UNIT 1

Human Resource Management:

Human resource management is designing formal systems in an organization to manage human
talent for accomplishing organizational goals. Whether you work in a big company with 10,000
employees or a small nonprofit organization with 10 employees, employees must be recruited,
selected, trained, managed, and retained. Employees must also be paid, which means an appropriate
and legal ­compensation system is needed. Each of these activities requires thought and ­
understanding about what works well given current employee concerns and company conditions.
Why Organizations Need HR Management
HR professionals must respond appropriately to current business challenges and opportunities if they
want to be helpful.
A recent survey indicates that worker engagement and performance, leadership development, and
employee retention are key issues in companies today, so HR leaders need to effectively address
these concerns.
Another survey shows that management of health care issues, loss of senior talent, retirement
concerns, and hiring skilled and educated individuals are key challenges that should be addressed.
Other trends include a globalized workforce, greater age diversity, a focus on sustainability, and an
emphasis on social media.
Human Resource Management as a Core Competency
The development and implementation of specific strategies must be based on an organization’s areas
of strength. Referred to as core competencies, those strengths are the foundation for creating the
organization’s competitive advantage. A core competency is a unique capability that creates high
value for a company.
Employees as a Core Competency
How might employees become a core competency for an organization? One of the main issues that
must be addressed is developing human capital in employees. Building positive human capital brings
together all assets of an organization so that work gets done and the company functions well
Human capital is not just the people in organizations—it also involves what ­individuals contribute to
organizational achievements. Broadly defined, human capital is the collective value of the
capabilities, knowledge, skills, life experiences, and motivation of an organization’s workforce.
Productivity
Employee productivity can be a competitive advantage because when the costs to produce goods and
services are lowered through increased. individual production, lower prices can be charged to
consumers. The result is often incremental increases in sales. However, increased productivity does
not necessarily mean greater output. Perhaps fewer people (or less money and/or time) are used to
produce the same amount. In its most basic sense, productivity is a measure of the quantity and
quality of work done, considering the cost of the resources used.
A useful way to measure the productivity of human resources is to consider unit labor cost, which is
computed by dividing the average cost of workers by their average levels of output. Using unit labor
costs, one can see that relatively high wages will not affect competitiveness if high productivity
levels are achieved. Low unit labor costs can be a basis for a strategy focusing on human resource
competency. Productivity and unit labor costs can be evaluated at the global, country, organizational,
departmental, or individual level
Improving Productivity
Organizational-level productivity ultimately affects profitability and competitiveness in a for-profit
organization and total costs in a not-for-profit organization.
Perhaps of all the resources used in organizations, the ones most closely scrutinized are human
resources.
It is estimated that the average employee completes work requirements on time and according to
standard at a rate of around 30% to 60%, which suggests that managing productivity is a key
challenge.
The use of poor business approaches such as bureaucratic policies, poorly managed meetings, and
low teamwork and collaboration can cause much of this decreased productivity but giving
employees autonomy and regular performance feedback can decrease many of these problems.
Among the major ways to increase employee productivity are:
• Organizational restructuring, which involves eliminating layers of management and changing
reporting relationships as well as cutting staff through downsizing, layoffs, and early retirement
buyout programs;
• redesigning work, which often involves making changes to the way work gets done by focusing on
the characteristics of jobs and altering how tasks are structured and coordinated;
• aligning HR activities, which means ensuring that HR efforts and practices are consistent with
organizational efforts to improve productivity and satisfy strategic goals; and
• outsourcing analyses, which require the HR department to conduct cost– benefit assessments that
indicate the overall positive or negative impact of outsourcing—HR then manages outsourcing
efforts if they occur
Customer Service and Quality
In addition to productivity, both customer service and quality efforts can significantly affect
organizational effectiveness, making them key areas that HR can emphasize when developing
employees as core competencies. Having managers and employees focus on customers’ needs
contributes significantly to achieving organizational goals and maintaining a competitive advantage.
Organizational Culture
Another important element of the workplace that drives the ability to use human resources as core
competencies to meet strategic objectives is organizational culture. Organizational culture consists of
the shared values and beliefs that give members of an organization meaning and provide them with
rules for behavior.

