Chapter 7 Recruiting, Motivating, and Keeping Quality Employees

Human Resource Planning

How does Starbucks make sure that its worldwide retail locations are staffed with just the right number of committed employees? How does Walt Disney World ensure that it has enough qualified “cast members” to provide visitors with a “magical” experience? How does Norwegian Cruise Lines make certain that when the Norwegian Dawn pulls out of New York harbor, it has a complete, fully trained crew on board to feed, entertain, and care for its passengers? Managing these tasks is a matter of strategic human resource planningProcess of developing a plan for satisfying an organization’s human resource needs.—the process of developing a plan for satisfying an organization’s human resources (HR) needs.

A strategic HR plan lays out the steps that an organization will take to ensure that it has the right number of employees with the right skills in the right places at the right times. HR managers begin by analyzing the company’s mission, objectives, and strategies. Starbucks’ objectives, for example, include the desire to “develop enthusiastically satisfied customers”Starbucks Mission Statement,” Starbucks.com, http://www.starbucks.com/aboutus/environment.asp (accessed May 6, 2006). as well as to foster an environment in which employees treat both customers and each other with respect. Thus, the firm’s HR managers look for people who are “adaptable, self-motivated, passionate, creative team members.”“Job Center,” Starbucks.com, http://www.starbucks.com/aboutus/jobcenter.asp (accessed May 6, 2006). Likewise, Disney’s overall objectives include not only making all visitors feel as if they’re special in a special place but also ensuring that employees’ appearance reflects a special image (there’s even a forty-seven-page book on the subject).“How Disney Puts the Magic in Recruiting,” Vault, http://www.vault.com/nr/newsmain.jsp?nr_page=3&ch_id=400&article_id=51875&cat_id=1083 (accessed May 6, 2006). Disney looks for people who best fulfill these job requirements. The main goal of Norwegian Cruise Lines—to lavish passengers with personal attention—determines not only the type of employee desired (one with exceptionally good customer-relation skills and a strong work ethic) but also the number needed (one for every two passengers on the Norwegian Dawn).“Overview of Careers on Cruise Ships,” Career Prospects in Virginia, http://www3.ccps.virginia.edu/career_prospects/briefs/PS/SummaryCruise.shtml (accessed May 6, 2006).

HR Supply and Demand Forecasting

Once they’ve analyzed the jobs within the organization, HR managers must forecast future hiring (or firing) needs. This is the three-step process summarized in Figure 7.2 "How to Forecast Hiring (and Firing) Needs".

Figure 7.2 How to Forecast Hiring (and Firing) Needs

Starbucks, for instance, might find that it needs three hundred new employees to work at stores scheduled to open in the next few months. Disney might determine that it needs two thousand new cast members to handle an anticipated surge in visitors. The Norwegian Dawn might be short two dozen restaurant workers because of an unexpected increase in reservations.

After calculating the disparity between supply and future demand, HR managers must draw up plans for bringing the two numbers into balance. If the demand for labor is going to outstrip the supply, they may hire more workers, encourage current workers to put in extra hours, subcontract work to other suppliers, or introduce labor-saving initiatives. If the supply is greater than the demand, they may deal with overstaffing by not replacing workers who leave, encouraging early retirements, laying off workers, or (as a last resort) firing workers.

Recruiting Qualified Employees

Armed with information on the number of new employees to be hired and the types of positions to be filled, the HR manager then develops a strategy for recruiting potential employees. RecruitingProcess of identifying suitable candidates and encouraging them to apply for openings in the organization. is the process of identifying suitable candidates and encouraging them to apply for openings in the organization.

Before going any further, we should point out that, in recruiting and hiring, managers must comply with antidiscrimination laws; violations can have legal consequences. DiscriminationPractice of treating a person unfairly on the basis of a characteristic unrelated to ability. occurs when a person is treated unfairly on the basis of a characteristic unrelated to ability. Under federal law, it’s illegal to discriminate in recruiting and hiring on the basis of race, color, religion, sex, national origin, age, or disability. (The same rules apply to other employment activities, such as promoting, compensating, and firing.)The U.S. Equal Employment Opportunity Commission, “Discriminatory Practices,” http://www.eeoc.gov/abouteeo/overview_practices.html (accessed May 6, 2006). The Equal Employment Opportunity Commission (EEOC)Federal agency in charge of enforcing federal laws on employment discrimination. enforces a number of federal employment laws, including the following:

• Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex, or national origin. Sexual harassment is also a violation of Title VII.
• The Equal Pay Act of 1963, which protects both women and men who do substantially equal work from sex-based pay discrimination.
• The Age Discrimination in Employment Act of 1964, which protects individuals who are forty or older.
• Title I and Title V of the Americans with Disabilities Act of 1990, which prohibits employment discrimination against individuals with disabilities.The U.S. Equal Employment Opportunity Commission, “Federal Equal Employment Opportunity (EEO) Laws,” http://www.eeoc.gov/abouteeo/overview_laws.html (accessed May 6, 2006).

Where to Find Candidates

The first step in recruiting is to find qualified candidates. Where do you look for them, and how do you decide whether they’re qualified? Let’s start with the second part of the question first. A qualified person must be able to perform the duties listed in the job description and must possess the skills, knowledge, and abilities detailed in the job specification. In addition, he or she must be a good “fit” for the company. A Disney recruiter, for example, wants a candidate who fits a certain image—someone who’s clean-cut and “wholesome” looking. The same recruiter might also favor candidates with certain qualities—someone who has a “good attitude,” who’s a “go-getter” and a “team player,” and who’s smart, responsible, and stable.Bob Nelson and Peter Economy, Managing for Dummies, 2nd ed. (New York: Wiley, 2003), 60.

