At&t retail sales consultant test answers

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Human Resource Management

Linking Strategy to Practice

Greg L. Stewart

Kenneth G. Brown

THIRD EDITION

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VICE PRESIDENT & EXECUTIVE PUBLISHER George Hoffman EXECUTIVE EDITOR Lisé Johnson PROJECT EDITOR Brian Baker EDITORIAL ASSISTANT Jacqueline Hughes ASSOCIATE DIRECTOR OF MARKETING Amy Scholz MARKETING MANAGER Kelly Simmons DESIGN DIRECTOR Harry Nolan PRODUCT DESIGNER Allison Morris ASSOCIATE PRODUCTION MANAGER Joyce Poh PRODUCTION EDITOR Eugenia Lee COVER DESIGNER Wendy Lai

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ISBN-13 978-1118-58280-0 (paperback)

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10 9 8 7 6 5 4 3 2 1

To Lisa, Brandon, Ryan, Jason, and Analisa—GLS

For my Mom—KGB

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http://www.wiley.com/go/citizenship
http://www.copyright.com
http://www.wiley.com/go/permissions
http://www.wiley.com/go/returnlabel
GREG L. STEWART, PH.D. Greg L. Stewart is the Henry B. Tippie Research Professor of Management and Organizations in the Henry B. Tippie College of Business at the University of Iowa. He received his Ph.D. in human resource management from Arizona State University and has been a faculty member at Vanderbilt University and Brigham Young University. His research has been published in top academic journals, including Journal of Applied Psychology, Personnel Psychology, Academy of Management Journal, Organizational Dynamics, and Organization Science. He served as an Associate Editor for Journal of Management. He has taught human resource management courses to undergraduate, MBA, and Executive MBA students, including international programs in Hong Kong, Italy, and India. He has received numerous teaching awards including GREAT Instructor of the Year for Executive MBA, the Dean’s Award for Teaching Excellence, and MBA Professor of the Year at the Consortium Institute of Management and Business Analysis (CIMBA). He has worked with a variety of large and small organizations including Eli Lilly, LG Electronics, Newton Manufacturing, and the National Federation of Independent Business. He is currently involved in a number of projects working to improve the delivery of healthcare within the Veterans Health Administration.

KENNETH G. BROWN, SPHR, PH.D. Kenneth G. Brown is a Professor and Tippie Research Fellow in the Henry B. Tippie College of Business at the University of Iowa. He also serves by courtesy appointment as a Professor of Educational Policy and Leadership Studies. He received his Ph.D. in industrial and organizational psychology from Michigan State University and his B.S. from the University of Maryland, and he is certi- fied as a senior professional in human resource management (SPHR). He has taught courses in training and career development, organizational behavior, and general management to undergraduate, MBA, and Ph.D. students. He is the recipient of numerous teaching awards, including the Student’s Choice for Faculty Excellence Award, the Dean’s Teaching Award, the Collegiate Teaching Award, the James N. Murray Faculty Award for outstanding teach- ing and assistance to students, and the President and Provost Award for Teaching Excellence. His work using experiential learning was recognized as a finalist for the inaugural Academy of Management Human Resources Division Innovative Teaching Award in 2006 and for the 2007 Iowa Campus Compact Faculty Award. He has published articles in human resource man- agement and organizational behavior for both academic and applied audi- ences. His academic work appears in such top journals as Journal of Applied Psychology, Personnel Psychology, and Organizational Behavior and Human Decision Processes. His applied work has been published by the American Society of Training and Development in T&D magazine and by the UK-based Chartered Institute of Personnel and Development. His consulting clients have included the Ford Motor Company, Rosetta Stone, the Society of Human Resource

iii

About the Authors

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Management, Toyota Motor Credit Corporation, the University of Iowa, and numerous local non-profit organizations. From 2012 to 2014, Brown serves as the editor-in-chief of the Academy of Management Learning and Education, a premiere journal of research on helping students acquire management knowledge and skill. From 2014–2016, Brown also serves as a Director of the HR Certification Institute, the worldwide leader in certifying HR competency.

iv About the Authors

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WHY LINK HUMAN RESOURCE PRACTICE TO STRATEGY?

v

The last decade has been an interesting period of change and survival for businesses. The worst economic recession in over 50 years forced many com- panies to rethink the way they did business. More recently, recovery from the recession has presented organizations with a number of different opportuni- ties and threats. Only the best companies survive and thrive in such trying times. But what makes some companies more successful than others? What gives organizations an advantage over their competitors? One answer empha- sizes the benefit of having the right people as members of the organization. It is often said that “the people make the place,” which tells us that employees are the most important asset of any organization. Practices that help obtain and motivate employees are the core focus of human resource management, which is the field of study presented in this textbook.

As you read this book, we hope you will agree that human resource man- agement is an exciting field of study. In order to make ideas and concepts come to life, we include a number of examples from real companies that illustrate how effective human resource management is helping companies achieve success. Each chapter explains how an organization can increase its effectiveness by improving its processes for hiring and motivating top- performing employees. We also specifically link human resource practices to competitive strategies. This linkage is critical, as it shows how a company can use human resource management to gain a competitive advantage over other companies.

The field of human resource management has evolved a great deal during the past 20 years. Today, many practitioners and researchers argue that human resource management should extend beyond its traditional focus on legal compliance and adopt a more strategic perspective for managing employees. Perhaps more importantly, successful organizations are taking a more stra- tegic approach to managing people. Many human resource textbooks have added material to reflect some of this change, but most books still lack a con- sistent strategic framework—even though this framework is rapidly becoming the norm within the field.

We have written Human Resource Management: Linking Strategy to Practice, Third Edition, in order to more fully develop and integrate the strategic per- spective. Throughout the book, we emphasize the theme that organizations excel when they have consistent human resource practices that align with their

Preface

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vi Preface

WHAT IS NEW IN THIS EDITION?

strategic direction. We begin by establishing a strategic framework that illus- trates how different approaches to human resource management fit with basic competitive strategies. We then integrate this strategic perspective into our discussion of traditional human resource practices, such as work design, staff- ing, performance management, training, compensation, and labor relations. At the same time, we clearly illustrate how these specific human resource prac- tices help increase organizational effectiveness.

The practice of human resource management continues to evolve and improve. New research is being published at a rapid pace, and organizations are constantly innovating. This third edition of Human Resource Management: Linking Strategy to Practice reflects these changes. We have combed through research studies conducted since the first and second editions to identify and include new and updated ideas. This edition contains a number of “How Do We Know?” features that describe recently published research that informs our understanding of human resource management. We have also updated our case examples to reflect innovative ideas being carried out in contempo- rary organizations. These additions to the third edition ensure that students are exposed to the latest ideas and innovative thinking.

One particular area of change in the revision concerns updated material related to finding balance between work and family demands. Both academic studies and organizational practices provide new insights for organizations seeking to help organizations reduce conflict between these important, yet sometimes competing, aspects of life. In particular, Chapter 4 provides an array of concepts and illustrations explaining how companies benefit from making work more family friendly. New laws and government practices, such as the Affordable Care Act (Obamacare), also present new challenges and opportunities for businesses. Many of the critical issues that organizations will face as they implement these new policies are discussed in the section of Chapter 12 that describes how health insurance is becoming a legally required rather than discretionary benefit.

We continue to emphasize the impact of globalization. The importance of thinking globally is emphasized in each chapter with specific examples of ways that human resource practices are similar and different across national boundaries.

The revision also continues to emphasize the strategic approach. New research supporting the benefits of aligning human resource practice with organizational strategy is included. Company illustrations are also used to describe how many of the companies that have performed well during the economic downturn did so largely because of their human resource strengths. In this way, the third edition continues our unique approach to integrating strategy and practice.

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Preface vii

A book designed around a strategic framework, such as the guiding model presented in Chapters 1 and 2, helps students not only to develop a set of human resource tools but also to know when each tool is most appropriate. The overall objective of Human Resource Management: Linking Strategy to Practice is thus to provide students with both an understanding of traditional human resource concepts and a framework for making decisions about when specific practices can be most beneficial. This link between strategy and practice is necessary for students to be able to correctly apply human resource tools to improve organizations.

The strategic perspective is critical for students because most people enrolled in an introductory course will not spend their careers working as human resource professionals. A majority will, however, work someday as managers with the charge to lead and direct others. Understanding the stra- tegic benefits of good human resource management can help future manag- ers better secure and motivate talented employees. The strategic perspective also provides a valuable framework for the future study of those students who do choose to become human resource professionals. Information from addi- tional courses that provide more in-depth coverage of topics such as staffing, training, and compensation will easily fit within the strategic orientation of this book and provide guidance for knowing when to use specific tools.

HOW CAN STUDENTS BENEFIT FROM A STRATEGIC PERSPECTIVE?

HOW IS THIS BOOK ORGANIZED?

Human Resource Management: Linking Strategy to Practice is organized to provide coverage of both strategic topics and specific practices, as illustrated in the accompanying schematic. We open the book in Chapter 1 by examining the value of aligning human resource practices with organizational strategies. Chapter 2 describes the strategic perspective in more detail. It discusses vari- ous ways organizations try to be more effective than their competitors, and it illustrates how human resource management can help organizations carry out their strategies. Chapter 3 discusses legal and safety issues. Laws and regu- lations drive many human resource practices, and knowledge of these legal realities is necessary for understanding several issues related to securing and motivating employees. Chapters 2 and 3 thus provide information that estab- lishes a strategic perspective and provides a context for much of the material in later chapters.