HRM FUNCTIONS
Strategic Role for Human Resources
The strategic role for HR involves addressing business realities, focusing on future
business requirements, and understanding how the management of human capital fits into
the organization’s plans. The HR department may or may not assist directly in the
formulation of business strategies, but it often helps carry them out. However, HR
managers are increasingly being seen as strategic contributors to the success of
organizations.
Some other examples of areas where HR can make strategic contributions are
• Evaluating mergers and acquisitions for organizational compatibility, potential structural
changes, and future staffing needs;
• conducting workforce planning to anticipate the retirement of employees at all levels and
identify workforce expansion in organizational strategic plans;
• working with executives to develop a revised sales compensation and incentives plan as
new products or services are rolled out to customers; and
• identifying organizational training opportunities that will more than pay back the costs
Human Resources Management Challenges
Skills Shortages: Various regions of the United States and different industries face significant
workforce shortages because of an inadequate supply of workers with the skills needed to
perform emerging jobs.
Globalization
Global staffing has also created political issues.
Wage Comparisons across Countries
Many economic factors are linked to different political, legal, cultural, and economic
systems. For example, in many developed countries, especially in Europe, employment
restrictions and wage levels are high.
Legal and Political Factors
Firms in the United States, Europe, and elsewhere are accustomed to relatively stable
political and legal systems. However, many nations function under turbulent and
varied legal and political systems. Grupo Clarin, a large media organization located
in Buenos Aires, Argentina, faces a number of HR issues related to blending the
different cultures in its various businesses, but the company also deals with high
inflation and a government that is trying break up the firm over claims that it is a
monopoly.
Racial and Ethnic Diversity
Racial and ethnic minorities such as Hispanics and African Americans account for a
growing percentage of the overall labor force. Immigrants will continue to expand
that growth. An increasing number of individuals characterize themselves as
multiracial, suggesting that the American “melting pot” is blurring racial and ethnic
identities
Gender in the Workforce
Women constitute about 50% of the U.S. workforce, but they may be a majority in
certain occupations. Additionally, numerous female workers are single, separated,
divorced, or widowed and are primary income earners in a household unit. A growing
number of U.S. households also include domestic partners, who are committed to each
other though not married, and who may be of the same or the opposite sex.
Human Resource Planning
Human Resource planning is the process of analyzing and identifying the need for and
availability of people so that the organization can meet its strategic objectives. The focus of HR
planning is ensuring that the organization has the right number of people with the right
capabilities at the right times and in the right places.
Human Resources Planning Process
Forecasting the Demand (Need) for Human Resource
1.Estimates
2. The Delphi technique
3.Nominal groups
4. Statistical regression analysis
5.Productivity ratios
6. Staffing ratios
Forecasting the Supply (Availability) of Human Resources
Once HR needs have been forecast, the availability of qualified individuals must be
determined. Forecasting availability considers both external and internal supplies.
External Supply ; The external supply of potential employees available to the organization
can be identified. Government estimates of labor force populations, trends in the industry,
and many more complex and interrelated factors must be considered. Such information is
often available from state or regional economic development offices. The following items
may be included:
• Net migration into and out of the area Individuals graduating from colleges and other
schools
• Changing workforce composition and patterns
• Economic forecasts for the next few years
• Technological developments and shifts
• Actions of competing employers
Markov Analysis
EQUAL EMPLOYMENT OPPORTUNITY
Equal employment opportunity means that employment decisions must be made on the
basis of job requirements and worker qualifications. Unlawful discrimination occurs when
those decisions are made based on protected characteristics, which are individual
attributes such as race, age, sex, disability, or religion that are protected under EEO laws
and regulations.
Theories of Unlawful Discrimination
There are two types of unlawful employment discrimination, disparate treatment and
disparate impact.
In a landmark case on disparate impact, Griggs vs. Duke Power (1971),9 the U.S.
Supreme Court ruled that lack of intent is not sufficient for an employer to prove that a
practice is lawful.
Equal Employment Opportunity Concepts
Business Necessity and Job Relatedness: A business necessity is a practice necessary for safe
and efficient organizational operations, such as restricting employees from wearing garments
that might get caught in machinery although the attire may be required by an employee’s
religion.
Employers are expected to use job-related employment practices. For instance, the use of
criminal background checks and credit reports in the selection process has come under fire
because it can result in disparate impact directed at minority applicant.
Bona Fide Occupational Qualification: Employers may discriminate on the basis of sex,
religion, or national origin if the characteristic can be justified as a bona fide occupational
qualification reasonably necessary to the normal operation of the particular business or
enterprise. Thus, a bona fide occupational qualification (BFOQ) provides a legitimate reason
an employer can use to exclude persons on otherwise illegal bases of consideration.
Nonretaliatory Practices Employers are prohibited from retaliating against individuals
who file discrimination charges. Retaliation occurs when employers take punitive
actions against individuals who exercise their legal rights.
Managing Affirmative Action Requirements
Federal contractors are required to develop and maintain a written affirmative action
program (AAP) that outlines proactive steps the organization will take to attract and hire
members of underrepresented groups.
Managing Racial and Ethnic Discrimination Issues
The original purpose of the Civil Rights Act of 1964 was to address race discrimination
in the United States. This concern continues to be important today. To take appropriate
actions, employers should be aware of potential HR issues that are based on race,
national origin, and citizenship.
Charges of racial discrimination continue to make up many of the complaints filed with the
EEOC. Employment discrimination can occur in numerous ways. This can include refusal to
hire someone because of their race or ethnicity and questions found in a selection interview.
All employment inquiries and decisions should be based on job-related factors, not personal
characteristics.. The EEOC found that a trucking delivery company failed to hire qualified
black applicants for dockworker positions because factors unrelated to job performance
were used in their hiring decisions. The company had to pay $120,000 to settle the lawsuit.
Racial and Ethnic Harassment
Racial and ethnic harassment is such a concern that the EEOC has issued guidelines on it. It
is recommended that employers adopt policies against harassment of any type, including
ethnic jokes, vulgar epithets, racial slurs, and physical actions that could constitute
harassment. The consequences of not enforcing these policies are seen in a case involving a
major transportation company that subjected African-American employees to a racially
hostile working environment and discriminatory employment conditions. The company was
fined $11 million in penalties.
Other cases demonstrate the importance of these issues. For instance, an African-
American police sergeant was allowed to pursue a discrimination case when he was
transferred to a late - shift that reduced his work responsibilities compared to his
other colleagues. In another case, a white accountant working for a Korean-owned
company claimed that she was not given a promotion to a higher position because she
wasn’t of Korean heritage. The HR manager stated that Korean leaders in the firm
did not want to consider Americans for the promotion, which allowed her to pursue a
lawsuit.24 However, in another case, it was found that an organization did not unlaw-
fully discriminate based on race when it relied on merit-based recruitment procedures
to hire a white woman rather than promoting an employee who was black
Pregnancy Discrimination
The Pregnancy Discrimination Act (PDA) of 1978 amended Title VII to require
that employers treat maternity leave the same as other personal or medical leaves.
Closely related to the PDA is the Family and Medical Leave Act (FMLA) of 1993.
The FMLA requires that qualified individuals be given up to 12 weeks of unpaid
family leave and also requires that those taking family leave be allowed to return
to jobs . The FMLA applies to both men and women.
The American with Disabilities Act Amendments Act (ADAAA) also expanded the
definition of a disability to include less permanent and serious physical and mental
issues, which can be interpreted to cover pregnancies.
Managing Sex and Gender Issues
The influx of women into the workforce has had major social, economic, and
organizational consequences. In particular, the growing number of women has led to
more sex and gender issues related to jobs and careers. Since women bear children
and traditionally play a significant role in raising children, issues of work–life
balance can emerge. Respect for employees’ lives outside of the workplace can pay
off in terms of attracting and retaining high-quality talent.
Glass Ceiling: For years, women’s groups have alleged that women in workplaces
encounter a glass ceiling, which refers to discriminatory practices that have pre-
vented women and other minority status employees from advancing to executive-
level jobs.
Consensual Relationships and Romance at Work
When work-based friendships lead to romance and off-the-job sexual relationships,
managers and employers face a dilemma. Should they “monitor” these relation-
ships to protect the firm from potential legal complaints, thereby “meddling” in
employees’ private, off-the-job lives.
Sexual Harassment
Many women report that they have been harassed at work during their careers.
This problem is a form of sex discrimination under Title VII. The Equal Employment
Opportunity Commission has issued guidelines designed to curtail sexual ha-rassment.
Types of Sexual Harassment
Two basic types of sexual harassment have been defined by EEOC regulations and
a number of court cases. There are two types and how they differ. They
are defined as follows:
1. Quid pro quo is sexual harassment that links employment outcomes to the
granting of sexual favors.
2. Hostile environment sexual harassment occurs when an individual’s work performance or
psychological well-being is unreasonably affected by intimidating or offensive working
conditions.
For example, numerous companies — from Wynn Resorts to Fox News to Mike Isabella’s
restaurant conglomerate to Uber Susan Fowler— have seen stock prices,
advertising revenue, sales numbers, and consumer loyalty fall as a result of negative
harassment-related publicity. Boards of directors have faced shareholder derivative suits
for failing to investigate and correct allegations of harassment. Some businesses, like
Fidelity, have taken critical steps to correct and prevent harassment as soon as they have
learned about it. Our hope is that other organizations and companies will begin to take
proactive steps, before they find themselves in the press.
The New York Times reported
that Google had asked Andy Rubin, the creator of Android, to resign after an internal
investigation corroborated allegations that he had coerced a coworker into performing a
sex act. Rubin had received a $90 million payout following his departure from the
company in 2014.107 Some claimed that Rubin had been permitted to behave poorly
because he was considered a so-called tech “aberrant genius”.
A second executive, Amit Singhal, received a multi-million dollar exit package when he
resigned in 2016 following accusations that he groped a colleague at an office event. A
subsequent New York Times article disclosed that Google paid Singhal $45 million
upon his departure.
But many Google employees seemed unimpressed with the company’s response to the
New York Times expose. On November 1, 2018, approximately 20,000 Google
employees in offices around the world walked out to protest how the company dealt
with sexual misconduct. Whittaker, one of the walkout organizers, stated, “I am here
because what you read in the New York Times are a sampling of the thousands of
stories we all have.
Disability Discrimination
Several federal laws have been enacted to advance the employment of individuals
with disabilities and to reduce discrimination based on disability. These laws and
regulations affect employment matters as well as public accessibility for individuals
with disabilities. Despite these attempts to open the workplace to individuals with
disabilities, unemployment among the disabled population has consistently ex-
ceeded the overall unemployment rate, particularly during economic downturns.
 Key compliances under the Disabilities Act
Although the majority of the compliances under the Act apply exclusively to government
establishments, private establishments are also covered under the purview of the Act
and must comply with the following requirements:
• Frame and publish an Equal Opportunities Policy on the establishment’s website or
at a conspicuous place within the establishment premises. The Policy must contain
details of the benefits and facilities provided to disabled persons at the workplace. A
copy of the Policy must also be registered with the State Commissioner.
• Establishments having more than 20 employees must appoint a Liaison Officer to
oversee the recruitment of disabled persons and special facilities provided for them.
• Establishments are required to identify job vacancies, which would be appropriate
for disabled persons. In case of establishments receiving incentives from the
government, a minimum of five percent of job vacancies must be compulsorily
reserved for disabled persons.
• The employer must ensure the prohibition of illegitimate discrimination against
disabled persons within the workplace.
• The employer must provide additional facilities or special benefits to disabled
employees in order to increase their accessibility, such as special leave and training
programs.
As Chieko Asakawa walks around IBM’s campus, she explores new ways of getting from
point A to point B. She recognizes the faces of colleagues approaching her and greets them.
She reads snack labels and decides whether to eat them. Although she is blind, Asakawa
doesn’t need a human or canine companion to complete these tasks. She’s helped invent a
smartphone app that, as she explained in a recent TED talk, “understands our surrounding
world and whispers to me in voice or sends a vibration to my fingers. Eventually, I’ll be
able to find a classroom on campus, enjoy window shopping, or find a nice restaurant
while walking along a street.”
Teaching managers to display inclusive leadership behaviors is just the first step.
Companies also need to create a culture of support and inclusion by doing the following::
Provide training. Many new employees with disabilities need support to get up to speed,
but their colleagues and managers may not know how to help them—or have the patience
to do it. Companies should put systems in place to help not only individuals with
disabilities, but their managers and peers as well.
Offer leadership development opportunities to employees with disabilities.
Unconscious bias can cause managers to overlook people with disabilities for leadership
programs. To combat this, managers can create development options specifically targeted
toward these individuals—and include them in opportunities that already exist and are
open to different talent cohorts. For example, Abilities in Motion, KPMG’s employee
resource group for employees with disabilities and those with family members who have
disabilities, launched an initiative two years ago to give the firm’s employees with
disabilities an opportunity to hone their leadership skills. The initiative connects aspiring
leaders with disabilities to senior leaders within the firm who offer advice and counsel..
Provide role models.
A prominent executive with a disability makes it easier for others with disabilities to see
themselves. in leadership positions at their companies. Mark Bertolini, chair and CEO of
Aetna, had a ski accident that severely damaged his spinal cord. After the accident, he
insisted on returning to work, using a special chair to support his neck, a one-handed
keyboard, a couch for rest when needed, and other accommodations. He continues to speak
openly about the ongoing chronic pain caused by the accident to act as a role model and
show others what’s possible.
Create allies in the organization.
Encourage employees to speak up and show their sympathy especially colleagues who are
familiar with the challenges faced by people with disabilities either through personal
relationships or caregiving. Shaun Kelly, global chief operating officer of KPMG
International, makes a point of speaking publicly about being a caregiver to his daughter,
who has Down Syndrome: “The stigma seems to go away because there’s somebody in a
leadership role who is comfortable talking about it.
Age Discrimination in Employment Act
The Age Discrimination in Employment Act (ADEA) of 1967, amended in
1978 and 1986, prohibits discrimination in terms, conditions, or privileges of
employ-ment against all individuals age 40 or older employed by organizations
having 20 or more workers.

