldwell, C., et al., (2011) op. cit. Ibid. 21 See Pfeffer, J., (1998) op. cit. 22 See Christensen, C. M., (2016) op. cit. 20



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4) A Commitment to Values – Good is no longer good enough23. A constant commitment to improvement; to learning and to technological excellence; to treating stakeholders as valued partners; and to honoring duties owed to a troubled world will motivate employees to pursue excellence and build trust, loyalty, and commitment24. These four qualities are vital to motivate individuals and organizations to achieve their optimal potential, to succeed in an exciting but challenging world, and to develop people and their companies to achieve their highest potential25.

Questions to Ponder 1) What should employers do with regard to sponsoring employees pursuing a graduate degree? What provisions should apply if an employee leaves immediately following completing that degree? 2) Why do so many companies take the position that personal improvement is an individual employee’s personal responsibility? 3) Do you believe that organizations should be committed to helping employees to become the best possible version of themselves? Why or why not?

An Ethical Conundrum?– Case Study – by Dr. Sarah J. Smith Jerry worked for an organization that offered a generous tuition reimbursement plan. For the first years of his career, Jerry did not take advantage of this benefit. At one point, Jerry realized that by not utilizing this employee benefit, he was losing out on an opportunity that not all organizations offer to their employees. In essence, there was an opportunity cost of choosing not to return to school for an advanced degree. He went to staff development to ask about details of tuition reimbursement. This organization partnered with a university to offer an MBA program partially on site. Jerry enrolled and began his journey to a master’s degree. Employees could attend their university or college of choice, however, the onsite option supported career development via convenience and time savings. Requests for tuition reimbursement had to be approved for programs that were or could be job-related. However, the versatility of the MBA applied to most leaders and potential leaders in the company. Training,

23

Collins, J., (2001) op. cit. See Pfeffer, J., (1998) op. cit. 25 See Covey, S. R., (2004) op. cit. 24



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designed to support current job duties, was shorter in duration (sometimes a half-hour session) and training sessions were held in-house. Internal trainers qualified as presenters if they were subject matter experts, but at times an external vendor was needed. When employees attended training, the staff development department provided movie-sized candy bars. One external trainer was surprised when the very first question of the session was "Is the candy closet open?" Although Jerry intended to stay with the organization until his retirement, recent ethical breaches and a looming acquisition had tested his resolve. Because Jerry was quite effective at his job another company recruited him. After personal reflection, Jerry decided this opportunity was one he should accept. He did not want to lose his MBA tuition opportunity and the new company had a policy for employees to wait one year after their start of employment to be eligible for tuition reimbursement. Jerry did not want to discontinue the MBA program. He decided to ask his hiring manager if an exception could be made to the company policy as a condition of his employment. Jerry was happy he asked, as the corporate leaders granted the exception. 1. Jerry had listened to negative feedback from others about the tuition reimbursement program. Comments such as “I can’t believe the company pays for this - these people are just going to increase their skills and then leave for greener pastures.” Do you agree with the skeptical coworkers? Was Jerry unethical when accepting tuition reimbursement and then left his company for a new opportunity? 2. Jerry’s new company offered an additional tuition reimbursement opportunity. Company leaders believed in developing a new generation of workers and dedicated $40,000 in tuition reimbursement per employee per dependent for their child’s higher education. Although never a requirement of the dependent tuition reimbursement program, several of the students interned at the company over summer and on break. The company held a celebratory reception for employees’ dependents in the program. A slide show featured their picture and introduced their major and career goals. What could this program do for employee morale, retention, and loyalty?

The Learning Center – Case Study – by Dr. Sarah J. Smith The corporate Learning and Development department of a Fortune 500 company was thrilled. The corporation was recognized by Forbes’ Best Companies to Work For annual recognition list for another year. Jane, the SHRP who led Learning and Development wanted to see what the Top 10 were doing that their organization could implement or


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improve upon. She had the Learning and Development team review what was noted for each of the Top Ten. At number 9, Acuity, workers felt a great sense of responsibility and purpose. Number 8, Salesforce, credits the CEO because he leads by example and truly believes making the world a better place. Ultimate Software employees, at number 7, credits supportive management. Employees at Edward Jones (#5) receive more than 100 hours of training per year. According to the ATD State of the Industry report, across organizations, employees averaged only 33.5 hours of training. Colleagues at The Boston Consulting Group (#3) can qualify for think sabbaticals which are designed to foster innovation and creativity. Google, who has held the #1 place on the list for six years in the row, offered unique perspectives on learning and development. "Googler to Googler" features employees as trainers (rather than HRPs who are referred to as People Operations). Google discovered with employees as trainers, people attended sessions because they wanted to learn from others, versus listening to what an HRP had to say. Creative Skills for Innovation and other career building classes taught by Googlers accounted for 55% of the training offered at Google. With employees as trainers, Google believes promoting a culture of learning comes from within. According to the Wall Street Journal, GoogleEDU is a learning and leadership program that has upper management support. The Google program is credited for creating loyalty and developing a ‘more Googley environment’. To create classes, Google relies on company statistics and employee input. Classes are developed for various branches within Google and for different levels of an employee’s career. Naturally, Google wants its employees to stay. However if employees do leave Google, leadership wants them to leave with a good feeling about the company. The review of these Top 10 companies provided the Jane and her staff with several thoughts regarding Learning and Development. The team could not wait to get started! Their plan was to formulate a plan for the best ideas that could provide competitive advantage through their employees’ enhanced knowledge base and seek upper management approval for implementation. 1. How could enhancing Learning and Development boost the company’s reputation? Would this be evidence that the company was an advocate for employees with a desire to empower them? 2. Establishing the link between employee training and development to organizational development can be elusive. How could the use of company statistics illustrate the positive outcomes of training and development as a supportive initiative for organizational development? How could employee input be captured to measure the organizational culture pre- and post- training and development activities?



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3. Leadership support of training and development is a common characteristic of effective training and development programs. How can corporate leadership illustrate their support to employees? Offer one example of successful leadership support of training and development from real life or via review of a company who is successful in this area.

REFERENCES Adkins, A., (2016). Employee Engagement in the U.S. Stagnant in 2015.” Gallup found online on October 1, 2017 at http://www.gallup.com/poll/188144/employeeengagement-stagnant-201.aspx. Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Beheshtifar, M., & Nazarian, R. (2013). Role of Occupational Stress in Organizations. Interdisciplinary Journal of Contemporary Research in Business. Vol. 4, pp. 648657. Caldwell, C., (2012). Moral Leadership: A Transformative Model for Tomorrow’s Leaders. New York: Business Expert Press. Caldwell, C., Hayes, L., Karri, R., and Bernal, P., (2008). “Ethical Stewardship: The Role of Leadership Behavior and Perceived Trustworthiness.” Journal of Business Ethics, Vol. 78, Iss. 1/2, pp. 153-164. Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Church, A. H., and Burke, W. W., (2017). “Four Trends Shaping the Future of Organizations and Organization Development.” OD Practitioner, Vol. 49, Iss. 3, pp. 14-22. Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. DePree, M., (2004). Leadership is an Art. New York: Crown Publishing Hastings, R. (2009). “The ‘What’ and ‘Why’ of Employee Engagement.” Found online on October 1, 2017 at http://www.shrm.org/resourceand tools/hr-topics/employeerelations/pages/whatandwhy.aspx. Kluczny, S., (2017). “9 Characteristics of Top Employee Training Programs.” Biz Library Blog found online on October 1, 2017 at https://www.bizlibrary.com/ article/employee-training-9-characteristics-of-top-programs/. Mello, J. A., (2014) Strategic Human Resource Management (4th ed.). Boston, MA: Cengage Learning Noe, R. A., (2016). Employee Training & Development. New York: McGraw-Hill.


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Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. Society of Human Resource Management, (2015). Engaging in Succession Planning. Washington, D. C: Society of Human Resource Management and found online on October 18, 2017 at https://www.shrm.org/resourcesandtools/tools-and-samples/ toolkits/pages/engaginginsuccessionplanning.aspx Waggoner, J. (2013). Do happy workers mean higher profit? USA Today. Retrieved from http://www.usatoday.com/story/money/personalfinance/2013/02/19/treatingemployeeswell-stock-price/1839887/.




Chapter 11

HIGH PERFORMANCE ORGANIZATIONS AND HUMAN RESOURCE MANAGEMENT Cam Caldwell1 and Verl Anderson2 1

Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman 2 Dixie State University, St. George, Utah, US

Because the strategic goal of virtually every organization and organization leader is to perform more efficiently and effectively in pursuing their organization’s mission, it is logically consistent that Human Resource Professionals (HRPs) and Human Resource Management (HRM) departments and staff will similarly be committed to helping their organizations and employees to be high performers1. Research about high performance work systems (HPWS) and high trust organizations (HTO) has confirmed that organizations with aligned HRM systems which adopt practices, programs, and policies that engage and empower employees are more profitable than comparable organizations that lack such alignment in their HRM systems2. The purpose of this chapter is to describe the key characteristics of HPWS and HTO organizations and to explain why aligned HRM systems are so important to the competitive advantage and long-term success of modern organizations. We begin the chapter by citing the research and academic literature which documents the

1

The logic of effective Strategic Human Resource Management (SHRM) has been articulated by many scholars, including Ulrich, D, Allen, J., Brockbank, W, Younger, J., & Nyman, M. (2009). HR Transformation: Building Human Resources from the Outside In. New York: The RBL Institute. 2 This research is documented in many scholarly publications, including Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: JosseyBass.


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characteristics and profitability of such systems – clarifying the nature of such systems as HRM-related and behaviorally important in creating relationships with employees. We then examine the underlying reasons why aligned HRM systems based upon creating high trust are so effective as a governance model in the 21st century. We conclude the chapter with ten recommendations for HRPs in creating and implementing HPWS and HTO cultures in their organizations.

Figure 1.

HIGH PERFORMANCE ORGANIZATIONS Organizations that are successful meld both economic and financial imperatives with organizational and values-based priorities3. An HPWS involves patterns of organizational work structures, systems, and practices that align HRM policies and programs4. The underlying philosophy of HPWS is that people make up the critical competitive asset of an organization and that aligned HRM practices “enhance employee skills, knowledge, motivation, and flexibility5.” HPWS organizations typically incorporate seven similar HRM practices.

3

This integration of values and financial objectives is the clear message of Beer, M., (2009) Ibid. and Paine, L. S., (2003). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. 4 See Van Buren, M. E. & Werner, J. M., (1996). “High Performance Work Systems.” Business and Economic Review, Vol. 43, Iss. 1, pp. 15-23. 5 Ibid., p. 16.


High Performance Organizations and Human Resource Management

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Figure 2.

1. Ensuring Employee Security – By demonstrating a commitment to employee security, companies like Lincoln Electric guarantee employment to workers after they complete three years on the job. Ensuring job security has been found to increase employee commitment and performance. 2. Selective Hiring – By adopting hiring practices that carefully evaluate new hires based upon critical job skills and attributes, companies like Enterprise RentACar pay close attention to bringing people into their organizations that fit the requirements of key job tasks and that match organizational culture. 3. Decentralized Decision-Making. By delegating decision-making and empowering employees, organizations build employee trust and commitment and enable employees to deliver better services to customers. Ritz-Carlton empowers its employees at all levels and is a great example of this practice. 4. Results-Based Compensation. Companies like NuCor Steel create compensation systems that reward employees working in work teams, based upon the value added and profitability created by their work units. This practice builds both accountability and team esprit.


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Cam Caldwell and Verl Anderson 5. Training by Commitment. Training by commitment includes teaching employees how to take responsibility for outcomes, how to resolve work problems, and when and how to initiate changes in work systems to improve efficiency and productivity. The Men’s Wearhouse exemplifies this approach to employee training and development in creating a collaborative and supportive work culture. 6. Reduced Status Barriers. Kingston Technology typifies the reduction of status barriers amongst its employees. Reducing status barriers and universalizing rewards throughout an organization send the message that all employees are valued. 7. Sharing Key Information. Companies like Springfield ReManufacturing share information with employees throughout their organization and promote an “open book management” philosophy that demonstrates high trust in employees and the recognition that sharing information improves employee effectiveness.6

Figure 3.

6

These seven HPWS factors were identified in Caldwell, C., and Floyd, L. A., 2014. “High Performance Work Systems: Building Commitment to Increase Profitability.” Graziadio Business Review, Vol. 17, Iss. 3, found online at http://gbr.pepperdine.edu/2014/12/high-performance-work-systems/ and in Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business School Press.



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It is the integration and synergy of an HPWS organization that aligns a culture and that makes it effective7. It is this HPWS alignment that enables a firm to achieve its potential “as an inimitable resource supporting the effective implementation of corporate strategy and the attainment of operational goals8.”

HIGH TRUST ORGANIZATIONS HTOs, also called High Commitment Organizations, are known for their high involvement of employees, the decentralization of decisions and employee empowerment9. HTOs are created by leaders who earn the confidence of followers that their organization will honor express and implied duties to treat employees both ethically and humanely10. In response to how they are treated under such systems, followers respond with a commitment to the organization’s goals in various degrees. Diagram 1 reflects follower behaviors that vary from reluctantly indifferent compliance to stewardship ownership of an organization’s goals and is presented as a continuum, based upon the level of trust of followers11. Each of the zones in this continuum reflects the willingness of followers to cooperate, comply with, or trust a leader12. Chester Barnard had identified the Zone of Indifference as the broad range of leader directives which employees were willing to accept without reservation or judgment as part of the employees’ jobs13. Herbert Simon suggested a related Zone of Acceptance in which employees were influenced by leaders and willing to comply with leader requests with unquestioned acceptance14. Caldwell and Hansen proposed a similar continuum, suggesting that acceptance required trust and the willing relinquishment of personal control -- identifying a Zone of Trust which reflected a higher

7

Van Buren, M. E. & Werner, J. M., (1996) op. cit. See Becker, B. E. and Huselid, M. A., (1998). “High Performance Work Systems”. Research in Personnel and Human Resource Management , Vol. 16, pp. 53-101. 9 This idea is the key message of Boxall, P. and Macky, K., (2009). “Research and Theory on High Performance Work Systems: Progressing the High-Involvement Stream.” Human Resource Management Journal, Vol. 19, Iss. 1, pp. 3-23. 10 This trust is articulated clearly in Hurley, R. F., (2011). The Decision to Trust: How Leaders Create High-Trust Organizations. San Francisco, CA: Jossey-Bass, p. 25. 11 This continuum was developed in Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270285 and reflects research about trust and follower commitment over the past eighty years. 12 The nature of trust as a behavior, rather than simply an attitude or intention is clarified in Gullett, J., CanutoCarranco, M., Brister, M., Turner, S., and Caldwell, C. (2009). “The Buyer-Supplier Relationship: An Integrative Model of Ethics and Trust.” Journal of Business Ethics, Vol. 90, Supp. 3, pp. 329-341. 13 Chester Barnard’s work on cooperation and human behavior identifies this zone in Barnard, C. I., (1938). The Functions of the Executive. Boston, MA: Harvard College, pp. 167-170 14 Nobel Prize winner, Herbert A. Simon, acknowledged his reliance upon Barnard’s work and relabeled the Zone of Indifference in his book, Simon, H. A., (1997). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations (4th ed.). New York: Free Press. 8


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degree of individual commitment15. Hayes and colleagues built upon this same idea and defined both a Zone of Commitment and a Zone of Stewardship16 – reflecting increasing levels of employee commitment to the extent that employees acted like full “owners and partners17.”

Figure 4.

The continuum reflects the degree to which individual employees trust and fully embrace the goals of an organization and their commitment to its mission in embracing and pursuing its objectives. Research suggests that this commitment or level of employee trust is responsible for 60% of the criteria in which HTOs earned “four times the return of the broader market” over a seven-year period18. Distrust leads to destructive organization behaviors and creates “we versus them” relationships that undermine cooperation19. Distrust generates the withholding of personal commitment and cooperation out of a desire to avoid being hurt or taken advantage of by another party20. A growing body of research confirms that trust and elements of justice

See Caldwell, C., and Hansen, M., (2010). “Trustworthiness, Governance, and Wealth Creation.” Journal of Business Ethics, Vol. 97, Iss. 2, pp. 173-188. 16 These two zones were identified in Hayes, L. et al., (2015) op. cit. indicated above. 17 This term comes from Block, P., (2013). Stewardship: Choosing Service over Self-Interest. San Francisco, CA: Berrett-Koehler. 18 This powerful insight is found on page 38 of Shockley-Zalabak, P. S. and Morreale, S. P. (2011).”Building HighTrust Organizations.” Leader to Leader, Vol. 2011, Iss. 60, pp. 39-45. The authors are citing a 2005 Russell Investment Group Annual Report. 19 Ibid. 20 Caldwell, C. & Hansen, M. (2010) op. cit. 15



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are closely related, that both profoundly impact employee commitment, and that trust and fair treatment are essential elements in creating high involvement organizations21. The alignment of HRM practices is a critical element that sends a consistent message and that reinforces a common set of organizational values that reflect an organization’s commitment to treating employees as valued partners22.

Figure 5.

Creating successful HTOs requires a commitment to five predictors, or key elements essential to establishing a culture based upon trust. 1. Competence – Trustworthiness in organizations is fully dependent upon the competence, knowledge, and demonstrated ability of leaders, the organization, and coworkers23. Technical and interpersonal competencies are absolutely necessary for creating a culture of trust and are essential for competing successfully in the modern economy24. Ironically, however, technological expertise is necessary yet insufficient to achieve organizational success and must be coupled with interpersonal effectiveness, vision, and the capacity to integrate organizational resources in achieving a worthy purpose25. 21

See, for example, the work of Searle, R., Hartog, D. N. D., Weibel, A., Gillespie, N., Six, F., Hatzakis, T., & Skinner, D., (2011) “Trust in the Employer: The Role of High-Involvement Work Practices and Procedural Justice in European Organizations.” International Journal of Human Resource Management, Vol. 22, Iss. 5, pp. 1069-1092. 22 See Beer, M. (2009) op. cit. 23 Shockley-Zalabak, P. S. and Morreale, S. P. (2011), op. cit. 24 Elements of trustworthiness are addressed in many studies, such as Caldwell, C., and Ndalamba, K., (In Press). “Trust and Being ‘Worthy’ – The Keys to Creating Wealth.” Paper accepted for publication in the Journal of Management Development. 25 Christensen, C. M.,


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Cam Caldwell and Verl Anderson 2. Openness and Honesty – Extensive leadership research confirms the importance of honesty and integrity26. Honoring commitments, telling the truth, and sharing important information are essential to creating a high-trust culture27. Integrity is also well established as a key antecedent to building trust28. Treating others with openness and honesty demonstrates a leader’s willingness to trust others as well and breeds two-way cooperation29. Keeping confidences and making certain that important information is shared and critical factors to openness and honesty30. 3. Concern for Employees and Stakeholders – Genuine concern for others is perceived as authentic and necessary for building high-trust relationships31. Leaders who listen to and act upon employee and stakeholder concerns demonstrate that they are worthy of high trust32. Ethical stewards demonstrate a commitment to the welfare, growth, and wholeness of stakeholders and ethical stewardship has been identified as both a key element of leadership and perceived trustworthiness33. Organizations that demonstrate this commitment to their stakeholders and employees build trust, increase productivity, and are more innovative than other organizations34. 4. Reliability – Reliability is acknowledged as a key element of both trust and quality35. The ability to be consistent and to perform according to established standards is the fundamental characteristic of reliability and predictability that builds trust36. Keeping commitments and explaining the rationale for decisions enable leaders to build confidence in their trustworthiness37. The correlation between organizational culture, high trust, and firm performance is a key element of HPWS and acknowledged to be dependent upon aligned HRM practices38.

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Kouzes, J. M. and Posner, B. Z., (2011). Credibility: How Leaders Gain and Lose It, Why People Demand It. San Francisco, CA: Jossey-Bass. 27 The importance of honesty and openness in building trust are identified repeatedly in Beer, M., (2009) op. cit. and Pfeffer, J., (1998) op. cit. 28 The most-cited paper about Mayer, R. C., Davis, J. H., & Schoorman., (1995). “An Integrative Model of Organizational Trust.” Academy of Management Review, Vol. 20, Iss. 3, pp. 709-734. 29 Kouzes, J. M. & Posner, B. Z., (2011) op. cit. 30 Shockley-Zalabak, P. S. and Morreale, S. P. (2011), op. cit. 31 This relationship is well developed in the research about authentic leadership and is found in Gardner, W. L., Cogliser, C. C., Davis, K. M., & Dickens, M. P.., (2011). “Authentic Leadership” A Review of the Literature and Research Agenda.” The Leadership Quarterly, Vol. 22, Iss. 6, pp. 1120-1145. 32 Shockley-Zalabak, P. S. and Morreale, S. P. (2011), op. cit. 33 For a thorough description of these relationships related to ethical stewardship, see Caldwell, C., Hayes, L., and Long, D., 2010. “Leadership, Trustworthiness, and Ethical Stewardship.” Journal of Business Ethics, Vol. 96, Iss. 4, pp. 497-512. 34 See Beer, M., (2009) op. cit. 35 See Rita, S. & Ganesan, V., (2012). Quality Enhancement in Prime Service Sectors: SERVQUAL-Based Approaches. Saarbrucken, Germany: Lambert Academic Publishing. 36 This point is emphasized in Mayer, R. C., Davis, J. H., & Schoorman., (1995) op. cit. 37 Shockley-Zalabak, P. S. and Morreale, S. P. (2011), op. cit. 38 These relationships are identified in Tzafrir, S. S., (2007). “The Relationship between Trust, HRM Practices, and Firm Performance.” The International Journal of Human Resource Management, Vol. 16, Iss. 9, pp. 16001622.



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5. Identification – Organizational identity is a function of that which is central, distinctive, and enduring in organizations39. Employee identification comes when employees believe that their values are not only reflected in what the organization says but in how it performs40. Organizational climate and identification are highly correlated with ethical decision-making and employee trust41. When organizational identification is high, employees are able to more effectively relate to their organizations’ mission, purpose, values, and priorities – and that connection inspires increased effort and personal commitment42. When employees relate to these five driving forces, not only does their trust increase in organizational leaders but their personal identities also are enhanced as they identify with their organizations’ mission and match it with their own values and identities43.

WHY HIGH PERFORMANCE/HIGH TRUST MAKES SENSE As a model of organizational governance, HPWS and HTO systems help organizations to address five major issues that characterize the modern organization and the world we know in the 21st century. Those issues have a profound influence on the global economy, the environmental and political factors that affect organizations of all types, and the individual needs of a world population that has become increasingly competitive – yet less capable of addressing these five issues. 1. Resources are Increasingly Scarce – In a world wherein organizations are struggling to do more with less and where concerns are being increasingly placed on the conservation of natural resources44, aligned and efficient organizations have a natural competitive advantage45. 2. World Competition Has Exponentially Increased – The speed of change has increased, disruptive innovation has become commonplace, and global competition has become the status quo for virtually all types of organizations –

39

The key elements of organizational identity are defined in the classic article, Albert, S. & Whetten, D. A. (1985). “Organizational Identity.” Research in Organizational Behavior, Vol. 7, pp. 263-296. 40 Shockley-Zalabak, P. S. and Morreale, S. P. (2011), op. cit. 41 This relationship is found in Gils, S., Hogg, M., Quaquebeke, N., & Knippenberg, D., (2017). “When Organziational Identification Elicits Moral Decision-Making: A Matter of the Right Climate.” Journal of Business Ethics, Vol. 142, Iss. 1, pp. 155-168. 42 Ibid. 43 This matching of one’s actions with personal self-image, or one’s comparator, is explained in Burke, P. J. & Stets, J. E., (2009). Identity Theory. Oxford, UK: Oxford University Press. 44 This decline in available resources is addressed by many experts, including Pullitzer Prize Winner, Friedman, T. L., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution – And How it Can Renew America, Release 2.0. New York: Picador Press. 45 Beer, M., (2009) op. cit.