Chapters 4 through 7 focus on the process of securing employees. Chapter 4 describes work design, which creates job descriptions that clarify who does what. The work design process also identifies the characteristics of people most likely to carry out tasks successfully. The result is a type of shopping list that defines the types of people most likely to succeed in specific jobs and

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viii Preface

organizations. Chapters 5 and 6 build on this information by discussing how to locate and identify people who have these characteristics. Chapter 5 gives details about recruiting and illustrates methods for attracting people to apply for jobs with the organization. Faced with a pool of applicants, the organization must decide which of them to hire. Chapter 6 devel- ops several selection methods useful in carry- ing out this task. Chapter 7 then explains ways of keeping good employees, as well as remov- ing low performers. Taken together, Chapters 4 through 7 provide information that helps guide efforts to get the right people doing the right tasks. These chapters combine a strate- gic perspective of securing employees with a review of specific activities associated with recruiting, hiring, and retaining workers.

Once the right people have been placed in the right jobs, the next step is to maxi- mize their performance. Chapters 8 through 13 focus on this process. Chapter 8 describes performance management, which provides methods for measuring what individuals con- tribute to the organization. Performance assessments are used to create feedback that teaches employees how to improve. Chapter

9 discusses the training process. Chapter 10 emphasizes career development and offers guidance for planning how employees can continue to contribute to the organization over the long term. Through training, people learn new things and become more valuable employees. Chapters 11 and 12 focus on compensation and illustrate how pay and benefits can increase motivation. Chapter 13 emphasizes the need for good labor relations and discusses meth- ods for working with labor unions and treating employees fairly. In sum, this set of chapters provides information about developing skills and increasing motivation to ensure that employees are reaching peak performance. The overall emphasis is on ensuring that employees have the skills and motivation necessary to carry out the organization’s strategy for competing with other firms.

The final chapter, Chapter 14, describes strategic alignment. The human resource practices of successful organizations align with organizational strate- gies for doing things better than competitors. Good human resource practices also work together. Staffing practices, for example, combine with compensa- tion practices to help the organization hire and motivate people with certain characteristics. Performance management measures areas where people need to improve, and training teaches them how to improve. The final chapter thus presents the big picture by illustrating how different pieces of human resource management fit together to create successful organizations.

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Each chapter opens with a real-life scenario describing a decision faced by an individual employee, manager, or human resource professional. These sce- narios, labeled “A Manager’s Perspective,” highlight the importance of strate- gic decision making and help students see exactly how the chapter material is relevant to their future careers. Each scenario ends with five thought ques- tions designed to get students thinking about core concepts from the upcoming chapter. A section labeled “A Manager’s Perspective Revisited” at the end of each chapter pro- vides answers to the thought questions and once again emphasizes how the material cov- ered in the chapter can help students build successful careers.

We have developed a number of pedagogical features for Human Resource Management: Linking Strategy to Practice, Third Edition, to support the strategic framework and enhance student interest and learning.

A M A N AG E R ’ S P E R S P E C T I V E A N D A M A N AG E R ’ S P E R S P E C T I V E R E V I S I T E D

Key Features

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x Key Features

Research is an important part of the field of human resources. Each chapter therefore includes a number of features describing specific research studies. These features—labeled “How Do We Know?”—use nontechnical language to summarize research studies that have been published in scholarly journals. Each concludes with a “Bottom Line” summary that shows how the findings of the study contribute to our under- standing of effective human resource management. These research sum- maries help students understand how knowledge is generated and help them see the science behind many of the principles discussed throughout the textbook.

H OW D O W E K N OW ?

The opening section of each chapter includes a discussion that illustrates how a specific company has used the concepts discussed in the chapter to increase effectiveness. Trader Joe’s, Southwest Airlines, Marriott, and General Electric are just a few of the firms included in these in-depth examinations of stra- tegic HR. Each of the company descriptions ends with a “Building Strength Through HR” feature that clearly summarizes how the firm has used specific human resource practices to become more effective and competitive.

Additional “Building Strength Through HR” features appear throughout each chapter. These brief cases illustrate how specific companies have benefited from implementing particular human resource practices—for example, how Leicester Royal Infirmary, a large teach- ing hospital in England, improved effi- ciency and patient satisfaction through work redesign and how LG Electronics created a global instructional program to connect company vision and values with leadership development practices. These discussions clearly illustrate how effective human resource practices have translated into success for a num- ber of organizations. The inclusion of foreign-based firms points up the fact that the usefulness of strategic HR crosses international boundaries.

B U I L D I N G S T R E N GT H T H R O U G H H R

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Key Features xi

T E C H N O L O G Y I N H R

Technological change has had a per- vasive influence on every aspect of management, and human resource man- agement is no exception. “Technology in HR” features describe how techno- logical advances are affecting the field of human resource management. The information included in this feature illustrates how the Internet and other forms of electronic communication are affecting human resource practices in areas such as employee selection, train- ing, and compensation. These discus- sions show students how advancements in technology are being incorporated to increase the effectiveness of human resource management.

A number of features included in each chapter help students focus on and learn key concepts.

Learning Objectives. A list of learning objectives opens each chapter and pre- pares readers for the key concepts to be discussed.

Key Terms and Definitions. Key terms shown in boldface in the chapter text and linked to margin definitions highlight critical concepts and pro- vide an opportunity for review.

. Each major section concludes with review questions that focus students’ atten- tion on major topics.

. Each chap- ter ends with a summary of key con- cepts linked to the chapter’s learning objectives and major sections.

. End-of-chapter discussion questions revisit major top- ics, providing readers with an oppor- tunity not only for review but also for critical thinking and interpretation.

R E C A L L F E AT U R E S

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xii Key Features

E N D - O F - C H A P T E R A P P L I C AT I O N E X E R C I S E S

Knowledge is most useful when it can be applied to solve real problems. We end each chapter with cases and experiential exercises that help students begin the process of applying the concepts to solve actual problems associated with effective human resource management.

. An example case illustrates how a specific company imple- ments the human resource practice discussed in the chapter.

. A discussion case provides background information about a fictional company that can serve as the launching point for a class discussion.

An experiential exercise describes an activity that a student can complete, often online, to actively learn more about the topic discussed in the chapter.

An interactive experiential exercise pro- vides a link to the companion website where students can go to participate in a role-play that tests their knowl- edge of the basic concepts discussed in the chapter.

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Several supplements have been designed to make both teaching and learning easier and more interesting for users of Human Resource Management: Linking Strategy to Practice, Third Edition. We are especially grateful to the following people for helping us to provide such a comprehensive teaching and learning package: Dyanne J. Ferk, University of Illinois–Springfield; Marcia Marriott, Monroe Community College and Rochester Institute of Technology.

Companion Website

The companion website for Human Resource Management: Linking Strategy to Practice, Third Edition, contains a myriad of tools and links to aid both teaching and learning, including nearly all of the resources described in this section. To access the site, go to www.wiley.com/college/stewart.

Instructor’s Resource Manual

The includes an introduction with sample syllabi, chapter outlines, chapter objectives, teaching notes on how to integrate and assign special features, and suggested answers for all quiz and test questions found in the text. The also includes additional dis- cussion questions and assignments that relate specifically to the cases, as well as case notes, self-assessments, and team exercises.

Test Bank

The robust test bank consists of over 100 true/false, multiple-choice, and short-answer questions per chapter. Furthermore, it is specifically designed so that questions vary in degree of difficulty, from straightforward recall to chal- lenging, to offer instructors the most flexibility when designing their exams. Adding still more flexibility is the , which requires a PC running Windows. The computerized test bank, which contains all the ques- tions from the manual version, includes a test-generating program that allows instructors to customize their exams.

PowerPoint Presentations

This resource provides another visual enhancement and learning aid for stu- dents, as well as additional talking points for instructors. This set of interactive PowerPoint slides includes lecture notes to accompany each slide.

Personal Response System

Personal Response System questions (PRS or “clicker” content) were designed for each chapter in order to spark additional discussion and debate in the classroom. For more information on PRS, please contact your local Wiley sales representative.

Supplements

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http://www.wiley.com/college/stewart
xiv Supplements

Web Quizzes

Online quizzes, available on the student portion of the Human Resource Management: Linking Strategy to Practice, Third Edition, companion website, include questions varying in level of difficulty, designed to help students eval- uate their individual progress through a chapter. Each chapter’s quiz includes 10 questions, including true/false and multiple-choice questions. These review questions, developed in conjunction with the test bank, were created to provide the most effective and efficient testing system. Within this system, students have the opportunity to “practice” the type of knowledge they’ll be expected to demonstrate on the exam.

Pre- and Post-Lecture Quizzes

The pre- and post-lecture quizzes, found on the student companion website, consist of 10 to 15 questions (multiple-choice and true/false) per chapter, varying in level of detail and difficulty, but all focusing on that chapter’s key terms and concepts. This resource allows instructors to quickly and easily eval- uate their students’ progress by monitoring their comprehension of the mate- rial from before the lecture to after it.

Videos

A set of short video clips from CBS News provides an excellent starting point for lectures or for general classroom discussion. Teaching notes, including clip introductions and assessment questions, are included for class discussion or assignment.

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This book could not have happened without contributions from an outstanding team. We thank Lisé Johnson for her outstanding efforts to make this third edition a reality. Brian Baker guided us, kept us on task, and answered numerous questions throughout the process. Eugenia Lee provided superb production and editorial help. We also thank Judy Joseph, Jayme Heffler, Leslie Kraham, Joan Kalkut, and Beverly Peavler for their assistance with many features of earlier editions of this book.