The Older Workers Benefit Protection Act is an amendment to the ADEA and
pro-tects employees who sign liability waivers for age discrimination in
exchange for severance packages during reductions in force. For example,
workers over the age of 40 are entitled to receive complete and accurate
information on available benefits, legal counsel from an attorney, and a
specified number of weeks to decide whether to accept severance benefits in
exchange for waiving their right to sue the employer.This act ensures that older
workers are not pressured into waiving their rights under the ADEA.
CHAPTER 2
Recruiting:
Recruiting becomes more important and complex as labor markets evolve. Although
recruiting can be expensive, think about the cost of unfilled jobs.
Strategic Recruiting and Human Resources Planning
External Factors
1.Labour Markets and Recruiting
Organizations must develop a recruiting campaign that makes sense in the context of a
specific labour market. Labour markets and economic conditions impose different
constraints. . In 1996, Toyota Canada was in the enviable position of having more than 50
000 people apply for 1200 positions that were being created as part of an expansion at its
Cambridge, Ontario plant. The jobs paid $20 per hour plus benefits in a geographic area
that had an 8.3 percent unemployment rate. Toyota had 11 000 applications on file before it
had run a single advertisement or posted the jobs with employment centres
Part-Time Labour Markets and Recruiting: In response to today’s global economy,
more and more companies are employing low-wage, entry-level workers on a part-
time basis. Temporary or contingent jobs have shown tremendous growth over the
last decade. Nearly 2 million people go to work each day in North America on a part-
time basis. North American retailing giants such as Sears, Walmart, and K-Mart have
made part-time work their industry norm.
Outsourcing: is the practice of contracting with an outside agent to take over
specified HR functions, specifically, recruitment. Companies that need workers on a
temporary or short-term basis often turn to temporary help agencies to provide them
with contingent workers. In these cases, the workers are employees of the temporary
help firm, not of the organization in which they do their work. The employee is
actually “leased” from the outside firm. The individual is employed by the outside
agency but assigned to a position with the client organization
Internal Factors
Business Strategy: A company’s business strategy or plan has a major impact on its
recruitment strategy. To be effective, the recruitment strategy must be linked to the
business plan. A company’s business plan is its action plan for managing the
company. The business plan or strategy includes a statement of its mission and
philosophy, recognition of its strengths and weaknesses, and a statement of its
strategic goals and objectives for competing in its economic environment.
For example, Company A wants to be a market leader on price and carefully controls
labour costs.
Company B wants to be a leader in producing unique, quality consumer products. It
needs employees who are innovative and creative
Organization Analysis
Organization analysis is an important step in the recruitment and selection process.
When designing and implementing recruitment and selection programs to fill jobs
within their organization, human resources specialists must be aware of the mission,
goals, and business strategy of the organization.
Different organizational goals lead to different recruitment strategies. Similarly, an
organization’s philosophy and values influence whether it actively seeks to recruit
women, visible minorities, Aboriginal people, and people with disabilities, or
whether its approach to employment equity is one of minimal compliance.
In developing recruiting strategies, one must decide whether to concentrate recruiting
efforts on internal or external candidates.
Job Analysis
Before you can recruit employees, you must have an idea of the KSAOs or
competencies that they should have now or after training. To what extent do these
KSAOs or competencies exist among our current workers? Map these KSAOs or
competencies of current employees onto the KSAOs or competencies needed to
implement the strategic business plan. Are there any gaps in the attributes your
current employees have and those needed to meet your strategic goals? Recruitment
should seek to narrow any gaps that result from this assessment.
Timing of Recruitment Initiatives
In many organizations, recruiting occurs in response to need. An employee leaves for
one reason or another and, if the position is retained, must be replaced through either
internal or external hiring. In cases like this, there is little organizational control over
timing. Delays in hiring may lead to delays in production, with unrealistic demands
placed on the remaining employees
This pattern occurs most often in large organizations, which recruit heavily from among
college and university graduates. it influences when they send information to campus
employment centres, place advertisements in campus newspapers, visit the schools, meet
with the potential applicants, extend invitations to visit the organization, and make their
job offers.
Locating and Targeting the Applicant Pool
In an ideal world, an organization could search as broadly as possible until it found the
most suitable applicant. However, extensive recruiting is an expensive proposition that
few organizations can afford. It is also questionable whether the benefits of extensive
recruiting surpass its associated costs. A more effective plan is to target recruiting efforts
on a specific pool of job applicants who have the appropriate knowledge, skills, abilities,
competencies, and other talents needed to perform the job. This applicant pool may be
concentrated in one geographic area or spread widely throughout the country. The HR
team must know where to find the appropriate applicant pool.
Recruitment Sources :
Internal job postings can be notices posted on bulletin boards, ads placed in company
newsletters, announcements made at staff meetings, or notices circulated through
departments.
Succession Plans/Replacement Charts Organizations expect that vacancies will occur
through death, illness, retirement, resignation, or termination and, as part of the HR
planning function, develop a succession plan for filling vacancies with existing
employees.
Human Resources Information Systems (HRIS) :human resources planning often
involves the creation of a comprehensive computerized database that contains the job
analysis information on each position, including information on the required KSAOs.
This computerized inventory also contains information on employee competencies
and KSAOs, along with employee work histories, experiences, and results of
performance evaluations. Internal candidates for a vacant position may be found
through a HRIS match of the person’s characteristics with those required by the job.
External Candidates
1.Job Advertisements:
The advertisements identify the employer and may include basic information on the
job and compensation, the job requirements, and how to apply (including closing
dates for applications).
2.Open houses
3. Job fairs
4. Referrals
5. Networking
6.E-Recruiting: Use of the Internet and Social Networks
Internet Recruiting : With Internet recruiting, a company can place notice of a
vacancy on its website or list it with one of the online job or career websites. The job
or career site does a keyword search of résumés in its database and forwards those
that match the position requirements to the company.
Social Network Recruiting:
Social networking has grown from a fad to a powerful recruiting source. Social
networks offer almost instant contact between HR professionals and potential job
applicants, particularly those who may not be actively engaged in a job search. A July
2016 survey of 1600 recruiting and HR professionals carried out annually by Jobvite
found that 87 percent of recruiters used some form of social media to recruit for their
organizations.
The Downside of Social Network Recruiting
The most significant disadvantage of social network recruiting is that it may have adverse impacts
on members of protected groups. While data for Canada are lacking, studies in the United States
show that Hispanics and African-Americans participate in LinkedIn to a lesser degree than members
of those groups in the total U.S. population—2 percent versus 15.4 percent for Hispanics and 5
percent versus 12.8 percent for African-Americans. Most likely, the participation rates for other
social networks are similar. Recruiting only from social networks may leave a company open to
charges of systemic discrimination.

Develop mobile recruitment strategy

Recent surveys indicate that increasingly large number of prospective candidates use mobile devices
to access the internet and carry out personal tasks including job search.
Using InstaJob
1.More targeted traffic to your career site. Each picture has your career site url on it and when
you post to sites like twitter and LinkedIn that link will be clickable resulting in actual visitors.