How to Find Candidates

Whether you search inside or outside the organization, you need to publicize the opening. If you’re looking internally in a small organization, you can alert employees informally. In larger organizations, HR managers generally post openings on bulletin boards (often online) or announce them in newsletters. They can also seek direct recommendations from various supervisors.

Recruiting people from outside is more complicated. It’s a lot like marketing a product to buyers: in effect, you’re marketing the virtues of working for your company. Starbucks uses the following outlets to advertise openings:

• Newspaper classified ads
• Local job fairs
• A dedicated section of the corporate Web site (“Job Center,” which lists openings, provides information about the Starbucks experience, and facilitates the submission of online applications)
• Announcements on employment Web sites like Monster.com and Vault.com
• In-store recruiting posters
• Informative “business cards” for distribution to customers“Target Your Recruitment Market,” InFocus: Recruiter News, http://www.net-temps.com/recruiters/infocus/article.htm?op=view&id=662 (accessed May 6, 2006).
• College-campus recruiting (holding on-campus interviews and information sessions and participating in career fairs)
• Internships designed to identify future talent among college students

When asked what it takes to attract the best people, Starbucks’ senior executive Dave Olsen replied, “Everything matters.” Everything Starbucks does as a company bears on its ability to attract talent. Accordingly, everyone is responsible for recruiting, not just HR specialists. In fact, the best source of quality applicants is the company’s own labor force.David Lee, “Becoming a Talent Magnet: Your First Task as a Recruiter: Recruit Senior Management onto Your Team,” http://www.humannatureatwork.com/Recruiting-Employees.htm (accessed May 6, 2006).

The Selection Process

Recruiting gets people to apply for positions, but once you’ve received applications, you still have to select the best candidate—another complicated process. The selectionProcess of gathering information on candidates, evaluating their qualifications, and choosing the right one. process entails gathering information on candidates, evaluating their qualifications, and choosing the right one. At the very least, the process can be time-consuming—particularly when you’re filling a high-level position—and often involves several members of an organization.

Let’s examine the selection process more closely by describing the steps that you’d take to become a special agent for the Federal Bureau of Investigation (FBI).The information in this section comes from two sources: Federal Bureau of Investigation, “Jobs: Special Agents,” http://www.fbijobs.com/JobDesc.asp?scr=001&requisitionid=368 (accessed May 6, 2006); Special Agent Selection Process: Applicant Information Booklet, rev. September 1997, http://www.fbi.gov/employment/booklet/SAapplinfobooklet.pdf (accessed May 6, 2006). Most business students don’t generally aspire to become FBI agents, but the FBI is quite interested in business graduates—especially if you have a major in accounting or finance. With one of these backgrounds, you’ll be given priority in hiring. Why? Unfortunately, there’s a lot of white-collar crime that needs to be investigated, and people who know how to follow the money are well suited for the task.

Interview

Figure 7.3

Interviewing candidates is the main way to gather the information necessary to make good hiring decisions.

© 2010 Jupiterimages Corporation

If you pass all these tests (with sufficiently high marks), you’ll be granted an interviewFormal meeting during which the employer learns more about an applicant and the applicant learns more about the prospective employer.. It serves the same purpose as it does for business recruiters: it allows the FBI to learn more about you and gives you a chance to learn more about your prospective employer and your possible future in the organization. The FBI conducts structured interviews—a series of standard questions. You’re judged on both your answers and your ability to communicate orally.

Contingent Workers

Though most people hold permanent, full-time positions, there’s a growing number of individuals who work at temporary or part-time jobs. Many of these are contingent workersTemporary or part-time worker hired to supplement a company’s permanent workforce. hired to supplement a company’s permanent workforce. Most of them are independent contractors, consultants, or freelancers who are paid by the firms that hire them. Others are on-call workers who work only when needed. Still others are temporary workers (or “temps”) who are employed and paid by outside agencies or contract firms that charge fees to client companies.

The use of contingent workers provides companies with a number of benefits. Because they can be hired and fired easily, employers can better control labor costs. When things are busy, they can add temps, and when business is slow, they can release unneeded workers. Temps are often cheaper than permanent workers, particularly because they rarely receive costly benefits. Employers can also bring in people with specialized skills and talents to work on special projects without entering into long-term employment relationships. Finally, companies can “try out” temps: if someone does well, the company can offer permanent employment; if the fit is less than perfect, the employer can easily terminate the relationship. There are downsides to the use of contingent workers. Many employers believe that because temps are usually less committed to company goals than permanent workers, productivity suffers.

New-Employee Orientation

Have you ever started your first day at a new job feeling upbeat and optimistic only to walk out at the end of the day thinking that maybe you’ve taken the wrong job? If this happens too often, your employer may need to revise its approach to orientationActivities involved in introducing new employees to the organization and their jobs.—the way it introduces new employees to the organization and their jobs. Starting a new job is a little like beginning college; at the outset, you may be experiencing any of the following feelings:

• Somewhat nervous but enthusiastic
• Eager to impress but not wanting to attract too much attention
• Interested in learning but fearful of being overwhelmed with information
• Hoping to fit in and worried about looking new or inexperienced“Induction: Orienting the New Employee,” HRM Guide Network, http://www.bestbooks.biz/learning/induction.html (accessed May 6, 2006).