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Cam Caldwell and Verl Anderson including many organizations that have historically been considered invulnerable46. 3. Governments Have Failed to Respond Effectively – Despite the fact that many of the problems of society have been well-documented for the past thirty years, governments throughout the world have been largely ineffective in dealing with the economic, political, and social problems that face a world that seems to be increasingly conflicted yet damnably ineffective in forging meaningful long-term solutions47. 4. Self-Interest Undermines Confidence – The problems of the world of today and tomorrow are rarely acknowledged by a modern society that is myopically focused and lacking in moral intensity – or the inability to perceive the problems of a world beyond one’s own horizon48. 5. Unrealistic Expenditures Reflect in Responsibility. We live in a society wherein debt is deferred and individuals in many communities live far beyond their means49. The problem transcends the $19.9 trillion debt owed by the United States50, although that approach to borrowing that some economists consider to be impossible to pay off, serves as a symbol of financial self-deception and irresponsible economic thinking51.

Organizations that adopt a HPWS or HTO model of governance have the opportunity to unlock the potential of their employees and to succeed in a world that must survive, despite these five difficult issues.

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The evolving and rapid nature of change and its profound competitive impacts have been cited by scholars like Christensen, C. M., (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business Review Press. 47 The inability of modern leaders to address today’s problems is well documented by Friedman, T. L. (2009) op. cit. and by Reich, R. B., (2013). Aftershock: The Next Economy and America’s Future Updated. New York: Random House. 48 This failure to see the long-term nature of problems or to recognize their potential global impact was articulated by Jones, T. M., (1991). “Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model.” Academy of Management Review, Vol. 16, Iss. 2, pp. 366-395. 49 This reality is documented in Friedman, T. L., (2009) op. cit. 50 This debt was documented by the Concord Coalition, an independent US research firm and found online on August 28, 2017 at https://www.concordcoalition.org/? gclid=Cj0KCQjw_o7NBRDgARIsAKvAgt3IgdGkWXMTV_la5AbiJ0EXnw26JWstxdBtARMAHXWmA2Z1F5ttloaAoJoEALw_wcB#id-13829. The Concord Coalition is a political advocacy group in the United States, formed in 1992. A bipartisan organization, it was founded by U.S. Senator Warren Rudman, former Secretary of Commerce Peter George Peterson, and U.S. Senator Paul Tsongas. 51 Among the many who have expressed concern about the world and US financial picture, is Reich, R. B., (2012). Beyond Outrage: Expanded Edition: What Has Gone Wrong with Our Economy and Our Democracy and How to Fix It. New York: Random House. Reich is a former Rhodes Scholar and currently works as the Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century



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RECOMMENDATIONS FOR IMPLEMENTING BETTER ORGANIZATIONS The challenge for today’s organizations is to create organizational cultures that align their values to build employee commitment, increase trust and cooperative behavior, and empower employees to become the best possible versions of themselves52. Although there is no “instant pudding” in creating HRM systems that support HPWS and HTO systems, the following are ten recommended steps for HRPs to consider in implementing such systems53. 1. Benchmark Current Performance – Documenting current performance establishes a benchmark for identifying opportunities for improvement and provides a comparison for employees and managers to use to identify areas of focus54. 2. Document the Challenges – Identify critical problem areas that are barriers to achieving desired organizational outcomes. Distinguish between symptoms and root causes55. 3. Articulate the Benefits – Projecting the expected benefits and outcomes provides an opportunity for focusing participant efforts and helps to identify realistic goals. 4. Obtain Top Management Ownership – The HRM function serves the Top Management Team and they must own any change process56. 5. Develop an Action Research Approach – The Action Research Model for problem formation, data collection, and analysis is a logical and practical model for implementing change that is high-involvement and empowering for employees57. 6. Partner with Employees – Involving employees as key partners in the assessment and change process utilizes their input and generates their ownership58. 7. Develop an Action Plan – Involve the Top Management Team in framing an action plan to identify changes needed to achieve desired goals. The Top

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The challenge facing organizations in achieving organizational and individual greatness is articulated in Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. 53 These ten steps mesh with the improvement process articulated by Block, P., (2011). Flawless Consulting: A Guide to Getting Your Expertise Used. San Francisco, CA: Pfeiffer. 54 Pfeffer, J., (1998) op. cit. 55 Distinguishing between symptoms and causes is a key skill identified by Covey, S. R., (2013). 7 Habits of Highly Effective People: Powerful Lessons in Personal Change. New York: Simon & Schuster. 56 This important point is fundamental to the HRM role but is also addressed in Sholtes, P., Joiner, B. L., & Streibel, B. J., (2003). The TEAM Handbook (3rd ed.). Madison, WI: Oriel, Inc. 57 Block, P. (2011) op. cit. 58 in Sholtes, P., Joiner, B. L., & Streibel, B. J., (2003) op. cit.


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Cam Caldwell and Verl Anderson Management Team’s ownership is essential, consistent with their role, and necessary for any successful change process to occur59. 8. Formalize Management Support – Communicate the implementation plan throughout the organization and the Top Management Team’s endorsement of the plan60. 9. Implement Aligned Changes – HPWS and HTO systems that are implemented should be implemented as an aligned system, as opposed to being implemented piece-meal61. 10. Monitor the System – Monitoring and following up on implemented changes and comparing results with initial benchmarks enables an organization to constantly learn and improve62.

There are, of course, no guarantees that implementing HPWS and HTO HRM systems will ensure that organizations will survive in today’s competitive global economy. Notwithstanding that reality, a growing body of evidence confirms that aligned and complementary HTO and HPWS practices improve productivity, customer service, and profitability for organizations of all types63.

Questions to Ponder 1. What do you think would be the primary difficulties in convincing a Top Management Team to consider a HPWS or HTO system? 2. What content should an HRP provide a Top Management Team in encouraging them to consider implementing an HPWS program? 3. What implicit values are involved in creating an HTO or HPWS system?

Will We Be Here Tomorrow? -- Case Study -- By Dr. Sarah J. Smith In an attempt at transparency, employees of a local manufacturer were briefed by corporate leaders: the plant was up for sale. Although corporate profits had declined, plant workers did not imagine the situation would lead to this! Corporate had already 59

Ibid. Ibid. 61 The importance of complementary and aligned HRM practices is documented in Foss, N. J, Pedersen, T., Forsgaaard, M. R., & Stea, D., (2015). “Why Complementary HRM Practices Impact Performance: The Case of Rewards, Job Design, and Work Climate in a Knowledge-Sharing Context.” Human Resource Management, Vol. 54, Iss. 6, pp 955-976. 62 Block, P. (2011) op. cit. 63 Beer, M., (2009) op. cit. 60



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closed three unprofitable plants. Employees were under the impression that their location was profitable and that they were holding their own despite tumultuous times. The employees thought corporate simply wanted to divest their particular product line as it no longer fit with the corporate mission. When potential buyers began to tour the facility, workers were not alarmed. The founding owner of this location had retired and sold the plant to the current corporation. During that transition, plant employees remained unaffected. The plant HRP and corporate HRM staff gathered to evaluate what had happened and to formulate potential solutions to present to corporate leaders. The HR team did not want to go through another plant closure. Results-based compensation had become nonexistent. Lack of financial resources had actually led to zero raises over the past three years. Employees who understood cost of living allowances (COLA) and inflation, as measured by the consumer price index (CPI), realized the result of zero raises was actually an annual pay cut of 2%. The zero raise decision affected everyone at the plant. Plant supervisors were proud of their hiring history. They were successful at selective hiring, with only one unsuccessful hire in the past five years. The work culture was collaborative and supportive. Plant employees shared, used effective communication, and were comfortable with each other. Status barriers did not exist. The only person at the plant who was privy to detailed financial information was the Brian, the plant manager. Month by month he watched profits plummet. The magnitude of this negative trend was significant. Brian was instructed by corporate to keep this information to himself. The plant HRP did not know the particulars of the financial situation. She had witnessed the three previous closures and naturally was concerned. During recent weeks Brian had been recruited by a large and successful company client. He was very impressed with this organization when he personally conducted client product training at the client’s job site. Although Brian thoroughly enjoyed being plant and the people with whom he worked, he had a daughter in college and bills to pay. If the plant was sold, there was no guarantee of his own job security. So . . . Brian decided to leave and take the new job offer. The day before his last day Brian personally funded an employee pizza party for first and second shift. He treated third shift to breakfast. Brian thanked each employee for his or her contributions to the plant and communicated how he thoroughly enjoyed working with them. When Brian put in his notice, corporate management directed him not to share financial information at the plant until instructed to do so. Employees did not have much time to internalize the plant manager's departure decision. One week later Brian started his new career with the client company who recruited him. He hoped he had made the right decision.


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Cam Caldwell and Verl Anderson 1. Did centralized decision-making optimize the situation for this facility or compromise its future? Specifically, what were some of the results of this corporate practice? 2. In High Performance Work Systems (HPWS), HRPs typically incorporate seven common practices. Which of the seven seemed to be compromised in this case? Based on information in this case, what evidence supports your conclusions? 3. Despite a potentially dismal situation, plant employees succeeded at some of the seven common practices of HPWS. Name two of the seven practices that remained successful and explain what information from the case supports your conclusions.

Success, Vision, and Dedication to Growth = Trust -- Case Study -- By Dr. Sarah J. Smith An organization with 2,000 employees announced a plan to hire additional staff. Corporate shared with local media that over the past 10 years, the organization had invested $100 million dollars in this facility. The current public announcement reviewed this information and added that currently there are 200 open positions available, with more to be added during the coming year. One of the reasons for so many open positions was an aging population and the need to replace retirees with highly skilled talent. The other primary reason was growth in the demand for its products in the global market. Jobs were designed for creative thinkers and doers who desired to not only want to design their own future through ample promotion possibilities but also to make a positive difference for society. One large manufacturer across town, a household name in most every kitchen, also recently a plant closure which made available 223 experienced and talented workers. Recruiters from the expanding firm hoped to capture some of that talent. Because of its proven track record, vision for future growth, and dedication not only to the employees but also the community, the expanding company is regarded as a high trust organization (HTO). Building trust begins even before an employee is on the payroll. During the interview stage, candidates learned about significant opportunities for career growth. Interested candidates also learned that an ample bonus structure was in place. The company had performed so well during the previous three years that the performance bonus was paid at 150% of its forecasted projection. 1. HPWS organizations share seven common practices. Many were illustrated in this case. Choose three, and provide evidence which supports each practice. 2. HTOs are known for high involvement of their employees. Would you consider this organization as a high involvement workplace? What practices from the case support your conclusion?



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3. What are the three most important qualities of an organization for which you would like to work?

REFERENCES Albert, S. & Whetten, D. A. (1985). “Organizational Identity.” Research in Organizational Behavior, Vol. 7, pp. 263-296. Barnard, C. I., (1938). The Functions of the Executive. Boston, MA: Harvard College, pp. 167-170. Becker, B. E. and Huselid, M. A., (1998). “High Performance Work Systems”. Research in Personnel and Human Resource Management, Vol. 16, pp. 53-101. Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Block, P., (2011). Flawless Consulting: A Guide to Getting Your Expertise Used. San Francisco, CA: Pfeiffer. Block, P., (2013). Stewardship: Choosing Service over Self-Interest. San Francisco, CA: Berrett-Koehler. Boxall, P. and Macky, K., (2009). “Research and Theory on High Performance Work Systems: Progressing the High-Involvement Stream.” Human Resource Management Journal, Vol. 19, Iss. 1, pp. 3-23. Burke, P. J. & Stets, J. E., (2009). Identity Theory. Oxford, UK: Oxford University Press. Caldwell, C., and Floyd, L. A., 2014. “High Performance Work Systems: Building Commitment to Increase Profitability.” Graziadio Business Review, Vol. 17, Iss. 3, found online at http://gbr.pepperdine.edu/2014/12/high-performance-work-systems/ Caldwell, C., and Hansen, M., (2010). “Trustworthiness, Governance, and Wealth Creation.” Journal of Business Ethics, Vol. 97, Iss. 2, pp. 173-188. Caldwell, C., Hayes, L., and Long, D., 2010. “Leadership, Trustworthiness, and Ethical Stewardship.” Journal of Business Ethics, Vol. 96, Iss. 4, pp. 497-512. Caldwell, C., and Ndalamba, K., (In Press). “Trust and Being ‘Worthy’ – The Keys to Creating Wealth.” Paper accepted for publication in the Journal of Management Development Christensen, C. M., (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business Review Press. Concord Coalition, an independent US research firm and found online on August 28, 2017 at https://www.concordcoalition.org/?gclid=Cj0KCQjw_o7NBRDgARIsAK vAgt3Igd-GkWXMTV_la5AbiJ0EXnw26JWstxdBtARMAHXWmA2Z1F5ttloaAoJo EALw_wcB#id-13829. Covey, S. R., (2013). 7 Habits of Highly Effective People: Powerful Lessons in Personal Change. New York: Simon & Schuster.


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Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. Foss, N. J, Pedersen, T., Forsgaaard, M. R., & Stea, D., (2015). “Why Complementary HRM Practices Impact Performance: The Case of Rewards, Job Design, and Work Climate in a Knowledge-Sharing Context.” Human Resource Management, Vol. 54, Iss. 6, pp 955-976. Friedman, T. L. (2009) op. cit. and by Reich, R. B., (2013). Aftershock: The Next Economy and America’s Future Updated. New York: Random House. Friedman, T. L., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution – And How it Can Renew America, Release 2.0. New York: Picador Press. Gardner, W. L., Cogliser, C. C., Davis, K. M., & Dickens, M. P.., (2011). “Authentic Leadership” A Review of the Literature and Research Agenda.” The Leadership Quarterly, Vol. 22, Iss. 6, pp. 1120-1145. Gils, S., Hogg, M., Quaquebeke, N., & Knippenberg, D., (2017). “When Organziational Identification Elicits Moral Decision-Making: A Matter of the Right Climate.” Journal of Business Ethics, Vol. 142, Iss. 1, pp. 155-168. Gullett, J., Canuto-Carranco, M., Brister, M., Turner, S., and Caldwell, C. (2009). “The Buyer-Supplier Relationship: An Integrative Model of Ethics and Trust.” Journal of Business Ethics, Vol. 90, Supp. 3, pp. 329-341. Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270-285. Hurley, R. F., (2011). The Decision to Trust: How Leaders Create High-Trust Organizations. San Francisco, CA: Jossey-Bass. Jones, T. M., (1991). “Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model.” Academy of Management Review, Vol. 16, Iss. 2, pp. 366395. Kouzes, J. M. and Posner, B. Z., (2011). Credibility: How Leaders Gain and Lose It, Why People Demand It. San Francisco, CA: Jossey-Bass. Mayer, R. C., Davis, J. H., & Schoorman., (1995). “An Integrative Model of Organizational Trust.” Academy of Management Review, Vol. 20, Iss. 3, pp. 709-734. Paine, L. S., (2003). Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw-Hill. Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business School Press. Reich, R. B., (2012). Beyond Outrage: Expanded Edition: What Has Gone Wrong with Our Economy and Our Democracy and How to Fix It. New York: Random House. Rita, S. & Ganesan, V., (2012). Quality Enhancement in Prime Service Sectors: SERVQUAL-Based Approaches. Saarbrucken, Germany: Lambert Academic Publishing.



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Searle, R., Hartog, D. N. D., Weibel, A., Gillespie, N., Six, F., Hatzakis, T., & Skinner, D., (2011) “Trust in the Employer: The Role of High-Involvement Work Practices and Procedural Justice in European Organizations.” International Journal of Human Resource Management, Vol. 22, Iss. 5, pp. 1069-1092. Shockley-Zalabak, P. S. and Morreale, S. P. (2011).”Building High-Trust Organizations.” Leader to Leader, Vol. 2011, Iss. 60, pp. 39-45. Sholtes, P., Joiner, B. L., & Streibel, B. J., (2003). The TEAM Handbook (3rd ed.). Madison, WI: Oriel, Inc. Simon, H. A., (1997). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations (4th ed.). New York: Free Press. Tzafrir, S. S., (2007). “The Relationship between Trust, HRM Practices, and Firm Performance.” The International Journal of Human Resource Management, Vol. 16, Iss. 9, pp. 1600-1622. Ulrich, D, Allen, J., Brockbank, W, Younger, J., & Nyman, M. (2009). HR Transformation: Building Human Resources from the Outside In. New York: The RBL Institute. Van Buren, M. E. & Werner, J. M., (1996). “High Performance Work Systems.” Business and Economic Review, Vol. 43, Iss. 1, pp. 15-23.





Chapter 12

WELLNESS AND MANAGING RISK: THE STRATEGIC ROLE OF HUMAN RESOURCES Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

In honoring their multiple responsibilities to their organizations and their employees, Human Resource Professionals (HRPs) play a variety of behavioral and technical roles that address both macro- and micro-issues that affect both corporate success and individual welfare. Two of those somewhat related responsibilities deal with keeping their employees healthy and on the job – working productively for the company and its customers. According to a 2012 study by the Integrated Benefits Institution – an organization which represents major U.S. employers and business coalitions – U.S. workforce illness cost businesses $576 billion annually, and much of those costs are preventable1. The purpose of this chapter is to identify the role of HRPs in helping their employers to increase employee wellness and reduce accident risks which result in time off and worker compensation claims. The chapter begins by briefly describing the role and purpose of employee wellness programs and the impacts of wellness programs for employers and employees.

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Japsen, B., (2012). “U. S. Workforce Illness Costs $575 Billion Annually from Sick Days to Workers Compensation.”


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Figure 1.

After identifying eight factors essential for implementing successful wellness programs, the chapter then describes the Human Resource Management (HRM) role in risk management and employee safety.

UNDERSTANDING WELLNESS Wellness is far more than absence of disease, but encompasses a philosophy of life encompassing achieving physical, mental, and emotional good health. Honoring the obligation to help employees attain that good health is a part of the responsibility of HRM programs and is included in the role of HRPs2. Wellness programs encompass a broad variety of physical, mental, behavioral, and financial health and can extend beyond an employee to include his or her family3. Wellness programs began to be an important part of corporate Human Resource Management (HRM) systems in the 1980s and have increasingly been recognized as a benefit to both employees and their companies4.

Parks, K. M., and Steelman, L. A., (2008). “Organizational Wellness Programs: A Meta-Analysis.” Journal of Occupational Health Psychology, Vol. 13, Iss. 1, pp. 58-68. 3 See, for example, Burjek, A., (2017). “Weighing the Value of Workplace Wellness.” Workforce, Vol. 96, Iss. 2, pp. 30-48. 4 Ibid. 2


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Although many companies contract out their wellness program activities, other companies run these programs in-house to a large degree and work in partnership with providers5. As with any HRM program, employee wellness programs are established to serve the twin goals of benefiting employees and helping the company. Business magazines like Fortune have examined employee wellness programs from the perspective of reduced health care costs and lost time due to Workers Compensation claims and sickness as well as for their benefits in helping employees to live longer, healthier, and more productive lives6.

Figure 2.

Employee Wellness Programs (EWPs) include a wide variety of health-related programs to promote employee good health, improve productivity, and reduce the rising costs of health-related expenses7. EWPs have been found to not only improve morale, reduce the incidence of employee smoking, and reduce employee turnover but have also drastically reduced the use of sick leave, workers compensation claims, and health care premiums8. A review of sixty-two different studies about EWPs and their impacts found that “companies with wellness programs had an average reduction of 25 percent in costs related to sick leave, health plans, workers compensation, and disability insurance9.” 5

Ibid. See Fry, E., (2017). “Corporate Wellness Programs: Healthy . . . Or Hokey?” Fortune, March 15. Vol. 175, Iss. 4, pp. 99-100. 7 Otenyo, E. E., and Smith E. A., (2017). “An Overview of Employee Wellness Programs (EWPs) in Large U.S. Cities: Does Geography Matter?” Public Personnel Management, Vol 46, Iss. 1, pp. 3-24. 8 These results were reported in the Harvard Business Review article, Berry, L. L., Mirabito, A. M., and Baun, W. B., (2010). “What’s the Hard Return on Employee Wellness Program?” Harvard Business Review, Vol. 88, Iss. 12, pp. 104-112. 9 These outstanding results were reported in Baldwin, N., (2016). “Navigating Employee Wellness Programs.” Workforce, Vol. 95, Iss. 3, pp. 24-25. 6


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Figure 3.

EWPs are varied in their content from company to company and from region to region10. Although EWPs are typically focused on a company’s specific needs, its history of expenses, and its financial position, the variety of programs and services included in EWPs typically is made up of a mix of the following elements. 1) Employee Assistance Programs (EAPs) – EAPs are interventions provided by an employer to assist employees undergoing a personal or family problem that is affecting job performance11. These confidential interventions are provided on a contract basis by trained mental health counselors. A wide range of services from eating disorders to gambling addiction and from divorce or marital problems to elder care are included in these services12. EAP services are provided to help an employee to address a problem affecting work productivity or performance directly or indirectly. 2) Smoking Cessation – Employee smoking is an issue for both the health of the employee and the financial interests of the employer13. Although establishing a Smoke Free workplace is one option for improving employee health, many

10

Otenyo, E. E., and Smith E. A., (2017) op. cit. Cooper, C., Dewe, P., and O’Driscoll, M., (2003). “Employee Assistance Programs” in Quick J. and Tetrick, L. (Eds.). Handbook of Occupational Health Psychology. Washington, D. C.: American Psychological Association, pp. 289=304. 12 Pascarella, A., (2015). “The Importance of Employee Assistance Programs.” Lawley, October 15th found online on October 11, 2017 at http://www.lawleyinsurance.com/wellness/the-importance-of-employee-assistanceprograms-eap/. 13 See Burroughs, A., (2015). “Smoking Cessation.” Smart Business Cleveland, Vol. 26, Iss. 12, pp. 62-63. 11



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companies also offer employees financial incentives for quitting smoking and improving their personal wellness14. 3) Weight Loss – Weight loss incentives are also offered, often in the form of cash rewards or as a decrease in the employee portion of the premium for health insurance15. There is some evidence, however, that extrinsic incentives are not effective in motivating employee weight loss16. Unfortunately, adult Americans have significant problems with excessive weight and obesity with 35.0% of men and 40.4% of women classified as obese, according to a report from the National Center for Biotechnology Information17. Obesity is also related to other chronic health problems. 4) Fitness Programs –Fitness and overall good health are correlated and firms that have implemented EWPs with fitness programs have seen cost savings as a result18. Work-sponsored fitness programs benefit a society in which only one in five Americans gets the recommended amount of daily exercise19. Major employers have initiated fitness programs as part of overall health care gainsharing agreements with employees in acknowledgement of the correlation between fitness, better health, and reduced health care costs20. Although fitness programs may be job-related, as is the case with some professions (e.g., firefighters), they also promote good health and overall wellness – benefiting individuals and decreasing their companies’ health care costs, time lost from sick leave, and workers compensation expenses. 5) Health Screening – Health screening, including fitness analysis, is offered by employers as part of many EWPs. Those screenings can identify employees who are at risk for chronic health conditions, in addition to providing valuable information to employees about their general health and opportunities available to improve overall health21. More than 141 million Americans have one or more chronic health conditions22. Blood pressure testing and a Body Mass Index analysis can be helpful for every employee and the makeup of an employee

14

Ibid. Ruhl, L., (2016). “Wellness Programs Shift Focus Away from Weight Loss.” Central Penn Business Journal February 19th, Vol. 32, Iss. 9, pp. 14-15. 16 Ibid. 17 Flegal, K. M., Kruszon-Moran, D., Carroll, M. D., Fryar, C. D., and Ogden, C. L., (2016). “Trends in Obesity among Adults in the United States, 2005-2014.” Bethesda, MY: National Center for Biotechnology Information. 18 Greene, J., (2011). “Employee Wellness Proves Its Worth.” Trustee, Vol. 64, Iss. 2, pp. 8-12. 19 This statistics is identified by the Center for Disease Control in a May 2, 2013 Press Release: “One in Five Adults Meet Overall Physical Activity Guidelines.” Atlanta, GA: Center for Disease Control Prevention found online on October 11, 2017 at https://www.cdc.gov/media/releases/2013/p0502-physical-activity.html. 20 Levitt, C., (2015). “New York City’s Health Care Cost Savings Plan.” Benefits Magazine, Vol. 52, Iss. 9, pp. 1115. 21 Desai, P., (2017). “Getting MORE from Health Screenings.” Benefits Magazine, Vol. 54, Iss. 9, pp. 45-51. 22 Ibid. 15


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Cam Caldwell population can be taken into account to conduct other health screening tests appropriate for that population23. 6) Financial Health Counseling – Many organizations have acknowledged the importance of including financial health counseling in their EAPs24. A research study conducted by Washington University affirmed that financial health and physical health were directly correlated25. Financial counseling services demonstrate to employees their companies’ commitment to their economic health but also have a positive overall impact on employee wellbeing26. With the high incidence of individual debt that is prevalent in society, financial counseling and financial stress management have practical relevance for many of today’s employees27. 7) Catastrophic Event Counseling – Often, as part of the services provided by EAPs, firms offer employees with counseling and emotional support during times of personal emergency or after the occurrence of a catastrophic event. Such counseling service acknowledges the needs of employees as a group or as individuals and enables persons who have undergone a catastrophe to adjust to its traumatic consequences. Individual and family emotional support during times of special need can be of great benefit to struggling employees and demonstrate to the entire employee group that a company is committed to its employees’ welfare28.