2. Employment branding through pictures. Use it to showcase your office environment, building
and employees. Show off what its like to work there by taking pictures of your business in action.
Candidates are more interested in "seeing" what it's like to work there.
LinkedIn Recruiter mobile app: enables those with paid LinkedIn Recruiter seats to
easily access the candidates they follow, get updates on their activity, view mobile-
optimized profiles, stay organized with project files, and easily message candidates.
Applicant tracking system (ATS)
An applicant tracking system (ATS), also called a candidate management system, is a
software application designed to help an enterprise recruit employees more
efficiently. An ATS can be used to post job openings on a corporate Web site or job
board, screen resumes, and generate interview requests to potential candidates by e-
mail
Employer Websites
E-Video and Recruiting
Gamification
Organizational Databases
Job Posting
Headhunters
Evaluating the Cost of Recruiting:
Total recruiting expenses
number of recruits hired
General Recruiting Process Metrics:
Because recruiting activities are important, the costs and benefits associated with
them should be analyzed. A cost–benefit analysis of recruiting efforts may include
both direct costs (advertising, recruiters’ salaries, travel, agency fees, etc.) and indi-
rect costs (involvement of operating managers, public relations, image, etc.). Cost–
benefit information on each recruiting source can be calculated. Comparing the
length of time that applicants hired from each source stay in the organization with
the cost of hiring from that source also offers a useful perspective.
Yield ratios: One means for evaluating recruiting efforts is yield ratios, which
compare the number of applicants at one stage of the recruiting process with the
number at the next stage.
A different approach to using yield ratios suggests that over a specific length
of time, organizations can develop ranges for crucial ratios. When a given indicator
ratio falls outside that range, it may indicate problems in the recruiting process. As
an example, in recruiting at colleges, the following ratios might be useful:
college seniors given second interviews
total number of seniors interviewed = range of 30% to 50%
Success Base rate A longer-term measure of recruiting effectiveness is the ap-
plicants’ success base rate. The success base rate can be determined by comparing
the number of past applicants who have become successful employees against the
number of applicants they competed against for their jobs, using historical data
within the organization. Also, benchmarking data can be used to compare the suc-
cess base rate with the success rates of other employers in the geographic area or
industry
Selection
Selection is the second phase of the talent acquisition process. It involves choos-
ing individuals with the correct qualifications to fill jobs in an organization.
Selection, Criteria, Predictors
A selection criterion is a characteristic that a person must possess to success-
fully perform job duties.
To determine whether candidates possess certain selection criteria (such as ability
and motivation), employers use predictors of selection criteria, which are measur-
able or visible indicators of those characteristics.
Reliability and Validity
There are several indicators that are used to determine how free of errors decisions
will be if we use specific predictors. Reliability and validity are two very important
qualities of predictors.
Reliability: The extent to which it repeatedly or consistently produces the same re-
sults over time reflects a predictor’s reliability. For example, if a person took a test in
December and scored 75 and then took the same test again in March and scored 76,
the exam is probably reliable. Reliability can be increased by using the same testing
procedure and conditions every time a test is administered.
The second quality of predictors that we evaluate is validity, or accuracy. Validity
refers to how well a test measures what it claims to measure.
A criterion-related validity study can be conducted in two different ways—using
current employees or using applicants. Concurrent validity uses current employees to
validate a predictor or “test.” Concurrent validity is measured when an employer tests
current employees and correlates the scores with their performance ratings on
appraisals.
Another method for establishing criterion-related validity is predictive validity.
To calculate predictive validity, applicants’ test results are compared with their sub-
sequent job performance.
The Selection Process
1.Legal Considerations in Selection
Job-relatedness means that a selection qualification or requirement is significantly
related to successful performance of job duties.
Business necessity relates to a practice that is necessary for safe and efficient op-
erations, such as restricting employees from wearing garments that might get caught
in machinery even though the attire may be required by the employee’s religion.
Applicant Job Interest
Regardless of how individuals express interest in employment, the selection process
has an important public relations dimension. Discriminatory hiring practices, impolite
interviewers, unnecessarily long waits, unreturned telephone inquiries, inappropriate
testing procedures, and lack of follow-up responses can produce unfavorable impres-
sions of an employer. Job applicants’ perceptions of the organization will be influ-
enced by how they are treated.
Realistic job previews
provide potential employees with an accurate introduction to a job so that they can
better evaluate the employment situation. Indeed, a realistic job preview can directly
identify necessary training and clarify a job role.
Companies can use videos, employee testimonials, and job shadowing to provide
a realistic snapshot of the work environment for applicants.
Applications and Résumés
Application Disclaimers Application forms typically include disclaimers and
notices so that appropriate legal protections are clearly stated. Recommended dis-
closures include the following:
• At-will employment: Indicates the right of the employer or the employee
to terminate employment at any time with or without notice or cause (where
applicable by state law)
• Reference contacts: Requests permission to contact previous employers listed
by the applicant on the application form or résumé
• Employment testing: Notifies applicants of required drug tests, pencil-and-
paper tests, physical exams, or electronic or other tests that will be used in the
employment decision
• Application time limit: Indicates how long application forms are active (typically
six months) and that individuals must reapply or reactivate their applications
after that period
• Information falsification: Conveys to an applicant that falsification of application
information can be grounds for serious reprimand or termination.
EEOC Considerations and Application Forms :An organization should
retain all applications and hiring-related documents and records for three years.
Guidelines from the EEOC and court decisions require that the data requested on
application forms must be job-related.
Selection Testing
1. Ability Tests
Cognitive ability tests measure an individual’s thinking, memory, reasoning,
verbal, and mathematical abilities.
Physical ability tests measure an individual’s physical abilities such as strength,
endurance, and muscular movement.
Various skill-based tests can be used, including psychomotor tests, which measure
a person’s dexterity, hand–eye coordination, arm–hand steadiness, and other factors.
Situational judgment tests are designed to measure a person’s judgment in work
setting.
Assessment Centers: An assessment center is not a place but a selection process
composed of a series of evaluative tests during which candidates are assessed by
multiple raters. In one assessment center, candidates go through a comprehensive
interview, a pencil-and-paper test, individual and group simulations, and work exer-
cises. Individual performance is then evaluated by a panel of trained raters.
Personality Tests
Personality is a unique blend of individual characteristics that can affect how people
interact with their work environment. Although many personality characteristics
exist, some experts believe that there are a relatively small number of underlying
major traits.
Potential issues with Personality Tests Faking is a major concern for
employers using personality tests. Many test publishers admit that test profiles can
be falsified, and they try to reduce faking by including questions that can be used
to compute a social desirability or “lie” score.
Emotional Intelligence Tests
Emotional intelligence reflects the soft skills that are critical for establishing good
working relationships within the work unit and organization. Emotional intelligence
is the ability to recognize our own feelings and the feelings of others and to effec-
tively manage our own and others’ emotions.
Polygraphs: The polygraph, more generally and incorrectly referred to as a lie de-
tector, is a mechanical device that measures a person’s galvanic skin response, heart
rate, and breathing rate. The idea behind the polygraph is that if a person answers
a question deliberately incorrectly, the body’s physiological responses will “reveal”
the falsification through the recording mechanisms of the polygraph. As a result of
concerns about polygraph validity, Congress passed the Employee Polygraph Pro-
tection Act, which prohibits most private-sector employers from using polygraphs
for pre-employment screening purposes. Federal, state, and local government agen-
cies are exempt from the act, as are certain private-sector employers such as security
companies and pharmaceutical companies. The act permits employers to use poly-
graphs as part of internal investigations of theft or loss. But in those situations, the
polygraph test should be taken voluntarily, and the employee should be allowed to
end the test at any time
Selection Interviews
1. Biographical interview: A biographical interview focuses on a chronological as-
sessment of the candidate’s past experiences. This type of interview is widely used
and is often combined with other interview techniques. Overall, the process pro-
vides a sketch of past experiences.
2. Behavioral interview In the behavioral interview format, applicants are asked
to describe how they have behaved or performed a certain task or handled a prob-
lem in the past.
3. Situational interview The situational interview invovles questions about how
applicants might handle specific job situations. A variation is termed the case study
interview, which requires a job candidate to diagnose and correct organizational
challenges during the interview.
Problems in the Interview

• Snap judgments. Some interviewers decide whether an applicant is suitable

within the first two to four minutes of the interview and spend the rest of the
time looking for evidence to support their judgment.
• Negative emphasis. When evaluating suitability, unfavorable information about
an applicant is often emphasized more than favorable information.
• Halo effect. The halo effect occurs when an interviewer allows a positive
characteristic, such as agreeableness, to overshadow other evidence. The phrase
devil’s horns describes the reverse of the halo effect; this occurs when a negative
characteristic, such as inappropriate dress, overshadows other traits.
• Biases and stereotyping. “Similarity” bias occurs when interviewers favor or
select people whom they believe to be like themselves on the basis of a variety
of personal factors. Interviewers should also avoid any personal tendencies to
stereotype individuals because of demographic characteristics and differences.
• Cultural noise. Interviewers must learn to recognize and handle cultural noise,
which results from social mores and cultural values and leads to responses that
applicants believe are socially acceptable rather than factual
Background Investigations
Background checking is critical for a wide range of positions, including schoolteachers,
janitors, bank tellers, and many others. Background information can be obtained from a
variety of sources, including past job records, credit history, testing records, educational
and certification records, drug tests, criminal history, sex offender lists, motor vehicle
records, and military records. Advancements in technology and access to information
online have made it simpler for employers of all sizes to conduct background checks.
Credit History and Criminal Background Checks: Many employers check
applicants’ credit histories. The logic is that poor credit histories may signal, either
correctly or incorrectly, a certain level of responsibility. Firms that check applicants’
credit records must comply with the federal Fair Credit Reporting Act, which requires:

• Disclosing that a credit check is being conducted

• Obtaining written consent from the person being checked
• Furnishing the applicant with a copy of the report
Mismanaged credit checks might violate the Fair Credit Reporting Act
and prompt complaints to the EEOC. Companies should use these assessments only
when needed, such as hiring for a job that involves financial responsibility.
https://youtu.be/T6nVuwr31wQ
 Case Study #1: Work to understand biases and set diversity goals
Dawn Smith, the chief legal officer at VMware, the Palo Alto–based maker of virtualization software,
says that one of the ways she tackles unconscious biases in the workplace is by talking about them
“openly and candidly” with her team.
 “Unconscious biases are so deep inside of us,” she says. “Unless we identify them and talk about them,
they are not going to change.”
 Dawn also requires her employees to complete bias awareness training. Her goal is for all team members
— many of whom are hiring managers — to develop an understanding of what these prejudices are and
why are they are insidious. “I talk about my own weaknesses,” she says. “If I am honest with my team,
then hopefully they can look inside themselves to see what biases they might have.”
 Earlier this year, Dawn had an opening for a “high-level, high-visibility” member of VMware’s legal
team. Her first order of business was to write the job description. To make the wording as “gender-
neutral as possible,” Dawn focused on the credentials she sought, rather than on potential applicants’
personal characteristics.
 “We specified that candidates needed to have been practicing law for a certain number of years, have
served a certain amount of time in government, and have a law degree from a top school,” she says.
 When it came time to winnow the pool and decide which applicants were worthy of an interview, Dawn
reminded both the internal search committee and the outside recruiting firm of the team’s diversity goals.
“I always want to see a diverse slate of candidates that includes at least two members of
underrepresented groups,” she says.
 Dawn does not do structured interviews; she prefers a more “conversational
style.” But she is a stickler when it comes to asking for structured feedback from
her colleagues on what they perceive as the candidate’s strengths and weaknesses.
 “Sometimes I hear feedback like, ‘She isn’t a good cultural fit’” — an important
but “squishier” measure of a candidate’s worth, Dawn says. “So I say, ‘Tell me
exactly what you mean. Why don’t you think she’s a good fit?’ And if they say, ‘I
can’t put my finger on it,’ I ignore it. But if they say something like, ‘She sees
things as black-or-white’ or ‘She jumps to conclusions,’ then I consider it.”
 For that particular job, Dawn and her team ended up hiring a minority woman
candidate.
 Dawn says she will continue to hire for diversity not only because it’s the right
thing to do but also because “there is a business reason to do it.”
 “At the end of the day, having a dynamic, engaged team with a diverse set of
perspectives makes our professional conversations better and more creative,” she
explains.
 Case Study #2: Use software to simplify and standardize the vetting process
A few years ago, Jill Koob, the vice president of sales solutions at Employer
Flexible, the Houston-based human resources and recruitment company, needed to
hire an operations analyst for the HR technology group.
 Because of the expertise the role required, Jill admits there may have been
unintentional biases at play. “I didn’t think about it, but I am sure that
subconsciously I thought we might see a predominantly male applicant pool,” she
says.
 This is why Jill relies on software to do much of the initial vetting in her hiring
decisions. “It makes the process much more independent,” she says.
 After she had done the initial résumé review of the pool (where she tried “not to
pay attention to name or address, which both can create some bias”), she asked
applicants to take an assessment through Affintus, a program that helps
benchmark and rank candidates. Top matches then progressed to a second
evaluation with Prove It, which tests candidate’s Excel, Word, and other
computer-related skills.
 The next step involved interviews, which Jill always approaches cautiously. “You
can have a great rapport with someone in an interview, but that doesn’t mean they
can do the job,” she explains.
 That’s why she favors structured interviews. With the operations analyst
candidates, she asked each of the three finalists the same 10 questions. “I would
sometimes ask clarifying questions to go deeper, but it was always the same
questions,” she says. “And then I gave each answer a rating on a scale of one to
five.”
 At last, Jill had it narrowed down to two finalists — a woman and a man. She
asked both for a work sample, which was standard practice on her team. “We give
the candidates a challenge that they could face in the job and 36 hours to work up
a presentation that shows us how they would handle it.”
 The female candidate, Christy, had to present to a group that included the IT
director and the company president. As soon as Christy finished, Jill knew she
was the right one for the job. “There was no competition. Christy hit it out of the
park,” she says. “She was assertive and direct — she had zero problems standing
her ground.”
 Christy got the job and has since been promoted.
TRAINING AND DEVELOPMENT
Needs Assessment at McDonald’s,
ADP, and HireRight Needs assessment is a critical first step in designing new training
courses and revising existing ones. Consider how needs assessment was used at
McDonald’s, ADP, and HireRight. McDonald’s conducted a needs assessment to help
examine where the company needed to go from a learning perspective to help the
company achieve its strategic goals. The chief learning officer and her team
examined employees’ backgrounds, including education level, gender, language, age,
and generation, to get a better understanding of trainees. They gathered data from
employees about how frequently they used online training content and how easy it
was to access it. Also, they reviewed the responsibilities, tasks, and leadership skills
for each job to ensure that they were supported by training classes and curriculum.
The needs assessment showed that although more trainees were millennials and
Generation Z, the way that training was delivered did not meet their needs or
expectations. As a result, they created a shorter training curriculum that was more
accessible using smartphones, computers, and tablets.
ADP provides human resource management software and services. ADP needed to revise
a new hire training program that took 17 weeks to complete. The program was too long to
train newly hired service associates and prepare them to begin performing their roles. To
redesign its training program so that it was shorter but still effective, ADP conducted a
needs assessment. Learning and development team members interviewed high-
performing sales associates, observed client calls, and analyzed data from over 3 million
client calls to identify the reasons for the calls and how they were typically resolved.
HireRight, a company that provides background screening services, conducted a needs
assessment by surveying all of its employees about the type of work environment they
considered the most engaging; interviewing company leaders and high performing
employees about their skill needs; reviewing benchmarking data; and analyzing important
company performance data. The needs assessment data were used to create a new
leadership development program and performance management system, as well as to start
an employee engagement initiative
Training is the process whereby people acquire capabilities to perform jobs.
Training provides employees with specific, identifiable knowledge and skills for
use in their present jobs.
Strategic Training
Training can indeed help an organization accomplish its goals.
A strategic decision by Walt Disney Company exemplifies how to use train-
ing strategically. Recognizing that animation artists were exceptionally difficult to
find, Disney managers created the Character Animation Program World. Aspiring
animators could study under the guidance of retired animation experts. Thus, the
program created the sustainability Disney needed to continue producing the anima-
tion feature films that made it famous. Only a long-term outlook on training leads
managers to such solutions.
A single training event or program is not likely to give a company a competitive
advantage because explicit knowledge is well- known and programs designed to teach it
can be easily developed and imitated.
However, tacit knowledge developed through experience and shared through interactions
between employees is impossible to imitate and can provide companies with a
competitive advantage.
Pixar’s development of successful computer-animated films such as WALL-E (a robot
love story set in a post-apocalyptic world of trash) and Inside Out (the story about
emotions, change, and growing up) required the cooperation of a team of talented
directors, writers, producers, and technology artists who were located in different
buildings, have different priorities, and speak different technical languages.
Pixar University offers a collection of in-house courses for training and cross-training
employees within their specialty areas. But it also offers optional classes that provide
opportunities for employees from different disciplines to meet and learn together.
Screenplay writing, drawing, and sculpting are directly related to the business, while
courses in Pilates and yoga are not. The courses are attended by employees with all
levels of expertise—from novices to experts—which reinforces the idea that all
employees are learning and it is fun to learn together.
Training and Human Resources
Legal Issues and Training:
Some legal issues must be considered when designing and delivering training. One
concern centers on the criteria and practices used to select individuals for inclusion
in training programs. Since training can be an opportunity to advance in the organi-
zation, considering only job-related factors that do not result in disparate impact is
important. Also, failure to accommodate individuals with disabilities in training can
expose organizations to equal employment opportunity (EEO) lawsuits.
Another legal issue involves requiring employees to sign training contracts to
protect the costs and time invested in specialized employee training
Finally, the Department of Labor has ruled that nonexempt employees who
are training outside normal working hours (e.g., at home by completing web-based
classes) must be compensated for their time. This is particularly challenging if em-
ployees access online training courses during off-duty hours.
Training Needs Assessment
Organizational Analysis
Training needs can be diagnosed by analyzing organizational outcomes and looking at
future organizational needs. A part of planning for training is identifying the KSAs that
will be needed now and, in the future, as both jobs and the organization change. Both
internal and external forces will influence training and must be considered when doing
organizational analysis.
Job/Task Analysis:; A second level of analyzing training needs involves reviewing
the jobs and tasks performed. Comparing worker skills in a job category to the skills
needed for successful job performance can identify gaps that can be filled by train-
ing.
Individual Analysis The third means of diagnosing training needs focuses on
individuals and how they perform their jobs
Training Design
Once training objectives have been established, the design of training can begin.
Whether job-specific or broader in nature, training must be established to address the
specific objectives. Effective training design considers the learners and instructional
strategies, as well as how to maximize the transfer of training from class to the job
site.
Working in organizations should be a continual learning process. Different
approaches are possible because learning is a complex psychological process. For
the training design to be effective and produce learning, each of the elements shown
in Figure below:
https://youtu.be/oas5n1nFHQQ
Training Delivery
On-the-Job Training
Cross-Training
Outsourcing of Training
Educational Assistance Programs
Apprentice Training
E-learning
MOOCs
Simulations
Games
Blended Learning
Training Evaluation
It is best to consider—before it begins—how training is to be evaluated. Donald
L. Kirkpatrick identified four levels at which training can be evaluated.73 They are
reaction, learning, behaviors, and results.
Training Evaluation Metrics
Training Evaluation Designs
Post-Measure The most obvious way to evaluate training effectiveness is to de-
termine whether the employees can perform according to standard after attending
the training.
Pre-/Post-Measure By designing the evaluation just discussed differently, the is-
sue of pre-test skill levels can be considered. If the data-entry speed is measured
before and after training, the results will indicate whether the training made any
difference.
Pre-/Post-Measure with a Control group Another evaluation design can ad-
dress the preceding problem. In addition to testing the 20 representatives who will
be trained, the manager can test another group of representatives who will not be
trained, to see if they do as well as those who are to be trained. This second group
is called a control group. If the trained representatives work significantly faster after
training than those who were not trained, the manager can be reasonably sure that
the training was effective.
CHAPTER 3-PERFORMANCE APPRAISAL SYSTEM
Gamification Makes HR Headline Evaluations Fun at Persistent Systems The managers at the
international software and technology firm Persistent Solutions wanted to improve employee
performance evaluations. They turned to the gamification company eMee to assist them in
making performance management more fun. Given that the organization employs over 7,000
people across the globe, it was also important to make the act of conducting appraisals better.
The resulting approach incorporated gamification to bring together group interaction, worker
development, and individual recognition in a manner that enabled employees to be more
involved in a transparent evaluation process. The underlying premise of eMee’s appraisal
strategy is that employees are continuously provided information about their performance
instead of just getting it at the end of the year. In addition, employees can manage the
performance of peers, rather than simply relying on the feedback provided by supervisors.
Performance is managed in a virtual environment, with avatars representing employees.
Virtual rewards can be given to employees by supervisors and coworkers to recognize
individuals for a job well done, and these rewards enable employees to accumulate points
that are compared to performance targets and criteria. Reprimands can also be carried out in
the virtual environment. The entire process is integrated into Persistent Systems’ information
management system, which streamlines the management of performance in the company. As
part of eMee’s appraisal model, continual performance feedback is provided to Persistent
Systems’ employees from a variety of stakeholders and colleagues. This
has helped the, measure, and evaluate job performance so the company better manage
performance even though people may move around in the company and have
different bosses. The model has been so successful that it is estimated that the
company saved over 28,000 hours of labor in a recent year by eliminating its old
approach. Attrition has also declined, while job satisfaction and customer feedback
have improved.
Performance management identifies the work that individuals need to do to be
effective and contribute to the mission and objectives of an organization. The process
should also encourage such that improvements can be made.
Performance appraisal is the process of determining how well employees do their
jobs relative to a standard and communicating that information to them. This tool is a
key part of performance management because it helps employees improve their job
performance.
Identifying and Measuring Employee Performance: Performance criteria vary from
job to job, but common employee performance measures include the following:
• Quantity of output
• Quality of output
• Timeliness of output
• Presence/attendance on the job
• Efficiency of work completed
• Effectiveness of work completed
Weighting of Management Duties at Sample Firm Weight
Improve customer feedback 50%
Control operational costs 30%
Encourage quality improvements 20%
Total Management Performance 100%
Types of Performance Information
Uses of Performance Appraisals
Sources of appraisals
Employee Ratings of Managers
Team/Peer Ratings
Self-Ratings
Customer Ratings
360-Degree Rating
Tools for Appraising Performance
1.Graphic Rating Scales The graphic rating scale allows the rater to mark an employee’s
performance on a continuum indicating low to high levels of a particular characteristic.
Because of the straightforwardness of the process, graphic rating scales are common in
performance evaluations.