The employer who understands how common such feelings are is more likely not only to help newcomers get over them but also to avoid the pitfalls often associated with new-employee orientation:

• Failing to have a workspace set up for you
• Ignoring you or failing to supervise you
• Neglecting to introduce you to coworkers (or introducing you to so many people that you have no chance of remembering anybody’s name)
• Assigning you no work or giving you busywork unrelated to your actual job
• Swamping you with facts about the companySusan Heathfield, “Top Ten Ways to Turn Off a New Employee,” About, Inc., http://humanresources.about.com/library/weekly/aa022601a.htm (accessed May 6, 2006).

A good employer will take things slowly, providing you with information about the company and your job on a need-to-know basis while making you feel as comfortable as possible. You’ll get to know the company’s history, traditions, policies, and culture over time. You’ll learn more about salary and benefits and how your performance will be evaluated. Most importantly, you’ll find out how your job fits into overall operations and what’s expected of you.

Training and Development

It would be nice if employees came preprogrammed with all the skills they need to do their jobs. It would also be nice if job requirements stayed the same: once you’ve learned how to do a job (or been preprogrammed), you’d know how to do it forever. In reality, new employees must be trained; moreover, as they grow in their jobs or as their jobs change, they’ll need additional training. Unfortunately, training is costly and time-consuming.

How costly? For every $1 in payroll that it spends, the consulting firm Booz Allen Hamilton invests almost $0.08 in employee training and development. At Pfizer, the world’s largest pharmaceutical company, the total is $0.14 out of every payroll dollar.“Top 100: Top Five Profile and Rank,” Training Magazine, March 2004, 42. What’s the payoff? Why are such companies willing to spend so much money on their employees? Pfizer, whose motto is “Succeed through People,” regards employee growth and development as its top priority. At Booz Allen Hamilton, consultants specialize in finding innovative solutions to client problems, and their employer makes sure that they’re up-to-date on all the new technologies by maintaining a “technology petting zoo” at its training headquarters. It’s called a “petting zoo” because employees get to see, touch, and interact with new technologies such as the Segway Human Transporter (a battery-operated vehicle that responds to the rider’s movements) even before they hit the market.Tammy Galvin, “The 2003 Training Top 100,” Training Magazine, March 2003, 2.

At Booz Allen Hamilton’s technology “petting zoo,” employees are receiving off-the-job trainingFormal employee training that occurs in a location away from the office.. This approach allows them to focus on learning without the distractions that would occur in the office. More common, however, is informal on-the-job trainingEmployee training (often informal) that occurs while the employee is on the job., which may be supplemented with formal training programs. This is the method, for example, by which you’d move up from mere coffee maker to a full-fledged “barista” if you worked at Starbucks.Brooke Locascio, “Working at Starbucks: More Than Just Pouring Coffee,” Tea and Coffee, January/February 2004, http://www.teaandcoffee.net/0104/coffee.htm (accessed May 6, 2006). You’d begin by reading a large spiral book (titled Starbucks University) on the responsibilities of the barista. After you’ve passed a series of tests on the reading material, you’ll move behind the coffee bar, where a manager or assistant manager will give you hands-on experience in making drinks. According to the rules, you can’t advance to a new drink until you’ve mastered the one you’re working on; the process, therefore, may take a few days (or even weeks). Next, you have to learn enough about different types of coffee to be able to describe them to customers. (Because this course involves drinking a lot of coffee, you don’t have to worry about staying awake.) Eventually, you’ll be declared a coffee connoisseur, but there’s still one more set of skills to master: you must complete a customer-service course, which trains you in making eye contact with customers, anticipating their needs, and making them feel welcome.Howard Schultz and Dori Jones Yang, Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time (New York: Hyperion, 1997), 250–51.

Diversity in the Workplace

The makeup of the U.S. workforce has changed dramatically over the past 50 years. In the 1950s, more than 60 percent was composed of white males.Judith Lindenberger and Marian Stoltz-Loike, “Diversity in the Workplace,” The Economics and Policy Resource Center, http://www.advertisingknowhow.com/article-archives/Business/Diversity-In-The-Workplace.html (accessed May 6, 2006). Today’s workforce, however, reflects the broad range of differences in the population—differences in gender, race, ethnicity, age, physical ability, religion, education, and lifestyle. As you can see in Table 7.1 "Employment by Gender and Ethnic Group", more women and minorities have entered the workforce, and white males now make up only 37 percent of the workforce.U.S. Equal Employment Opportunity Commission, “Occupational Employment in Private Industry by Race/Ethnic Group/Sex, and by Industry, United States, 2002,” http://www.eeoc.gov/stats/jobpat/2002/us.html (accessed May 6, 2006). Their percentage representation diminished as more women and minorities entered the workforce.