EWPs are most effective when they are developed in partnership with employees and are focused on the unique characteristics of the organization and its mix of employees. Understanding employee needs and identifying opportunities to involve employees in programs that improve employee health and wellbeing and improve the financial position of the organization are major responsibilities of HRPs and can have substantial positive benefits for all parties.

Dugmore, D., (2011). “A Wider View of Wellness.” Employee Benefits, September, pp. 6-8. Butler, K., (2015). “Today’s Wellness: Sound Body, Mind & Finances.” Workforce, Vol. 4, Iss. 11, pp. 38-42. 25 Gubler, T., and Pierce, L., (2014). “Healthy, Wealthy, and Wise: Retirement Planning Predicts Employee Health Improvements.” Psychological Science, Vol. 24, Iss. 9, pp. 1822-1830. 26 Ibid. 27 This important point is made in “Promoting Financial Wellness in the Workplace.” Employee Benefit News, Vol. 27, Iss. 13, Special section, pp. 3-11, Oct. 2013. 28 This point is made in O’Brien, E., and Tepper, T., (2016). “The High Cost of Coping.” Money, December, Vol. 45, Iss. 11, pp. 72-81. 23 24



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Figure 4.

IMPLEMENTING WELLNESS PROGRAMS Based upon the experiences of many organizations, EWPs can be successfully implemented by both small and large businesses at a reasonable cost29. Although larger businesses typically have EWPs and EAPs, smaller companies also provide this service for their employees and the cost of the service can be as low as $6 per employee per month30. The following eight factors should be considered by HRPs as they consider implementing an EWP program as part of their organization’s HRM function. 1) Identify the unique needs that characterize the organization. Understanding the health status and demographics of employees that are unique to an organization enables HRPs to identify where to best invest organization resources to meet those needs.

29 30

Neely, M., (2012). “Wellness Strategies for Smaller Businesses.” Benefits Quarterly, Vol. 28, Iss. 3, pp. 16-19. See “Employee Assistance Programs.” Inc. BrandView found online on October 11, 2017 at https://www.inc.com/encyclopedia/employee-assistance-programs.html.


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Figure 5.

2) Research program elements that meet organization priorities. Although EWPs have been beneficial to many firms, HRPs need to fully understand the nuances of wellness efforts and be aware of the time required and the “hidden costs” of implementation31. 3) Obtain the Top Management Team commitment and support. Top Management Team buy-in and commitment is essential to the success of any HRM program32 and such programs should be focused on achieving an organization’s strategic goals33. For best success, Top Management should be active participants in EWP activities. 4) Promote wellness as part of the organization culture. Making wellness an important organizational value and incorporating it into the organization’s culture strengthens employee commitment and program success. 5) Incorporate elements that include employee families. EAPs should be available to employee family members inasmuch as family problems often affect employee productivity. 6) Establish metrics for assessing individual and organization wellness. Metrics should be based upon relevant historical data for the organization, as well as individual information for employees. Bray, E., (2011). “Moving Beyond the Buzz.” Employee Benefit News, Vol. 25, Iss. 7, pp. 15-16. For a discussion of the importance of Top Management Team support for new initiatives, see Scholtes, P. R., and Joiner, B. L., (2003). The TEAM Handbook (3rd ed.). Madison, WI: Oriel Inc. 33 This relationship is clearly enumerated in Caldwell, C., Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171182. 31 32



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7) Track individual and organizational goals set and goals achieved. Keeping accurate and up-to-date records reinforces the importance of the EWP and enables HRPs to document program results and individual accomplishments. 8) Celebrate individual and organizational successes. The evidence suggests that EWPs are typically successful in reducing the incidence of time off work and the costs of health insurance and Workers Compensation. Celebrating individual and organizational successes and publicizing that information strengthens the reputation of an EWP and builds organization commitment to program goals. These eight factors are elements of successful EWPs and enable organizations to build employee ownership of the program and commitment to its goals. As HRPs interact with employees about EWP activities, they also build interpersonal relationships and improve the reputation of the HRM program.

RISK MANAGEMENT AND THE HRM FUNCTION Risk involves uncertainty about an outcome which may result in a negative result, a loss, or a failure to achieve a desired goal. In HRM, risk management is associated with the goals and objectives of an organization involving its personnel and their achievements. HRPs seek to achieve the objectives of an organization’s Top Management Team In minimizing risk and achieving the priorities essential for successful organizational performance. With regard to HRM, risk management involves a multitude of potential issues34.  

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34

Loss of Key Employees. The inability to retain employees who play a major role in creating value can be a disastrous problem for organizations. Retention of Unwanted Workers. Employees who do not contribute value at least equivalent to their compensation need to be identified and remediated or assisted in finding a better fit for themselves and for their employer. Loss of Skilled Manpower to Competitors. Investing in employee development and enhancing an employee’s skills is counterproductive if that employee subsequently is lost to a competitor. Reputational Risk of Dishonest Staff. As was the case with the Arthur Andersen accounting firm with the ENRON debacle, a firm’s reputation can be destroyed by the actions or inactions of staff.

The risks identified in this list come from Shastri, P. P., and Shastri, J. P., (2014). “Risk Management in Human Resource Management Domain.” Journal of the Insurance Institute of India. Vol. 2, Iss. 2, pp. 124-128.


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Non-transparent Communication. Communication that fails to disclose key information undermines an organization’s credibility, erodes morale, and impedes progress. Migration of Employees to Other Countries. The loss of employees to other countries where better opportunities exist can be a significant issue for multinational companies. Inefficient and Incompetent Employees. Employees who perform ineffectively damage a company’s effectiveness and raise questions about the competence of its management. Regulatory and Legal Risks. The failure to comply with legal requirements – as well as the intent of those laws and regulations – not only can create financial vulnerability but erode confidence in an organization and its integrity. Infrastructure Inefficiencies. The inadequacy of a company’s infrastructures can be the root cause of perceived “employee performance” problems and need to be addressed in a timely manner. Technical Competence Shortcomings. In an increasingly competitive global marketplace, employees must be able to demonstrate the ability to consistently utilize technical resources in performing their jobs. Monitoring this competence and providing proper training are essential. Inappropriate Political Activities. Employee involvement in political activities can create image problems for organizations and must also be monitored to protect employees with differing political preferences. Ambiguity of Language. Unclear personnel policies and rules and/or inconsistent enforcement of ambiguous language can create problems of perceived inequity as well as potential legal action. Coordination of Response. The unique characteristics of individual departments or divisions of a company may affect how personnel policies are administered and coordinated. These differences should be understood, monitored, and addressed so that fairness and equitable treatment prevail.

HRPs must develop a refined understanding of the nuances of all of these potential HRM risks and demonstrate the ability to address and mitigate such risks. By understanding the complex implications of each of these risks, HRPs prepare themselves to assist their organizations to most effectively utilize employees to achieve strategic goals and assist employees to become successful partners in that process.



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EMPLOYEE SAFETY AND ACCIDENT PREVENTION Employee safety is a practical problem associated with saving companies money and involves moral obligations to the individuals hired to perform company tasks35. HRPs play a variety of roles in helping to define safe work behaviors; providing training for employees, managers, and supervisors; involving employees in ensuring that hazards and risks are minimized; and keeping track of employee safety and accident information which can help a company to know where to focus its loss prevention efforts36. Workplace safety is governed by state and federal laws which set forth the importance of working conditions free from predictable causes of harm or accident37. HRPs often play an important role in their organizations in not only providing safety training and inspections but in coordinating Safety Committees. Those committees are typically made up of representatives from the ranks of employees. Employees meet on a regular basis to discuss safety issues, identify problem areas, determine whether incidents are preventable or not preventable, and develop suggestions to eliminate causes of incidents and accidents38. Employee Safety Committees can be an effective way of communicating to employees a company’s commitment to safe work practices. According to the Society for Human Resource Management, successful committees operate with Top Management Team support, are adequately staffed and funded, and made a priority to employees and supervisors39. As is the case with any well-planned committees, Safety Committees work best when members are adequately trained, when the committee meets regularly and publishes minutes of its accomplishments, and when employees are engaged as full owners and partners in the committee’s role40. In creating a viable Safety Committee program, the most effective models have a common set of characteristics. Kevin Druley, Associate Editor of Safety + Health magazine, offered seven tips for creating a successful Safety Committee41. 1) Put Progression before Perfection. Identify realistic goals and work toward accomplishing what matters first.

35

Mathis, R. L., Jackson, J. H., Valentine, S. R., and Meglich, P. A., (2016). Human Resource Management (15th ed.). Boston, MA: Cengage Learning. 36 Ibid. 37 Ibid. 38 Ibid. See also “Committees Put Employees in Control of Safety, Health.” Workers Compensation Monitor, Vol. 18, Iss. 7, p. 7. April, 2005. 39 Human Resource Management found online on October 13, 2017 at https://www.shrm.org/resourcesandtools/hrtopics/risk-management/pages/workplace-safety-committees.aspx. 40 Ibid. 41 Druley, K., (2017). “7 Tips for an Effective Workplace Safety Committee.” Safety + Health, February 26th found online on October 13, 2017 at http://www.safetyandhealthmagazine.com/articles/15308-tips-for-an-effectiveworkplace-safety-committee.


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Cam Caldwell 2) Embrace Variety. Include representatives from both the employee group and management. Members should be selected to serve who consider safety to be an important priority. 3) Incorporate a Basic Training Curriculum. Train members about the key principles involved in creating a safe work environment and make the training a requirement of all committee members. 4) Plan Meetings Carefully. Meetings should be planned ahead of time and staffed by a Committee Leader who prepares and follows a meaningful agenda, prepares and distributes needed information before the meeting, and keeps the committee focused on important work. 5) Maintain a Reasonable Member Rotation. Members should remain on the committee long enough to become qualified decision-makers and participants but should rarely be appointed on a permanent basis so that other interested personnel can also become involved. 6) Make Meetings Fun. The meetings should avoid wasting time, include useful and interesting information related to the organization’s needs, and should involve members in meaningful tasks that have real value to the organization and its members. 7) Occasionally look outward. Explore what other organizations have done successfully. Do the necessary research and analysis to be able to take advantage of programs that have worked effectively elsewhere.

HRM departments traditionally play a major role in supporting Safety Committees and provide important background information for the Committee Leader to help that person to be effective in leading the committee’s work. When information about incidents, accidents, and their causes are used to make improvements, the credibility of a safety program and a Safety Committee are enhanced and can help an organization reduce the incidence of accidents and their associated costs and loss of time at work.

CONCLUSION Although employee wellness and risk management are not always considered to be the most important elements of HRM systems, they make an important strategic contribution to organizations by keeping employees healthy, safe, and productive. In addition, wellness and risk management activities demonstrate to employees the values of a company’s culture in benefiting employees and their families long-term. Wellness and safety programs help employees to understand how they can take better care of themselves, develop better lifestyle habits, and become more conscious of how they can



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live healthier and happier lives42. For companies the benefits of these programs transcend reduced health care premiums, lower workers compensation costs, and less employee time off work. Well-conceived wellness and safety programs enable companies to maximize their productivity and profitability while honoring their commitment to helping employees to become the best version of themselves43. HRPs who understand the benefits of wellness and safety programs and who engage employees in protecting their self-interests by being healthy and safe contribute a valuable strategic benefit to their employers and to the employees that they serve. In the many roles that HRPs play to serve the organization and to assist a company to achieve its strategic mission, they reinforce the importance of the partnership between a company and its employees and help to create an organizational culture where employees not only succeed but flourish. As they implement programs that contribute to employee wellbeing and good health and address the multitude of risk-related and safety needs of employees, HRPs also strengthen the credibility of the HRM function and their own value as part of the company’s management team44.

Questions to Ponder 1) In today’s complex world, which EWP programs do you think have the most value for employees? 2) Do you think committees have a vested interest in the family of an employee? Can today’s companies afford that investment in the competitive global environment? Why or why not? 3) What are the advantages of having employees serve as decision-making members of a company Safety Committee? How about overseeing an EWP?

Do I Want Apples? - Case Study - by Dr. Sarah J. Smith Grace was conducting a seminar to assist area employers with enhanced management skills. Her topic was hiring, training, and retention of a transient workforce. After her session concluded, she went to the back of the room to listen to the other speaker. Bruce approached her and said he had heard she was an effective presenter. He offered Grace an opportunity to present at a seminar he would coordinate in a few months. Bruce and

42

For a summary of the benefits of wellness and safety programs for employers and employees, see Becker, E. (2017). “The Benefits of a Health and Safety Program.” Concentra found online on October 14, 2017 at https://www.concentra.com/resource-center/articles/the-benefits-of-a-health-and-safety-program/. 43 These two goals are part of the universal mission of every organization identified in Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Simon & Schuster, p. 99. 44 The importance of the strategic contribution of HRPs is addressed in Caldwell, C., et al., (2011) op. cit.


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Grace worked for the same employer: he was at the main location and she was located at a satellite facility two hours away. Corporate had determined a need to increase wellness offerings and to raise employee awareness of the many available programs that would undoubtedly enhance the employees' knowledge of his or her own health. Grace has worked as an HRP in organizations that administered a Health Risk Appraisal (HRA) through a third party vendor in order to protect confidentiality. Bruce was surrounded by employees who had never completed an HRA. They were shocked at some of the questions that asked about family health history, frequency that individuals exercised, smoking status, and alcohol consumption. Most employees, despite the assurance of confidentiality, refused to complete the HRA because they became increasingly uncomfortable with its questions. Simultaneously, this organization had created a wellness Apple a Day program. Employees would earn virtual apples for activities such attending informative seminars about wellness, eating the “healthy choice” menu option in the employee cafeteria, or taking a walk. When a preset number of apples were earned by the program deadline, apples were converted to a cash bonus. Bruce said at the main location, this created a group of regular walkers who participated on a daily basis. Some participants were so overweight that they lumbered along the walk. As he thought about the Apple a Day program, Bruce went to his neighborhood YMCA and became a member. He was pleased to learn his employer offered a 10% membership discount. Bruce was not adverse to wellness and protecting good health, but he just wanted to do it his way rather than joining the Apple a Day walkers. 1) What could the HRPs do in the future to dispel employee concerns about the HRA and confidentiality? 2) Some employees 'missed the memo'. They did not realize An Apple a Day was underway and lost out on an opportunity to participate. How could HRPs develop a communication strategy to eradicate this issue for the next wellness program? What types of media could be included in the plan? 3) Do you think An Apple a Day was a success? What clues in the case support your stance?

A Family Struggle - Case Study - by Dr. Sarah J. Smith Bill had a son who recently demonstrated volatile behavior. He wondered if drugs could be involved and if this was a situation that might benefit from his company's Employee Assistance Program (EAP). At this company, the EAP provided for eight visits per employee or eight family member per year. A desirable feature of this program was that visits could be totaled and combined. For Bill, this meant he could see an EAP



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mental health provider, his son could also visit on his own, and both could go together. Between them, there would be 16 complementary sessions. The company understood that employees who never accessed EAP programs could have several questions in addition to concerns about confidentiality. The HRP invited the EAP vendor to conduct employee knowledge sessions. Although these were available at each department, if time date, or employee preference were factors, an employee could attend any information session. The presenter ensured each employee had a pamphlet in hand, including the phone number to call. The initial call service was available 24/7, 365 days a year. The EAP speaker made sure to tell employees that their needs could be monitored over the phone, or, they could be referred to an area mental health care provider. For this EAP provider, confidentiality was a competitive advantage. With complete assurance of confidentiality, when an employee was facing a situation that impacted his work and or family life, 99% of the time the employee would voluntarily seek EAP services on his own. Employer (supervisory) referrals were uncomfortable for most, but fortunately the assured high level of confidentiality resulted in a mere 1% supervisor referral rate. HRPs listen to employees and seek solutions to support the workers and their organization. When asked, the employees at Bill's workplace stated they would like multiple locations from which to choose to see a counselor in person. The community was small, and everyone knew everyone. In addition, a local medical clinic had converted and sublet its second floor to an EAP vendor. Employees said “If I go to that building and press 2 in the elevator, everyone knows why I am there.” Child care availability was another feature employees requested for their EAP. 1) Bill decided to call the EAP number. He was pleasantly surprised with the level of professionalism. Confidentiality was again assured and he and his son would be seeing a care provider in the near future. In your opinion, what did the HRP do to establish a program that employees would be comfortable utilizing? 2) The HRP was consulted by a supervisor who had an employee with an increased number of days absent. She was concerned the employee could jeopardize his job if the absences continue. The HRP coached this supervisor as to what to say to the employee. She also volunteered to be present, mainly for moral support. Once the program was accessed and the employee was in counseling, the supervisor wanted to know why she was not provided with a report. The HRP explained that for a supervisory referral, the only documentation provided from the EAP vendor answered two questions: Was the employee attending, and were he or she making progress. What is your opinion of how the HRP handled this inquiry? 3) Your organization decides to implement an EAP. As the HRP, what lessons could you take from this company's example that would be helpful to vendor selection and EAP implementation for your company and its employees?


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REFERENCES Baldwin, N., (2016). “Navigating Employee Wellness Programs.” Workforce, Vol. 95, Iss. 3, pp. 24-25. Becker, E. (2017). “The Benefits of a Health and Safety Program.” Concentra found online on October 14, 2017 at https://www.concentra.com/resourcecenter/articles/the-benefits-of-a-health-and-safety-program/. Berry, L. L., Mirabito, A. M., and Baun, W. B., (2010). “What’s the Hard Return on Employee Wellness Program?” Harvard Business Review, Vol. 88, Iss. 12, pp. 104112. BrandView “Employee Assistance Programs.” Inc. BrandView found online on October 11, 2017 at https://www.inc.com/encyclopedia/employee-assistance-programs.html Bray, E., (2011). “Moving Beyond the Buzz.” Employee Benefit News, Vol. 25, Iss. 7, pp. 15-16. Burjek, A., (2017). “Weighing the Value of Workplace Wellness.” Workforce, Vol. 96, Iss. 2, pp. 30-48. Burroughs, A., (2015). “Smoking Cessation.” Smart Business Cleveland, Vol. 26, Iss. 12, pp. 62-63. Butler, K., (2015). “Today’s Wellness: Sound Body, Mind & Finances.” Workforce, Vol. 4, Iss. 11, pp. 38-42. Caldwell, C., Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Center for Disease Control in a May 2, 2013 Press Release: “One in Five Adults Meet Overall Physical Activity Guidelines.” Atlanta, GA: Center for Disease Control Prevention found online on October 11, 2017 at https://www.cdc.gov/media/releases/ 2013/p0502-physical-activity.html Cooper, C., Dewe, P., and O’Driscoll, M., (2003). “Employee Assistance Programs” in Quick J. and Tetrick, L. (Eds.). Handbook of Occupational Health Psychology. Washington, D. C.: American Psychological Association, pp. 289=304. Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Simon & Schuster. Desai, P., (2017). “Getting MORE from Health Screenings.” Benefits Magazine, Vol. 54, Iss. 9, pp. 45-51. Druley, K., (2017). “7 Tips for an Effective Workplace Safety Committee.” Safety + Health, February 26th found online on October 13, 2017 at http:// www.safetyandhealthmagazine.com/articles/15308-tips-for-an-effective-workplacesafety-committee Dugmore, D., (2011). “A Wider View of Wellness.” Employee Benefits, September, pp. 6-8.



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Employee Benefit News. “Promoting Financial Wellness in the Workplace.” Employee Benefit News, Vol. 27, Iss. 13, Special section, pp. 3-11, Oct. 2013. Flegal, K. M., Kruszon-Moran, D., Carroll, M. D., Fryar, C. D., and Ogden, C. L., (2016). “Trends in Obesity Among Adults in the United States, 2005-2014.” Bethesda, MY: National Center for Biotechnology Information. Fry, E., (2017). “Corporate Wellness Programs: Healthy . . . Or Hokey?” Fortune, March 15. Vol. 175, Iss. 4, pp. 99-100. Greene, J., (2011). “Employee Wellness Proves Its Worth.” Trustee, Vol. 64, Iss. 2, pp. 8-12. Gubler, T., and Pierce, L., (2014). “Healthy, Wealthy, and Wise: Retirement Planning Predicts Employee Health Improvements.” Psychological Science, Vol. 24, Iss. 9, pp. 1822-1830. Japsen, B., (2012). “U. S. Workforce Illness Costs $575 Billion Annually from Sick Days to Workers Compensation.” Levitt, C., (2015). “New York City’s Health Care Cost Savings Plan.” Benefits Magazine, Vol. 52, Iss. 9, pp. 11-15. Mathis, R. L., Jackson, J. H., Valentine, S. R., and Meglich, P. A., (2016). Human Resource Management (15th ed.). Boston, MA: Cengage Learning. Maurer, R., (2013). “Making Workplace-Safety Committees Work.” Society for Human Resource Management found online on October 13, 2017 at https://www.shrm.org/ resourcesandtools/hr-topics/risk-management/pages/workplace-safety-committees. aspx Neely, M., (2012). “Wellness Strategies for Smaller Businesses.” Benefits Quarterly, Vol. 28, Iss. 3, pp. 16-19. O’Brien, E., and Tepper, T., (2016). “The High Cost of Coping.” Money, December, Vol. 45, Iss. 11, pp. 72-81. Otenyo, E. E., and Smith E. A., (2017). “An Overview of Employee Wellness Programs (EWPs) in Large U.S. Cities: Does Geography Matter?” Public Personnel Management, Vol 46, Iss. 1, pp. 3-24. Parks, K. M., and Steelman, L. A., (2008). “Organizational Wellness Programs: A MetaAnalysis.” Journal of Occupational Health Psychology, Vol. 13, Iss. 1, pp. 58-68. Pascarella, A., (2015). “The Importance of Employee Assistance Programs.” Lawley, October 15th found online on October 11, 2017 at http://www.lawleyinsurance.com/ wellness/the-importance-of-employee-assistance-programs-eap/ Ruhl, L., (2016). “Wellness Programs Shift Focus Away from Weight Loss.” Central Penn Business Journal February 19th, Vol. 32, Iss. 9, pp. 14-15 Scholtes, P. R., and Joiner, B. L., (2003). The TEAM Handbook (3rd ed.). Madison, WI: Oriel Inc.


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Shastri, P. P., and Shastri, J. P., (2014). “Risk Management in Human Resource Management Domain.” Journal of the Insurance Institute of India. Vol. 2, Iss. 2, pp. 124-128. Workers Compensation Monitor. “Committees Put Employees in Control of Safety, Health.” Workers Compensation Monitor, Vol. 18, Iss. 7, p. 7. April, 2005.