2. Behavioral Rating Scales In an attempt to overcome some of the concerns with graphic
rating scales, employers may use behavioral rating scales designed to assess individual
actions instead of personal attributes and characteristics. Different approaches are used, but
all describe specific examples of employee job behaviors. In a behaviorally anchored rating
scale (BARS), these examples are “anchored” or measured against a scale of performance
levels
Ranking: The ranking method lists the employees being rated from highest to lowest based
on their performance levels and relative contributions.
Forced Distribution: Forced distribution is a technique for distributing ratings that are
generated with any of the other appraisal methods and comparing the ratings of people in
a work group.
Critical Incident: In the critical incident method, the manager keeps a written record of both
favorable and unfavorable actions performed by an employee during the entire rating period.
MBO Process Implementing a guided self-appraisal system using MBO is a four-stage
process. The stages are as follows:
1. Job review and agreement: The employee and the superior review the job description
and the key activities that constitute the employee’s job. The idea is to agree on the
exact makeup of the job.
2. 2. Development of performance standards: Together, the employee and his or her
superior develop specific standards of performance and determine a satisfactory level
of performance that is specific and measurable. For example, a quota of selling five
cars a month may be an appropriate performance standard for a salesperson.
3. 3. Setting of objectives: Together, the employee and the superior establish objectives
that are realistically attainable.
4. 4. Continuing performance discussions: The employee and the superior use the
objectives as a basis for continuing discussions about the employee’s performance.
Although a formal review session may be scheduled, the employee and the supervisor
do not necessarily wait until the appointed time to discuss performance. Objectives can
be mutually modified as warranted.
The Appraisal Interview: The appraisal interview presents both an opportunity and a
challenge. It can be an emotional experience for the manager and the employee
because the manager must communicate both praise and constructive criticism. A
major concern for managers is how to emphasize the positive aspects of the
employee’s performance while still discussing ways to make needed improvements.
Microsoft has always been on the cutting edge of performance management and
compensation. The firm has a reputation for hiring good employees and taking care
of them by providing generous rewards and opportunities. In particular, paying
workers based on their performance is an approach that the company has utilized for
some time. Over the last several decades, Microsoft has given employees stock
options, generous increases to base pay, and restricted stock units. A number of years
ago, the flexible rewards program My Microsoft was offered, and it enabled workers
to earn merit pay, bonuses, and restricted stock units. In an effort to support this HR
management philosophy, Microsoft introduced a stack rank-ings process more
recently, which required managers to rate employees (on a scale of 1 to 5, with 1
being the highest) so that they could be ultimately ranked against each other. These
rankings affected the amount of compensation (i.e., merit, bonuses, restricted stock
units) employees would receive. The ranking process also forced managers to
designate a certain percentage of their employees as poor performers.This
requirement makes stack ranking a con-troversial performance management
approach be-cause there are always losers, despite the fact that a company may be
hiring and developing well. Crit-ics also point out that the stack ranking process, or
“rank and yank” as it is sometimes called, doesn’t do much to create a sense of teamwork among
em-
ployees.
Despite these limitations, some managers, including the previous CEO of General
Electric Jack Welch, defend the practice. They claim that it allows leaders to
effectively differentiate varying levels of job performance among employees more
effectively.
Given these concerns, Microsoft elected to drop its stack ranking system a few years
after it was adopted. This means that managers do not have to use the scaling and
ranking methods that were introduced several years earlier. In addition, managers do
not have to indicate through the employee appraisals that a percentage of workers are

not meeting standards. It will be interesting to see how managers continue to tweak
the company’s performance management system so that employees are rewarded
fairly and accurately for their job performance.
Questions
1. What is your overall opinion of the stack rank-ing system? Do you think this
approach serves a purpose in modern organizations?
2. What are the potential challenges associated with implementing this system?
COMPENSATION & BENEFITS
Compensating employees is often a major cost item for employers, so top management and
HR executives must work together toward aligning rewards with the strategic goals of the
organization. This allows companies to offer compensation that leads to overall
improvements to employee satisfaction and the bottom line. Several strategic decisions can
guide the design of compensation practices:
• Compliance with all applicable laws and regulations
• Cost-effectiveness for the organization
• Internal and external equity for employees
• Optimal mix of compensation components
• Performance enhancement for the organization
• Enhanced recruitment, involvement, and retention of employees
Base Pay :The basic compensation that an employee receives is called base pay.
Organizations often provide basic compensation as either an hourly wage or as a
salary. These two base pay categories are identified according to the way pay is de-
termined and the nature of the jobs.

Variable Pay Another type of direct pay is variable pay, which is compensation
linked directly to individual, team, or organizational performance. The most com-
mon types of variable pay are bonuses, incentive program payments, equity awards,
and commissions.
Benefits: Many organizations provide indirect rewards in the form of employee
benefits. With indirect compensation, employees receive financial rewards without
receiving actual cash or other direct monetary payments. A benefit is an indirect
reward given to an employee or group of employees as part of membership in the
organization, regardless of performance. Examples of benefits are dental coverage,
vacation leave, and retirement plans.
Laws Governing Compensation
Pay practices are regulated by several federal laws that address issues such as overtime
pay, minimum wage standards, hours of work, and pay equity. The following discussion
examines the laws and regulations affecting base compensation.
Fair Labor Standards Act (FLSA)
The primary federal law affecting compensation is the Fair Labor Standards Act
(FLSA), which was passed in 1938. Compliance with FLSA provisions is enforced
by the Wage and Hour Division of the U.S. Department of Labor (DOL). Penalties
for wage and hour violations often include awards of up to two years of back pay
for affected current and former employees, along with a monetary penalty. Willful
violations may be penalized by up to three years of back pay. For example, Walmart
was assessed almost $5 million in back wages and penalties for overtime violations
resulting from improperly classifying employees as exempt from overtime, and Sta-
ples was fined $42 million to settle similar claims. In another case, the airport
shuttle service at Baltimore-Washington International Thurgood Marshall Airport
“Shuttle Express” was ordered to arbitrate with an individual who claimed that he
was classified as an independent contractor or franchisee instead of an employee,
which adversely affected his compensation.The provisions of both the original act
and subsequent revisions focus on the following major areas
 Minimum Wages: The FLSA sets a minimum wage to be paid to a broad spectrum
of covered employees. The current minimum wage of $7.25 an hour was set as part
of the Fair Minimum Wage Act of 2007. A lower minimum wage of $2.13 an hour
is set for “tipped” employees, such as restaurant servers, but their compensation
must equal or exceed the minimum wage when average tips are included. However,
many states have minimum wage levels for both regular and tipped employees that
are higher than the federal minimum wage, and employers must pay this higher
wage.
Child Labor Provisions: There is often much legal speculation and litigation related
to paying employees minimum wages. For instance, Marriott’s announcement that it
would encourage tipping of housekeepers (by leaving tip envelopes in guest rooms)
has increased con-cern about the company paying these employees as tipped workers
at the appropriate lower minimum wage.
Exempt and Non-exempt employees:Under the FLSA, employees are classified as
exempt or nonexempt. Exempt employees hold positions for which they are not paid
overtime. Nonexempt employees must be paid overtime.
Overtime: The FLSA established overtime pay requirements at 1.5 times the regu-
lar pay rate for all hours worked over 40 in a week, except for exempt employees.
There are other exceptions to the overtime requirements, such as farm workers, but
these exceptions are rare. There has been a recent push to expand the number of ex-
empt employees who receive overtime, including managers in fast food outlets, loan
officers, computer technicians, and individuals working in some other executive and
professional jobs.
Special Pay/Overtime issues For individuals who are nonexempt, employers
must consider many issues. These include the following:
1. Compensatory time off: “Comp” hours are earned by public-sector nonexempt
employees in lieu of payment for extra time worked at the rate of 1.5 times the
number of hours over 40 that are worked in a week. Comp time is prohibited
in the private sector and cannot be legally offered to employees working for
private organizations.
2. Incentives for nonexempt employees: Employers must add the amount of direct
work-related incentives to an employee’s base pay and then calculate overtime
pay as 1.5 times the higher (adjusted) rate of pay.

3. Training time: Time spent in training must be counted as time worked by

nonexempt employees unless it is voluntary or not directly related to the job.