Most companies today strive for diverse workforces. HR managers work hard to recruit, hire, develop, and retain a workforce that’s representative of the general population. In part, these efforts are motivated by legal concerns: discrimination in recruiting, hiring, advancement, and firing is illegal under federal law and is prosecuted by the EEOC.U.S. Equal Employment Opportunity Commission, “Federal Laws Prohibiting Job Discrimination: Questions and Answers,” Federal Equal Employment Opportunity (EEO) Laws, http://www.eeoc.gov/facts/qanda.html (accessed May 6, 2006). Companies that violate antidiscrimination laws not only are subject to severe financial penalties but also risk damage to their reputations. In November 2004, for example, the EEOC charged that recruiting policies at Abercrombie & Fitch, a national chain of retail clothing stores, had discriminated against minority and female job applicants between 1999 and 2004. The employer, charged the EEOC, had hired a disproportionate number of white salespeople, placed minorities and women in less visible positions, and promoted a virtually all-white image in its marketing efforts. Six days after the EEOC filed a lawsuit, the company settled the case at a cost of $50 million, but the negative publicity will hamper both recruitment and sales for some time to come.U.S. Equal Employment Opportunity Commission, “EEOC Agrees to Landmark Resolution of Discrimination Case Against Abercrombie & Fitch,” http://www.eeoc.gov/press/11-18-04.html (accessed May 6, 2006).

There’s good reason for building a diverse workforce that goes well beyond mere compliance with legal standards. It even goes beyond commitment to ethical standards. It’s good business. People with diverse backgrounds bring fresh points of view that can be invaluable in generating ideas and solving problems. In addition, they can be the key to connecting with an ethnically diverse customer base. If a large percentage of your customers are Hispanic, it might make sense to have a Hispanic marketing manager. In short, capitalizing on the benefits of a diverse workforce means that employers should view differences as assets rather than liabilities.

Hierarchy-of-Needs Theory

Psychologist Abraham Maslow’s hierarchy-of-needs theoryTheory of motivation that holds that people are motivated by a hierarchical series of unmet needs. proposed that we are motivated by the five unmet needs, arranged in the hierarchical order shown in Figure 7.4 "Maslow’s Hierarchy-of-Needs Theory", which also lists examples of each type of need in both the personal and work spheres of life. Look, for instance, at the list of personal needs in the left-hand column. At the bottom are physiological needs (such life-sustaining needs as food and shelter). Working up the hierarchy we experience safety needs (financial stability, freedom from physical harm), social needs (the need to belong and have friends), esteem needs (the need for self-respect and status), and self-actualization needs (the need to reach one’s full potential or achieve some creative success).

Figure 7.4 Maslow’s Hierarchy-of-Needs Theory

There are two things to remember about Maslow’s model:

1. We must satisfy lower-level needs before we seek to satisfy higher-level needs.
2. Once we’ve satisfied a need, it no longer motivates us; the next higher need takes its place.

Let’s say, for example, that you’ve just returned to college and that for a variety of reasons that aren’t your fault, you’re broke, hungry, and homeless. Because you’ll probably take almost any job that will pay for food and housing (physiological needs), you go to work repossessing cars. Fortunately, your student loan finally comes through, and with enough money to feed yourself, you can look for a job that’s not so risky (a safety need). You find a job as a night janitor in the library, and though you feel secure, you start to feel cut off from your friends, who are active during daylight hours. You want to work among people, not books (a social need). So now you join several of your friends selling pizza in the student center. This job improves your social life, but even though you’re very good at making pizzas, it’s not terribly satisfying. You’d like something that will let you display your intellectual talents (an esteem need). So you study hard and land a job as an intern in the governor’s office. On graduation, you move up through a series of government appointments and eventually run for state senator. As you’re sworn into office, you realize that you’ve reached your full potential (a self-actualization need) and you comment to yourself, “It doesn’t get any better than this.”

Needs Theory and the Workplace

Figure 7.5

Employees are motivated by different factors. For some, the ability to have fun at work is a priority.

© 2010 Jupiterimages Corporation

What implications does Maslow’s theory have for business managers? There are two key points: (1) Not all employees are driven by the same needs and (2) the needs that motivate individuals can change over time. Managers should consider which needs different employees are trying to satisfy and should structure rewards and other forms of recognition accordingly. For example, when you got your first job repossessing cars, you were motivated by the need for money to buy food. If you’d been given a choice between a raise or a plaque recognizing your accomplishments, you’d undoubtedly have opted for the money. As a state senator, by contrast, you may prefer public recognition of work well done (say, election to higher office) to a pay raise.

Two-Factor Theory

Another psychologist, Frederick Herzberg, set out to determine which work factors (such as wages, job security, or advancement) made people feel good about their jobs and which factors made them feel bad about their jobs. He surveyed workers, analyzed the results, and concluded that to understand employee satisfaction (or dissatisfaction), he had to divide work factors into two categories:

• Motivation factors. Those factors that are strong contributors to job satisfaction
• Hygiene factors. Those factors that are not strong contributors to satisfaction but that must be present to meet a worker’s expectations and prevent job dissatisfaction

Figure 7.6 "Herzberg’s Two-Factor Theory" illustrates Herzberg’s two-factor theoryTheory that holds that motivation involves both motivation factors (which contribute to job satisfaction) and hygiene factors (which help to prevent job dissatisfaction).. Note that motivation factors (such as promotion opportunities) relate to the nature of the work itself and the way the employee performs it. Hygiene factors (such as physical working conditions) relate to the environment in which it’s performed. (Note, too, the similarity between Herzberg’s motivation factors and Maslow’s esteem and self-actualization needs.)