Chapter 13

HONORING EMPLOYEE RELATIONSHIPS: EMPLOYEE RELATIONS AND EMPLOYEE LAW Cam Caldwell1 and Verl Anderson2 1

Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman 2 Dixie State University, St. George, UT, US

Although the Human Resource Management (HRM) exists to optimize an organization’s long-term and short-term value1, that purpose is best achieved by honoring the obligation to assist employees to improve themselves and achieve their highest potential2. Human Resource Professionals (HRPs) are not the advocates of employees per se, but they should nonetheless pursue employee best interests long-term -- for it is by honoring these employee interests that HRPs demonstrate commitment to long-term sustainability, competitive advantage, and success3. HRPs best serve employees, not by advocacy of their articulated interests, but by establishing the best possible environ for

1

This moral duty is articulated by Lennick, D. & Kiel, F., (2011). Moral Intelligence 2.0: Enhancing Business Performance and Leadership Success in Turbulent Times. Boston, MA: Pearson Publishing. 2 This obligation of leaders and organizations is clearly suggested by a multitude of highly regarded scholars and is a moral duty. See, for example, Burns, J. M., (2010). Leadership, New York: Harper & Row and Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press, and Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. 3 This HRM responsibility is clearly the focus of Atwijuka, S. and Caldwell, C., 2017. “Human Resource Management and Strategic Management” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing and Caldwell, C., 2017. “Transformative Ethics and Trust – Keys to Competitive Advantage” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing.


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employees to succeed and to flourish, and that virtuous outcome is the emphasis of employee relations4.

Figure 1.

The purpose of this chapter is to explain the importance of HRM employee relations – linking it with current employee laws. Employee relations (ER) are intended to build and sustain high trust, employee growth, innovation, and creativity. Unfortunately, current elements of employee law often erode those noble objectives and this chapter identifies how fuzzy legal thinking can undermine successful ER implementation. We begin by identifying key elements of effective ER and describe many of its defining characteristics. We then identify both positive and negative features of employee law related to legal realities affecting employees. We conclude the chapter with five practical ER applications for HRPs in today’s highly competitive global environment.

CHARACTERISTICS OF EMPLOYEE RELATIONS ER “covers the whole range of interactions and communications between employers and employees, and also the processes by which they adjust to the needs and wants of each other”5. ER is based largely upon the idea that employees and employers acknowledge their interdependence and the advantages of cooperation to achieve shared

4

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This virtuous purpose is explained beautifully in Cameron, K., (2011). “Responsible Leadership as Virtuous Leadership.” Journal of Business Ethics, Vol. 98, pp. 25-35. Found on page 80 of Seth, R. C., (2014). “What Influences Harmonious Employee Relations?” International Journal of Research in Commerce & Management, Vol. 5, Iss. 2, pp. 80-82.


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goals6. Although ER is sometimes thought of in terms of the labor union context, the term encompasses far more than that formalized relationship7.

Figure 2.

Implicit in the employer-employee relationship are the complex but often unwritten psychological contracts that exist between the parties8. For every organization that psychological contract is subjectively perceived by each individual employee9 – and is based upon each employee’s unique individual experiences10. Mutually held agreements between the parties may vary simply because of subtle differences in their interpretation of the agreement’s provisions and unity in perception is actually the exception rather than the norm11. Accordingly, one of the most common realities of ER is that it is subject to differences in perception about the precise nature of the relationship – differences that may nonetheless be strongly held and may be perceived as an ethical breach if not honored12. 6

Ibid. Aylott, E., (2014). Employee Relations. London, UK: Kogan Page Limited. 8 Ibid. 9 For a comprehensive review of the subjective nature of psychological contracts, see Rousseau, D. M., (1995). Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Thousand Oaks, CA: Sage Publications. 10 The individual mediating lens of each person upon which subjective perceptions are based is addressed in Caldwell, C., and Hayes, L., 2007. “Leadership, Trustworthiness, and the Mediating Lens.” Journal of Management Development. Vol. 26, Iss. 3, pp. 261-278. 11 For a review of the problem of inconsistency about psychological contract perceptions, please see Robinson, S. L. & Rousseau, D. M., (1994). “Violating the Psychological Contract: Not the Exception but the Norm.” Journal of Organizational Behavior, Vol. 15, Iss. 3, pp. 245-259. 12 Ibid. 7


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Figure 3.

To clarify their expectations of what they expect from employees, organizations typically establish a comprehensive set of policies, procedures, job descriptions, work rules, and guidelines that define those expectations. Organizations adopt and distribute a Human Resources Handbook or Personnel Policy Manual which summarizes the rules governing employee work; for employees governed by a labor agreement those rules are formalized in an employment contract13. Despite the fact that policies and rules are in writing, those rules are nonetheless subject to interpretation and can often be the cause of substantial disagreements between employees and their employer14. Differences in employee perceptions of their relationship with a company and the duties owed to them often lead to a serious breach in the psychological contract, as perceived by those employees and can result in the erosion of commitment and trust15. ER is dependent upon the perceived trustworthiness of an organization in honoring its duties to its employees16. Although it is the Top Management Team that establishes a company’s culture and articulates its values17, the HRM staff implement an organization’s personnel systems and model the values that reflect a company’s commitment to employee success18. Creating an ER based upon high trust is essential for any organization to establish credibility with its employees. Organizations that consistently communicate expectations and values – and monitor the actions of

13

For a review of how to create such a manual, please see Lawson II, J. W. R., (2005). How to Develop a Personnel Policy Manual. New York: AMACOM. 14 Robinson, S. L. & Rousseau, D. M., (1994) op. cit. 15 Ibid. 16 Organizational trustworthiness is a key to competitive advantage and is addressed in a number of sources. See, for example, Caldwell, C., and Clapham, S., 2003. “Organizational Trustworthiness: An International Perspective,” Journal of Business Ethics, Vol. 47, Iss. 4, p. 349-364 and WA: Washington State University Press. 17 For a review of the role of a company’s leaders in establishing its culture and values, please see Schein, E. H. & Schein, P., (2013). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. 18 Atwijuka, S. & Caldwell, C., (2017) op. cit.



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Figure 4.

supervisors and leaders to ensure that they adhere to those criteria – reaffirm the organization’s ground rules and articulate its priorities and values to employees. When systems, policies, and values espoused are aligned with the actions of HRPs, managers, and the Top Management Team, trust in an organization increases and employee commitment is enhanced19. Employee engagement -- the degree to which an organization involves employees in organization decisions, creates a culture that holds employees in high regard, and treats employees as partners in improvement -- enables an organization to reinforce its commitment to employee success and enhances productivity and performance. An employee who is engaged “is fully involved in, and enthusiastic about, his or her work, and thus will act in a way that furthers their organization’s interests”20. Unfortunately, the overwhelming majority of employees describe themselves as not engaged at work and fewer than one in three Millennials are positively engaged21. When managers and team 19

For a more complete understanding of the importance of engagement, see Smith, S., Peters, R., and Caldwell, C., (2016). “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80 available online at http://sciedu.ca/journal/index.php/bmr/article/view/9734. 20 This helpful definition is found at Paul, E., (2017). “Employee Engagement: A Key HR Strategy” EmptrustHR found online on October 25, 2017 at http://www.emptrust.com/blog/employee-engagement-a-key-hr-strategy. 21 The actual percentage, according to a Gallup survey was 28.9%. See Adkins, A., (2015). “Majority of U.S. Employees not Engaged Despite 2014 Gains.” Washington, D. C.: Gallup found online on October 25, 2017 at http://news.gallup.com/poll/181289/majority-employees-not-engaged-despite-gains-2014.aspx.


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Figure 5.

leaders provide meaningful feedback to employees, a 2017 Gallup report found that those employees are 3.5 times more likely to be engaged in their organization22. Creating a culture of engagement through effective ER enables organizations to unlock the potential contributions that employees can make through increasing innovation, productivity, and creativity within an organization23. One means of increasing a positive employee response to its organization is by internal marketing. Internal marketing “views the employees as internal customers”24 and is the communication of positive information about an organization to its own employees, thereby building greater pride in the organization and improving customer service and performance25. A positive way to build high employee regard for their organization is to share with the employees the ethical rationale behind decisions that are made and the values of the organization that guide that rationale26. When employees take pride in their

Gallup Access, (2017). “Transform Your Workplace” found online on October 25, 2017 at https://my.gallup.com/?utm_source=google&utm_medium=cpc&utm_campaign=workplacebranded&utm_keyword=gallup%20employee%20engagement&gclid=CjwKCAjw7MDPBRAFEiwAppdF9K R2g0Qkku7KtYEWftJnQxhGeknveZH1q04MqO-mPqfQrTUbzPWl5xoC-dUQAvD_BwE. 23 Smith, S., Peters, R., and Caldwell, C., (2016) op. cit. 24 This quote is found on page 1118 of Tsai, Y., & Tang, T-W., (2008). “How to Improve Service Quality: Internal Marketing as a Determining Factor.” Total Quality Management & Business Excellence, Vol. 19, Iss. 11, pp. 1117-1126. 25 See Caldwell, C., Licona, B., and Floyd, L. A., 2015. “Internal Marketing to Achieve Competitive Advantage.” International Business and Management, Vol. 10, Iss. 1., pp. 1-8. 26 Ibid. 22



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Figure 6.

companies and feel positive about the underlying values, principles, and moral impacts of their company in society, commitment to the organization increases and can become a source of competitive advantage27. One of the important first steps in building successful relationships with new employees in ER is the quality of an organization’s onboarding process to transition employees and prepare them for success on the job28. Unfortunately, most organizations are ineffective in their onboarding process for new employees – to their own detriment and to the disadvantage of incoming employees29. Despite the fact that onboarding is essential to enable new employees to become truly effective and despite the economic savings from assisting these employees to become quickly assimilated into an organization, HRPs consistently fail to take advantage of this opportunity and obligation to assist new employees to become familiar with their new organization context and make a smooth transition30. By failing to make onboarding an HRM priority, HRPs violate the perceived duty to help new employees as they enter their organizations and overlook an important opportunity to create a strong ER impression31. Another critical factor in great ER is an organization’s commitment to the training and professional development of employees. Investing in employee training and 27

Ibid. The importance of onboarding employees is identified by the Society for Human Resource Management in their online book by Talya N. Bauer. See Bauer, T. N., (2010). Onboarding New Employees: Maximizing Success. Washington, D. C.: SHRM Foundation found online on October 25, 2017 at https://www.shrm.org/ foundation/ourwork/initiatives/resources-from-past-initiatives/Documents/Onboarding%20New%20 Employees.pdf. 29 This verity about the ineffectiveness of new employee onboarding is identified in Caldwell, B. G., and Caldwell C., 2016. “Ten Classic Onboarding Errors: Violations of the HRM – Employee Relationship.” Business and Management Research, Vol. 5, No. 4, pp. 47-55 and available online at http://www.sciedu.ca/journal/ index.php/bmr/article/view/10672/6501. 30 See Caldwell, C. and Peters, R. 2017. “New Employee Onboarding – Psychological Contracts and Ethical Perspectives.” Paper accepted for publication in the Journal of Management Development. 31 Ibid. 28


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development, when done properly, inevitably brings an economic return on that investment – in addition to improving service quality, reducing turnover, increasing innovation and creativity, and improving employee morale32. Creating a learning culture enables a company to adapt to change and keep pace with an increasingly competitive global marketplace33. Training and development and creating a learning organization are expected obligations of the modern organization in honoring their responsibility to help their employees to progress personally and professionally34. Each of these important elements of ER enables organizations to demonstrate their commitment to employee success while improving the ability of those organizations to compete effectively and create high value. ER plays a vital role in creating the work environment that builds a committed and enthusiastic culture and promotes profitability35. Great ER programs create a win-win benefit for organizations and their employees and HRPs who are effective in establishing such programs honor their obligation as stewards who optimize long-term wealth while helping employees to grow and progress36.

EMPLOYEE LAW AND HRM IMPACTS There are a number of significant legal issues associated with HRM and, particularly, with the impact of those issues on ER. Without question, the issue of “employment-atwill” is the most important legal issue that affects employees. This concept enables an employer to terminate an employee with or without cause, or even for bad cause, with four exceptions: 





Public policy – The public policy exception prohibits terminating an employee who is acting in the public interest, such as warning that an employer is shipping harmful or defective products that can seriously endanger the public. Implied contract – An employee may not be fired under an implied contract exception in thirty-six states if an employee handbook specifically states that an employee may not be fired, except for “just cause.” Violation of good faith – Eleven states prohibit the termination of an employee if that termination appears to be for a malicious reason, such as terminating a long-

32

See Pfeffer, J., (1998) op. cit. and Beer, M., (2009) op. cit. for confirmation about the return on investment from well-crafted employee training and development programs. 33 Ibid. 34 See Atwijuka, S. & Caldwell, C., (2017) op. cit. and Caldwell, Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182, 35 This ER purpose is clearly enumerated in Aylott, E., (2014) op. cit. 36 See and Caldwell, C., Hayes, L., Karri, R., and Bernal, P., 2008. “Ethical Stewardship: The Role of Leadership Behavior and Perceived Trustworthiness.” Journal of Business Ethics, Vol. 78, Iss. 1/2, pp. 153-164.





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tenured employee just prior to when (s)he is eligible to qualify for accrued retirement benefits. Existence of a written contract – If a union labor agreement or written contract exists that specifically protects employee rights, an employer is required to demonstrate just cause for termination.

In all but one state, the employment-at-will rule is the rule of law governing employee termination. Montana requires just cause for firing an employee. Despite the fact that the employment-at-will rule fails to protect an employee’s right to be treated fairly by an employer, this rule is overwhelmingly the dominant legal position and is conceptually justified under the argument that an employee also has the right to terminate his or her employment at any time. But this law is, nevertheless, biased firmly in the favor of employers37. From a procedural justice perspective the employment-at-will rule is patently unfair on its face and jeopardizes the rights of any employee to assume that (s)he will always be fairly treated by an employer under its provisions. Ethics scholars like Dr. Patricia Werhane, Director of the DePaul University Ethics Institute, and Dr. Tara Radin have expressed strong criticism of the employment-at-will doctrine38 – with Werhane calling the doctrine “morally bankrupt”39. Termination recourse for employees who claim that their employers have violated their federally-protected 14th Amendment due process rights is also limited. Employees who are terminated by employers who claim to have had their rights violated due to their age, religious preference, gender, sexual preference, or other protected classification are dependent upon an Equal Employment Opportunity (EEO) hearing before they have the legal right to sue their employer. According to federal law, the agency has “180 business days” or as long as thirty-eight weeks to defer hearing a filed complaint – and as a practical matter most employees cannot wait that long to have a discrimination claim resolved. Only after the EEO has heard a claim can a wronged employee then sue his or her employer. As a practical matter, this law is distinctly biased on behalf of employers and leaves employees in a position where they effectively have extremely limited recourse, even if discriminated against40. Similarly, employees who have a written contract must go through an extended legal waiting period which they can rarely afford—requiring them to

37

See Pfeffer, J. (1998) op. cit. for a strong criticism of the employment-at-will rule. Radin, T., and Werhane, P. W., (2003). “Employment-at-Will, Employee Rights, and Future Directions for Employment.” Business Ethics Quarterly, Vol. 13, Iss. 2, pp. 113-130. 39 This description was used by Dr. Werhane in a personal discussion on January 17, 2012 at the International Conference on Ethics in Business at St. Johns University. 40 The EEOC process is explained at “Federal Employees: You be the Judge” found online on October 25, 2017 at https://yaf.1105uat.com/default.aspx?g=posts&t=3851#post17101. 38


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Figure 7.

hire an expensive attorney to represent them if they feel they have been unfairly treated. Once again, most individuals are financially unprepared to fight for their violated rights, even when those rights are clearly enumerated by their employer in writing. In many organizations the Human Resource Handbook or Personnel Policy Manual for the company has been written by an attorney. Often the specific goal of the attorney is to preserve and protect the rights of an employer and to disclaim any and all liability that may be associated with ER. For that reason many such handbooks or manuals read like intimidating legal documents that communicate in formal language and limit the rights of individual employees. We urge HRPs and Top Management Team members to carefully reexamine the message that they send to their employees by allowing their attorney to draft such documents. If the purpose of ER is to create an environment of partnership and trust with employees and to communicate their value to the organization, then attorneys should be given the opportunity to review a Human Resource Handbook or Personnel Policy Manual to offer advice but should not be asked to write those documents. The guiding query in assessing the impact of a legalistic manual of personnel policies and rules should be, “Do these rules convey the best interests of the organization in creating a high trust partnership with employees while communicating performance expectations?” Employee policies and rules that undermine the importance of creating a collaborative partnership with employees or that convey the message that the employeremployee relationship is an “arms-length” adversarial association conflict with best practices of HRM and are not in the interest of the modern organization41. The maxim that Top Management Teams and HRPs should seriously consider in identifying the role of the attorney with regard to ER is that “Attorneys should be ‘on tap’ but not ‘on top.’” 41

This conclusion is the strong opinion of Pfeffer, J., (1998) op. cit. as well as the logical inference derived from the empirical evidence provided by many other scholars.



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From an ER perspective, input from the legal staff should be evaluated on the basis of that input’s impact on an organization’s ability to accomplish its mission – rather than on protecting a narrow liability interest that may be unjust and unfair to an organization’s individual employees. Protecting liability from the mishandling of an employee termination is far less important than creating an organizational culture that merits the trust, respect, and extra-mile commitment of the entire work force. At the same time, attorneys can be extremely valuable resources in helping HRPs to understand the meaning and intent of the many laws and regulations that affect organizations as they interact with employees. That legislation covers a multitude of topics from overtime requirements for employees to employee rights that are and ought to be protected – such as those covered by the Occupational Safety and Health Administration regulations, the Fair Labor Practices Act, the Age Discrimination and Employment Act, and the Family Medical Leave Act. Providing detailed specifics about the multitude of legal issues affecting employees on the job is not the purpose of this chapter, nor is it covered in this book – but that information is readily available in other sources and the advice of an organization’s attorney can be valuable in understanding the application of the laws that apply.

PRACTICAL APPLICATIONS FOR ER PROGRAMS Effective ER programs are the result of the Top Management Team understanding the importance of creating an organizational culture that promotes collaborative effort; clear communication; a commitment to a worthy purpose; and constant attention to the important details essential to creating mutual respect, trust, and cooperation. Such programs are inevitably value-based, principle-centered, and ethically virtuous42. HRPs can play an important role in helping their Top Management Team to create such ER programs. HRPs honor their roles and serve their organizations best when they treat employees as owners and partners in the organization’s quest to achieve its best possible outcomes43. The following are five practical principles for HRPs in implementing successful ER programs. 1. Focus on Creating High Trust. The ER relationship is, first and foremost, a partnership with employees and is dependent upon creating cooperation, collaboration, and commitment.

42 43

See Covey, S. R., (2004) op. cit. for confirmation of the importance of each of these qualities. For insights about the ethical nature of HRM and the importance of honoring ethical duties owed to the organization and its employees, please see Atwijuka, S. & Caldwell, C., (2017) op. cit. and Hosmer, L. T. (1987). “Ethical Analysis and Human Resource Management.” Human Resource Management, Vol. 26, Iss. 3, pp. 313-330.


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Cam Caldwell and Verl Anderson 2. Communicate Clearly, Simply, and Constantly. Make a constant effort to provide employees with the information they need to succeed. Be precise in communicating but also pay attention to communicating in a manner that conveys the organization’s commitment to mutual understanding. Listen as well as conveying information. 3. Emphasize Purpose and Values. Always keep the organization’s purpose and mission in mind and the values upon which the organization is based. An organization’s purpose, mission, and values are worthy ideals to inspire excellence and employee commitment. 4. Always Honor Obligations. Keep commitments. Recognize and honor promises. Clarify duties owed to stakeholders and be sure that those duties are fulfilled. 5. Model the Behaviors You Expect. Leaders and HRPs send a powerful message when they are servant leaders who model the values they espouse and who exemplify dedication to the organization’s purpose and mission.

The challenges in creating a great organization are many and those challenges can best be met by employees who work together to achieve a worthy set of goals. ER programs that enroll employees in meeting and overcoming those challenges help organizations to achieve their strategic purposes and add great value in the quest to succeed in today’s extremely competitive world.

Questions to Ponder 1. In your opinion, how does the employment-at-will doctrine undermine employee trust in management? 2. How do employees perceive the duties owed to them by a company in the modern organization? 3. What can HRPs do to build trust with employees in an organization where the employment-at-will doctrine exists?

Equity, Employment Law, and Employee Relations - Case Study -- By Dr. Sarah J. Smith Margaret looked at her new business card: Human Resources and Labor Relations. At first she thought the company made a mistake. After all, she applied for the HR position at this plant location. Half of the company’s employees were union members, half were not. This was an interesting mix! As Margaret became acclimated with her new work, she felt her business card should have said Employee Relations.



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Two issues had surfaced which would need resolution. The first was that union employees, through their collective bargaining agreement had a defined grievance process. These employees understood what steps to take, documentation to provide, and who to see about their concerns or perceived inequitable treatment. The non-union employees had no policy, procedure, nor form to use for filing a grievance. So Margaret developed a procedure and grievance form for the non-union employees. Upper management approved both the procedure and the form, and the non-union employees now had a method to file a grievance, should that be necessary. The second situation was far more complex. Margaret realized that no one at the plant had reviewed the health care documentation for quite some time. Margaret discovered the corporation was self-insured, meaning requests for changes to the plan could be made and implemented with ease. While reviewing the plan documents, Margaret noticed the reimbursement for ambulance service was far below actual costs. Part of the health care plan -- reimbursement for an eye exam, frames, and lenses was meager at best. Employees with young children and teenagers approached Margaret and asked why the company plan would pay for cavities to be filled, but not for dental sealants. Margaret called area ambulance providers and developed a pricing guide for local service as well as for distance travel to big city research hospitals. Margaret asked a cross section of employees what providers they would use for vision and dental care. She developed a list of commonly selected providers and researched the cost of dental sealants and for filling a cavity. With the support of management, she brought the proposed changes to the board of directors who approved her recommendations. The plan was updated and Margaret felt she had provided a valuable service to the organization and its employees. 1. Methods to communicate employee benefits changes include posters, Power point presentations, video presentations, post cards mailed to employees’ homes, payroll stuffers, company intranet-based benefits hub, group meetings, one-onone consultation, newsletters, social media, or text messages. Which of these methods do you feel would be the most effective? Explain your response. 2. Non-union employees were happy with the plan upgrades. Union employees, however, accused Margaret of bargaining in ill faith. Health care benefits are a mandatory bargaining subject and although the changes were all positive, union employees were not happy they were not consulted. How should Margaret respond? 3. The National Labor Relations Act (NLRA) was enacted in 1935 to protect employees from management actions that could be harmful. Do the provisions of this act ‘fit’ in Margaret’s situation? Why or why not?


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The EEOC Newsroom -- Case Study -- By Dr. Sarah J. Smith Case law can have an impact on employee relations. Recent decisions must be considered in order to protect the credibility of an HRP, retain trust in his or her decisionmaking abilities, and simply, to do what is right for the employees and the organization. For 30 years Personnel Today has included updates on legal matters and reviewed precedent setting cases. The Society of Human Resources (SHRM) reviews relevant and groundbreaking employment cases for HR professionals. Employment laws that were passed years ago still impact employee relations and case law decisions today. According to SHRM, contemporary areas of concern relate back to the Civil Rights Act (1964, amended 1991), the Equal Pay Act (1963), the Americans with Disabilities Act (1990), the Age Discrimination in Employment Act (1967), the Family Medical Leave Act (1993), and the Fair Labor Standards Act (1938). One source for updates is the Equal Employment Opportunity Commission (EEOC). The Newsroom summarizes recent cases as well as those filed and pending. Appellate Decisions are noted in its own section. In Appellate Court, initial decisions could be reversed or upheld. The Small Business Resource Center could be helpful to most HRPs, regardless of the number of employees employed within their organization. 1. Visit eeoc.gov and find The Newsroom. What do you observe about recent cases that were taken forward by the EEOC? 2. How would recent case law impact a decision made by a company’s management team? How should that company respond? 3. As an HRP involved in employee relations, how would you keep current with the seemingly continual changes that result from case law decisions and appeals?