Our efforts have also been aided by a number of outstanding colleagues who have read different manuscript versions and provided valuable input. Their feedback has improved our coverage of topics and helped us identify areas of weakness. These colleagues include

Muriel Anderson, Vondra Armstrong, Tim Barnett, Myrtle Bell,

Jerry Bennett, Stephen Betts, Thomas Bock

Walter Bogumil, Angela Boston, H. Michael Boyd, Gene Brady, Lynda Brown, April Cobb,

Patrick Coughlin, Ralph Covino, Craig Cowles, Carol Cumber, Tammy Davis, Diana Deadrick,

Paula Donson, Karen Eastwood, Dyanne Ferk, Bill Ferris,

Mary Gowan, Brooke Hargreaves-Heald, John Hendon, University

Kim Hester, John Hulsebus, Samira Hussein,

Jennie Johnson, Roy Johnson, Kathleen Jones, Deborah Kelly, Mukta Kulkarni,

Wendall Lawther, Dane Loflin, Lucy McClurg, Margie McInerney, Jon Monat,

Byron Morgan, Darlene Motley, Robert Dorothy Mulcahy, James Myers,

Rebecca Neilson, Kay Nicols, Texas Laura Parks, Sue Pogue, Tennessee Tech

John Poirier, Alexander P. Portnyagin, Richard Posthuma,

Gary Potts, Ross Prizzia, Herve Queneau, Gail Sammons,

John Shaw, Carol Spector, University Howard Stanger, Gary Stroud,

Abe D. Tawil, Linda Urbanski, Phillip Varca, Steve Warner, Paige Wolf, George

Laura Wolfe, Michael Wolfe, University and Ryan Zimmerman,

Acknowledgments

xv

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xvi

PART 1 Seeing People as a Strategic Resource 1

Chapter 1 Creating Value Through Human Resources 2 Chapter 2 Making Human Resource Management Strategic 38 Chapter 3 Ensuring Equal Employment Opportunity and Safety 76

PART 2 Securing Effective Employees 119

Chapter 4 Designing Productive and Satisfying Work 120 Chapter 5 Recruiting Talented Employees 160 Chapter 6 Selecting Employees Who Fit 202 Chapter 7 Managing Employee Retention and Separation 250

PART 3 Improving Employee Performance 291

Chapter 8 Measuring Performance and Providing Feedback 292 Chapter 9 Training for Improved Performance 334 Chapter 10 Developing Employees and Their Careers 378

PART 4 Motivating and Managing Employees 413

Chapter 11 Motivating Employees Through Compensation 414 Chapter 12 Designing Compensation and Benefit Packages 456 Chapter 13 Working Effectively with Labor 496 Chapter 14 Aligning Strategy with Practice 536

APPENDICES (available online at www.wiley.com/college/stewart)

Appendix A Occupational Outlook for HR Managers and Specialists Appendix B HR Certification Institute Body of Knowledge Appendix C HR People & Strategy Pillars of Knowledge Appendix D Organizations of Interest to HR Students and Professionals Appendix E Journals Useful to HR Students and Professionals

Glossary 569 Name and Company Index 579 Subject Index 595 Appendix Summary 611

Brief Contents

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http://www.wiley.com/college/stewart
A Manager’s Perspective 2

How Can Human Resource Management Make an Organization Effective? 4

How Is Organizational Success Determined? 6 Success in Life-Cycle Stages 6

Success from Stakeholder Perspectives 9

The Chain of Success 12

What Does Human Resource Management Provide to an Organization? 13

Core Human Resource Functions 13 Spreading Knowledge about Human Resource Practices 16

What Do Human Resource Specialists Do? 17 Human Resource Roles 18 Human Resource Competencies 22

How Will Current Trends Affect Human Resource Management? 24

Population Trends 25 Labor Force Trends 25 Employment Trends 26 Trends in Education and Training 27 Globalizations Trends 27

How Do Strategic and Functional Perspectives Combine to Direct Human Resource Practices? 28

A Manager’s Perspective Revisited 30

Summary/Key Terms/Discussion Questions 30

Contents

Chapter 1 Creating Value Through Human Resources

PART 1 Seeing People as a Strategic Resource

WHAT DO YOU THINK? 3

BUILDING STRENGTH THROUGH HR: Trader Joe’s 5

HOW DO WE KNOW? Does Effective Human Resource Management Increase Organizational Success? 8

HOW DO WE KNOW? Why Are Some Organizations More Effective than Others? 11

TECHNOLOGY IN HR: Using Web-Based Information to Manage People 15

BUILDING STRENGTH THROUGH HR: Edwards Lifesciences 21

BUILDING STRENGTH THROUGH HR: McDonald’s 23

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xviii Contents

Chapter 2 Making Human Resource Management Strategic

A Manager’s Perspective 38

How Can a Strategic Approach to Human Resources Improve an Organization? 40

How Is Strategy Formulated? 42 Gathering Information 43 Analyzing Information and Making Decisions 46

What Are Common Competitive Business Strategies? 48

Cost Leadership Strategy 49 Differentiation Strategy 50 Combination Strategy 51

What Are Basic Approaches to Human Resource Strategy? 52

The Universalistic Approach 53 The Contingency Approach 56

What Are Common Human Resource Strategies? 60 Internal/Cost HR Strategy: The Loyal Soldier 60 External/Cost HR Strategy: The Bargain Laborer 61 Internal/Differentiation HR Strategy: The Committed Expert 62 External/Differentiation HR Strategy: The Free Agent 62

EXAMPLE CASE: Zappos 33

DISCUSSION CASE: Curt’s Cowboy Corner 35

EXPERIENTIAL EXERCISE: Visit the SHRM Website 36

INTERACTIVE EXPERIENTIAL EXERCISE: Building an HR Department at Mega Manufacturing 36

WHAT DO YOU THINK? 39

BUILDING STRENGTH THROUGH HR: Southwest Airlines 42

TECHNOLOGY IN HR: Twitter as an Opportunity for Business 45

HOW DO WE KNOW? What Differentiates Fast-Food Restaurants? 51

HOW DO WE KNOW? Do Good Human Resource Practices Improve Performance? 55

BUILDING STRENGTH THROUGH HR: Fenmarc Produce Ltd 58

Cases 33

Exercises 36

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Contents xix

WHAT DO YOU THINK? 77

BUILDING STRENGTH THROUGH HR: Responding to Discrimination Claims 79

HOW DO WE KNOW? Do Courts Give Companies Credit for Good HR Practices? 85

HOW DO WE KNOW? Who Is Most Likely to Unfairly Discriminate? 87

TECHNOLOGY IN HR: Legal Issues with Internet and Email Use 89

Chapter 3 Ensuring Equal Employment Opportunity and Safety

A Manager’s Perspective 76

Why Is It Important to Understand Legal and Safety Issues? 78

What Is the Main Law Relating to Discrimination and Employment? 79.

Title VII of the Civil Rights Act of 1964 81 The Civil Rights Act of 1991 88 Application of U.S. Laws to International Employers 90

What Are Other Important Employment Laws? 92 The Age Discrimination in Employment Act 92 The Americans with Disabilities Act 94 The Equal Pay Act 96 The Family and Medical Leave Act 97

HOW DO WE KNOW? Do Human Resource Practices Influence Customer Service? 65

EXAMPLE CASE: United Parcel Service 69

DISCUSSION CASE: Mountain Bank 70

EXPERIENTIAL EXERCISE: Explore Company Websites 72

INTERACTIVE EXPERIENTIAL EXERCISE: HR Strategy in Action: Selling the HR Function at Mega Manufacturing 72

How Do Human Resource Strategies Align with Competitive Business Strategies? 63

Research Supporting the Contingency Perspective 64 Putting it all Together 66

A Manager’s Perspective Revisited 66

Summary/Key Terms/Discussion Questions 67

Cases 69

Exercises 72

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xx Contents

WHAT DO YOU THINK? 121

BUILDING STRENGTH THROUGH HR: W. L. Gore & Associates 123

HOW DO WE KNOW? Do Empowered Teams Have Higher Performance? 125

Chapter 4 Designing Productive and Satisfying Work

PART 2 Securing Effective Employees

A Manager’s Perspective 120

How Can Strategic Design of Work Tasks Improve an Organization? 122

How Is Work Design Strategic? 124 Developing Autonomy 124 Developing Interdependence 126 Linking Autonomy and Interdependence to HR Strategy 127

How Can Organizations Increase Diversity? 98 Executive Order 11246 100 Restrictions on Affirmative Action Plans 101 Affirmative Action Plans Today 101

What Are the Major Laws Relating to Occupational Safety? 102

Occupational Safety and Health Act 103 Workers’ Compensation 105

What Specific Practices Increase Fairness and Safety? 107

Employees 107 Leadership 108

A Manager’s Perspective Revisited 110

Summary/Key Terms/Discussion Questions 111

Cases 113

Exercises 115

BUILDING STRENGTH THROUGH HR: PepsiCo 99

BUILDING STRENGTH THROUGH HR: Union Pacific Corporation 106

HOW DO WE KNOW? What Can Organizations Do to Promote Safety? 109

EXAMPLE CASE: Xerox 113

DISCUSSION CASE: Jones Feed and Seed 114

EXPERIENTIAL EXERCISE: Locating Government Resources on the Web 115

INTERACTIVE EXPERIENTIAL EXERCISE: The Legal Side of HR: Handling Equal Employment Issues at Mega Manufacturing 115