Figure 7.6 Herzberg’s Two-Factor Theory

Expectancy Theory

If you were a manager, wouldn’t you like to know how your employees decide to work hard or goof off? Wouldn’t it be nice to know whether a planned rewards program will have the desired effect—namely, motivating them to perform better in their jobs? Wouldn’t it be helpful if you could measure the effect of bonuses on employee productivity? These are the issues considered by psychologist Victor Vroom in his expectancy theoryTheory of motivation that proposes that employees will work hard to earn rewards they value and consider obtainable., which proposes that employees will work hard to earn rewards that they value and that they consider obtainable.

As you can see from Figure 7.7 "Vroom’s Expectancy Theory", Vroom argues that an employee will be motivated to exert a high level of effort to obtain a reward under three conditions:

1. The employee believes that his or her efforts will result in acceptable performance.
2. The employee believes that acceptable performance will lead to the desired outcome or reward.
3. The employee values the reward.

Figure 7.7 Vroom’s Expectancy Theory

Equity Theory

What if you spent thirty hours working on a class report, did everything you were supposed to do, and handed in an excellent assignment (in your opinion). Your roommate, on the other hand, spent about five hours and put everything together at the last minute. You know, moreover, that he ignored half the requirements and never even ran his assignment through a spell-checker. A week later, your teacher returns the reports. You get a C and your roommate gets a B+. In all likelihood, you’ll feel that you’ve been treated unfairly relative to your roommate.

Your reaction makes sense according to the equity theoryTheory of motivation that focuses on our perceptions of how fairly we’re treated relative to others. of motivation, which focuses on our perceptions of how fairly we’re treated relative to others. Applied to the work environment, this theory proposes that employees analyze their contributions or job inputs (hours worked, education, experience, work performance) and their rewards or job outcomes (salary, benefits, recognition). Then they create a contributions/rewards ratio and compare it to those of other people. The basis of comparison can be any one of the following:

• Someone in a similar position
• Someone holding a different position in the same organization
• Someone with a similar occupation
• Someone who shares certain characteristics (such as age, education, or level of experience)
• Oneself at another point in time

When individuals perceive that the ratio of their contributions to rewards is comparable to that of others, they perceive that they’re being treated equitably; when they perceive that the ratio is out of balance, they perceive inequity. Occasionally, people will perceive that they’re being treated better than others. More often, however, they conclude that others are being treated better (and that they themselves are being treated worse). This is what you concluded when you saw your grade. You’ve calculated your ratio of contributions (hours worked, research and writing skills) to rewards (project grade), compared it to your roommate’s ratio, and concluded that the two ratios are out of balance.

What will an employee do if he or she perceives an inequity? The individual might try to bring the ratio into balance, either by decreasing inputs (working fewer hours, refusing to take on additional tasks) or by increasing outputs (asking for a raise). If this strategy fails, an employee might complain to a supervisor, transfer to another job, leave the organization, or rationalize the situation (perhaps deciding that the situation isn’t so bad after all). Equity theory advises managers to focus on treating workers fairly, especially in determining compensation, which is, naturally, a common basis of comparison.

Job Redesign

The average employee spends more than two thousand hours a year at work. If the job is tedious, unpleasant, or otherwise unfulfilling, the employee probably won’t be motivated to perform at a very high level. Many companies practice a policy of job redesignManagement strategy used to increase job satisfaction by making jobs more interesting and challenging. to make jobs more interesting and challenging. Common strategies include job rotation, job enlargement, and job enrichment.

Job Enlargement

Instead of a job in which you performed just one or two tasks, wouldn’t you prefer a job that gave you many different tasks? In theory, you’d be less bored and more highly motivated if you had a chance at job enlargementJob redesign strategy in which management enhances a job by adding tasks at similar skill levels.—the policy of enhancing a job by adding tasks at similar skill levels (see Figure 7.8 "Job Enlargement versus Job Enrichment"). The job of sales clerk, for example, might be expanded to include gift-wrapping and packaging items for shipment. The additional duties would add variety without entailing higher skill levels.

Figure 7.8 Job Enlargement versus Job Enrichment

Work/Life Quality

Building a career requires a substantial commitment in time and energy, and most people find that they aren’t left with much time for nonwork activities. Fortunately, many organizations recognize the need to help employees strike a balance between their work and home lives.Jeffrey Greenhaus, Karen Collins, and Jason Shaw, “The Relationship between Work-Family Balance and Quality of Life,” Journal of Vocational Behavior 63, 2003, 510–31. By helping employees combine satisfying careers and fulfilling personal lives, companies tend to end up with a happier, less-stressed, and more productive workforce. The financial benefits include lower absenteeism, turnover, and health care costs.

Family-Friendly Programs

In addition to alternative work arrangements, many employers, including KPMG, offer programs and benefits designed to help employees meet family and home obligations while maintaining busy careers. KPMG offers each of the following benefits.

Unmarried without Children

You’ve undoubtedly noticed by now that many programs for balancing work and personal lives target married people, particularly those with children. Single individuals also have trouble striking a satisfactory balance between work and nonwork activities, but many single workers feel that they aren’t getting equal consideration from employers.See Karen Collins and Elizabeth Hoover, “Addressing the Needs of the Single Person in Public Accounting,” Pennsylvania CPA Journal, June 1995, 16. They report that they’re often expected to work longer hours, travel more, and take on difficult assignments to compensate for married employees with family commitments.