REFERENCES Adkins, A., (2015). “Majority of U.S. Employees not Engaged Despite 2014 Gains.” Washington, D. C.: Gallup found online on October 25, 2017 at http://news.gallup.com/poll/181289/majority-employees-not-engaged-despite-gains2014.aspx. Atwijuka, S. and Caldwell, C., 2017. “Human Resource Management and Strategic Management” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing Aylott, E., (2014). Employee Relations. London, UK: Kogan Page Limited. Bauer, T. N., (2010). Onboarding New Employees: Maximizing Success. Washington, D.C.: SHRM Foundation found online on October 25, 2017 at https://www.shrm.org/



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foundation/ourwork/initiatives/resources-from-past-initiatives/Documents/ Onboarding%20New%20Employees.pdf. Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Burns, J. M., (2010). Leadership, New York: Harper & Row and Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press, Caldwell, B. G., & Caldwell C., 2016. “Ten Classic Onboarding Errors: Violations of the HRM – Employee Relationship.” Business and Management Research, Vol. 5, No. 4, pp. 47-55 and available online at http://www.sciedu.ca/journal/ index.php/bmr/article/view/10672/6501. Caldwell, C., 2017. “Transformative Ethics and Trust – Keys to Competitive Advantage” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing. Caldwell, C., & Clapham, S., 2003. “Organizational Trustworthiness: An International Perspective,” Journal of Business Ethics, Vol. 47, Iss. 4, p. 349-364. Caldwell, C., Hayes, L., Karri, R., and Bernal, P., 2008. “Ethical Stewardship: The Role of Leadership Behavior and Perceived Trustworthiness.” Journal of Business Ethics, Vol. 78, Iss. 1/2, pp. 153-164. Caldwell, C., & Hayes, L., 2007. “Leadership, Trustworthiness, and the Mediating Lens.” Journal of Management Development. Vol. 26, Iss. 3, pp. 261-278. Caldwell, C., Licona, B., & Floyd, L. A., 2015. “Internal Marketing to Achieve Competitive Advantage.” International Business and Management, Vol. 10, Iss. 1., pp. 1-8. Caldwell, C. & Peters, R. 2017. “New Employee Onboarding – Psychological Contracts and Ethical Perspectives.” Paper accepted for publication in the Journal of Management Development. Caldwell, Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182, Cameron, K., (2011). “Responsible Leadership as Virtuous Leadership.” Journal of Business Ethics, Vol. 98, pp. 25-35. EEOC. “Federal Employees: You be the Judge” found online on October 25, 2017 at https://yaf.1105uat.com/default.aspx?g=posts&t=3851#post17101. Gallup Access, (2017). “Transform Your Workplace” found online on October 25, 2017 at https://my.gallup.com/?utm_source=google&utm_medium=cpc&utm_campaign= workplace-branded&utm_keyword=gallup%20employee%20engagement&gclid= CjwKCAjw7MDPBRAFEiwAppdF9KR2g0Qkku7KtYEWftJnQxhGeknveZH1q04 MqO-mPqfQrTUbzPWl5xoC-dUQAvD_BwE. Hosmer, L. T. (1987). “Ethical Analysis and Human Resource Management.” Human Resource Management, Vol. 26, Iss. 3, pp. 313-330.


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Lawson II, J. W. R., (2005). How to Develop a Personnel Policy Manual. New York: AMACOM. Lennick, D. & Kiel, F., (2011). Moral Intelligence 2.0: Enhancing Business Performance and Leadership Success in Turbulent Times. Boston, MA: Pearson Publishing. Paul, E., (2017). “Employee Engagement: A Key HR Strategy” EmptrustHR found online on October 25, 2017 at http://www.emptrust.com/blog/employee-engagement-a-keyhr-strategy. Radin, T., and Werhane, P. W., (2003). “Employment-at-Will, Employee Rights, and Future Directions for Employment.” Business Ethics Quarterly, Vol. 13, Iss. 2, pp. 113-130. Robinson, S. L. & Rousseau, D. M., (1994). “Violating the Psychological Contract: Not the Exception but the Norm.” Journal of Organizational Behavior, Vol. 15, Iss. 3, pp. 245-259. Rousseau, D. M., (1995). Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Thousand Oaks, CA: Sage Publications. Schein, E. H. & Schein, P., (2013). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. Seth, R. C., (2014). “What Influences Harmonious Employee Relations?” International Journal of Research in Commerce & Management, Vol. 5, Iss. 2, pp. 80-82. Smith, S., Peters, R., and Caldwell, C., (2016). “Creating a Culture of Engagement – Insights for Application.” Business and Management Research, Vol. 5, No. 2, pp. 70 -80 available online at http://sciedu.ca/journal/index.php/bmr/article/view/9734 Tsai, Y., & Tang, T-W., (2008). “How to Improve Service Quality: Internal Marketing as a Determining Factor.” Total Quality Management & Business Excellence, Vol. 19, Iss. 11, pp. 1117-1126. Werhane, Dr.in a personal discussion on January 17, 2012 at the International Conference on Ethics in Business at St. Johns University.




Chapter 14

INTERNATIONAL HUMAN RESOURCE MANAGEMENT: STRATEGIC APPLICATION OF CORE PRINCIPLES Cam Caldwell Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman

INTRODUCTION International commerce is not new and anthropologists have documented evidence of long-distance trading in Europe dating back to the Stone Age1. Rudimentary Human Resource Management (HRM) at that time was undoubtedly simplistic with one imagining that the person seeking to trade over a long distance relied heavily on family members or others from his or her immediate clan for assistance. Though International HRM (IHRM) is numbingly more complex in today’s competitive world, it is best understood in context with the strategic application of core HRM principles which affect virtually every business involved in international commerce. The purpose of this chapter is to identify and to briefly explain eight of the significant IHRM issues affecting businesses as they compete within the global economy. The chapter begins by identifying the application of the six key roles of strategic HRM within an international context. Although the complexity of IHRM naturally varies with the size and scope of the company engaged in international business, the same concepts and principles of effective HRM apply within a global marketplace. Several factors, however,

1

See Inc., (2017). “Global Business” Sept. 10, found online on November 4, 2017 at https://www.inc.com/ encyclopedia/global-business.html.


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become far more difficult to address and have been consistently handled poorly – even

Figure 1.

by many Multi-National Corporations (MNCs) who have been engaged in global commerce for many years. The chapter incorporates a Western bias by focusing on many of the problems faced by the companies doing business out of the United States. The chapter also offers twelve IHRM principles for businesses to consider as they assess their own HRM systems and as they establish guidelines for conducting business in the global economy.

SIX HRM ROLES -- THE INTERNATIONAL CHALLENGE The six fundamental roles of HRM are made more challenging as Human Resource Professionals (HRPs) and Top Management Teams guide their organizations in a milieu that is constantly changing, culturally diverse, highly competitive, and often volatile2. In this section we briefly review the six strategic HRM roles and identify IHRM factors that make each role more difficult.

2

The term, VUCA, meaning a Volatile, Uncertain, Complex, and Ambiguous world is briefly summarized in Bennett, N. & Lemoine, G. J., (2014). Harvard Business Review, Vol. 92, Iss. 1/2, p. 27.


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1. Create and sustain an organizational culture aligned with the mission and strategy. Because a company’s international strategy may expand to include production, and/or distribution and sales in other countries, HRPs need to clearly understand the nuances of that strategy and the implications of working with employees with diverse backgrounds. HRPs can assist the Top Management Team to understand the cultural differences that exist from country to country and the behavioral and ethical implications of those differences that affect achieving desired outcomes3. Norms, values, and priorities that may seem to be “basic assumptions” or “common sense” in the home country may have far different implications within the host country context. HRPs must become subject matter experts about cultural nuances of the countries in which a firm conducts business. A humorous example of the problems that might have occurred if a company fails to consider cultural and/or language differences and their significance is the experience that Chevrolet could have had if it had begun marketing its Nova in Spanish-speaking countries. Chevrolet realized that “no va” means “It does not go” and opted to market its Chevy Novas elsewhere than in Spanish speaking countries4. HRM policies, systems, and programs must pass the litmus test of cultural and language differences or be amended as necessary. As with parallel responsibilities in the home country, IHRM programs and systems must align with the organization’s mission or be vulnerable to sending mixed messages and creating uncertainty. 2. Demonstrate excellence in performing technical and operational tasks requiring the specialized skills and knowledge of HRM. HRPs must confirm that the technical and operational HRM tasks that they perform in host countries are contextually explained, properly conducted, and culturally aligned with best HRM practices. HRPs are responsible for ensuring that the purpose, underlying values, and principles that are the foundation of technical and operational tasks are maintained so that necessary outcomes may be achieved. IHRM tasks become a building block for efficient and effective performance – if, and only if, there is no cultural conflict with the values of the host country. Although HRPs are not responsible for changing policies, they have an absolute obligation to the Top Management Team, to employees, and to managers in the host country to alert all See, for example, Katiyar, A., Thomas, K., and Caldwell, C. 2011. “Ethical Issues in International Human Resource Management.” Journal of Global Business Development, Vol. 3, No. 1, pp. 103-114 and Dixon, R. D., Caldwell, C., Chatchutimakorn, A., Gradney, K., and Rattanametangkul, K., 2010. “Managing Justly Across Cultures: The Problem of Fairness in International Business.” Journal of Management and Strategy, Vol. 1, pp. 22-32. 4 Fortunately the Chevy Nova story is one of many urban myths that did not occur because a company’s employees were sensitive to potential cultural and/or language issues. The Nova story and its status as a myth (that is often told but it not true) is retold in Wooten, A., (2011). “Chevy Nova Tale, Other Marketing Myths Debunked.” Deseret News July 10 International Business found online on Nov. 4, 2017 at https://www.deseretnews.com/article/705388000/Chevy-Nova-tale-other-global-marketing-mythsdebunked.html. 3


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parties about potential cultural conflicts associated with HRM tasks so that the Top Management Team can address those issues and make appropriate accommodations. Perform as business partners for each organizational department to assist them in identifying how to most effectively achieve operating efficiencies in accomplishing tasks that support the organization’s mission. Being an effective international business partner for a host country’s divisions is more complex than providing that service in the home country. To be successful as an international business partner, HRPs must develop an in-depth expertise about the goals, operations, and objectives of the departments in the international division. Premature attempts at providing this service without proper preparations are recipes for failure. This internal organizational consulting role demands extensive research and is often highly sophisticated in its requirements. If HRPs are unable to develop this strategic capability, their companies must call upon other resources that can result in time delays and expense. Listen to and provide an effective voice for the work-related needs of employees to enable and empower employees to be contributors to improving the organization. In fulfilling responsibilities within a global context, HRPs need to listen to, understand, and communicate the unique needs of international employees as well as those of home country employees and convey those concerns to the Top Management Team. Giving priority to the needs of international employees and responding effectively enables organizations to create high trust organizational cultures that 1) enhance quality, productivity, and profitability in the international division; 2) encourage international employees to innovate, grow, and thrive; and 3) build organization-wide commitment and unity of direction. Create organizational systems that support continuous improvement, organizational and individual learning, the creation of new knowledge and innovation, and the acquisition of critical information associated with outside stakeholders. At the international level, alignment requires integrating insights about local cultures with the company’s values and purpose. Constant improvement and continuous learning are important factors within the international context and integrating organizational information with international divisions is a necessity. Building a constantly learning organization makes it possible for those international units to keep track of customer needs, industry innovations, and new opportunities. Failing to invest in constant improvement at the international level makes an organization vulnerable to competitors in its geographic market. Monitor the organization climate and assist the organization to make timely and effective changes, as required by constantly changing environmental



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conditions. Monitoring employee attitudes and perceptions is as important in international divisions as it is in the home country. HRPs who pursue opportunities to improve the quality of life within the international division and who understand the most effective ways to make employees partners in the process of organization success can make a powerful contribution at the international level. Once again, being highly sensitive to local country values and cultural expectations is a requirement in developing policies and systems that best achieve a company’s objectives.

Figure 2.

All six of these HRM roles have practical application at the international business level and HRPs responsible for serving international divisions have the responsibility to become experts about adapting HRM policies within those divisions.

Eight Important International Issues IHRM presents unique challenges for employers that should never be underestimated or minimized and that have serious consequences for organizations conducting international business. Candidly, IHRM has not yet developed a reputation for effectively dealing with these gnawing issues and the struggles of many organizations reflect the difficulties of these challenges. The importance of HRPs becoming expert about their six strategic roles is made more complicated because of variables associated with differing employee perspectives and a different national culture. The following is a brief summary of eight challenging issues and the IHRM problems associated therewith.


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Cam Caldwell 1. Selecting, training, compensating, and coaching expatriates and utilizing them effectively upon their return. The failure of corporations in properly selecting, training, compensating, and coaching expatriates is notorious. In a 1999 Harvard Business Review article about managing expatriates (expats), Black and Gregersen reported that 80% of midsize and large companies doing business abroad used expats and 45% planned to expand that approach to managing internationally5. Alarmingly, however, they also reported that 10 to 20 percent of expats came home from assignments early – and one-third of the remaining expats who completed their assignments in a host company did so unsatisfactorily6. Of those who completed their expat assignments one of four then left the company within the first year of returning home and immediately joined a competitor7. This data is alarming and emphasizes the failures of companies to effectively manage the expat relationship. According to a more recent 2013 article published by the Society for Human Resource Management, 58% of expat assignments were declared “successful” by HRPs and Top Management Teams8 – although that number is likely to be self-serving and inflated. 2. Developing policies that are culturally contextual. HRPs face the challenging problem of understanding and adapting to the complex factors required in recruiting, selecting, evaluating, and compensating employees hired within a host country – as well as adjusting to the nuances of the cultural perspectives of expats who work within that country9. Although Geert Hofstede has done a widely-respected job of classifying cultural factors that dominate in many countries, he has also noted that variance within countries was as wide as the differences in cultures between countries10. Understanding the best ways to interact with employees’ demands that HRPs research and apply how cultural factors affect employee relationships and the HRM policies that affect

This issue is addressed in Black, J. S. & Gregersen, H. B., (1999). “The Right Way to Manage Expats.” Harvard Business Review, Vol. 77, Iss. 2, pp. 52-63. 6 Ibid. 7 Ibid. 8 See Maurer, R., (2013). “Survey: Companies Fail to Train Managers for Overseas Assignments.” Washington, D. C.: Society for Human Resource Management July 8, 2013 found online on November 6, 2017 at https://www.shrm.org/resourcesandtools/hr-topics/global-hr/pages/fail-train-managers-overseasassignments.aspxm. 9 For a review of the many cultural factors that HRPs must address, see Dordevic, B., (2016). “Impact of National Culture on International Human Resource Management.” Economic Themes, Vol. 54, Iss. 2, pp. 281-300. 10 See Hofstede, G., (2003). Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations (2nd ed.). Thousand Oaks, CA: Sage Publishing. 5



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Figure 3.

those relationships11. The evidence suggests that companies provided HRPs with inadequate resources to properly assess cultural factors and develop HRM policies that mesh well with host country values12. 3. Supporting and training international host country personnel. International employees from the host country frequently find it challenging to make a smooth transition in adopting the implicit values of their hiring (or acquiring) corporation13. Assuming that onboarding a new employee is an easy task is a common error made by many organizations, but the challenge of integrating an employee into a new organizational culture is frequently difficult in the best of conditions14. Tarique and colleagues note that training international employees and providing management development opportunities for international staff is one of the important priorities of IHRM if a firm is to keep pace with its international competitors in the host country15. Specific training attention needs to emphasize assisting managers and supervisors to understand 11

Dordevic, B., (2016) op. cit. See Tarique, I., Briscoe, D., & Schuler, R., (2015). International Human Resource Management: Policies and Practices for Multinational Enterprises. New York: Routledge. 13 Ibid., Chapter 10, pp. 288-327l. 14 The difficulties associated with onboarding new employees are identified in many sources. See, for example, Caldwell, B. G., and Caldwell C., 2016. “Ten Classic Onboarding Errors: Violations of the HRM – Employee Relationship.” Business and Management Research, Vol. 5, No. 4, pp. 47-55 and available online at http://www.sciedu.ca/journal/index.php/bmr/article/view/10672/6501 15 See Tarique, I., Briscoe, D., & Schuler, R., (2015), op. cit., Chapter 10. 12


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Cam Caldwell the application of personnel policies and systems that convey firm values and mission and that integrate the corporate and national culture16. 4. Articulating and honoring ethical responsibilities in host countries. International differences exist in identifying what constitutes ethical behavior throughout the world and those ethical variations are frequently found in IHRM17. Assumptions about the employee relationship, the role of employees in decision-making, and the role of employee representatives as corporate policy setters are common IHRM issues that HRPs must understand to meet the duties and responsibilities owed to employees and to their companies18. The perceived rights of individual employees and the obligations of companies owed to expatriates are often the focus of subjective perceptions and the breach of those rights can be perceived by employees as unethical and unfair19. A key to resolving many of these perceived differences in ethical obligations can be mitigated by communicating to supervisors and employees the values-based differences that form the basis for the ethical assumptions; explaining how those differences will be handled to treat employees with their welfare in mind; and honoring duties to employees, customers, and society20. 5. Compensating employees across nations. Among the most difficult practical and philosophical issues facing international organizations is the handling of employee compensation – especially when the home and host countries involved differ markedly in their economic conditions and quality of life. The issue is made much more complex in light of the need to fairly compensate expat employees, provide housing and education for them and their families, and the contrast in the reward systems made available to expats and their families as compared to benefits provided to host country staff with whom they work21. According to one study, there are many different perspectives about the obligations that companies owe in compensating expats, with 15% of all companies not adopting a compensation philosophy regarding their expat benefit structure22. The Cost-of-Living index for countries varies widely and can be a major factor in affecting real and perceived income and employee benefits23.

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Ibid. See Winstanley, D. & Woodall, J., (1999). Ethical Issues in Contemporary Human Resource Management. London, UK: Palgrave. 18 Ibid. 19 See Rousseau, D. M., (1995). Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Thousand Oaks, CA: Sage. 20 This process is addressed in Katiyar, A., Thomas, K., and Caldwell, C. (2011). “Ethical Issues in International Human Resource Management.” Journal of Global Business Development, Vol. 3, No. 1, pp. 103-114. 21 Haile, S. & Williams, D., (2011). “Factors that Affect Expatriate Compensation.” Academy of Business Research Journal, Vol. 1, pp. 25-32. 22 Reported in Noe, R. A., Hollenbeck, J. R. Gerhart, B., & Wright, P. M., (2011). Fundamentals of Human Resource Management (4th ed.). New York: McGraw-Hill, Chapter 15. 23 See Tan, B. S., (2016). “On Comparing Cost of Living of Cities Using Expatriate Price Surveys.” Policy Studies, Vol. 37, Iss. 1, pp. 53-73. 17



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Figure 4.

6. Monitoring performance and identifying opportunities for performance improvement. Monitoring and evaluating expat performance and the success, or lack thereof, of a new international division is fraught with complex challenges. On-site information is often critical to accurately assess performance and providing people at an international division site to monitor a division can be both expensive and difficult to schedule. Moreover, those who conduct evaluations are often limited by their lack of familiarity with the host country culture, values, and the manner of doing business. In addition, it is difficult to identify the root causes of major shifts in clients and levels of business in foreign markets and/or to determine the relative contribution of a local host who serves as a coach for an expat24. Careful attention needs to be given to the process that will be used in assessing and improving a new division’s performance, with HRPs involved in establishing metrics by which to measure the division’s accomplishments25.

See, for example, van Bakel, M., Gerritsen, M. & van Oudenhoven, J. P., (2011). “Impact of a Local Host on the Success of an International Assignment.” Thunderbird International Business Review, Vol. 53, Iss. 3, pp. 391402. 25 See Tarique, I., Briscoe, D., & Schuler, R., (2015) op. cit. 24


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Cam Caldwell 7. Creating business partnership relationships with host country personnel. Establishing business partnerships between HRPs and host country personnel is dependent upon the ability of the HRPs to be perceived as competent, credible, and trustworthy26. Although the natural tendency may be to standardized HRM policies, the realities of the host country culture and HRM practices often require customizing those practices. Adopting HRM policies that fit local cultural needs enables HRPs to demonstrate that they understand the values of the local division. As with other business partnership relationships, HRPs are there to serve the managers and staff of the host country and to play a staff role, rather than to direct those employees and managers or to assume that the HRPs’ knowledge is superior to that of local individuals. By carefully managing their support role and by demonstrating that they clearly understand the local culture, values, and priorities, HRPs can become highly valued international business resources and can empower local managers and staff members to manage change and continuously improve27. 8. Managing the language, culture, and communication gaps. HRPs play a major role in monitoring organization expectations, perceptions, and communication about outcomes, policies, and goals and identifying gaps that have not been adequately addressed28. Differences in language, culture, and meaning are constant problems in international communication and the subtle nuances of those differences can destroy trust and reduce commitment. By becoming experts about a new international division, its needs, and its communication issues, HRPs fill a profoundly important role in assessing information and keeping the Top Management Team informed29. It is by enhancing this trust and commitment through improved communication that enables HRPs to play a critical role in improving the effectiveness of a new international division by engaging and involving employees30.

The universal problem facing HRPs for all of the issues associated with IHRM involves reaching consensus with the Top Management Team about the resources required to address the complexities associated with meeting organization needs in new See Cogin, J. A. & Williamson, I. O. (2014). “Standardize or Customize: The Interactive Effects of Environment Uncertainty on MNC Performance.” Human Resource Management, Vol. 53, Iss. 5, pp. 701-721. 27 Kochan, T. A., Dyer, L., (1993). Managing Transformational Change: The Role of Human Resource Professionals.” International Journal of Human Resource Management, Vol. 4, Iss. 3, pp. 569-590. 28 See Lado, A. A. & Wilson, M. C., (1994). “Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective.” Academy of Management Review, Vol. 19, Iss, 4, pp. 699-727 and Atwijuka, S. and Caldwell, C., 2017. “Human Resource Management and Strategic Management” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing. 29 See Thomas, G. F., Zolin, R., & Hartman, J. L., (2009) “The Central Role of Communication in Developing Trust and Its Effect on Employee Involvement.” Journal of Business Communication, Vol. 46, Iss. 3, pp. 287-310. 30 See Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. 26



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international divisions. Inevitably, organizations fail to adequately provide HRM resources to optimize the effective transition of a company, to support the staff required to succeed, and to enable HRPs to pay adequate attention to these eight important priorities.

Figure 5.

TWELVE PRINCIPLES TO GUIDE IHRM As HRPs who have international assignments seek to assess their own performance, or as members of Top Management Teams evaluate their HRM systems, there are wellestablished HRM principles that have proven helpful in determining whether there are opportunities for continued improvement. In this section we identify twelve principles and briefly comment on the practical issues associated with each one. 1. Begin at the top. Leaders of every organization possess the capacity to make or break its success; they have access to resources; they model behaviors; they provide a guiding vision; and they either earn the trust and followership of others or they destroy


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that trust by their actions, their inconsistencies, and their failure to realize the duties that they owe to others31. Hire for attitude AND intelligence. Both a positive willingness to work with others and the raw intelligence to understand critical issues and to craft workable solutions are essential in employees. Attitude is not enough. Intelligence, by itself, is insufficient32. Align talent with strategy. The strategy of an organization should always be the purpose for which the organization exists in adding value to society33. Achieving that purpose requires people whose talents match the organization’s mission and who make that purpose a personal quest34. Maintain a change perspective. Organizations that are constantly learning, striving to be excellent, and committed to innovation create a change-oriented culture that sustains constant improvement35. Acknowledging the constant pressure of change is a cultural value that must be present in today’s global marketplace36. Honor commitments. Building trust depends upon the ability of organization leaders to make and honor commitments and demonstrate personal credibility37. Keeping promises and honoring commitments are foundation elements of trustworthiness38. Emphasize employee retention. High performing organizations have realized that creating high trust cultures means that the employee-employer partnership must be based upon mutual commitment and shared goals. Creating a culture that values and retains its employees establishes that committed partnership39.