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Contents xxi

Chapter 5 Recruiting Talented Employees

A Manager’s Perspective 160

How Can Strategic Recruiting Make an Organization Effective? 162

How Are Employee Jobs Determined? 128 The Job Analysis Process 128 Specific Methods of Collecting Job Analysis Information 133 How Is Job Description Information Made Useful? 136 Job Analysis and Legal Issues 137 Competency Modeling 138

How Do We Determine the Tasks Associated with Each Job? 140

Mechanistic Approach 141 Motivational Approach 142 Perceptual Approach 144 Biological Approach 144 Combining Work Design Approaches 145

How Can Work Be Designed to Improve Family Life? 145

Flexible Work Scheduling 147 Alternative Work Locations 148

A Manager’s Perspective Revisited 150

Summary/Key Terms/Discussion Questions 151

Cases 153

Exercises 156

BUILDING STRENGTH THROUGH HR: Purolator 129

BUILDING STRENGTH THROUGH HR: Leicester Royal Infirmary 141

HOW DO WE KNOW? Do Employees Work Harder When They Think Their Tasks Matter? 143

BUILDING STRENGTH THROUGH HR: International Business Machines Corporation 147

TECHNOLOGY IN HR: Potential Problems With Working From Home 149

EXAMPLE CASE: Coney Island Hospital 153

DISCUSSION CASE: Josh’s Toy Manufacturing 155

EXPERIENTIAL EXERCISE: Assessing the Accuracy of Job Descriptions 156

INTERACTIVE EXPERIENTIAL EXERCISE: Job Design: Creating New Positions at Graphics Design, Inc. 156

WHAT DO YOU THINK? 161

BUILDING STRENGTH THROUGH HR: Google 163

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xxii Contents

How Is Employee Recruiting Strategic? 164 Broad Versus Targeted Skill Scope 164 Internal Versus External Sourcing 166 Realistic Versus Idealistic Messaging 168

How Does Human Resource Planning Facilitate Recruiting? 170

The Planning Process 170 Batch and Flow Approaches 174 Centralization of Processes 174

Who Searches for Jobs? 175 New Workforce Entrants 176 Unemployed Workers 177 Workers Currently Employed 178

What Characteristics Make an Organization Attractive? 179

Generally Attractive Characteristics 180 Fit Between People and Organizations 182

What Are Common Recruiting Sources? 183 Job Posting 183 Employee Referrals 183 Print Advertising 185 Electronic Advertising 185 Employment Agencies 186 Campus Recruiting 189

How Is Recruiting Effectiveness Determined? 190 Common Measures 190 Differences among Recruiting Sources 191

A Manager’s Perspective Revisited 192

Summary/Key Terms/Discussion Questions 193

Cases 195

Exercises 198

HOW DO WE KNOW? Why Do Realistic Job Previews Reduce Employee Turnover? 169

BUILDING STRENGTH THROUGH HR: WellPoint Health Networks 172

HOW DO WE KNOW? Who Succeeds in a Job Search? 177

HOW DO WE KNOW? Are Early Job Offers Better? 181

TECHNOLOGY IN HR: Staying in Touch with Recruits 187

EXAMPLE CASE: MITRE 195

DISCUSSION CASE: Friendly Financial Works 197

EXPERIENTIAL EXERCISE: Learning about Your Career Center 198

INTERACTIVE EXPERIENTIAL EXERCISE: Strategic Recruitment: Finding the Right People for Graphics Design, Inc. 198

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Contents xxiii

WHAT DO YOU THINK? 203

BUILDING STRENGTH THROUGH HR: United States Marine Corps 205

HOW DO WE KNOW? Which Type of Fit Is Most Important? 209

HOW DO WE KNOW? Is It Better to Be Smart or Beautiful? 221

TECHNOLOGY IN HR: Administering Tests on the Internet 225

BUILDING STRENGTH THROUGH HR: Target 229

HOW DO WE KNOW? Does It Matter How You Shake Hands in an Interview? 233

EXAMPLE CASE: Outback Steakhouse 240

DISCUSSION CASE: Stringtown Iron Works 241

A Manager’s Perspective 202

How Can Strategic Employee Selection Improve an Organization? 204

How Is Employee Selection Strategic? 205 Aligning Talent and HR Strategy 205 Making Strategic Selection Decisions 208

What Makes a Selection Method Good? 211 Reliability 211 Validity 213 Utility 215 Legality and Fairness 217 Acceptability 218

What Selection Methods Are Commonly Used? 219 Testing 219 Information Gathering 228 Interviewing 232

How Are Final Selection Decisions Made? 235 Predictor Weighting Approach 236 Minimum Cutoffs Approach 236 Multiple Hurdles Approach 237 Banding Approach 237

A Manager’s Perspective Revisited 238

Summary/Key Terms/Discussion Questions 238

Cases 240

Chapter 6 Selecting Employees Who Fit

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xxiv Contents

Chapter 7 Managing Employee Retention and Separation

A Manager’s Perspective 250

How Can Strategic Employee Retention and Separation Make an Organization Effective? 252

How Are Employee Retention and Separation Strategic? 254

Strategic Emphasis on Employee Retention 254 Strategic Emphasis on Employee Separation 255

How Can Undesirable Employee Turnover Be Reduced? 256

Recognizing Paths to Voluntary Turnover 257 Understanding Decisions to Quit 259 Organizational Practices that Reduce Turnover 262

How Do Layoffs Affect Individuals and Organizations? 269

The Effect of Layoffs on Organizations 269 The Effects of Layoffs on Individuals 270 Reducing the Negative Impact of Layoffs 272

What Are Common Steps in Disciplining Employees? 274

Principles of Due Process 275 The Process of Progressive Discipline 275

EXPERIENTIAL EXERCISE: Learning through Interviewing 242

INTERACTIVE EXPERIENTIAL EXERCISE: Employee Selection: Choosing the Best of the Best for Graphics Design, Inc. 243

WHAT DO YOU THINK? 251

BUILDING STRENGTH THROUGH HR: SAS Institute, Inc. 254

BUILDING STRENGTH THROUGH HR: Convergys Corporation 259

TECHNOLOGY IN HR: Computerized Orientation Programs 265

BUILDING STRENGTH THROUGH HR: FreshDirect 266

HOW DO WE KNOW? Are Coworkers Contagious? 267

HOW DO WE KNOW? Do Managers Think Discipline Is Fair? 277

Exercises 242

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Contents xxv

WHAT DO YOU THINK? 293

BUILDING STRENGTH THROUGH HR: General Electric 296

TECHNOLOGY IN HR: Monitoring Electronic Activity 303

HOW DO WE KNOW? Who Is Most Likely to Provide Error-Free Ratings? 307

A Manager’s Perspective 292

How Can Performance Management Make an Organization Effective? 294

How Is Performance Management Strategic? 296 Emphasizing Either Merit or Parity 296 Linking Merit and Parity Systems to HR Strategy 297

What Is Performance? 299 Task Performance 299 Citizenship Performance 300 Counterproductive Performance 301

How Is Performance Measured? 302 Contamination and Deficiency as Sources of Inaccuracy 304 General Types of Performance Measures 304 Common Problems with Performance Measures 306 Rating Formats 311

Chapter 8 Measuring Performance and Providing Feedback

PART 3 Improving Employee Performance

How Should Employee Dismissals Be Carried Out? 277

Outplacement Services 278 The Dismissal Meeting 278

A Manager’s Perspective Revisited 279

Summary/Key Terms/Discussion Questions 280

Cases 282

Exercises 284

EXAMPLE CASE: Apparel Inc. 282

DISCUSSION CASE: County General Hospital 283

EXPERIENTIAL EXERCISE: Learning about Discipline Procedures 284

INTERACTIVE EXPERIENTIAL EXERCISE: Turnover: Dealing with the Good, the Bad, and the Ugly at Global Telecommunications 285

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xxvi Contents

Chapter 9 Training for Improved Performance

HOW DO WE KNOW? Is Performance Management the Same Around the World? 315

TECHNOLOGY IN HR: Feedback Through Twitter and Facebook 317

BUILDING STRENGTH THROUGH HR: Whirlpool Corporation 318

EXAMPLE CASE: Medical Center 326

DISCUSSION CASE: Reliable Underwriters 327

EXPERIENTIAL EXERCISE: Assessing Performance in Sports 328

INTERACTIVE EXPERIENTIAL EXERCISE: Performance Appraisal: Delivering Positive and Negative Feedback at Global Telecommunications 328

A Manager’s Perspective 334

How Can Strategic Employee Training Improve an Organization? 336

How Is Employee Training Strategic? 339 Differentiation versus Cost Leadership Strategy 339 Internal Versus External Labor Orientation 341

What Are Key Principles for Getting Benefits from Training? 342

Partnership 343 Systematic Process 344

WHAT DO YOU THINK? 335

BUILDING STRENGTH THROUGH HR: Rockwell Collins 338

BUILDING STRENGTH THROUGH HR: Apple 340

Who Should Measure Performance? 313 Multisource Performance Ratings 313 Rating Source Differences 314

How Should Feedback Be Provided? 316 Providing Positive and Negative Feedback 318 Effectively Communicating Methods for Improvement 319 Reducing Negative Emotional Responses 321 Building High Expectations 322

A Manager’s Perspective Revisited 322

Summary/Key Terms/Discussion Questions 323

Cases 326

Exercises 328

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Contents xxvii

WHAT DO YOU THINK? 379

BUILDING STRENGTH THROUGH HR: Aflac 381

Chapter 10 Developing Employees and Their Careers

A Manager’s Perspective 378

How Can Strategic Employee Development Make an Organization Effective? 380

How Is Employee Development Strategic? 382 External Versus Internal Labor Orientation 382 Differentiation Versus Cost Strategy 383