Needless to say, requiring singles to take on additional responsibilities can make it harder for them to balance their work and personal lives. It’s harder to plan and keep personal commitments while meeting heavy work responsibilities, and establishing and maintaining social relations is difficult if work schedules are unpredictable or too demanding. Frustration can lead to increased stress and job dissatisfaction. In several studies of stress in the accounting profession, unmarried workers reported higher levels of stress than any other group, including married people with children.Data was obtained from 1988 and 1991 studies of stress in public accounting by Karen Collins and from a 1995 study on quality of life in the accounting profession by Collins and Jeffrey Greenhaus. Analysis of the data on single individuals was not separately published.

With singles, as with married people, companies can reap substantial benefits from programs that help employees balance their work and nonwork lives: they can increase job satisfaction and employee productivity and reduce turnover. PepsiCo, for example, offers a “concierge service,” which maintains a dry cleaner, travel agency, convenience store, and fitness center on the premises of its national office in Somers, New York. Single employees seem to find these services helpful, but what they value most of all is control over their time. In particular, they want predictable schedules that allow them to plan social and personal activities. They don’t want employers assuming that being single means that they can change plans at the last minute. It’s often more difficult for singles to deal with last-minute changes because, unlike married coworkers, they don’t have the at-home support structure to handle such tasks as tending to elderly parents or caring for pets.

Compensation and Benefits

Though paychecks and benefits packages aren’t the only reasons why people work, they do matter. Competitive pay and benefits also help organizations attract and retain qualified employees. Companies that pay their employees more than their competitors generally have lower turnover. Consider, for example, The Container Store, which regularly appears on Fortune magazine’s list of “The 100 Best Companies to Work For.”Robert Levering and Milton Moskowitz, “Special Report: The 100 Best Companies to Work For,” Fortune, January 12, 2004, 56–62. The retail chain staffs its stores with fewer employees than its competitors but pays them more—in some cases, three times the industry average for retail workers. This strategy allows the company to attract extremely talented workers who, moreover, aren’t likely to leave the company. Low turnover is particularly valuable in the retail industry because it depends on service-oriented personnel to generate repeat business.

In addition to salary and wages, compensation packages often include other financial incentives, such as bonuses and profit-sharing plans, as well as benefits, such as medical insurance, vacation time, sick leave, and retirement accounts.

Wages and Salaries

The largest, and most important, component of a compensation package is the payment of wages or salary. If you’re paid according to the number of hours you work, you’re earning wagesCompensation paid to employees based on the number of hours worked.. Counter personnel at McDonald’s, for instance, get wages, which are determined by multiplying an employee’s hourly wage rate by the number of hours worked during the pay period. On the other hand, if you’re paid for fulfilling the responsibilities of a position—regardless of the number of hours required to do it—you’re earning a salaryCompensation paid for fulfilling the responsibilities of a position regardless of the number of hours required to do it.. The McDonald’s manager gets a salary for overseeing the operations of the restaurant. He or she is expected to work as long as it takes to get the job done, without any adjustment in compensation.

Incentive Programs

In addition to regular paychecks, many people receive financial rewards based on performance, whether their own, their employer’s, or both. At computer-chip maker Texas Instruments (TI), for example, employees may be eligible for bonuses, profit sharing, and stock options. All three plans are incentive programsProgram designed to financially reward employees for good performance.: programs designed to reward employees for good performance.Texas Instruments, “Benefits,” http://www.ti.com/recruit/docs/benefits.shtml (accessed May 6, 2006).

Benefits

Another major component of an employee’s compensation package is benefitsCompensation other than salaries, hourly wages, or financial incentives.—compensation other than salaries, hourly wages, or financial incentives. Types of benefits include the following:

• Legally required benefits (Social Security and Medicare, unemployment insurance, workers’ compensation)
• Paid time off (vacations, holidays, sick leave)
• Insurance (health benefits, life insurance, disability insurance)
• Retirement benefits

Unfortunately, the cost of providing benefits is staggering. According to the U.S. Chamber of Commerce, it costs an employer 42 percent of a worker’s salary to provide the same worker with benefits. So if you’re a manager making $100,000 a year, your employer is also paying out another $42,000 for your benefits. The most money goes for health care (15 percent of salary costs), paid time off (12 percent), and retirement benefits (6 percent).U.S. Chamber of Commerce, “Chamber Survey Shows Worker Benefits Continue Growth,” January 2004, http://www.uschamber.com/press/releases/2004/january/04-07.htm (accessed May 6, 2006).

Some workers receive only benefits required by law, including Social Security, unemployment, and workers’ compensation. Low-wage workers generally get only limited benefits and part-timers often nothing at all.National Compensation Survey: Employee Benefits in Private Industry, 2003, U.S. Department of Labor, Bureau of Labor Statistics, March 2003, 2, http://www.bls.gov/ncs/ebs/home.htm (accessed May 6, 2006). Again, Starbucks is generous in offering benefits. The company provides benefits even to the part-timers who make up two-thirds of the company’s workforce; anyone working at least twenty hours a week gets medical coverage.

The Basic Three-Step Process

Appraisal systems vary both by organization and by the level of the employee being evaluated, but as you can see in Figure 7.9 "How to Do a Performance Appraisal", it’s generally a three-step process:

1. Before managers can measure performance, they must set goals and performance expectations and specify the criteria (such as quality of work, quantity of work, dependability, initiative) that they’ll use to measure performance.
2. At the end of a specified time period, managers complete written evaluations that rate employee performance according to the predetermined criteria.
3. Managers then meet with each employee to discuss the evaluation. Jointly, they suggest ways in which the employee can improve performance, which might include further training and development.