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This leadership role is clearly the message of Schein, E. H. & Schein, P., (2016). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. 32 Caldwell, C., Converse, P., and Beverage, M., 2018. “Selecting for ‘Flair Factors’ -- Improving the Selection Process.” Paper accepted for publication in the Journal of Management Development. 33 The importance of a purpose-driven organization is clearly enumerated in Collins, J. & Porras, J. I., (2004). Built to Last: Successful Habits of Visionary Companies (3rd ed.). New York: Harper Business. 34 See Collins, J., (2001). Good to Great: Why Some Companies Make the Leap and Others Don’t. New York: Harper Collins. 35 See Senge, P. M., (2006). The Fifth Discipline: The Art & Practice of a Learning Organization. New York: Doubleday. 36 Christensen, C. M., (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business Review Press. 37 See Kouzes, J. M. & Posner, B. Z., (2011). Credibility: How Leaders Gain and Lose It Why People Demand It. San Francisco, CA: Jossey-Bass. 38 This fundamental principle for people and organizations is identified in Pfeffer, J., (1998) op. cit. and Caldwell, C., and Clapham, S., 2003. “Organizational Trustworthiness: An International Perspective,” Journal of Business Ethics, Vol. 47, Iss. 4, p. 349-364. 39 See Pfeffer, J., (1998) op. cit. and Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass.



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7. Embed core values. Core values can be embedded into an organization by constantly emphasizing them, creating HRM systems that sustain those values, and living the values on a daily basis40. Organizations that are value-based and principle-centered honor what they claim to believe. Deviating from those values violates the organization’s norms41. 8. Integrate the culture. The integration of an organizational culture into international divisions requires careful attention to the unique elements of the host culture and a well-conceived plan for connecting values with organization systems. Cultures that have systems, programs, and policies that conflict with their values fail to create that integration42. 9. Balance global and local needs. The organizational purpose at the global level and the unique features of a country’s culture both create compelling needs that must be understood and integrated into any new international corporate division for it to optimize its performance. HRPs who understand the nuances of local needs can play a key part of this integration process43. 10. Market the company internally. Internally communicating to employees, emphasizing the company’s contribution to the larger community, and promoting its high values and goals are all part of the process of internal marketing. That internal marketing process builds esprit, increases team commitment, and elevates the pride of the entire work force44. 11. Create employee ownership. As organizational stewards, effective HRPs seek to make employees “owners and partners” with the opportunity to personally grow and improve along with the organization. When employees become stakeholders in the organization’s success and share in its profitability, they adopt that ownership mentality and increase their commitment45. 12. Balance short-term and long-term. Stewardship as it relates to IHRM includes honoring duties owed to all stakeholders, maintaining a long-term vision in the pursuit of wealth creation, and avoiding the pursuit of short-term profits that jeopardize the future46. The 40

See Atwijuka, S. & Caldwell, C., (2017) op. cit. See Schein, E. H. & Schein, P., (2016) op. cit. 42 Ibid. and Pfeffer, J., (1998) op. cit. 43 See Tarique, I., Briscoe, D., & Schuler, R., (2015) op. cit. 44 See Caldwell, C., Licona, B., and Floyd, L. A., 2015. “Internal Marketing to Achieve Competitive Advantage.” International Business and Management, Vol. 10, Iss. 1., pp. 1-8. 45 See Pfeffer, J., (1998) op. cit. and Beer, M. (2009) op. cit. 46 Compare Caldwell, C., Truong, D., Linh, P., and Tuan, A., 2011. “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. 41


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Cam Caldwell moral obligation of every organization is to focus on creating value both shortterm and long-term47.

Figure 6.

There is no guarantee to success in international business because of the constancy of change, the rapidity of innovation, and the fierce struggle for competitive advantage48. However, HRPs and their Top Management Teams who apply these twelve IHRM principles can exponentially increase their likelihood for success – but if, and only if, they constantly seek to improve and excel.

CONCLUSION Despite an overwhelming body of evidence, international corporations, their leaders, and their HRPs fail to acknowledge the importance of the key roles of HRM, the vital importance of IHRM issues that seem to constantly recur, and the fundamental principles upon which HRM is founded for achieving long-term success. As is the case with many 47

That moral requirement is clearly set forth in Lennick, D. & Kiel, F., (2011). Moral Intelligence 2.0: Enhancing Business Performance and Leadership Success in Turbulent Times. Boston, MA: FT Press. 48 That verity is constantly reemphasized by scholars and practitioners. See, for example, Quinn, R. E., (1996). Deep Change: Discovering the Leader Within. San Francisco, CA: Jossey-Bass.



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issues, the problem is often not that we are unaware of what needs to be done or what standards to establish – but is in the implementation of what ought to be done. There is, however, a continuing lack of insight about the important role of well-qualified, dedicated, and competent HRPs – and, unfortunately, often that same failure to acknowledge the evidence on the part of Top Management Teams and leaders who discount the HRM role in modern organizations.

Figure 7.

Questions to Ponder 1. What barriers do you think are most difficult for HRPs to overcome as they seek to contribute to the success of an international division? 2. Which of the twelve principles do you consider to be the most difficult to apply within an international context? Why? 3. Why are companies so unsuccessful in placing and retaining expats? What solutions do you think they should consider? What do you think should constitute “expat success” for a company?


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No Man Is an Island -- Case Study -By Dr. Sarah J. Smith In some organizations, HR is responsible for safety and health of the employees. HRPs can assist a safety professional or division when developing or revising company polices. The duty to protect employees from harm continues when doing business on a global scale. One challenge to IHRM professionals is recommending employment health and safety initiatives abroad. The question of home country v. host country safety and policy must also be reconciled. This quest should begin with top management to set policies and guidelines that will keep workers safe and healthy while representing the home plant as an expatriate, or for employees of a foreign-based location to meld their safety culture with the host country’s requirements and philosophies. Nikolaj, a Danish plant manager, was sent to the corporation’s production facility in Beijing, China to evaluate safety and health concerns as well as improve operations at this global location. A few months prior, a top manager from Denmark visited the Chinese plant location. He was less than impressed with what was seemingly a lack of safety, health, and environmental policies to protect workers. The Danish Working Environment Act protects those working in Denmark and offshore, but not abroad. The Beijing facility had adopted some best practices put forth in the Act, however, room for improvement existed. Nikolaj had his family accompany him in China. He was surprised to find smog indicators in public areas, such as on highways. In many northern countries, school is canceled when conditions are not safe. In Beijing schools may be canceled for smog days. Students stay home from school and construction work is called off. Research by Nanjing University’s School of the Environment links smog to nearly one-third of the deaths in China. In the United States, the Occupational Safety and Health Act was passed into law in 1970. The act does not transcend country borders. Larry, an American plant manager for a wire manufacturer, was sent to China with his Chinese wife, to establish production in Changshu, a small city about an hour’s drive from Shanghai. The plant was immaculate and workers were highly devoted because they were allowed to return home every night rather than stay in rooms of a company dormitory. At one company work station an employee guided wire through his fingers after it went through a cooling tank to check for wire quality. Larry discovered that this man had no fingerprints because he chose not to wear protective gloves. Nikolaj and Larry felt they needed home country top management support to design and implement health, safety, and environmental company policies at the China plant.



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1. If you were a member of the IHRM team, how would you develop policies for host country employee health and safety? What might convince top management to work with the IHRM team on company policies when working abroad? 2. Both Nikolaj and Larry had to lock themselves in their offices during times of employee unrest. They were instructed by their perspective home country HRPs to roll their office bars down, place any money in their office safe, and seek shelter in place. It is not uncommon for Chinese workers to take over a plant location in order to obtain benefits or additional compensation. How would you frame a safety policy for people like Nikolaj and Larry? 3. The home page for the US State Department, travel.state.gov, lists travel alerts, travel warnings, and worldwide cautions. Should this resource be incorporated into IHRM policy for a US company? What would you do if you found an alert or warning for a country in which one of your US workers was assigned?

Integrating HR Policies Abroad -- Case Study -By Dr. Sarah J. Smith In the US, the personnel manual is a common resource to communicate policies to employees. Several policies need to be revised for US workers assigned abroad. Jenny, an International HRP, looked for resources to guide her as she drafted policies to address host country cultural issues. Two of her favorite resources were globalEDGE and The GLOBE Study. GlobalEDGE was established by Michigan State University. This is a vast resource which includes the information from Culture Crossings on traditions, expectations, and culture in a host country. The second resource, The GLOBE Study, extends the work of Geert Hofstede and his focus on cultural dimensions. GLOBE is an acronym for Global Leadership and Organization Behavior. For 62 countries, The GLOBE Study examined leadership worldwide. Both resources can provide the International HRP with valuable information as to how organizational members should lead and function within a global society. The GLOBE Study looks to assist host country leaders so that innovation is encouraged because the leader is able to motivate, influence, and enable others to contribute to the organization's success. After a review of home country policies, the HRP involved in IHRM formulated recommendations to the top management team. They understood the importance of support for the host country leader and asked HR to proceed with their review. The HRPs in the international division discovered was a need to research and customize HR policies associated with the following topics:


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Cam Caldwell Accepting gifts/Giving Gifts Drinking on the Job Dress Code Gender Rules Meetings Negotiations Titles, and Business Card 1. Go to globaledge.msu.edu and choose an HR policy-related topic. How do you think the International HR team should address country differences for this topic? 2. What do you think is the best way to communicate corporate IHRM policy and procedure guidelines to host country leaders? 3. In addition to the topic areas listed above, do you think there should be other policies to consider? What other topics do you think might be included?

REFERENCES Atwijuka, S. and Caldwell, C., 2017. “Human Resource Management and Strategic Management” in Competitive Advantage: Strategies, Management, and Performance, (C. Caldwell & V. Anderson, eds.). Hauppauge, New York: NOVA Publishing. Beer, M., (2009). High Commitment High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. Bennett, N. & Lemoine, G. J., (2014). Harvard Business Review, Vol. 92, Iss. 1/2, p. 27. Black, J. S. & Gregersen, H. B., (1999). “The Right Way to Manage Expats.” Harvard Business Review, Vol. 77, Iss. 2, pp. 52-63. Caldwell, B. G., & Caldwell C., (2016). “Ten Classic Onboarding Errors: Violations of the HRM – Employee Relationship.” Business and Management Research, Vol. 5, No. 4, pp. 47-55 and available online at http://www.sciedu.ca/journal/ index.php/bmr/article/view/10672/6501. Caldwell, C., & Clapham, S., 2003. “Organizational Trustworthiness: An International Perspective,” Journal of Business Ethics, Vol. 47, Iss. 4, p. 349-364. Caldwell, C., Converse., P., and Beverage, M., (2018). “Selecting for ‘Flair Factors’ -Improving the Selection Process.” Paper accepted for publication in the Journal of Management Development. Caldwell, C., Licona, B., & Floyd, L. A., 2015. “Internal Marketing to Achieve Competitive Advantage.” International Business and Management, Vol. 10, Iss. 1., pp. 1-8.



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Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. Christensen, C. M., (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business Review Press. Cogin, J. A. & Williamson, I. O. (2014). “Standardize or Customize: The Interactive Effects of Environment Uncertainty on MNC Performance.” Human Resource Management, Vol. 53, Iss. 5, pp. 701-721. Collins, J. & Porras, J. I., (2004). Built to Last: Successful Habits of Visionary Companies (3rd ed.). New York: Harper Business. Collins, J., (2001). Good to Great: Why Some Companies Make the Leap . . . .And Others Don’t. New York: Harper Collins. Dixon, R. D., Caldwell, C., Chatchutimakorn, A., Gradney, K., and Rattanametangkul, K., 2010. “Managing Justly Across Cultures: The Problem of Fairness in International Business.” Journal of Management and Strategy, Vol. 1, pp. 22-32. Dordevic, B., (2016). “Impact of National Culture on International Human Resource Management.” Economic Themes, Vol. 54, Iss. 2, pp. 281-300. Haile, S. & Williams, D., (2011). “Factors that Affect Expatriate Compensation.” Academy of Business Research Journal, Vol. 1, pp. 25-32. Hofstede, G., (2003). Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations (2nd ed.). Thousand Oaks, CA: Sage Publishing. Katiyar, A., Thomas, K., and Caldwell, C. 2011. “Ethical Issues in International Human Resource Management.” Journal of Global Business Development, Vol. 3, No. 1, pp. 103-114 Kochan, T. A., Dyer, L., (1993). Managing Transformational Change: The Role of Human Resource Professionals.” International Journal of Human Resource Management, Vol. 4, Iss. 3, pp. 569-590. Kouzes, J. M. & Posner, B. Z., (2011). Credibility: How Leaders Gain and Lose It Why People Demand It. San Francisco, CA: Jossey-Bass. Lado, A. A. & Wilson, M. C., (1994). “Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective.” Academy of Management Review, Vol. 19, Iss, 4, pp. 699-727. Lennick, D. & Kiel, F., (2011). Moral Intelligence 2.0: Enhancing Business Performance and Leadership Success in Turbulent Times. Boston, MA: FT Press. Maurer, R., (2013). “Survey: Companies Fail to Train Managers for Overseas Assignments.” Washington, D. C.: Society for Human Resource Management July 8, 2013 found online on November 6, 2017 at https://www.shrm.org/resourcesandtools/ hr-topics/global-hr/pages/fail-train-managers-overseas-assignments.aspxm.


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Noe, R. A., Hollenbeck, J. R. Gerhart, B., & Wright, P. M., (2011). Fundamentals of Human Resource Management (4th ed.). New York: McGraw-Hill. Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. Quinn, R. E., (1996). Deep Change: Discovering the Leader Within. San Francisco, CA: Jossey-Bass. Rousseau, D. M., (1995). Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Thousand Oaks, CA: Sage. Schein, E. H. & Schein, P., (2016). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. See Inc., (2017). “Global Business” Sept. 10, found online on November 4, 2017 at https://www.inc.com/encyclopedia/global-business.html. Senge, P. M., (2006). The Fifth Discipline: The Art & Practice of a Learning Organization. New York: Doubleday. Tan, B. S., (2016). “On Comparing Cost of Living of Cities Using Expatriate Price Surveys.” Policy Studies, Vol. 37, Iss. 1, pp. 53-73. Tarique, I., Briscoe, D., & Schuler, R., (2015). International Human Resource Management: Policies and Practices for Multinational Enterprises. New York: Routledge. Thomas, G. F., Zolin, R., & Hartman, J. L., (2009) “The Central Role of Communication in Developing Trust and Its Effect on Employee Involvement.” Journal of Business Communication, Vol. 46, Iss. 3, pp. 287-310. van Bakel, M., Gerritsen, M. & van Oudenhoven, J. P., (2011). “Impact of a Local Host on the Success of an International Assignment.” Thunderbird International Business Review, Vol. 53, Iss. 3, pp. 391-402. Winstanley, D. & Woodall, J., (1999). Ethical Issues in Contemporary Human Resource Management. London, UK: Palgrave. Wooten, A., (2011). “Chevy Nova Tale, Other Marketing Myths Debunked.” Deseret News July 10 International Business found online on Nov. 4, 2017 at https://www.deseretnews.com/article/705388000/Chevy-Nova-tale-other-globalmarketing-myths-debunked.html




Chapter 15

THE FUTURE OF HUMAN RESOURCE MANAGEMENT: RESPONDING TO A NEW CONTEXT Cam Caldwell1 and Verl Anderson2 1

Distinguished Visiting Scholar -- Modern College of Business and Science, Muscat, Oman 2 Dixie State University, St. George, Utah, US

As the increasing demands of global competition, customer expectations, and an uncertain economy have challenged modern corporations, their leaders have recognized the Darwinian impacts of a business world that has required corporations to be more focused, more innovative, and more competent to survive. Human Resource Professionals (HRPs) have realized that they must either respond to those same exponentially different demands or find themselves relegated to being subordinate to their organizations’ Top Management Teams, rather than strategic participants in framing their companies’ futures. Although the Human Resource Management (HRM) profession has evolved significantly, many HRPs and their organization leaders continue to view employees as a cost to control and minimize, rather than as the source of innovation, improved customer service, and wealth creation1. The purpose of this chapter is to identify the changes facing the HRM profession and the roles of HRPs as those who work in the profession respond to an ever-evolving world. The chapter begins with a brief summary of the evolution of HRM, identifying many of the factors that have required organizations to rethink their assumptions about most effectively managing people and the strategic importance of HRM. We identify the challenges HRPs and organization leaders face as they prepare for a changing world in 1

This perspective has been identified as a short-coming of many organizations by Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press.


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which challenges and problems are ominous and fraught with economic, social, and environmental problems that world leaders seem incapable of addressing2. The chapter then identifies ten predictions about positive changes that are necessary to address these challenges. Although we acknowledge that any forecast is speculative and uncertain to some degree, the insights of highly regarded scholars and practitioners are cited in identifying opportunities for HRPs as they contemplate their contribution to a difficult world.

EVOLUTION OF HRM Throughout its history, HRM has primarily been focused on administrative functions and tasks in its staff support role3. Although these tasks were necessary and contributed to an organization’s efficiency, they tended to be technically focused rather than strategic. The management of people did not fully emerge as its own discipline until the 1920’s and was then called “Personnel Administration4.” Prior to that period individual experts in scientific management and industrial relations like the Gilbreths and Frederick Taylor had acknowledged the importance of the individual in the organization and the interaction of groups on performance and productivity - but those insights were not widely held5. Personnel administration was primarily focused on hiring, training, record keeping, and compensation6. The rise of assembly line manufacturing treated employees as an extension of the manufacturing process and led to the rise of unionism in response to employees being treated as commodities and costs to be minimized7. With the Hawthorne studies conducted by Mayo and Roethlisberger, attention began to be focused on the importance of understanding the psychology of work8 and led to the founding of what became known as the “human relations school of management.”

The dangers facing tomorrow’s world have been cited by many scholars, including Roger Lowenstein and Thomas L. Friedman. See also Caldwell, C. and Anderson, V. 2017. “Ethical Leadership in Troubled Times.” International Journal of Public Leadership, Vol. 13, Iss. 2, pp. 54-58. 3 For an excellent summary of the evolution of HRM through the end of the 20th century, see Ehrlich, C. J., (1997). “Human Resource Management: A Changing Script for a Changing World.” Human Resource Management, Vol. 37, Iss. 1, pp. 85-89. 4 For a complete history of the evolution of modern management, see Wren, D. A. & Bedeian, A. G., (2009). The Evolution of Management Thought. Chennai, India: John Wiley & Sons. 5 Ibid. 6 Ibid. 7 See Ehrlich, C. J., (1997) op. cit. 8 See SHRM, (2009). A History of Human Resources: SHRM’s 60 Year Journey. Alexandria, VA: Society for Human Resource Management. 2


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Figure 1.

This perspective recognized the value of the supervisor-employee relationship and the role of teams in organizations in determining production9, but its focus was primarily on “treating people as if they were important” - rather than fully acknowledging their worth and potential contribution. Business innovators like Chester Barnard and Mary Parker Follett had recognized the importance of cooperation and collaboration as factors affecting work success10, as well as the advantages of “power with” rather than simply “power over” employees11. However, that perspective was not universally understood and conflicts often arose between labor and management. Selection and testing became an HRM priority during World War II, especially when psychologists and military personnel recognized that general intelligence was insufficient as a predictor for the success of individuals chosen for military intelligence and espionage12. Behavioral simulations and assessment centers, originally used by the Germans during World War I, were adopted by the Office of Strategic Service and proved to be far more accurate predictors of behavioral skills than other methods13. After World War II, these same selection methods were subsequently used by large organizations that recognized the need to identify and develop candidates with superior 9

Ibid. This insight was emphasized by Barnard, C. I., (1938). The Functions of the Executive. Cambridge, MA: Harvard College. 11 The contributions of Mary Parker Follett, who was often labeled “light years ahead of her time,” are found in Follett, M. P., (1940) Dynamic Administration: The Collected Papers of Mary Parker Follett edited by E. M. Fox and L. Urwick. London: Pitman Publishing. 12 For information about the history and use of assessment centers, see Thornton III, G. C., (1992). Assessment Centers in Human Resource Management. Upper Saddle River, NJ: Prentice Hall. 13 Ibid. 10


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interpersonal skills14. Once again, however, insights acquired about the effective utilization of people in organizations were not universally understood15. The contributions of scholars like Douglas McGregor16 and Abraham Maslow17 provided managers with important insights about the nature of human motivation. Following World War II, HRM became relatively less important than other management functions in the United States (US). Because of the advantageous position of the US, relative to other nations attempting to recover from the war, the country enjoyed economic growth and prosperity and businesses thrived without extensive international competition. However, by the decade of the 1980’s American businesses began to feel the effects of growing international competition in a world that had become more technologically sophisticated, more globally competitive, and more connected as a result of the advent of the World Wide Web18. The consequences of constant change in the modern era of management required HRM to become more strategic in its focus, more insightful in its understanding of how organizations create value, and more skilled in assisting department managers and the Top Management Team of organizations to establish organization cultures and programs that bring out the best in employees.

Figure 2. 14

Ibid. Wren, D. A. & Bedeian, A. G., (2009) op. cit. 16 The landmark contribution of McGregor is McGregor, D., (1960). The Human Side of Enterprise. New York: McGraw Hill. 17 Maslow’s insights about a hierarchy of needs and personality are found in Maslow, A., (1970). Motivation and Personality. New York: Joanna Cotler Books. 18 Much of this evolution and the impact of change is chronicled in Friedman, T. J., (2006). The World is Flat: The Globalized World in the 21st Century. New York: Penguin Books. http://www.huffington post.com/2013/09/06/illiteracy-rate_n_3880355.html. 15



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STRATEGIC ROLES FOR HRPS The demands of change in the global marketplace require organizations to be more productive, more efficient, and more flexible19. The strategic role of human resources has become increasingly important in empowering employees, involving them as partners in the process of continuous improvement, and adding value in meeting the needs of demanding customers20. In a misguided attempt to become more profitable, some organizations have opted to contract out HRM functions and continue to treat employees as costs that need to be controlled21. This latter approach has resulted in a deterioration of loyalty and trust in the workplace and the creation of a transactional approach to employee relations wherein employees are paid for their time but not valued as organizational partners22.

Figure 3.

For firms that view employees as engaged and empowered partners, however, HRPs began to demonstrate six professional competency roles in the areas of business knowledge, change management, and HRM service delivery23. The following is a brief summary of those six roles.

19

These phenomena are addressed in Pfeffer, J., (1998) op. cit. See Beer, M., (2009). High Commitment, High Performance: How to Build a Resilient Organization for Sustained Advantage. San Francisco, CA: Jossey-Bass. 21 This trend is documented in Pfeffer, J., (1998), op. cit. 22 Ibid. 23 These competencies are identified in Ulrich, D., Younger, J., Brockbank, W., and Ulrich, M., (2012). HR from the Outside In: Six Competencies for the Future of Human Resources. New York: McGraw Hill. The competencies are found on pages 51-54. 20


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Cam Caldwell and Verl Anderson 1) Credible Activist. As advocates for achieving the highest potential of employees and the organization, HRPs honor commitments and do what they promise to do. They can be counted on. They have personal integrity. They build trust and strive to focus their organizations on creating win-win partnerships with employees. 2) Strategic Positioner. HRPs understand the company’s vision, its relationships with customers and within the industry, and the HRM role in supporting and sustaining the strategic goals of the organization. HRPs recognized that the primary role of HRM was to create aligned systems, programs, and policies that fit with their organization’s strategic mission and to create a culture that reinforced company values24. 3) Capacity Builder. HRPs have worked with department heads and employees to build the unique capabilities of the organization, to expand the creation of meaning, and to help make work purposeful and results-oriented. The role of HRM has been to help the organization to fully engage and empower employees in the pursuit of continuous improvement, constant learning, and the ongoing improvement of employee skills and organization capacity25. 4) Change Champion. HRM professionals develop the structures, systems, and processes that support innovation and change. HRPs help their organizations to learn from both successes and failures and help employees recognize the need for change - recognizing that their organizations must be well informed about competitors, responsive to customer requirements, and flexible in the ability to adapt to a constantly evolving world26. 5) Innovator and Integrator. HRPs apply HRM principles, develop ways to improve HRM practices, and integrate systems and practices to help their organizations to more effectively achieve business results. This role transcends simply keeping pace with “best practices” and includes developing new and better ways to build commitment and the extra-mile dedication that is the difference between good performance and the truly outstanding outcomes that create long-term competitive advantage27. 6) Technology Proponent. HRPs utilize technology to connect people, to create relationships, build connection with customers, and monitor competitors. HRPs also play an important role in refining results-oriented management information systems that identify value added and assist the organization to monitor progress and make required improvements. These information management systems are

24

Pfeffer, J., (1998) op. cit. Ibid. 26 Beer, M., (2009) op. cit. 27 To understand more about this higher degree of follower stewardship commitment and its impact on wealth creation, see Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270-285. 25



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both technical and behavioral and are critical to building consensus, increasing mutual understanding, and aligning the organization28.