How Are Training Needs Determined? 345 Proactive Needs Assessment 345 Reactive Needs Assessment 349 Prioritizing and Creating Objectives 351

How Is Effective Training Designed and Delivered? 353

Content 354 Training Methods 355 Training Media 359 Transfer-Enhancement Techniques 362 Putting It All Together 364

How Do Organizations Determine Whether Training Is Effective? 365

Purpose 365 Outcomes 367 Design 369 Results 369

A Manager’s Perspective Revisited 370

Summary/Key Terms/Discussion Questions 371

Cases 372

Exercises 375

HOW DO WE KNOW? Is There One Best Way to Train for Computer Skills? 359

TECHNOLOGY IN HR: Benefits and Drawbacks of e-Learning 360

HOW DO WE KNOW? How Can Transfer Be Enhanced? 365

EXAMPLE CASE: Northwestern Memorial Hospital 372

DISCUSSION CASE: Hypothetical Telecommunications 374

EXPERIENTIAL EXERCISE: Finding an Off-the-Shelf Training Product 375

INTERACTIVE EXPERIENTIAL EXERCISE: The Art of Training: Finding the Right Program for Global Telecommunications 375

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xxviii Contents

What Are Careers Like Today? 384

How Can Organizations Help Employees Develop? 386

Formal Education 386 Assessments and Feedback 387 Work Experiences 391 Developmental Relationships 393

How Do Organizations Integrate Development Efforts? 395

Competency Model 395 Career Development Process 396 Technology 398

What Are Some Important Career Development Challenges? 399

Orienting New Employees 399 Reducing Burnout 400 Helping Employees Balance Work with Personal Lives 401 Developing a Diverse Workforce 402 Managing International Assignments 402

A Manager’s Perspective Revisited 404

Summary/Key Terms/Discussion Questions 405 Cases 407

Exercises 409

HOW DO WE KNOW? Can a Feedback Program Really Improve Performance? 391

HOW DO WE KNOW? How Do We Maximize the Return on Mentoring? 395

BUILDING STRENGTH THROUGH HR: LG Electronics 397

TECHNOLOGY IN HR: National Aeronautics and Space Administration (NASA) 398

EXAMPLE CASE: Expanding into Switzerland 407

DISCUSSION CASE: First Day on the Job 409

EXPERIENTIAL EXERCISE: Creating a Personal Development Plan 409

INTERACTIVE EXPERIENTIAL EXERCISE: Career Development: Building a Workforce for Long-Term Success at Global Telecommunications 410

Chapter 11 Motivating Employees Through Compensation

PART 4 Motivating and Managing Employees

A Manager’s Perspective 414

How Can Strategic Employee Compensation Make an Organization Effective? 416

WHAT DO YOU THINK? 415

BUILDING STRENGTH THROUGH HR: Marriott International, Inc. 418

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Contents xxix

How Is Employee Compensation Strategic? 418 External Versus Internal Labor 419 Differentiation Versus Cost Strategy 419 Aligning Compensation with HR Strategy 420

How Does Compensation Motivate People? 422 Theories of Motivation 423 Linking Motivation with Strategy 429

How Is Compensation Level Determined? 432 Pay Surveys 432 Pay-Level Strategies 436 Linking Compensation Level and Strategy 437

How Is Compensation Structure Determined? 438 Job-Based Pay 438 Skill-Based Pay 441 Linking Compensation Structure to Strategy 442

How Do Government Regulations Influence Compensation? 443

Fair Labor Standards Act 443 State and Local Regulations 447

A Manager’s Perspective Revisited 447

Summary/Key Terms/Discussion Questions 448

Cases 451

Exercises 453

Chapter 12 Designing Compensation and Benefit Packages

A Manager’s Perspective 456

How Can a Strategic Compensation Package Make an Organization Effective? 458

HOW DO WE KNOW? Do Contingent Rewards Really Improve Performance? 424

TECHNOLOGY IN HR: Be Careful When Obtaining Information 434

BUILDING STRENGTH THROUGH HR: The Container Store 437

HOW DO WE KNOW? Do People Lose Sleep Over Pay? 445

EXAMPLE CASE: Delphi Corporation 451

DISCUSSION CASE: Joe’s Hamburger Grill 451

EXPERIENTIAL EXERCISE: Conduct a Pay Survey Using BLS Data 453

INTERACTIVE EXPERIENSTIAL EXERCISE: How Much to Pay: Finding the Right Balance at SuperFoods 453

WHAT DO YOU THINK? 457

BUILDING STRENGTH THROUGH HR: IKEA 459

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xxx Contents

How Do Compensation Packages Align with Strategy? 460

At-Risk Compensation 460 Line of Sight 461 Common Elements of Compensation Packages 463

What Are Common Approaches to Base Pay? 464

What Are Common Employee Benefit Plans? 466 Legally Required Benefits 467 Discretionary Benefits 471 Flexible Benefit Programs 474

What Are Common Individual Incentives? 476 Piece-Rate Incentives 476 Commissions 477 Merit Pay Increases 479 Merit Bonuses 480

What Are Common Group and Organizational Incentives? 481

Team Bonuses and Incentives 481 Gainsharing 483 Profit Sharing 484 Stock Plans 485

How Do Strategic Decisions Influence a Compensation Package? 486

A Manager’s Perspective Revisited 488

Summary/Key Terms/Discussion Questions 489

Cases 491

Exercises 493

BUILDING STRENGTH THROUGH HR: Strategically Managing Compensation During a Recession 462

BUILDING STRENGTH THROUGH HR: Netflix 465

BUILDING STRENGTH THROUGH HR: Burton Snowboards 475

TECHNOLOGY IN HR: Enterprise Incentive Management 478

HOW DO WE KNOW? Does How Much You Make Depend on How Much You Weigh? 479

BUILDING STRENGTH THROUGH HR: Deere & Company 482

EXAMPLE CASE: Best Buy 491

DISCUSSION CASE: Collegiate Promotions 492

EXPERIENTIAL EXERCISE: Learning Through Interviewing 493

INTERACTIVE EXPERIENTIAL EXERCISE: Is It All about Base Salary? Explaining Compensation Issues at SuperFoods 494

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Contents xxxi

Chapter 13 Working Effectively with Labor

A Manager’s Perspective 496

How Can Good Labor Relations Make an Organization Effective? 498

How Are Labor Relations Strategic? 500

How Has Organized Labor Evolved over Time? 504 The Influence of Government Regulations 504 Current Trends in Organized Labor 508 International Differences in Organized Labor 510 The Effect of Labor Unions on Nonunion Workers 513

How Do Workers Become Part of a Union? 514 Union Organizing Campaigns 514 Decertification Campaigns 516 Factors Influencing Union Campaigns 517

What Happens During Labor Negotiations and Collective Bargaining? 518

Bargaining Topics 518 Work Stoppages 519 The Bargaining Atmosphere 520 Interest-Based Negotiation 523

What Is the Grievance Process? 525 Grievance Procedures 525 Determinants of Grievance Filing 526 Grievance Mediation 526

A Manager’s Perspective Revisited 527

Summary/Key Terms/Discussion Questions 527

Cases 529

WHAT DO YOU THINK? 497

BUILDING STRENGTH THROUGH HR: Kaiser Permanente 500

BUILDING STRENGTH THROUGH HR: MidState Medical Center 503

HOW DO WE KNOW? Can Unions Make Life Better for Childcare Workers? 511

TECHNOLOGY IN HR: Replacing Laborers with Computers 519

HOW DO WE KNOW? Does Cooperating with Unions Help Organizations Succeed? 522

EXAMPLE CASE: Energy Co. 529

DISCUSSION CASE: Teaching Assistants at State University 531

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xxxii Contents

WHAT DO YOU THINK? 537

BUILDING STRENGTH THROUGH HR: Walt Disney World 540

HOW DO WE KNOW? What Happens When Organizations Send Mixed Signals about the Value of Employees? 543

BUILDING STRENGTH THROUGH HR: U.S. Navy 547

HOW DO WE KNOW? Does Working in a Foreign Country Require More Skill? 556

BUILDING STRENGTH THROUGH HR: Ford Motor Company 559

Chapter 14 Aligning Strategy with Practice

A Manager’s Perspective 536

How Can Alignment of HR Practices Make an Organization Effective? 538

What Are Two Basic Forms of Strategic Alignment? 541

How Do HR Practices Align with One Another? 543 External/Cost: Alignment for Bargain Laborers 544 Internal/Cost: Alignment for Loyal Soldiers 546 Internal/Differentiation: Alignment for Committed Experts 549 External/Differentiation: Alignment for Free Agents 552

What Are Some Other HR Issues? 554 Variations of Basic Strategies 555 HR as an Input to Competitive Strategy 556 The Role of HR in Small Businesses 557

What Might the Future of HR Look Like? 558 Volatile Economic Conditions 559 Increased Emphasis on Sustainabilty 560 Growth of Social Networking 560 Balancing of Work and Family 560 Adaptation of Healthcare Legislation 560

A Manager’s Perspective Revisited 561

Summary/Key Terms/Discussion Questions 562

EXPERIENTIAL EXERCISE: Investigating the Labor–Management Partnership 532

INTERACTIVE EXPERIENTIAL EXERCISE: Unions: Negotiating a New Labor Contract for Mega Manufacturing 533

Exercises 532

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Contents xxxiii

APPENDICES (available online at www.wiley.com/college/stewart)