Figure 7.9 How to Do a Performance Appraisal

It sounds fairly simple, but why do so many managers report that, except for firing people, giving performance appraisals is their least favorite task?Susan Heathfield, “Performance Appraisals Don’t Work,” About, http://humanresources.about.com/cs/perfmeasurement/l/aa061100a.htm (accessed May 6, 2006). To get some perspective on this question, we’ll look at performance appraisals from both sides, explaining the benefits and identifying potential problems with some of the most common practices.

Among other benefits, formal appraisals provide the following:

• An opportunity for managers and employees to discuss an employee’s performance and to set future goals and performance expectations
• A chance to identify and discuss appropriate training and career-development opportunities for an employee
• Formal documentation of the evaluation that can be used for salary, promotion, demotion, or dismissal purposesBob Nelson and Peter Economy, Managing for Dummies, 2nd ed. (New York: Wiley, 2003), 140.

As for disadvantages, most stem from the fact that appraisals are often used to determine salaries for the upcoming year. Consequently, meetings to discuss performance tend to take on an entirely different dimension: the manager appears judgmental (rather than supportive), and the employee gets defensive. It’s the adversarial atmosphere that makes many managers not only uncomfortable with the task but also unlikely to give honest feedback. (They tend to give higher marks in order to avoid delving into critical evaluations.) HR professionals disagree about whether performance appraisals should be linked to pay increases. Some experts argue that the connection eliminates the manager’s opportunity to use the appraisal to improve an employee’s performance. Others maintain that it increases employee satisfaction with the process and distributes raises on the basis of effort and results.Archer North & Associates, “Reward Issues,” Performance Appraisal, http://www.performance-appraisal.com/rewards.htm (accessed May 6, 2006).

360-Degree and Upward Feedback

Instead of being evaluated by one person, how would you like to be evaluated by several people—not only those above you in the organization but those below and beside you? The approach is called 360-degree feedback, and the purpose is to ensure that employees (mostly managers) get feedback from all directions—from supervisors, reporting subordinates, coworkers, and even customers. If it’s conducted correctly, this technique furnishes managers with a range of insights into their performance in a number of roles.

Some experts, however, regard the 360-degree approach as too cumbersome. An alternative technique, called upward feedback, requires only the manager’s subordinates to provide feedback. Computer maker Dell uses this approach as part of its manager-development plan. Every six months, forty thousand Dell employees complete a survey in which they rate their supervisors on a number of dimensions, such as practicing ethical business principles and providing support in balancing work and personal life. Like most companies using this technique, Dell uses survey results for development purposes only, not as direct input into decisions on pay increases or promotions.Michele M. Melendez, “Business Can Gain When Worker Gets to Evaluate Boss,” Newhouse News Service, June 6, 2004, http://www.mindbridge.com/news/boss.htm (accessed May 6, 2006).

Retaining Valuable Employees

When a valued employee quits, the loss to the employer can be serious. Not only will the firm incur substantial costs to recruit and train a replacement, but it also may suffer temporary declines in productivity and lower morale among remaining employees who have to take on heavier workloads. Given the negative impact of turnoverPermanent separation of an employee from a company.—the permanent separation of an employee from a company—most organizations do whatever they can to retain qualified employees. Compensation plays a key role in this effort: companies that don’t offer competitive compensation packages (including benefits) tend to lose employees. But other factors come into play, some of which we discussed earlier, such as training and development, as well as helping employees achieve a satisfying work/nonwork balance. In the following sections, we’ll look at a few other strategies for reducing turnover and increasing productivity.Gregory P. Smith, “How to Attract, Keep and Motivate Your Workforce,” Business Know-How, http://www.businessknowhow.com/manage/attractworkforce.htm (accessed May 6, 2006).

Why People Quit

As important as such initiatives can be, one bad boss can spoil everything. The way a person is treated by his or her boss may be the primary factor in determining whether an employee stays or goes. People who have quit their jobs cite the following behavior by superiors:

• Making unreasonable work demands
• Refusing to value their opinions
• Failing to be clear about what’s expected of subordinates
• Rejecting work unnecessarily
• Showing favoritism in compensation, rewards, or promotionsGregory P. Smith, “Top Ten Reasons Why People Quit Their Jobs,” The CEO Refresher, http://www.refresher.com/!gpsquit.html (accessed May 6, 2006).

Figure 7.10

Trying to meet unreasonable work demands can be extremely stressful and is a major reason people quit their jobs.

© 2010 Jupiterimages Corporation

Holding managers accountable for excessive turnover can help alleviate the “bad-boss” problem, at least in the long run. In any case, whenever an employee quits, it’s a good idea for someone—someone other than the individual’s immediate supervisor—to conduct an exit interview to find out why. Knowing why people are quitting gives an organization the opportunity to correct problems that are causing high turnover rates.

Involuntary Termination

Before we leave this section, we should say a word or two about termination—getting fired. Though turnover—voluntary separations—can create problems for employers, they’re not nearly as devastating as the effects of involuntary termination on employees. Losing your job is what psychologists call a “significant life change,” and it’s high on the list of “stressful life events” regardless of the circumstances. Sometimes, employers lay off workers because revenues are down and they must resort to downsizingPractice of eliminating jobs to cut costs.—to cutting costs by eliminating jobs. Sometimes a particular job is being phased out, and sometimes an employee has simply failed to meet performance requirements.