Figure 4.

Although some HRPs have recognized the need to acquire these six roles as part of their strategic competency, in other organizations the HRM function is focused on reducing labor costs; downsizing whenever possible; hiring part-time, contract, and temporary employees to avoid the costs of health care benefits; and treating employees in a transactional manner rather than as empowered partners29. Unfortunately, the result of policies that have focused on cost-cutting, down-sizing, and creating arms-length relationships with employees has also undermined employee loyalty and rarely generated long-term value creation30.

ALTERNATIVE FUTURES According to a Public Broadcasting Service report conducted in 2014, 54% of Americans surveyed opined that the quality of life in the United States would continue to 28

29

30

The behavioral significance of this role and its impact on the organization are addressed in Caldwell, C. & Ndalamba, K., 2017. “Human Resource Professionals as Strategic Leaders – A Behavioral Opportunity for Improving Information Management.” Journal of Values-Based Leadership, Vol. X, Iss. 1, pp. 44-53. This trend has been identified by Beer, M., (2009) op. cit. and Pfeffer, J., (1998) op. cit. and both scholars have explained why it is a fallacious long-term strategy for wealth creation. See Pfeffer, J., (1998) op. cit. and Cameron, K., (1994). “Guest Editor’s Note: Investigating Organizational Downsizing – Fundamental Issues.” Human Resource Management, Vol. 32, Iss. 2, pp. 183-188. Both of these insightful sources identify the limitations of cost-reduction programs on creating organizational value.


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decline by the year 205031, with an equal number feeling that conditions had worsened in the previous four years32. Only 23% of respondents thought that life conditions would improve33. In the wake of the 2008-2009 fiscal crisis, the challenges facing business in a global marketplace are uncertain at best34. Elected officials and business leaders have been criticized for providing retirement benefits for workers that are both unaffordable and beyond the realm of imagination for many citizens35. And the list of environmental, financial, and social problems goes on and on – ranging from the decline of family values to an ostrich-like denial of changes in weather patterns and the denial of the effects of global warming due to industrialization36. Employee engagement - the measure of whether employees are enthusiastic about, involved in, and committed to their work and workplace - has dropped so low that 87% of employees worldwide acknowledged that they are not engaged. In addition, at least 17% of employees from new hires to long-tenured employees admit that they are disengaged at work37. According to Gallup, only 5% of all employees in the work force qualify as fully engaged high performers38. As businesses struggle to survive, they sometimes mortgage future opportunities by chasing quarterly report results that both misrepresent their financial health and undermine long-term wealth creation39. Although the empirical evidence suggests that downsizing efforts have not created long-term financial benefits for most corporations or for society, cost savings efforts that actually undermine the ability of firms to increase long-term wealth are commonly initiated – even by many of the world’s most wellknown firms and most highly regarded leaders40.

Cass, C., (2014). “Most Americans Have a Gloomy Outlook for Life in 2050.” PBS News Hour found online on September 13, 2017 at http://www.pbs.org/newshour/rundown/most-americans-have-a-gloomy-outlook-forlife-in-2050/. 32 Ibid. 33 Ibid. 34 This uncertainty is the clear message of a number of concerned writers, including Friedman. 35 in Lowenstein, R., (2009). While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis. New York: Penguin Press. 36 Friedman, T. L., (2009) op. cit. 37 Cited in Mann, A., & Harter, J., (2016). “The Worldwide Employee Engagement Crisis.” Business Journal, January 16th found online on September 14, 2017 at http://www.gallup.com/businessjournal/188033/ worldwide-employee-engagementcrisis.aspx?g_source=Business+Journal&g_medium=CardRelatedItems&g_campaign=tiles. 38 Harter, J., (2015). “Companies Are Maximizing Only 5% of Their Workforces.” Business Journal, March 24 th found online on September 14, 2017 at http://www.gallup.com/businessjournal/182087/companiesmaximizing-workforces.aspx?g_source=Business+Journal&g_medium=CardRelatedItems&g_campaign=tiles. 39 The frequency of accounting misrepresentations led to Sarbanes-Oxley and is addressed in numerous studies such as Goldman, E. & Slezak, S. L., (2006). “An Equilibrium Model of Incentive Contracts in the Presence of Information Manipulation.” Journal of Financial Economics, Vol. 80, No. 3, pp. 603-626. 40 See Pfeffer, J., (1998) op. cit. 31



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HRM-RELATED PREDICTIONS ABOUT THE FUTURE HRM has the potential to play an important role in the future success of business in the decades ahead.

Figure 5.

We have identified ten significant changes that are likely to affect the roles of HRPs in the decades ahead – although we acknowledge that these changes are prescriptive in addition to being predictive about future conditions. Each of these ten changes in the status quo have the potential to benefit businesses as well as making a significant contribution to the quality of life in tomorrow’s complex and challenged world. 1) Consistent with the research about High Performance Work Systems, corporate CEOs will recognize the importance of an expanded role of HRM. High Performance and High Trust work systems with aligned HRM systems, policies, and practices focused on increasing employee empowerment and participation have been proven to increase the profitability of businesses that adopt such practices – in addition to improving quality, employee morale, and the quality of customer service41. HRPs will play a key supportive role in helping organizations

41

The research of Huselid, M., (1995) has documented the value of High Performance Work Systems and aligned HRM programs and policies. See Huselid, M., (1995). “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance.” Academy of Management Journal, Vol. 38, Iss. 3, pp. 63-672.


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Cam Caldwell and Verl Anderson to create organizational cultures, aligned systems, and programs that mesh with the values of High Performance Work Systems42. 2) HRPs will become increasingly competent in financial management, business partnering, organization analysis, and internal consulting. The demands of an increasingly competitive global marketplace will require HRPs to either become competent resources in these key areas43 or find their role being downsized or contracted out44. By achieving these competencies, HRPs will enhance the ability of organizations to achieve their strategic objectives and demonstrate their value to their organizations45. 3) Top companies will recognize the importance of assessment centers and other behavioral tools to improve employee training and selection. Hiring the right people, putting employees in the right positions, and ensuring that they are competently trained to perform critical duties have always been challenges facing organizations46. Although assessment centers and other behavioral tools require proper administration to be run correctly47, they are far more effective than other selection tools and are extremely valuable as a resource for evaluating and developing managerial and interpersonal skills48. 4) Companies that do business globally will exponentially improve their ability to prepare, train, and retain expatriate employees given international assignments. As the workforce becomes more global, companies have increasingly realized their failures in managing relationships with expatriate employees49 and the ethical responsibilities associated with those assignments50. Improperly preparing and training the expatriate employee and their families and the failure to utilize insights obtained by persons assigned in foreign countries have led to many assignments being prematurely cut short and have resulted in alarmingly high turnover rates once employees return. HRPs will be required to do a much better job of selecting, preparing, and managing the reentry of expatriates into their organizations51.

42

Pfeffer, J., (1998) op. cit. J., (2014). Strategic Human Resource Management (4th ed.). Mason, OH: South-western Publishing. 44 2005). “Outsourcing the Human Resource Function: Environmental and Organizational Conditions that Affect HR Performance.” Journal of Business Strategies, Vol. 22, No. 1, pp. 55-73/. 45 Mello, J., (2014) op. cit. 46 These key priorities have been clearly articulated in Collins, J., (2001). Good to Great: Why Some Companies Make the Leap . . . . And Others Don’t. New York: HarperBusiness. 47 The difficulties associated with conducting assessment centers and common errors made are cited in Caldwell, C., Thornton III, G. C., and Gruys, M. 2003 “Ten Classic Assessment Center Errors: Challenges to Selection Validity.” Public Personnel Management, Vol. 32, Issue 1, pp 73-88. 48 See Thornton III, G. C., (1992), op. cit. 49 These issues are identified in Vance, and Paik, Y., (2014). Managing a Global Workforce” Challenges and Opportunities in International Human Resource Management (3rd ed.). New York: Routledge. 50 These duties are identified in Katiyar, A., Thomas, K., and Caldwell, C. (2011). “Ethical Issues in International Human Resource Management.” Journal of Global Business Development, Vol. 3, No. 1, pp. 103-114. 51 Ibid. 43



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5) Corporations, universities, and governments will increasingly partner in the pursuit of shared learning and economic growth. Although there are a growing number of cities and universities which have created local business incubators to support start-up companies and entrepreneurship, the need for exponentially expanded partnering between corporations, universities, and government has been identified as an opportunity area demanding increased participation52. HRPs have the opportunity to reach out to business faculty to identify opportunities for faculty to conduct publishable academic research that can also help businesses to improve their work climate and employee commitment. 6) Governments will increasingly provide tax credits and grants to companies that engage in Corporate Social Responsibility programs that address serious national and international problems. The need for cooperative partnerships and economic support from governments to encourage and assist Corporate Social Responsibility goals has been identified by many experts53. The obligation to expand the role of business to address and resolve significant social problems has similarly been addressed as an ethical obligation of business in today’s troubled world54. The need for HRPs to become the moral conscience of their companies in honoring social responsibilities has also been addressed by many experts55. 7) Governments will reinstitute Workforce Development Programs that train the illiterate and undereducated population to prepare to be work ready. According to the U. S. Department of Education, the mean annual income of those who dropped out of high school, age 18 to 67, was $18,000 less than the income of those with a GED or who had graduated56 or $630,000 over their lifetime57. In addition, other studies report that the high school dropout rate in America’s fifty largest cities was 47% - with one study reporting that only 38% of high school

Caldwell, C., (2014). “Forging Ethics-Based Business Partners: The Integration of Business, Employees, and Education.” Graziadio Business Review published by Pepperdine University in the April, 2014 edition found online at https://gbr.pepperdine.edu/2014/04/forging-ethics-based-business-partners/. 53 For example, see Friedman, T. L., (2009) op. cit. 54 The importance of this role has been identified by Solomon, R. C., (1992). Ethics and Excellence: Cooperation and Integrity in Business. Oxford, UK: Oxford University Press. 55 This role of HRPs becoming the moral conscience of their companies has been discussed in many contexts including Bierema, L. L., and D’Abundom, M. L., (2004). “HRM with a Conscience: Practicing Socially Responsible HRD.” International Journal of Lifelong Education, Vol. 23, Iss. 5, pp. 443-458. Others like Stephen R. Covey have also offered commentaries about the need for organizations to periodically assess their values in Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. 56 See this information in U. S. Department of Education, (2011). Trends in High School Dropout and Completion Rates in the United States 1972-2009 – Compendium Report. Washington DC: National Center for Education Statistics - Institute of Education Sciences. 57 The lifetime impact of failure to earn a high school diploma, as compared to a GED, as identified by a National Center for Education Statistics study, was reported in Zhao, E., (2012). “High School Dropout Rates for Minority and Poor Students Disproportionately High.” Huffington Post October 20, 2011 update February 14, 2012 and found online on September 17, 2017 at http://www.huffingtonpost.com/2011/10/20/high-schooldropout-rates_n_1022221.html. 52


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Cam Caldwell and Verl Anderson freshmen in the Cleveland inner cities graduated within four years58. Of those who do graduate from high schools, 19% are functionally illiterate and cannot read above the 5th grade level59. Workforce Development Programs, funded by state and federal governments, are likely to partner to a much greater extent with local businesses, colleges, and universities to assist this unprepared population – with HRPs playing a key coordinating role for businesses60. 8) Governments will provide academic institutions and businesses with financial incentives to involve students in service learning projects that benefit identified problems. Service learning has become a well-established part of many higher education programs and has had a positive impact on Corporate Social Responsibility, student attitudes, and service project recipients61. Corporate HRPs will become increasingly involved in joining with local academic institutions so that both businesses and schools can benefit from this effort by governments to provide incentives to address community priorities and benefit society62. 9) Standards for employee accountability will become much more sophisticated as HRPs partner with department heads to measure and improve employee productivity. Measuring value added and employee performance will increasingly become a key function of HRPs who will team with department leaders and Finance Department staff to improve metrics to measure employee performance63. HRPs will be required to clearly understand and evaluate the costs and benefits of human performance64 and will develop greater competence in managing information and measuring effectiveness65. 10) Companies, non-profit organizations, and governmental agencies will increasingly partner with academic institutions to facilitate Action Training and Research projects that improve the efficiency and effectiveness of local organizations and benefit local communities. The importance of integrating Corporate Social Responsibility with the needs of local communities has been recognized as a critical factor in resolving those problems at the local level.

See Dillon, S., (2010). “Large Urban-Suburban Gap Seen in Graduation Rates.” New York Times, Feb 18 found online on September 17, 2017 at http://www.nytimes.com/2009/04/22/education/22dropout.html?mcubz=1. 59 This information reflects a study conducted by the U. S. Department of Education and the National Institute of Literacy, as reported in “The U. S. Literacy Rate Hasn’t Changed in Ten Years.” Huffington Post September 6, 2013 updated on December 12, 2014 found online on September 17, 2017 at http://www.huffingtonpost.com/ 2013/09/06/illiteracy-rate_n_3880355.html. 60 Proposed in Anderson, V., Ndalamba, K. K., and Caldwell, C., (2017) op. cit. 61 See Lester, S. W., Tomkovick, C., Wells, T., Flunker, L., & Kickul, J., (2005). “Does Service-Learning Add Value: Examining the Perspectives of Multiple Stakeholders.” Academy of Management Learning and Education, Vol. 4, No. 3, pp. 278-294. 62 The value of service learning in enhancing social responsibility is identified in Tyran, K. L., (2017). “Transforming Students into Global Citizens: International Service Learning and PRME.” International Journal of Management Education, Part B, Vol. 15, Iss. 2, pp. 162=171. 63 The integrated role of HRPs and Finance personnel is described in Roy, S. N., (2016). HR and Finance: Two Inseparable Heads of the Same Organizational Coin.” Human Capital, Vol. 19, Iss. 8, pp. 40-43. 64 Fritz-Enz, J., (2009). The ROI of Human Capital: Measuring the Economic Value of Employee Performance. New York: AMACOM. 65 See Caldwell, C. and Ndalamba, K. K., (2016) op. cit. 58



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Incorporating an Action Training and Research model of collaboration and involving non-profit and governmental agencies as partners will enhance the planning and effectiveness of such projects66. HRPs will play a liaison role in making such projects happen67. These ten changes can assist modern organizations that will struggle to deal with the long-term social, economic, political, and environmental problems that will plague the world of tomorrow. Organizational leaders and HRPs who recognize the need for the changing demands of tomorrow’s world are acknowledging that social responsibility and developing new approaches to mitigate those problems are necessary steps to creating a better future68.

CONCLUSION The future facing HRM and HRPs is challenging and exciting, yet not a little bit uncertain and certainly intimidating. The problems that we face as a society are troubling morally, financially ominous, and environmentally significant . . . yet many of today’s leaders, and those responsible for leading governments and businesses over the past three decades, have opted to duck the problems and avoid making the morally difficult decisions. The famous quote from Edmund Burke is that “(t)he only thing necessary for evil to triumph is for good men to do nothing69.” In a recent interview Dr. Henry Mintzberg, McGill University’s brilliant scholar, advocated that “the Good Folk,” or “the people who genuinely care about the issues we face have to act70.” Apparently, the leaders of governments and business have been doing very little for years,” some would suggest. For HRPs they must become not only extremely competent subject matter experts about HRM and their company’s business metrics but also adept at how to listen and communicate to employees at all levels of the organization. In the future, HRPs will find that they will need to fully understand their company’s strategic mission and ensure that its policies, systems, and practices align with its values and strategies. They must establish a reputation of competence, caring, character, and the capacity to integrate those critical qualities in the pursuit of organizational outcomes that create long-term value for 66

The importance of such projects is identified in Anderson, V., Ndalamba, K. K., and Caldwell, C., (2017) op. cit. See Zhang, W., Levenson, A., and Crossley, C., (2015). “Move Your Research from the Ivory Tower to the Boardroom: A Primer on Action Research for Academics, Consultants, and Business Executives.” Human Resource Management, Vol. 54, Iss. 1, pp. 151-174. 68 See Anderson, V., Ndalamba, K. K., and Caldwell, C., (2017) op. cit. 69 This well-known and frequently cited quotation was found on September 14, 2017 at https://www.brainyquote.com/quotes/quotes/e/edmundburk377528.html. 70 This interview is found in Mintzberg, H. & Caldwell, C., (2017). “Leadership, ‘Communityship,’ and ‘The Good Folk.’” International Journal of Public Leadership, Vol. 13, Iss. 1, pp. 5-8. 67


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all stakeholders71. HRPs must become ethical stewards72 dedicated to the best possible outcomes for employees, shareholders, customers, and society if they are to honor their moral obligations to their company, to its employees, and to society in a world that has become increasingly complex, chaotic, competitive, and challenge73.

Questions to Ponder 1) What are the reasons why so many corporations and their leaders have minimized the role of HRPs over the years? What do you think HRPs can do to contribute more effectively to corporate success? 2) Given the alarming problems facing a struggling world, which of the ten predictions about the future do you think should be given the highest priority to address some of those problems? Justify your position with thoughtful insights and evidence. 3) Do you think the evolution of HRM as a profession has worked as a benefit or as a detriment to business and society? Explain your position but identify arguments for either point of view.

WEWORK - Case Study - by Dr. Sarah J. Smith Human resource professionals and top management have recognized the need to empower employees and to encourage creativity and innovation. These qualities are also critically important for entrepreneurs. The majority of entrants into the business marketplace do not begin as large employers but as small entrepreneurial businesses. Studies have shown an increased level of employee engagement and decreased turnover when employees are happy in their work environment. In addition, highly creative organizational members find solitude a welcome respite to foster innovation and to generate business solutions. Most HR professionals and top management understand that if workers entering the workforce do not feel an ability to contribute or that their work is valued, they will often move on, leaving the organization rather than committing to remain with their current employer.

71

72

73

These four factors have been identified as critical conditions precedent to being perceived as worthy of trust in Caldwell, C., and Ndalamba, K. K., (2017). “Trust and Being ‘Worthy’ – The Keys to Creating Wealth.” Journal of Management Development, Vol. 36, Iss. 8, pp. 1076-1086. The concept of HRPs as ethical stewards is articulated in Caldwell, C., Truong, D., Linh, P., and Tuan, A., (2011). “Strategic Human Resource Management as Ethical Stewardship.” Journal of Business Ethics, Vol. 98, Iss. 1, pp. 171-182. This world is clearly described in Friedman, T. L., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution – And How It Can Renew America, Release 2.0. New York: Picador Press.



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Sabbatical requests have been granted for highly innovative and technically competent employees in mid-sized to large organizations. These sabbaticals are certainly not a benefit offered by all employers, but rather a discretionary benefit designed to identify tomorrow's opportunities and to plan or begin implementation of new product development though innovation. What if future HRPs proposed a similar structure in a contemporary setting for workers who have an entrepreneurial mindset? 1) What do you think is the likelihood that future businesses will propose a similar structure for workers who have an entrepreneurial mindset? 2) With new “work at home” options, many employees do not have access to HR departments on a regular basis. How should this issue be addressed? 3) What do you think are likely to be successful ways to inspire and motivate tomorrow’s employees?

Sharpening the Saw - Case Study - by Dr. Sarah J. Smith Stephen Covey will be remembered most as author of The Seven Habits of Highly Effective People. The 7th habit is Sharpening the Saw. Learning and reading are two suggested activities to follow a path of what one might call personal continuous improvement. Many human resource professionals entered the HRM profession because they liked interacting with others. A good percentage have avoided measurement and using HR metrics for strategic human resource decision-making. In order to be strategic leaders in an ever-changing world, tomorrow's HR leaders must be prepared in a multitude of ways. Understanding financial management, business partnering, organizational analysis, and internal consulting will become skills the strategic human resource professional must understand and be able to carry out. To support strategic organizational objectives, HR professionals must understand HR metrics and be able to understand and correlate a broad variety of productivity measures. After learning about the future needs for knowledge and skills development, HR professionals could formulate their own personal growth plan to sharpen the saw. For HRPs they must become not only extremely competent subject matter experts about HRM and their company’s business metrics but also be adept at how to work with employees at all levels of the organization. 1) Do HRPs need to participate in higher education to learn skills that will be necessary in the future in order to serve the organization as a successful human resource professional? Why or why not?


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Cam Caldwell and Verl Anderson 2) We live in a world with a multitude of conflicting demands. What would be the biggest barrier in your life that would challenge your own continuous improvement? 3) What specific methods will you plan to use to sharpen the saw for your career?

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Covey, S. R., (2004). The 8th Habit: From Effectiveness to Greatness. New York: Free Press. Dillon, S., (2010). “Large Urban-Suburban Gap Seen in Graduation Rates.” New York Times, Feb 18 found online on September 17, 2017 at http://www.nytimes.com/2009/ 04/22/education/22dropout.html?mcubz=1 Ehrlich, C. J., (1997). “Human Resource Management: A Changing Script for a Changing World.” Human Resource Management, Vol. 37, Iss. 1, pp. 85-89 Follett, M. P., (1940) Dynamic Administration: The Collected Papers of Mary Parker Follett edited by E. M. Fox and L. Urwick. London: Pitman Publishing. Friedman, T. J., (2006). The World is Flat: The Globalized World in the 21st Century. New York: Penguin Books. http://www.huffingtonpost.com/2013/09/06/illiteracyrate_n_3880355.html Friedman, T. L., (2009). Hot, Flat, and Crowded: Why We Need a Green Revolution – And How It Can Renew America, Release 2.0. New York: Picador Press. Fritz-Enz, J., (2009). The ROI of Human Capital: Measuring the Economic Value of Employee Performance. New York: AMACOM. Goldman, E. & Slezak, S. L., (2006). “An Equilibrium Model of Incentive Contracts in the Presence of Information Manipulation.” Journal of Financial Economics, Vol. 80, No. 3, pp. 603-626 Harter, J., (2015). “Companies Are Maximizing Only 5% of Their Workforces.” Business Journal, March 24th found online on September 14, 2017 at http://www.gallup.com/ businessjournal/182087/companies-maximizing-workforces.aspx?g_source= Business+Journal&g_medium=CardRelatedItems&g_campaign=tiles. Hayes, L., Caldwell, C., Licona, B. and Meyer, T. E., 2015. “Follower Behaviors and Barriers to Wealth Creation.” Journal of Management Development, Vol. 34, Iss. 3, pp. 270-285. Huselid, M., (1995). “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance.” Academy of Management Journal, Vol. 38, Iss. 3, pp. 63-672Lowenstein, R., (2009). While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis. New York: Penguin Press. Katiyar, A., Thomas, K., and Caldwell, C. (2011). “Ethical Issues in International Human Resource Management.” Journal of Global Business Development, Vol. 3, No. 1, pp. 103-114. Lester, S. W., Tomkovick, C., Wells, T., Flunker, L., & Kickul, J., (2005). “Does Service-Learning Add Value: Examining the Perspectives of Multiple Stakeholders.” Academy of Management Learning and Education, Vol. 4, No. 3, pp. 278-294.