Appendix A Occupational Outlook for HR Managers and Specialists Appendix B HR Certification Institute Bodies of Knowledge Appendix C HR People & Strategy Pillars of Knowledge Appendix D Organizations of Interest to HR Students and Professionals Appendix E Journals Useful to HR Students and Professionals

Glossary 569

Name and Company Index 579

Subject Index 595

Appendix Summary 611

Cases 564

Exercises 566

EXAMPLE CASE: Portman Ritz-Carlton in Shanghai, China 564

DISCUSSION CASE: Technology Consultants 565

EXPERIENTIAL EXERCISE: Learning about Company Cultures 566

INTERACTIVE EXPERIENTIAL EXERCISE: A Final Journey: Communicating the Strategic Importance of HR 566

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http://www.wiley.com/college/stewart
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Par t 1 Seeing People as a Strategic Resource

Chapter 1 Creating Value Through Human Resources

Chapter 2 Making Human Resource Management Strategic

Chapter 3 Ensuring Equal Employment Opportunity and Safety

AFP/Getty Images Ned Dishman/NBAE/Getty Images Bloomberg/Getty Images

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C h a p t e r 1

Creating Value Through Human Resources

A M A N A G E R ’ S P E R S P E C T I V E

MIGUEL DISCONNECTS HIS PHONE AND BREATHES A SIGH OF RELIEF. THE JOB OFFER IS EVERYTHING HE HOPED IT WOULD BE. HE IS PRETTY CERTAIN HE WILL ACCEPT THE AUDITOR POSITION IN A

COUPLE OF DAYS, BUT HE WANTS TO DO A LITTLE MORE RESEARCH FIRST. TWO YEARS AGO MIGUEL TOOK HIS FIRST ACCOUNTING CLASS AND INSTANTLY

KNEW WHAT HE WANTED TO DO FOR A CAREER. HE LOVES THE STRUCTURE AND LOGIC OF ACCOUNTING. PUTTING ALL THE NUMBERS IN THE RIGHT PLACE AND MAKING SURE THEY ADD UP GIVES HIM A

SENSE OF ACCOMPLISHMENT. NOW HE JUST NEEDS TO BE SURE THAT HE IS JOINING THE RIGHT FIRM.

As Miguel reflects back on his day of interviews with the firm, he recalls a number of insightful conversations. One thing that impresses him is the firm’s strong reputation for excellence. In the last few years, he has seen many of his friends lose their jobs. Seeing their pain has steered Miguel toward business organizations that he feels are unlikely to have financial difficulties. He knows that profitability is one key to success. But why is the firm that is offering him a position so

profitable? Of course, much of it has to do with the firm’s excellent operating procedures. From everything he has learned, the firm is simply superior at meeting customer needs. According to some of the managers who interviewed him, being profitable helps the firm invest more money to improve working conditions. The firm also has a strong reputation for helping people in the commu- nity, which is very important to Miguel.

Something that really attracts Miguel to the company is how they treated him during the job interviews. Sarah, a human resource staff member, told Miguel that he has already progressed far- ther than 90 percent of job applicants. Sarah also described how the company focuses on finding and keeping only the best employees. This makes Miguel feel good and leads him to believe he will have competent coworkers. The firm seems to have good human resource practices. It offers numerous train- ing opportunities and pays above-market wages. Insurance benefits are much better than most

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THE BIG PICTURE Human Resource Management Practices Help Successful Organizations Meet the Needs of Employees, Customers, Owners, and Society.

competitors’. According to Sarah, the firm also emphasizes internal promotions, making it likely that Miguel will have an opportunity to become a manager.

The firm also seems to have a strategic plan for dealing with important changes that are likely to occur both in the marketplace and among future employees. Cutting-edge technology allows the firm to keep up with constantly changing account- ing rules and procedures. Now that he has received an offer, Miguel plans to discuss things with his parents and a friend who works for the firm. Unless something changes his mind, he plans to take the offer and is convinced that he has the potential for a great career with the firm.

WHAT DO YOU THINK? Suppose you are listening to a conversation between Miguel and his parents. His parents make the following statements as they and Miguel discuss his decision about the job offer. Which of the statements do you think are true?

Companies with good human resource practices have more satisfied workers.

Companies with happy employees are more profitable.

Companies lose money when they try to be good social and environmental citizens.

Having a successful career in the future workplace will require young employees to work effectively with older people.

Human resource specialists can provide critical information and support that helps make life better for employees.

?

T OR F

T OR F

T OR F

T OR F

T OR F

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4 Chapter 1 Creating Value Through Human Resources

Human resource management focuses on people in organizations. Of course, people are a major component of any organization, so it follows that organiza- tions with more productive employees tend to be more successful. Employee productivity increases when organizations hire and motivate employees effectively. In addition, good human resource practices create more satisfied employees, who in turn work harder to satisfy customers.1

One prosperous organization that traces much of its success to effective management of people is Trader Joe’s. The chain now includes over 365 stores in more than 30 different states, but it began in the 1960s as three convenience stores seeking to survive the introduction of 7-Eleven. Seeing the difficulty of competing head-to-head with 7-Eleven, the founder—Joe Coulombe—decided to change Trader Joe’s to a specialty store selling unique products. Trader Joe’s has since become well known for providing foods and beverages that cannot be found in other stores. Products, which usually carry the store’s own label, include gourmet and specialty foods such as soy ice- cream cookies, black rice, and stuffed salmon.2

Keeping prices low is one key to success for Trader Joe’s. However, cus- tomers describe their shopping experience as something more than a simple hunt for bargains. Trader Joe’s works hard to attract educated customers who develop a loyal relationship with the company. Many of these customers say they have fun shopping at Trader Joe’s. They look forward to searching store aisles and finding interesting products. They also enjoy their interactions with helpful store employees dressed in casual Hawaiian shirts. The real key to suc- cess for Trader Joe’s, then, seems to be finding and keeping great employees.3

What does Trader Joe’s do to develop and maintain a productive work- force? Flexible job design certainly plays a role. Employees have a great deal of autonomy in determining how the store can best serve customers. Every employee is encouraged to sample products and make recommendations. Employees are free to tell customers when they don’t like something. Workers at Trader Joe’s are not limited to performing certain tasks but help out wher- ever they are needed. Managers, for example, often sweep floors and stock shelves.4

Human resource management The field of study and practice that focuses on people in organizations.

How Can Human Resource Management Make an Organization Effective?

After reading this chapter you should be able to:

Explain how human resource management, from the organizational life-cycle and stakeholder perspectives, can facilitate organizational success.

List the core functions of human resource management.

Explain what human resource professionals do to help create successful organizations.

Identify important labor trends that are affecting organizations and their human resource practices.

Explain how effective human resource management requires a combination of strategic and functional perspectives.

LEARNING OBJECTIVE 1

LEARNING OBJECTIVE 2

LEARNING OBJECTIVE 3

LEARNING OBJECTIVE 4

LEARNING OBJECTIVE 5

L E A R N I N G O B J E C T I V E S

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How Can Human Resource Management Make an Organization Effective? 5

Of course, not everyone would fit equally well into the job environ- ment at Trader Joe’s. Employee selection focuses on hiring people with personalities that fit the productive and creative culture. Trader Joe’s looks for employees who are upbeat, outgoing, and motivated by chal- lenge. Employees also need a good sense of humor and a strong customer orientation.

Convincing people to take jobs with Trader Joe’s does not seem to be dif- ficult. The store has a reputation as a desirable place to work, and a large number of people apply whenever job openings are advertised.5 One reason people like to work at Trader Joe’s is the company’s compensation practices. Employees are paid substantially more than they could make doing similar jobs in other companies. Full-time crew members begin at salaries around $50,000. They receive health insurance and participate in an excellent retire- ment savings program, including a plan that contributes over 15 percent of gross income to a tax-deferred retirement account. Excellent pay not only helps get people interested in working at Trader Joe’s but also helps ensure that employees will stay with the company. Managers are almost always pro- moted from within the company, and few employees leave to work elsewhere.6

Both employees and customers see Trader Joe’s as a successful company. It is a profitable company, with annual sales exceeding $8 billion. More impor- tant, Trader Joe’s generates twice as many dollars in sales per square foot of store space as competitors such as Whole Foods. This profitability has helped the company expand the number of stores without taking on debt. Profits grew tenfold over a 10-year period.7

The success of Trader Joe’s clearly illustrates how a company can thrive in difficult and changing times. Rather than giving up to a formidable competi- tor, Joe Coulombe identified an unmet need and created an organization to fill that need. Human resource practices at Trader Joe’s help attract and moti- vate employees who provide great customer service. Doing things differently from the competition, and doing them better, has created a culture where people like to go to work. Happy employees make shoppers happy.

TRADER JOE’S Trader Joe’s is a privately owned chain of about 365 specialty grocery and wine stores. Human resource management at Trader Joe’s builds competitive strength by

Designing work to give people autonomy to complete tasks in creative ways. Identifying and hiring people who have fun, outgoing personalities. Providing high pay and excellent benefits to attract the best workers. Matching human resource practices with a competitive strategy of providing unique products.

Building Strength Through HR

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6 Chapter 1 Creating Value Through Human Resources

As you begin studying human resource management, it is important to think about what you want to gain from your efforts. How can understanding human resource management better prepare you for success in your upcoming career? The most basic answer is that human resource skills will help you hire, manage, and motivate employees more effectively. Clearly, human resource skills are useful not only to human resource professionals but also to everyone who has responsibility for leading and managing others. Furthermore, even if you don’t plan to work either as a human resource specialist or as a man- ager, learning the concepts of human resource management will help you to understand why the places where you work do much of what they do.