4. Security inspection time: Some companies may have to count the time that
employees spend going through security inspections after work as compen-
sable. Claims related to security inspection time have been brought against
organizations such as Amazon, Apple, and CVS Health.
5. After-hours email time: The increased use of email in organizations raises ques-
tions about whether employees can claim that responding to company emails
after hours should count toward overtime. Organizations should consider
adopting email curfew policies that discourage employees from reading and
answering work-related emails off the clock.
6. Travel time: Travel time must be counted as work time if it occurs during nor-
mal work hours for the benefit of the employer. Travel to and from work is not
considered compensable travel time.
Pay Equity Laws
Title VII of the Civil Rights Act of 1964 prohibits discrimination based on race,
color, sex, religion, or national origin. However, prior to its passage, pay discrimina-
tion on the basis of sex was outlawed under the Equal Pay Act of 1963. Since then,
additional laws have been proposed or enacted to counter wage discrimination on
the basis of sex.
Equal Pay Act of 1963 The act prohibits companies from using different wage
scales for men and women performing substantially the same jobs. Pay differences
can be justified on the basis of merit, seniority, quantity or quality of work, expe-
rience, or factors other than gender. Similar pay must be given for jobs requiring
equal skills, equal responsibilities, or equal efforts, or for jobs done under similar
working conditions.
Lilly Ledbetter Fair Pay Act: This law was signed in 2009 in response to a
U.S. Supreme Court decision restricting the statute of limitations allowed under the
Equal Pay Act for claiming pay discrimination based on sex. Under the Equal Pay
Act, an employee alleging discrimination had up to 300 days to file a claim. The
Fair Pay Act essentially treats each paycheck as a new act of discrimination. Pay
discrimination need not be intentional to be unlawful. Pay practices resulting in
disparate impact are also actionable. Steps to reduce liability include conducting a
periodic disparate impact analysis of compensation plans, properly documenting all
compensation decisions, retaining complete pay records for an appropriate dura-
tion and limiting discretion in pay decisions to higher levels in the organization.
Organizational Climate and Compensation Philosophies:
1. Entitlement Philosophy: The entitlement philosophy assumes that individuals
who have worked another year with the company are entitled to pay increases
with little regard for performance differences. When organizations give automatic
increases to their employees every year, they are using the entitlement philosophy.
Most employees receive the same or nearly the same percentage increase. These au-
tomatic increases are often referred to as cost-of-living raises, even if they are not
tied specifically to economic indicators
performance Philosophy: A pay-for-performance philosophy assumes that
compensation decisions reflect performance differences.
Human Resource Metrics and Compensation:
Compensation Fairness and Equity:
External equity : If an employer’s rewards are not viewed as equitable compared
to other organizations, the employer is likely to experience higher turnover. This
also creates greater difficulty in recruiting qualified and high-demand individuals.
Internal equity Internal equity means that employees are compensated fairly
within the organization with regard to the KSAs they use in their jobs, as well as their

responsibilities, accomplishments, and job performance.

Pay Secrecy: Another equity issue concerns the degree of secrecy organizations
have regarding their pay systems. Pay information that may be kept secret in “closed”

systems relates to information about individual pay amounts, pay raises, and incen-
tive payouts.
Job evaluation
It is a formal, systematic process to determine the relative worth of
jobs within an organization.
The ranking method is a simple system that places jobs in order, from highest
to lowest, by their value to the organization.
The classification method is often used in public-sector organizations. Descriptions
of job classes are written, and then each job is put into a grade ac-
cording to the class it best matches
The factor-comparison method is a complex quantitative method that combines
the ranking and point factor methods.
Market Pricing
While the point factor method has served employers well for many years, the trend
is moving to a more externally focused approach. More companies are moving to
market pricing, which uses market pay data to identify the relative value of jobs
based
on what other employers pay for similar jobs. A recent survey showed that 85% of
companies use market pricing to figure out how to value different jobs.

Pay Surveys
A pay survey is a collection of data on compensation rates for workers perform-
ing similar jobs in other organizations. Pay surveys are an important element for
establishing external pay equity. Both job evaluation and market pricing are tied to
surveys of the pay that other organizations provide for similar jobs
Pay Ranges:
Broadbanding:
The practice of using fewer pay grades with much broader ranges
than in traditional compensation systems is called broadbanding. Combining many
grades into these broad bands is designed to encourage horizontal movement and
therefore, more skill acquisition.
 Variable Pay
Variable pay is compensation that is tied to performance. Better performance leads
to greater rewards for employees. Performance may be evaluated and rewarded at
the individual, group (a team or even a whole plant), or entire organization level.
Variable Pay: Incentive for Performance
Key Performance Indicators
Critical success factors are variables that have a strong influence on the results of
the organization.
Key performance indicators (KPIs) are the scorecard measures that tell manag-
ers how well the organization is performing relative to the critical success factors.

Three Levels of Variable Pay:

Individual Level
Group level
Organizational level
1.Individual Incentives
Piece-Rate Systems
Bonuses
“Spot” Bonuses
Nonmonetary Incentives:
Performance Awards
Service Awards
2. Team Incentives
Gainsharing
Profit Sharing
A stock option plan
Employee Stock Ownership Plans
Managing Employee Benefits
A benefit is a tangible indirect reward provided to an employee or group of
employees for organizational membership.

Global Benefits
In many countries, a variety of benefits are provided through programs administered
by the government.
The costs of these benefits are often quite high due to generous retirement and health
insurance plans, coupled with an aging workforce and increasing
retiree populations.
Health care benefits also differ significantly worldwide. Developed nations
(with the exception of the United States until very recently) are far more likely to
provide compulsory, government-sponsored health plans for all citizens, regard-
less of employment status
The amount of paid leave provided to employees also varies significantly in dif-
ferent countries. Paid time off for childbirth and medical disability are generous in
Scandinavian and European countries, and they provide lengthy paid leave for new
mothers.
Given these various issues, companies that employ people in different coun-
tries face a number of challenges.
Multinational companies operating in various countries must determine how to
compensate both host-country nationals and expatriates so that all employees will
feel that they are being treated fairly.
Benefits Design
Flexible Benefits :As part of both benefits design and administration, employers
may offer employees choices in benefits. A flexible benefits plan is a program that
allows employees to select the benefits they prefer from options established by the
employer
Domestic Partner Benefits: There have been a number of challenges to how
marriages are defined at different state and federal levels, with cases focusing on
the Defense of Marriage Act (DOMA), as well as whether and how to recognize
same-sex marriage. The U.S. Supreme Court recently voted against DOMA, which
changed the way terms such as marriage and spouse are defined and essentially
treats same-sex spouses the same as opposite-sex married couples. This means that
same-sex spouses may be entitled to certain benefit plans, and if same-sex couples
get divorced, one partner may be entitled to a share of retirement benefits.
In states where gay marriage is legal, companies have to consider whether to
treat same-sex spouses in the same manner as traditional married couples with re-
gard to benefits. This issue is made even more complicated when organizations have
operations in multiple states with varying laws
Older Workers Benefit Needs: Hiring and retaining older workers can be an
important strategy for an organization seeking high-quality talent with a wealth of
knowledge and experience. Modified work schedules, part-time benefits, and sim
plified seasonal travel can be attractive to older workers.
Types of Benefits:
A cafeteria benefit plan is one in which employees are given a budget and can pur-
chase the bundle of benefits most important to them from the “menu” of options
offered by the employer
Legally Required Benefits
1. Social Security Employees and employers share in the cost of Social Security
through a tax on employees’ wages or salaries. When the law was first enacted,
em-ployers and employees each contributed 1% of worker wages to the fund. By
1990, the rate had increased to 6.2% paid by each party (for a total of 12.4%),
which is the current rate of payroll tax contributions. Normal retirement age to
receive maximum Social Security benefits has been steadily increased from 65 to
67. Starting in 2015, the taxable wage base was increased from $117,000 to
$118,500, with earnings over that amount not being subject to Social Security
tax.
2. Medicare Medicare is a government-operated health insurance program for
older
Americans. Each party pays 1.45% of employee earnings. Unlike the taxes paid
for Social Security, there is no earnings limit on Medicare contributions.
Retirement Plans
1. Defined Benefit Pension Plans A traditional pension plan is one in which the
employer makes required contributions and the employee receives a defined
amount each month upon retirement. A defined benefit plan is a retirement
program in which employees are promised a pension amount based on age and
years of service.
2. Defined Contribution Pension Plans A defined contribution plan is a retire-
ment program in which the employer and/or employee makes an annual payment

to an employee’s retirement account. The key to this plan is the contribution rate;