Union Structure

Unions have a pyramidal structure much like that of large corporations. At the bottom are locals that serve workers in a particular geographical area. Certain members are designated as shop stewards to serve as go-betweens in disputes between workers and supervisors. Locals are usually organized into national unions that assist with local contract negotiations, organize new locals, negotiate contracts for entire industries, and lobby government bodies on issues of importance to organized labor. In turn, national unions may be linked by a labor federation, such as the American Federation of Labor/Congress of Industrial Organizations (AFL/CIO), which provides assistance to member unions and serves as the principal political organ for organized labor.

Collective Bargaining

In a nonunion environment, the employer makes largely unilateral decisions on issues affecting its labor force, such as salary and benefits. Management, for example, may simply set an average salary increase of 3 percent and require employees to pay an additional $50 a month for medical insurance. Typically, employees are in no position to bargain for better deals. (At the same time, however, for reasons that we’ve discussed earlier in this chapter, employers have a vested interest in treating workers fairly. A reputation for treating employees well, for example, is a key factor in attracting talented people.)

The process is a lot different in a union environment. Basically, union representatives determine with members what they want in terms of salary increases, benefits, working conditions, and job security. Union officials then tell the employer what its workers want and ask what they’re willing to offer. When there’s a discrepancy between what workers want and what management is willing to give—as there usually is—union officials serve as negotiators to bring the two sides together. The process of settling differences and establishing mutually agreeable conditions under which employees will work is called collective bargainingProcess by which management and union-represented workers settle differences..

When Negotiations Break Down

At times, labor and management can’t resolve their differences through collective bargaining or formal grievance procedures. When this happens, each side may resort to a variety of tactics to win support for its positions and force the opposition to agree to its demands.

Union Tactics

The tactics available to the union include striking, picketing, and boycotting. When they go on strikeUnion tactic by which workers walk away from their jobs and refuse to return until a labor-management dispute has been resolved., workers walk away from their jobs and refuse to return until the issue at hand has been resolved. As undergraduates at Yale discovered when they arrived on campus in fall 2003, the effects of a strike can engulf parties other than employers and strikers: with four thousand dining room workers on strike, students had to scramble to find food at local minimarkets. The strike—the ninth at the school since 1968—lasted twenty-three days, and in the end, the workers got what they wanted: better pension plans.

Though a strike sends a strong message to management, it also has consequences for workers, who don’t get paid when they’re on strike. Unions often ease the financial pressure on strikers by providing cash payments. (Some unionized workers, by the way, don’t have the right to strike. Strikes by federal employees, such as air-traffic controllers, are illegal because they jeopardize the public interest.)

Figure 7.12

The adverse affects of a strike can impact management and workers alike.

© 2010 Jupiterimages Corporation

When you see workers parading with signs outside a factory or an office building (or even a school), they’re probably picketingUnion tactic of parading with signs outside a factory or other facility to publicize a strike.. The purpose of picketing is informative—to tell people that a workforce is on strike or to publicize some management practice that’s unacceptable to the union. In addition, because other union workers typically won’t cross picket lines, marchers can interrupt the daily activities of the targeted organization. How would you like to show up for classes to find faculty picketing outside the classroom building? In April 2001, faculty at the University of Hawaii, unhappy about salaries, went on strike for thirteen days. Initially, many students cheerfully headed for the beach to work on their tans, but before long, many more—particularly graduating seniors—began to worry about finishing the semester with the credits they needed to keep their lives on schedule.“Hawaii Professors End Strike,” USA Today, June 19, 2001, http://www.usatoday.com/news/nation/2001-04-18-hawaii.htm (accessed May 6, 2006).

The final tactic available to unions is boycottingMethod used by union members to voice displeasure with certain organizations by refusing to buy the company’s products and encouraging others to follow suit., in which union workers refuse to buy a company’s products and try to get other people to follow suit. The tactic is often used by the AFL/CIO, which maintains a national “Don’t Buy or Patronize” boycott list. In 2003, for example, at the request of two affiliates, the Actor’s Equity Association and the American Federation of Musicians, the AFL/CIO added the road show of the Broadway musical Miss Saigon to the list. Why? The unions objected to the use of nonunion performers who worked for particularly low wages and to the use of a “virtual orchestra,” an electronic apparatus that can replace a live orchestra with software-generated orchestral accompaniment.Union Label and Service Department, AFL/CIO, “AFL-CIO National Boycott List,” November–December 2004, http://www.unionlabel.org/boycott.jsp (accessed May 6, 2006).

The Future of Unions

As we noted earlier, union membership in the United States is declining. So, what’s the future of organized labor? Will membership continue to decline and unions lose even more power? The AFL/CIO is optimistic about union membership, pointing out recent gains in membership among women and immigrants, as well as health care workers, graduate students, and professionals.AFL-CIO, “How & Why People Join Unions,” Unions 101, http://www.aflcio.org/joinaunion/union101.cfm (accessed May 6, 2006).

But convincing workers to unionize is still more difficult than it used to be and could become even harder in the future. For one thing, employers have developed strategies for dissuading workers from unionizing—in particular, tactics for withholding job security. If unionization threatens higher costs for wages and benefits, they can resort to part-time or contract workers. They can also outsource work, eliminating jobs entirely, and more employers are now investing in technology designed to reduce the amount of human labor needed to produce goods or offer services.