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Lilly, J. D., Gray, D. A., & Virick, M., (2005). “Outsourcing the Human Resource Function: Environmental and Organizational Conditions that Affect HR Performance.” Journal of Business Strategies, Vol. 22, No. 1, pp. 55-73. Mann, A., & Harter, J., (2016). “The Worldwide Employee Engagement Crisis.” Business Journal, January 16th found online on September 14, 2017 at http://www.gallup.com/businessjournal/188033/worldwide-employee-engagementcrisis.aspx?g_source=Business+Journal&g_medium=CardRelatedItems&g_campaig n=tiles. Maslow, A., (1970). Motivation and Personality. New York: Joanna Cotler Books. McGregor, D., (1960). The Human Side of Enterprise. New York: McGraw Hill. Mello, J., (2014). Strategic Human Resource Management (4th ed.). Mason, OH: Southwestern Publishing. Mintzberg, H. & Caldwell, C., (2017). “Leadership, ‘Communityship,’ and ‘The Good Folk.’” International Journal of Public Leadership, Vol. 13, Iss. 1, pp. 5-8. National Institute of Literacy, as reported in “The U. S. Literacy Rate Hasn’t Changed in Ten Years.” Huffington Post September 6, 2013 updated on December 12, 2014 found online on September 17, 2017 at http://www.huffingtonpost.com/2013/09/06/ illiteracy-rate_n_3880355.html. Pfeffer, J., (1998). The Human Equation: Building Profits by Putting People First. Boston, MA: Harvard Business Review Press. Roy, S. N., (2016). HR and Finance: Two Inseparable Heads of the Same Organizational Coin.” Human Capital, Vol. 19, Iss. 8, pp. 40-43. SHRM, (2009). A History of Human Resources: SHRM’s 60 Year Journey. Alexandria, VA: Society for Human Resource Management. Solomon, R. C., (1992). Ethics and Excellence: Cooperation and Integrity in Business. Oxford, UK: Oxford University Press. Thornton III, G. C., (1992). Assessment Centers in Human Resource Management. Upper Saddle River, NJ: Prentice Hall. Tyran, K. L., (2017). “Transforming Students into Global Citizens: International Service Learning and PRME.” International Journal of Management Education, Part B, Vol. 15, Iss. 2, pp. 162=171. Ulrich, D., Younger, J., Brockbank, W., and Ulrich, M., (2012). HR from the Outside In: Six Competencies for the Future of Human Resources. New York: McGraw Hill. U. S. Department of Education, (2011). Trends in High School Dropout and Completion Rates in the United States 1972-2009 – Compendium Report. Washington DC: National Center for Education Statistics -- Institute of Education Sciences. Vance, and Paik, Y., (2014). Managing a Global Workforce” Challenges and Opportunities in International Human Resource Management (3rd ed.). New York: Routledge.



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Wren, D. A. & Bedeian, A. G., (2009). The Evolution of Management Thought. Chennai, India: John Wiley & Sons. Zhang, W., Levenson, A., & Crossley, C., (2015). “Move Your Research from the Ivory Tower to the Boardroom: A Primer on Action Research for Academics, Consultants, and Business Executives.” Human Resource Management, Vol. 54, Iss. 1, pp. 151174. Zhao, E., (2012). “High School Dropout Rates for Minority and Poor Students Disproportionately High.” Huffington Post October 20, 2011 update February 14, 2012 and found online on September 17, 2017 at http://www.huffingtonpost.com/ 2011/10/20/high-school-dropout-rates_n_1022221.html.



ABOUT THE EDITORS Cam Caldwell, PhD 1110A Jim Meyer Drive, Alexandria, LA, 71303, CA Tel: (318) 955-6188 Email: [email protected] CAM CALDWELL received his PhD in Human Resources and Organization Behavior from Washington State University where he was a Thomas S. Foley Graduate Fellow. He holds the Senior Professional and Global Professional in Human Resources professional certifications. Prior to earning his PhD, he worked as a Human Resource Director, City Manager, and Management Consultant for more than twenty years. This is his fifth book and he has published many papers about a variety of management and leadership topics. Dr. Verl Anderson Dixie State University, Professor of Management 225 S. 700 E. UHB 346 St George, 84770, UT Tel: (435)652-7840 Email: [email protected] VERL ANDERSON obtained his doctorate degree in Business Administration from Arizona State University. He is currently a professor in Management and International Business at Dixie State University, St George, Utah. He has taught university courses as a visiting professor in New Zealand and four universities in China. He has published 34 articles in the past two years on leadership, ethics, China culture, kindness, strategic management, and social responsibility. His research interests include China culture and international cultures. He has traveled extensively, and annually takes groups on cultural/educational tours to China and New Zealand.



INDEX A Abraham Maslow, 234 accommodations, 213 advertisements, 77 advocacy, 168, 195 Age Discrimination in Employment Act, 208 aging population, 172 alcohol consumption, 190 American Psychological Association, 180, 192 Americans with Disabilities Act, 208 anthropologists, 211 Aristotle, 22 assessment centers, 79 assessment tools, 148 assets, viii, 9, 11, 21

B background information, 188 bankruptcy, 101 Barnard, Chester, 28, 163, 233 barriers, 19, 21, 29, 150, 162, 169, 171, 225 Barry Posner, 29 benchmark positions, 97 benchmarks, 97, 170 benefits, 18, 20, 32, 57, 59, 62, 66, 71, 79, 87, 93, 94, 95, 100, 101, 102, 103, 104, 106, 134, 141, 149, 169, 179, 182, 189, 192, 203, 207, 218, 227, 237, 238, 242 bias, 113, 212 building blocks, 15, 93 Bureau of Labor Statistics, 100, 107

business environment, 4 business partners, 16, 36, 214, 220 businesses, 100, 177, 183, 211, 234, 238, 239, 241, 242, 243, 244, 245 buyers, 171

C candidates, 4, 48, 67, 77, 78, 80, 81, 82, 83, 84, 86, 99, 151, 172, 233 career development, 154 case law, 208 cash, 181, 190 Catastrophic Event Counseling, 182 certification, 6 change management, 60, 128, 129, 137, 139, 235 changing environment, 16, 214 charismatic, 32, 38, 39 Chester Barnard, 28, 163, 233 Civil War, 50, 54, 77, 90 climate, 16, 116, 167, 214 collaboration, 50, 85, 205, 233, 243 collective bargaining, 207 commerce, 211, 212 commodity, 94, 116 common sense, 213 communication, 24, 87, 109, 134, 190, 200, 220 comparative method, 97 compensation, 9, 32, 37, 48, 54, 93, 94, 96, 97, 98, 99, 100, 102, 103, 105, 117, 121, 147, 153, 161, 171, 177, 179, 181, 185, 189, 218, 227, 232 compensation and benefits plan, 103 compensation methods, 96 compensation philosophy, 98, 153, 218


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Index

compensation systems, 96, 99, 117, 161 competition, 4, 77, 115, 234 competitive advantage, vii, 4, 6, 13, 15, 21, 51, 60, 69, 77, 116, 156, 159, 167, 191, 195, 198, 201, 224, 236 competitiveness, 82 competitors, 13, 77, 99, 104, 116, 214, 217, 236 complement, 83, 137 complexity, 2, 36, 211 compliance, 68, 70, 105, 163 computer, 23, 77 conference, 23, 141 confidentiality, 190, 191 consumer price index, 171 cooperation, 17, 24, 46, 53, 85, 103, 134, 135, 163, 164, 166, 196, 205, 233 Corporate Social Responsibility, 241, 242 correlation, 114, 166, 181 cost, 14, 20, 100, 101, 102, 106, 141, 147, 154, 171, 177, 181, 183, 207, 231, 237, 238 cost of living, 171 cost saving, 20, 100, 102, 147, 181, 238 Cost-of-Living index, 218 counseling, 182, 191 Covenantal, 32, 39, 40, 59, 72, 73, 146 Commitment, 146 Covenantal Commitment, 146 Covey, Stephen R., 21, 25, 31, 35, 40, 109, 112, 152, 241 CPI, 171 creativity, 16, 19, 52, 68, 85, 146, 147, 156, 196, 200, 202, 244 credentials, 6, 12, 23, 52 criticism, 203 cultural differences, 213 cultural factors, 60, 216 cultural nuances, 213 culture, 7, 14, 15, 23, 24, 25, 38, 60, 69, 70, 81, 83, 104, 105, 106, 116, 117, 118, 128, 130, 131, 134, 137, 138, 139, 140, 145, 147, 151, 153, 156, 162, 163, 165, 166, 171, 184, 188, 198, 199, 202, 219, 220, 222, 223, 226, 227, 236 customer service, vii, 117, 170, 200, 231, 239 customers, 13, 14, 45, 49, 51, 86, 104, 109, 121, 134, 140, 152, 161, 177, 200, 218, 235, 236, 244

D data collection, 133, 135, 169

Deloitte, 111, 123 dental care, 207 Department of Education, 241, 242, 248 Department of Labor, 75 Digital recruitment, 77 disability, 179 discrimination, 203 Douglas McGregor, 234 downsizing, 237, 238 drugs, 190 due process, 203

E eating disorders, 180 eBay, 151 economic growth, 234, 241 education, 77, 83, 88, 97, 101, 102, 148, 218, 242, 247 EEOC, 203, 208, 209 emergency, 182 emotional intelligence, 81, 82 empathy, 66 Employee, Benefits, 81, 90, 100, 141, 182, 192 compensation, 9, 93, 218 empowerment, 138, 163, 239 engagement, 64, 100, 111, 138, 199, 238, 244 law, 196 relations, 196 safety, 187 Wellness Programs, 179, 192, 193 employers, 37, 70, 77, 81, 86, 94, 95, 100, 105, 108, 149, 154, 177, 181, 189, 196, 203, 215, 244, 245 employment, 4, 36, 70, 94, 105, 122, 155, 161, 198, 202, 203, 206, 208, 226 employment relationship, 105 employment-at-will, 202, 203, 206 empowerment, 19, 138, 150, 163, 239 energy, 36, 150 enforcement, 186 enrollment, 141 entrepreneurs, 244 entrepreneurship, 241 environment, 4, 38, 59, 71, 85, 106, 114, 122, 141, 151, 156, 189, 196, 204 environmental factors, 60 Equal Employment Opportunity Commission, 208 Equal Pay Act, 208


Index equality, 66 equity, 48, 102, 105, 121 erosion, 21, 198 espionage, 233 Ethic of Care, 66 Ethic of Contributing Liberty, 66 Ethic of Distributive Justice, 66 Ethic of Economic Efficiency, 66 Ethic of Government Regulation, 66 Ethic of Religious Injunction, 66 Ethic of Self-Actualization, 66 Ethic of Self-Interest, 66 Ethic of Universal Rights, 66 Ethic of Universal Rules, 66 ethical implications, 129, 213 ethical responsibilities, 57, 58, 59, 65, 68, 69, 218, 240 ethical standards, 64, 69 ethical stewardship, 14, 17, 18, 19, 22, 63, 65, 69, 145, 166 evolution of HRM, 232 exchange relationship, 17 expertise, 16, 60, 88, 153, 165, 214 external environment, 13, 44 extrinsic rewards, 93

F facilitators, 153 Fair Labor Standards Act, 208 federal government, 137, 143, 242 federal law, 187, 203 Financial counseling, 182 financial incentives, 181, 242 financial institutions, 112 financial planning, 107 financial resources, 142, 171 financial support, 139 financial vulnerability, 186 firm value, 218 fitness programs, 181 flexibility, 106, 153, 160 Follett, Mary Parker, 233, 247 forecasting, 81, 91 foreign companies, 100 formal education, 83 formal language, 204 formation, 169 foundations, 96, 145

255 G

Gainsharing, 98 gambling, 180 Geert Hofstede, 216, 227 general intelligence, 233 General Motors, 101, 108, 238, 247 Germany, 166, 174 Gig economy, 94 global competition, 4, 115, 167, 231 global economy, 167, 170, 211 global marketplace, 68, 85, 95, 118, 153, 186, 202, 211, 222, 235, 238, 240 global scale, 115, 226 global warming, 238 goal setting, 114 Golden Rule, 34, 40 governance, 17, 26, 160, 167, 168 government intervention, 141 Green Revolution, 35, 40, 61, 73, 112, 124, 167, 174, 244, 247 growth, 31, 34, 48, 59, 68, 87, 94, 145, 146, 147, 148, 149, 151, 166, 172, 196, 245 growth rate, 94 guide chart, 97, 98 guidelines, vii, 15, 29, 35, 48, 58, 110, 198, 212, 226, 228 guiding principles, 57

H Hawthorne studies, 232 hazards, 187 health care, 10, 141, 179, 181, 189, 207, 237 health care costs, 10, 141, 179, 181 health condition, 181 health insurance, 95, 100, 181, 185 health problems, 181 Health screening, 181 health status, 183 hierarchy of needs, 234 High Commitment Organizations, 163 high performance work systems, 159 high trust organizations, 159 higher education, 155, 242, 245 hiring, 7, 23, 48, 50, 53, 71, 75, 78, 80, 81, 82, 83, 86, 87, 88, 94, 95, 99, 102, 103, 107, 152, 155, 161, 171, 189, 217, 232, 237 historical data, 184


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Index

Hofstede, Geert, 216, 227 host country culture, 219, 220 hourly wage, 106 HRP Roles, 146, 147 hub, 207 human behavior, 163 human capital, 117 human motivation, 110, 234 Human Resource Management, v, vi, vii, 1, 2, 6, 8, 10, 11, 12, 13, 14, 19, 25, 27, 31, 34, 36, 39, 40, 43, 54, 57, 61, 64, 65, 67, 72, 73, 74, 75, 76, 77, 81, 88, 89, 90, 93, 102, 108, 111, 116, 123, 124, 138, 139, 143, 145, 146, 152, 157, 158, 159, 163, 165, 166, 170, 173, 174, 175, 178, 184, 185, 187, 192, 193, 194, 195, 201, 202, 205, 208, 209, 211, 213, 216, 217, 218, 220, 223, 228, 229, 230, 231, 232, 233, 237, 239, 240, 243, 244, 246, 247, 248, 249 Human Resource Professionals, vii, 1, 11, 14, 27, 43, 57, 76, 116, 123, 128, 137, 145, 159, 177, 195, 212, 220, 229, 231, 237, 246 human resources, 20, 77, 84, 87, 235 human right, 66

I illiteracy, 234, 242, 247, 248 income, 106, 107, 218, 241 individual rights, 65 industrial relations, 232 industrialization, 238 ineffectiveness, 19, 201 inequity, 186 inflation, 100, 112, 171 information sharing, 149 information technology, 141 inspections, 187 institutions, 33, 40, 64, 73, 100, 108, 242 integration, 160, 163, 223 integrity, 21, 61, 65, 66, 86, 166, 186, 236 intelligence, 52, 222, 233 international communication, 220 international competition, 234 International differences, 218 International employees, 217 International Issues, 215 international strategy, 212 interpersonal relations, 18, 58, 185 interpersonal relationships, 18, 58, 185

interpersonal skills, 50, 79, 82, 83, 234, 240 investment, 60, 111, 129, 147, 150, 189, 202

J James Kouzes, 29 job analysis, 8, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 78, 82, 83, 84 job classification, 47 job description, 46, 47, 50, 52, 53, 54, 142, 198 Job design, 48 Job Evaluation, 48 job performance, 80, 180 job satisfaction, 44, 151 job skills, 161 Job specifications, 48 justification, 38, 62

K Kotter, 128, 129, 131, 142, 143, 144 Kouzes, James, 29 Kurt Lewin, 131

L lack of confidence, 64, 73 laws and regulations, 186, 205 leadership, 8, 11, 15, 17, 19, 20, 21, 22, 24, 27, 28, 29, 30, 31, 32, 33, 34, 36, 37, 38, 57, 61, 111, 121, 122, 129, 141, 145, 148, 152, 156, 157, 166, 222, 227 leadership characteristics, 17 leadership style, 24, 38 learning culture, 16, 32, 38, 67, 202 learning process, 132 lifelong learning, 24 loyalty, 86, 95, 105, 116, 146, 151, 154, 155, 156, 235, 237

M management, vii, viii, 1, 4, 8, 9, 17, 18, 23, 25, 37, 43, 60, 69, 70, 98, 100, 104, 109, 110, 111, 113, 114, 115, 117, 118, 119, 120, 121, 122, 123, 127, 128, 129, 135, 137, 139, 142, 156, 162, 171, 185, 186, 187, 188, 189, 193, 206, 207, 208, 217, 226, 227, 232, 233, 234, 235, 236, 240, 244, 245 marketing, 200, 213, 223, 230


Index marketplace, 4, 68, 85, 93, 95, 118, 153, 186, 202, 211, 222, 235, 238, 240, 244 Mary Parker Follett, 233, 247 Maslow, Abraham, 234 McGregor, Douglas, 234 mental health, 180, 191 metaphor, 34 misconceptions, 1, 5, 7 mission, vii, 2, 7, 13, 14, 15, 16, 19, 31, 34, 35, 43, 45, 49, 53, 59, 69, 76, 93, 97, 102, 104, 105, 106, 112, 113, 116, 117, 139, 142, 146, 147, 148, 152, 153, 159, 164, 167, 171, 189, 205, 206, 212, 214, 218, 222, 236, 243 modern society, 168 modules, 37, 70 moral obligation, 13, 17, 35, 36, 187, 224, 244 morale, 25, 38, 114, 117, 129, 150, 155, 179, 186, 202, 239 multinational companies, 186 mutual respect, 205

N National Center for Education Statistics, 241, 248 national culture, 215, 218 natural resources, 167 negative experiences, 113 Nobel Prize, 163

O obesity, 181 Occupational Safety and Health Act, 226 opportunism, 17 opportunities, 7, 9, 16, 17, 21, 37, 44, 48, 59, 60, 106, 116, 117, 118, 121, 133, 134, 147, 150, 152, 153, 169, 172, 181, 182, 186, 214, 217, 219, 221, 232, 238, 241, 245 organizational culture, 5, 10, 15, 16, 20, 21, 82, 95, 130, 139, 142, 143, 156, 161, 166, 169, 189, 205, 212, 214, 217, 223, 240 organizational development, 131, 145, 146, 153, 156 OSHA, 70 outsourcing, 53 oversight, 79, 88, 122 overtime, 205 overweight, 190

257 P

participants, 7, 11, 14, 45, 49, 51, 54, 103, 129, 133, 134, 148, 184, 188, 190, 231 payroll, 23, 172, 207 performance appraisal, 7, 48, 111, 112, 113, 114, 119, 120, 121, 122, 123, 124 Performance management, 109, 111, 115 performance measurement, 7, 44, 120 performance rate, 113 performance ratings, 121 perseverance, 22, 50 personal relations, 30 personal relationship, 30 personal responsibility, 154 physical health, 182 Platinum Rule, 34, 40 policy, 25, 79, 119, 123, 155, 202, 207, 218, 226, 227, 228 politics, 38 population, 78, 167, 182, 241 positive feedback, 152 positive relationship, 147 Posner, Barry, 29 Principle-Centered, 32, 39, 112, 123 principles, vii, 9, 15, 17, 18, 19, 20, 30, 32, 35, 58, 65, 66, 68, 69, 113, 115, 128, 139, 188, 201, 205, 211, 213, 221, 224, 225, 236 private sector, 13, 100, 115 private sector employees, 100 procedural justice, 203 professional development, 101, 148, 150, 201 professionalism, 191 profitability, vii, 16, 19, 20, 59, 69, 71, 99, 105, 160, 161, 170, 189, 202, 214, 223, 239 project, 94, 117, 118, 128, 133, 135, 136, 137, 147, 242 psychology, 110, 131, 232 public interest, 202 public policy, 202

Q qualifications, 20, 22, 44, 47, 48, 49, 50, 78, 80, 82, 83, 96 quality improvement, 134, 152 quality of life, 17, 214, 218, 237, 239


258

Index R

Rater Bias, 113, 122 reality, vii, 1, 2, 4, 64, 76, 81, 86, 114, 118, 120, 127, 137, 168, 170 recognition, 117, 155, 162 recommendations, 7, 83, 93, 103, 104, 136, 137, 160, 207, 227 recruiting, 76, 77, 81, 85, 216 regulations, 70, 205 reliability, 78, 166 reputation, 21, 151, 156, 185, 215, 243 resource management, 65, 127 resources, viii, 4, 11, 13, 16, 29, 44, 46, 59, 60, 66, 69, 77, 94, 97, 107, 108, 110, 112, 114, 118, 125, 129, 135, 137, 138, 139, 147, 148, 153, 165, 167, 183, 186, 201, 205, 209, 214, 217, 220, 221, 227, 240 retirement, 100, 106, 107, 155, 203, 238 rewards, 162, 181 risk management, 10, 178, 185, 188 risk-taking, 117 Roethlisberger, 232 rule of law, 203

S safety, 10, 37, 70, 105, 121, 178, 187, 188, 189, 192, 193, 226, 227 salary range, 98 savings, 100, 102, 106, 107, 154, 201 scarce resources, 66 Secretary of Commerce, 168 security, 140, 161, 171 self-confidence, 33 self-image, 167 self-interest, 17, 32, 63, 66, 189 self-reflection, 33 service quality, 202 Short-term thinking, 95 smog, 226 smoking, 179, 180, 190 Smoking Cessation, 180, 192 social contract, 18 social problems, 168, 238, 241 social responsibility, 35, 242, 243 Social Security, 100, 106 staff development, 38, 154, 155 staff members, 220

staffing, 4 stakeholders, 14, 16, 17, 18, 21, 29, 31, 32, 36, 46, 49, 53, 57, 58, 59, 60, 62, 63, 65, 67, 68, 69, 71, 110, 129, 145, 153, 154, 166, 206, 214, 223, 244 Stephen R. Covey, 21, 25, 31, 35, 40, 109, 112, 152, 241 Stewardship Theory, 17, 26 stock, 112, 151, 158 storage, 113 strategic management, 7 stress, 79, 182 stress management, 182 supervisors, 13, 43, 46, 48, 49, 51, 84, 104, 109, 110, 111, 114, 117, 120, 121, 140, 171, 187, 199, 217, 218

T tax credits, 241 teaching experience, 102 team members, 35, 37, 98, 137, 151 TEAM process, 134 teams, vii, viii, 8, 35, 85, 103, 109, 110, 116, 117, 134, 135, 137, 147, 161, 233 technology, vii, 85, 87, 151, 152, 236 test scores, 82 testing, 6, 9, 48, 49, 76, 77, 78, 79, 81, 82, 84, 85, 147, 181, 233 Testing Candidates, 77 time frame, 122 time pressure, 82 Toyota, 113, 124 training, 6, 20, 37, 44, 48, 60, 70, 82, 84, 95, 97, 105, 106, 107, 113, 117, 120, 133, 134, 138, 147, 148, 150, 152, 155, 156, 157, 162, 171, 186, 187, 188, 189, 201, 202, 216, 217, 232, 240 training programs, 147, 152 traits, 30, 36, 121 transformational, 32, 116, 220, 229 transformative, 8, 19, 25, 26, 32, 34, 39, 58, 64, 65, 66, 69, 72, 95, 107, 116, 117, 118, 123, 145, 157, 195, 209 transformative ethics, 8, 34, 39, 58, 64, 65, 66, 69, 72, 195, 209 transparency, 33, 170 transportation, 53, 54 trustworthiness, 19, 30, 59, 68, 165, 166, 198, 222 turnover, 24, 100, 179, 202, 240, 244


Index U unionism, 232 unique features, 223 urban, 213 utilitarian ethics, 66

V validation, 82, 84 values-based, 33, 40, 116, 123, 237, 246 virtue ethics, 66 virtuous continuum, 63, 68, 69 vision, 27, 29, 30, 105, 106, 129, 137, 141, 142, 165, 172, 207, 221, 223, 236

W wastewater, 70 wealth, viii, 11, 17, 18, 21, 61, 85, 116, 117, 145, 146, 202, 223, 231, 236, 237, 238 weather patterns, 238 web sites, 107 weight loss, 181 welfare, 66, 68, 94, 146, 166, 177, 182, 218 well-being, 149 wellness, vi, 10, 177, 178, 179, 181, 182, 183, 188, 192, 193

259

programs, 10, 177, 178, 179 wellness programs, 10, 177, 178, 179 work climate, 7, 17, 147, 153, 241 work environment, 16, 24, 48, 64, 87, 147, 188, 202, 244 work ethic, 52 work roles, 152 workers, 22, 23, 70, 94, 99, 100, 105, 106, 107, 108, 122, 148, 151, 155, 156, 158, 161, 170, 172, 179, 181, 189, 191, 226, 227, 238, 244, 245 workforce, 4, 6, 12, 23, 94, 141, 149, 151, 177, 189, 240, 244 workforce planning, 48 working conditions, 187 workload, 103 workplace, 48, 64, 70, 73, 93, 106, 111, 124, 148, 172, 180, 187, 191, 192, 193, 200, 209, 235, 238 World War I, 233, 234 World Wide Web, 77, 234

Z Zone of Acceptance, 163 Zone of Commitment, 164 Zone of Indifference, 163 Zone of Stewardship, 164 Zone of Trust, 163