The goal of human resource management is, of course, to make organi- zations more effective. Thus, a starting point for learning about the field of human resource management is to explore the concept of organizational suc- cess. We know that some organizations are more successful than others. Can differences in human resource management explain why?

Most observers agree that Trader Joe’s is a successful organization. This is supported by top rankings from publications such as Consumer Reports. But what exactly does it mean to say an organization is successful? Does it mean the organization makes a lot of money? Does it mean the organization makes the world a better place? Perhaps success is meeting the demands of differ- ent stakeholders, such as Trader Joe’s recent agreement with a farmworker organization concerning employee fair treatment as part of tomato-growing practices.8 Maybe success simply means the organization has been around for a long time. Because organizational success has many faces, each of these perspectives is partly true. Different viewpoints capture different meanings of success. Here, we briefly examine the meaning of organizational success from two perspectives—the life-cycle model and the stakeholder perspective—and consider how human resource management plays a role in making organiza- tions effective from each viewpoint.

SUCCESS IN LIFE-CYCLE STAGES Think about success for you as an individual. Being successful now doesn’t guarantee you will be successful in 10 years. Having just enough money to buy pizza and books may equal success when you are 20, for example, but probably isn’t enough when you are 40. Similarly, the life-cycle approach to organiza- tional success suggests that measures of effectiveness change as an organiza- tion grows. Twenty-five years ago, Trader Joe’s was successful simply because it didn’t close when 7-Eleven entered the market. Success today depends on expansion into a national chain.

At the heart of this model of success is the organizational life cycle, a series of stages through which an organization moves during its lifetime. Stages of growth begin when the organization is founded and end when it ceases to exist. Since goals and objectives change as the organization moves from stage to stage, the nature and meaning of success also change. Here, we examine four common stages in the organizational life cycle: the entrepreneurial stage, the communal stage, the formalization stage, and the elaboration stage.9 As

Organizational life cycle Stages through which an organization moves after its founding.

How Is Organizational Success Determined?

LEARNING OBJECTIVE 1

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How Is Organizational Success Determined? 7

you will see, human resource management plays an important role in every stage. Table 1.1 summarizes key differences across the stages.

Entrepreneurial Stage An organization enters the entrepreneurial stage when it is first created. This stage is a lot like infancy for human beings. The main goal is survival and growth. Organizations in the entrepreneurial stage need to develop an iden- tity and obtain resources. Success during this stage is often measured sim- ply in terms of staying alive. Organizations that survive are successful. The early history of the Internet company Yahoo! is a good example. Yahoo! wasn’t profitable in the beginning, but it showed innovation and growth when many competitors were going out of business.

Effective human resource management is very important for the survival and growth of newly formed organizations. Organizations must find and hire a sufficient number of high-quality employees. They must also develop basic plans for measuring performance and paying people.

A typical organization employs one human resource specialist for every 100 employees.10 This means that organizations in the entrepreneurial stage of development are typically too small to have a full-time, dedicated human resource staff. As a result, it is likely that owners and managers of firms with relatively few employees perform many human resource duties themselves or hire outside consultants to do this work.

Given the importance of human resources for entrepreneurial organizations, it is not surprising that firms with better-developed plans and methods of obtain- ing and paying employees are more likely to survive. For instance, one study found that new organizations lacking clear human resource and pay plans have just a 34 percent chance of surviving the first five years. Firms with good human resource plans, in contrast, have a 92 percent chance of survival.11 Organizations with better plans for hiring and motivating workers are thus more likely to survive— and survival is a key indicator of success during the entrepreneurial stage.

Communal Stage Organizations that survive the entrepreneurial stage enter the communal stage, which is marked by expansion, innovation, and cooperation. This stage is much like the teenage years for human beings. The main objective is to gain a unique identity and overcome internal conflict. Learning who you are and improving your skills are the essence of life during these years. Similarly, orga- nizations in the communal stage focus on developing and improving processes

Entrepreneurial stage First stage in the organizational life cycle; focuses on survival.

Communal stage Second stage in the organizational life cycle; focuses on expansion and innovation.

Stage Goal Human Resource Contribution

Entrepreneurial Survival and growth Need to hire and maintain employees; emphasis on creat- ing plans for measuring performance and deciding pay

Communal Develop identity and overcome conflict

Need to develop clear communication channels; emphasis on building strong loyalty among employees

Formalization Efficient production Need to create formalized practices for hiring, training, and compensating; emphasis on continual improvement of employee skills and motivation

Elaboration Adaptation and renewal

Need to alter practices to meet changing demands; emphasis on new ways of organizing work tasks

Table 1.1 Human Resources Across the Organizational Life Cycle

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8 Chapter 1 Creating Value Through Human Resources

for effectively producing goods and services. Members of the organization begin to feel a sense of commitment. Survival is still important, but organi- zational success is measured increasingly by the extent to which employees feel a sense of cohesion or belonging. It is important for employees to build strong feelings of attachment to coworkers and to the mission of the organiza- tion. Such attachment is an important part of success at Trader Joe’s, where employees feel connected. The company’s managers listen to employees, which encourages employees to communicate effectively with customers.12

Organizations with effective human resource management practices in the communal stage continue to hire good employees and provide training. They also communicate well with employees. Employees, aware of these activities, develop a feeling that the organization is committed to taking care of them. Such feelings increase job satisfaction and feelings of empowerment, so that organizations with better human resource practices have happier employees who are more committed to making the organization successful and helping others.13 Employees are also less likely to leave organizations with good human resource practices. The accompanying “How Do We Know?” feature describes a study that demonstrates how effective human resource practices in call centers increase the likelihood of retaining workers, which in turn increases profitability.

DOES EFFECTIVE HUMAN RESOURCE MANAGEMENT INCREASE ORGANIZATIONAL SUCCESS? Have you phoned a company’s call center in the past to ask a question or complain about a product or service? Perhaps a call center representative has phoned you to try to sell you something. Many com- panies have call centers, and some centers employ thousands of people. As you can probably imag- ine, working in a call center is not always fun, and employees frequently quit shortly after being hired.

An important question therefore is whether good human resource practices can improve work in call centers. Rosemary Batt conducted a study to learn about the effect of human resource practices on organizational performance in call centers. She asked call center managers about the skill level of employees, the amount of freedom employees had to choose how to do their work, and human resource incentives. She also measured employee quit rates and sales growth.

The study found higher sales growth in call cen- ters with better human resource practices. Higher- performing centers had ongoing training, more employees working full-time rather than part-time, and more elaborate performance management

systems. Better centers allowed employees to exer- cise greater control in determining things like work pace, scheduling, and technology design. Much of the effect of the human resource practices on performance came through employee retention. Fewer employees left call centers that had better practices, which in turn helped these centers to experience increased sales growth.

The Bottom Line. Organizations are more successful when they have good human resource practices. Success comes from having a stable work- force, which develops when fewer people leave the organization. People are less likely to leave when they have freedom to make choices about how to do their work. They also stay longer when they have full-time jobs that pay them well. Professor Batt thus concluded that good human resource prac- tices lead to lower quit rates, which in turn increase growth in customer sales.

Source: Rosemary Batt, “Managing Customer Services: Human Resource Practices, Quit Rates, and Sales Growth,” Academy of Management Journal 45, no. 3 (2002): 587–597.

How Do We Know?

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How Is Organizational Success Determined? 9

Formalization Stage The formalization stage occurs as organizations become stable and develop clear practices and procedures for doing work. In humans, the formalization stage often begins just after graduation from college, when people tend to set- tle into stable jobs. Organizations in the formalization stage focus on improv- ing efficiency and finding better ways to accomplish tasks. They develop clear goals for guiding their efforts. Making goods and services as efficiently as pos- sible becomes a key goal. Making a good profit is also important.

Effective management of people is beneficial for increasing efficiency and goal accomplishment in this stage. Organizations with formalized human resource practices that develop employee skills and motivate workers gener- ate more sales per employee.14 IBM represents a company in this stage. IBM has been in existence 100 years and currently employs over 430,000 people. Keeping in touch with so many employees is difficult. However, IBM has a database that contains a profile for every employee. The profile lists each employee’s skills. Maintaining such a database takes a great deal of effort, but cost savings from improved matching of employees and jobs has saved IBM $1.4 billion. Effective formalization of human resource practices has thus improved the efficiency and profitability of IBM.15

Elaboration Stage The elaboration stage occurs when organizations need to adapt and renew. This stage is similar to middle age for human beings. Success often depends on redefining objectives and identifying new opportunities. People in this stage sometimes go through midlife crises, perhaps changing occupations and developing new hobbies. Organizations in the elaboration stage, like middle- aged people, have existed for some time, but shifting trends and preferences require them to change. For example, years ago Hallmark became successful as a producer of greeting cards, but changes in technology have forced the company to innovate and adapt to produce electronic greetings and family- based media.

Good human resource management is critical for successful adaptation. In fact, one survey found change management to be the most important skill that human resource professionals can contribute to an organization.16

An example of an organization in this stage is Crouse Hospital in Syracuse, New York. At one point the company had a net loss of $15 million. About half of the hospital’s employees were quitting each year. Hospital leaders took note and began to involve employees in an effort to change the cul- ture of the organization. Numerous employee groups met and made sug- gestions. Employee efforts to turn around hospital performance took time but were successful. Financial problems were reversed to a net profit, and the employee quit rate dropped to 18 percent. Overall job satisfaction has increased to 96 percent.17 Improved human resource management thus helped move Crouse Hospital from the elaboration stage back to the formal- ization stage.

SUCCESS FROM STAKEHOLDER PERSPECTIVES A second approach for assessing organizational effectiveness is the stake- holder perspective. According to this view, organizations are successful to the extent that they meet the needs of their stakeholders. Stakeholders are defined as individuals or groups of people who can affect or who are affected

Formalization stage Third stage in the organizational life cycle; focuses on establishing clear practices and procedures for carrying out work.

Elaboration stage Final stage in the organizational life cycle; focuses on reinvention and adaptation to change.

Stakeholders Individuals or groups who are affected by or who affect an organization.

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10 Chapter 1 Creating Value Through Human Resources

by an organization.18 This definition is quite broad, since almost every living person could in some way potentially affect or be affected by an organiza- tion. Fortunately, research suggests that employees, customers, and owners (shareholders) are the primary stakeholders. Their participation is crucial for the survival of the organization.19 Society as a collective group is also seen by many as an important stakeholder.

Employees Employees make up an important group of stakeholders. Because employ- ees complete tasks to make goods and services, they obviously influence the organization’s ability to achieve its objectives. Their lives are also obviously influenced by the organization. Meeting the needs of employees is a critical component of organizational success.

Many human resource practices protect the interests of employees. For instance, the human resource department often plays a major role in ensur- ing that the organization complies with employment and safety laws. A num- ber of these laws are designed to make sure the organization treats employees fairly. Helping design work tasks to make them more enjoyable is another way human resource management makes life better for employees. Human resource professionals help individuals plan and advance their careers, which keeps employees happy and reduces the chance that they will leave for jobs in other organizations. Thus, good human resource practices reduce employee turnover, which happens when employees quit and take jobs elsewhere.20 Low turnover is a strong sign that employees’ needs are being met. Simply put, people are less likely to look for new work opportunities when they are sat- isfied with their current jobs.21 As you can imagine, most companies prefer employee turnover to be low.

Customers Customers are another important group of stakeholders. An organization obviously will have trouble achieving its goals if customers don’t buy its goods or services, so the influence of customers on the organization is immense. The goods and services available to customers can also affect their lives both positively and negatively.

Research evidence strongly supports the notion that good human resource management improves customer satisfaction, largely through customers’ interactions with employees. Employees tend to treat customers the same way they believe managers treat them. If employees feel the organization values them and treats them with respect, they reproduce these good attitudes and behaviors in their interactions with customers. If they believe management doesn’t care about them, they are less likely to be positive and helpful to cus- tomers.22 For example, one study of hairstylists found that those who were most satisfied with their jobs were helpful to clients and coworkers and in turn had more satisfied customers.23 Human resource practices that demonstrate care and concern for employees thus translate into increased customer sat- isfaction. Hiring and keeping skilled employees can also improve customer satisfaction. Just think of an experience you have had shopping for something like a new computer. Getting information from a knowledgeable employee is much more satisfying than trying to get information from someone who knows less than you do.

Employee turnover The process in which employees leave the organization and are replaced by other employees.

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How Is Organizational Success Determined? 11

Owners A third group of important stakeholders is made up of owners, including stockholders. Owners influence organizations by determining who leads and makes decisions. In most cases their chief concern is the organization’s prof- its, and the extent to which the organization returns profits and provides them with money influences them in many ways.

A great deal of research has linked human resource practices to organiza- tional profits. As discussed in the “How Do We Know?” feature, this research illustrates how good human resource management makes a difference. Organizations are more profitable when they ensure high levels of employee skill by properly designing jobs, carefully selecting employees, and providing useful training. Effective practices also motivate employees by carefully mea- suring performance, making fair promotion decisions, and linking pay to per- formance.24 In short, employees who have better skills, are well paid, and feel their jobs are secure have higher individual performance, which translates into desirable organizational improvements like growth in sales.25

Society Society represents the broader community in which the organization oper- ates. Although further removed from the organization than the stakeholder

WHY ARE SOME ORGANIZATIONS MORE EFFECTIVE THAN OTHERS? Human resource specialists often claim that differ- ences in employee skill and ability represent a pri- mary source of competitive advantage for firms. In short, having skilled and knowledgeable employees is seen as a valuable resource that firms can draw on to outperform competitors. Of course, there are many other things, such as firm strategy and eco- nomic conditions, that affect organizational per- formance. An important research question is thus whether organizations with better employees— those that have greater human capital—are indeed more effective than their competitors. Russell Crook, Samuel Todd, James Combs, David Woehr, and David Ketchen sought a clear answer to this question by summarizing the results of 66 different existing studies.

Human capital was scored as higher when employees have more work experience, higher levels of education, more desirable traits such as greater intelligence, and more knowledge of work processes. Organizational performance was

captured through financial measures such as prof- itability and return on assets. As predicted, orga- nizations with greater human capital were found to have higher profitability. The relationship was strongest when specific measures of human capital were used, suggesting that effective organizations develop and utilize employee skills and knowledge that are unique to them and not easily transferred to other organizations.

The Bottom Line. Having high-quality employ- ees is a key to organizational success. Hiring and retaining the best employees pays off. The research- ers thus conclude that organizations should empha- size acquiring and retaining the best and brightest workers.

Source: T. Russell Crook, Samuel Y. Todd, James G. Combs, David J. Woehr, and David J. Ketchen, Jr., “Does Human Capital Matter? A Meta-Analysis of the Relationship Between Human Capital and Firm Performance,” Journal of Applied Psychology 96 (2011): 443–456.

How Do We Know?

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12 Chapter 1 Creating Value Through Human Resources

groups discussed so far, society still serves as an important stakeholder. On the one hand, organizations affect society through their environmental practices, as well as their support of community charities and other such activities. On the other hand, various political and social forces can strongly influence orga- nizations. For example, think about how changes in attitudes toward conser- vation and large automobiles affect the U.S. automobile industry.

Interestingly, organizations that are better community citizens are gener- ally more profitable than organizations that ignore environmental and social concerns. Although there are exceptions, expending effort to do things such as protect the environment and improve local communities usually leads to improved financial performance for organizations.26 In addition, effective human resource management within the organization results in other ben- efits to society. It provides employees with open channels of communication, which can reduce instances of unethical corporate behavior. Skilled and moti- vated employees also produce goods and services that help make the world a better place. Taking care of people at work can thus translate into important benefits for society as a whole.

THE CHAIN OF SUCCESS Successful firms must meet the needs of each group of stakeholders, and these needs vary from group to group.27 Fortunately, meeting the needs of one group can often help meet the needs of others. First, effective human resource management acquires high-quality employees, motivates them to maximize performance, and helps meet their psychological and social needs. This leads to long-term relationships with skilled and happy employ- ees. Effective employees provide good customer service, which results in repeat business. Better customer service leads to improved financial perfor- mance that ensures profitability and success. Increased profitability allows organizations to spend money on improving human resource practices, which loops back and continues the chain of success. Properly managing people is therefore a critical part of the chain of success, which is shown in Figure 1.1 and summarizes the relationship among employee, owner, and customer interests. Obtaining and keeping excellent employees gives an organization an advantage in meeting customer needs, which trans- lates into profitability and thereby provides organizations with resources to further improve human resource practices. This cycle of success was sup- ported by a study that concluded that companies rated by Fortune as “The 100 Best Companies to Work for in America” are more profitable than their competitors.28

Figure 1.1 The Chain of Success.

HUMAN RESOURCE MANAGEMENT

EFFECTIVE EMPLOYEES

CUSTOMER SERVICE

Greater resources for improving human resource practices

FINANCIAL PERFORMANCE

Acquiring Employees erformance oyee Needs

y Workers Workers

erm Workers

ong Relationships epeat Business

rvival and Growth ofitability

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What Does Human Resource Management Provide to an Organization? 13

? CONCEPT CHECK 1. What are the four stages of the organizational life cycle, and

what is the main goal of each stage? 2. How does human resource management contribute to success

at each stage? 3. What four primary groups make up an organization’s key

stakeholders?

What Does Human Resource Management Provide to an Organization?

LEARNING OBJECTIVE 2

Anyone who has applied for a job with a moderately large organization has probably interacted with a human resource department. But human resource functions go far beyond processing employment applications. From an overall strategic perspective, effective human resource management builds human capital that in turn increases organizational performance. In this section, we thus look at a number of activities that human resource professionals carry out in their role of managing the organization’s employees.

CORE HUMAN RESOURCE FUNCTIONS Core human resource functions can be summarized as people management activities. As shown in Table 1.2, these activities represent the primary purpose for having a human resource department. The Society for Human Resource Management (SHRM) and its affiliated Certification Institute have identified

Table 1.2 Core Human Resource Functions

Source: Information from Society for Human Resource Management (SHRM) and affiliated Certification Institute. See the PHR and SPHR Body of Knowledge at http://www.hrci.org/ uploadedfiles/Content/Resource_Library/Certification_Handbooks_and_Other_Publications/ PHR-SPHR%20BOK.pdf/

Function Description

Business Management and Strategy Working with other parts of the organization to establish goals and provide high-quality goods and services

Workforce Planning and Employment Identifying jobs that capture employee tasks; recruiting and selecting desirable employees

Human Resource Development Measuring employee performance; teaching employees new knowledge, skills, and abilities

Compensation and Benefits Paying employees fairly; administering benefits such as insurance

Employee and Labor Relations Establishing and managing relationships between the company and employees; working with labor unions

Risk Management Establishing procedures to provide a safe and secure working environment