employee retirement benefits depend on fixed contributions and investment earn-

ings
Health Care Benefits
Employers provide a variety of health care and medical benefits, usually through
insurance coverage. Major changes brought about by the Patient Protection and
Affordable Care Act (PPACA), which is still evolving, may significantly alter the
involvement of employers in providing these essential benefits
Health Care Legislation
1. COBrA Provisions The Consolidated Omnibus Budget Reconciliation Act
(COBRA) requires that most employers with 20 or more full-time and/or part-
time employees offer extended health care coverage to certain groups of plan
participants.
2. HiPAA Provisions The Health Insurance Portability and Accountability Act
(HIPAA) of 1996 allows employees to switch their health insurance plans when
they change employers and to enroll in health coverage with the new company
regardless of pre-existing health conditions. The statute also prohibits group
insurance plans from dropping coverage for a sick employee and requires them
to make individual coverage available to people who leave group plans.
Insurance Benefits
In addition to health care insurance, some companies provide other types of
insurance. These benefits offer major advantages for employees because employers
may pay some or all of the costs.
Relocation benefits are offered by many firms. Companies may pay for temporary
living expenses and moving expenses, and help a “trailing spouse” find a job.
Numerous other financial-related benefits may be offered as well, including the use
of a company car, company expense accounts, and assistance in buying or selling a
house.
Severance Pay
Companies may provide severance pay to individuals whose jobs are eliminated or
who leave the company by mutual agreement.
Family-Oriented Benefit
FMLA Leave Provisions The law requires employers to allow eligible employ-
ees to take a maximum of 12 weeks of unpaid, job-protected leave during any
12-month period for the following situations:
• Birth of a child and care for the newborn within one year of birth
• Adoption or foster care placement of a child
• Caring for a spouse, child, or parent with a serious health condition
• Serious health condition of the employee.
Paid-Time-Off Benefits
1. Vacation Pay
2. Holiday Pay
3. Leaves of Absence
a) Family Leave
b) Sick leaves
Worker Protection
Safety and Health Regulations
Workers’ Compensation
Relevant Legislation in India
The Factories Act This is an Act to consolidate and amend the law regulating labour
in factories. It came into force on the 1st day of April, 1949 as the Factories Act,
1948 and extends to the whole of India (Government of India, 1948).
The legislation for labour welfare, known as the Factories Act, 1948, was enacted
with the prime objective of protecting workmen employed in factories against
industrial and occupational hazards.
The legislation for labour welfare, known as the Factories Act, 1948, was enacted
with the prime objective of protecting workmen employed in factories against
industrial and occupational hazards.
The Mines Act
The Indian Mines Act which is related to the regulation and inspection of mines was
passed in 1923. Although it has since been amended in certain respects, the general
framework has remained unchanged. Experience of the Act’s working revealed a
number of defects and deficiencies which hampered its effective administration.
The significant obligations under the Mines Act and the Mines Rules, 1955 include
the formation of safety committees in every mine where more than 100 persons are
employed; providing a notification of accidents and the appointment of workmen’s
inspectors by the manager (one inspector for every 500 miners).
According to this Act the owner, agent or manager has to remove any dangerous or
defective situation, as per the directions of the inspector.
The Workmen’s Compensation Act
The objective of the Workmen’s Compensation Act is to make provision for the
payment of compensation to a workman only, i.e., to the concerned employee himself
in case of his surviving the injury in question and to his dependents in the case of his
death.
The Act provides for cheaper and quicker disposal of disputes relating to
compensation through special tribunals are possible under the civil law. The passage
of time has widened the courts’ approach and their approach has become more
liberal, leaning towards the workman.
Child labor
Indian law prohibits the employment of children under age 14 in occupations deemed
hazardous, a list that will now include domestic, hotel and restaurant work. Under the
law, government officials must remove and rehabilitate children, and prosecute
employers illegally using underage children.
 Hazardous Occupations
1. Transport of passengers, goods or mails by railways.
2. Cinder picking, clearing of an ash pit or building operation in the railway premises.
3. Work in a catering establishment at a railway station, involving the movement of a vendor or any other
employee of the establishment from the one platform to another or in to or out of a moving train.
4. Work relating to the construction of a railway station or with any other work where such work is done in close
proximity to or between the railway lines.
5. A port authority within the limits of any port.
6. * Work relating to selling of crackers and fireworks in shops with temporary licenses.
7. # Abattoirs/Slaughter House.
8. $ Automobile workshops and garages
9. Foundries
10. Handling of toxic or inflammable substances or explosives
11. Handloom and power loom industry
12. Mines (underground and under water) and collieries
13. Plastic units and fibreglass workshops
14. ** Domestic workers or servants and
15. ** Dhabas (roadside eateries), restaurants, hotels, motels, tea shops, resorts, spas or other recreational centres
16. Diving
17. Caring of Elephant
18. Working in the circus
Occupational Safety and Health Act
The Occupational Safety and Health Act of 1970 was enacted to ensure that the
health and safety of workers would be protected. Every employer that is engaged in
commerce and has one or more employees must comply with the act. Farmers with
fewer than 10 employees are exempt. Employers in specific industries, such as rail-
roads and mining, are covered under other health and safety acts. Federal, state, and
local governments are covered by separate statutes and provisions.
The Occupational Safety and Health Act of 1970 established three agencies
within the Department of Labor to oversee various aspects of workplace safety:

1. The Occupational Safety and Health Administration, known as OSHA, administers

the provisions of the law, conducts workplace inspections, and
works with companies to improve worker safety.
2. The National Institute for Occupational Safety and Health (NIOSH) is a supporting
body that conducts research and develops safety standards.
3. The Occupational Safety and Health Review Commission (OSHRC) reviews
OSHA enforcement actions and addresses disputes between OSHA and employers
that are cited by OSHA inspector
OSHA Enforcement Actions and Results
A major responsibility of OSHA is to enforce safety regulations in an effort to reduce
injuries and illnesses in the workplace. Enforcement includes creating guidelines and
rules, investigating, inspecting, and levying fines. Compliance officers have great
discretion and authority to ensure worker safety.
OSHA has initiated stronger enforcement efforts on behalf of temporary workers.
Temporary workers make up a significant share of the workforce and unfortunately, they
have a much higher risk of occupational injury. Staffing agencies and the companies who
employ temporary workers both bear some responsibility for ensuring that these
individuals are properly trained and equipped for any workplace hazards that they may
encounter.
Hazard Communication: OSHA has established process safety management (PSM)
standards that focus on hazardous chemicals. Hazard communication standards require
manufacturers, importers, distributors, and users of hazardous chemicals to evaluate,
classify, and label those substances using standardized symbols.
Personal Protective equipment Standards for personal protective equipment
(PPE) require that employers analyze job hazards, provide adequate PPE to employees in
hazardous jobs, and train them in the use of PPE items.
Bloodborne Pathogens and infectious Diseases OSHA has established a
standard regarding exposure to bloodborne pathogens such as the hepatitis B virus
(HBV) and the human immunodeficiency virus (HIV). This regulation was developed to
protect employees who are regularly exposed to blood and other such sub-
stances from contracting AIDS and other serious diseases. Obviously, health care
laboratory workers, nurses, and medical technicians are at greatest risk.
Pandemic guidelines In addition to regulations, OSHA issues guidelines to
protect people at work in matters of health and safety. One such set of guidelines
can help employers prepare for a pandemic.
Cumulative trauma disorders (CTDs) are muscle and skeletal injuries that occur when
workers repetitively use the same muscles when performing tasks.
Carpal tunnel syndrome, a cumulative trauma disorder, is an injury common to
people who put their hands through repetitive motions such as typing, playing certain
musical instruments, cutting, and sewing.
OSHA Recordkeeping Requirements
Employers must keep a log for each establishment on site. Employees have the right to
review these records. Each year, employers are also required to summarize data from the log
and post it in the workplace from February 1 through April 30. Injuries to direct and indirect
(temporary, contract, and other contingent workers) workers must all be recorded.
Categories of recordable injury include:

• Death: Fatality at the workplace or caused by work-related actions.

• Injuries causing days away from work: Job-related injuries or disabling occurrences that
cause an employee to miss regularly scheduled work on the day following the accident.

• Injuries or illnesses causing job transfer or restricted duty: Job-related injuries

or illnesses that lead to an employee working in a job outside his or her normal
assignment.

• Other recordable cases: Injuries that require treatment by a physician but do

not cause an employee to miss a regularly scheduled work turn
Accident Reduction Using Ergonomics
Ergonomics is the study and design of the work environment to address physical de-
mands placed on individuals as they perform their jobs. The primary goal is to make
work more human friendly and to reduce work-related injuries, particularly repetitive
motion problems. In a work setting, ergonomic studies look at factors such as
fatigue, lighting, tools, equipment layout, and placement of controls. Ergonomics
can provide economic value to employers by reducing injuries.

For specific problem industries and jobs, OSHA has voluntary guidelines that
identify industries with serious ergonomic problems and give employers tools to
help highlight and control ergonomics hazards. Among the industries receiving
guidelines are nursing homes, poultry processors, and retail grocery stores.

Ergonomics analysis includes reviewing physical, environmental, and psycho-

logical stressors and finding ways to reduce their impact on workers. Management
must commit to reducing injuries caused by repetition and cumulative trauma,
along with poor workstation design and workflow. Getting employees involved is
the key to successfully implementing an ergonomics program
 Long Island, New York, construction company cited for fall hazards
following fatal structure collapse
 OSHA has cited Northridge Construction Corp. for willful and serious violations
of workplace safety standards at the company's headquarters in East Patchogue,
New York. The company faces $224,620 in penalties.
 In December 2018, an employee suffered fatal injuries when a structure collapsed
during installation of roof panels on a shed. OSHA inspectors determined that the
company failed to provide fall protection and protective helmets, did not ensure
the structural integrity of the roof, and misused a ladder.
 "Fall-related fatalities are preventable if employers use required fall protection
systems, such as guardrails or personal fall arrest systems," said OSHA Long
Island Area Director Anthony Ciuffo. "OSHA standards are legal requirements
that every employer must follow to ensure workers are protected from serious
injuries."
 Federal judge upholds safety and health citations, penalties against Jersey
City, New Jersey Medical Center
 An administrative law judge with the Occupational Safety and Health Review
Commission (OSHRC) has issued a decision affirming all safety and health
citations issued by OSHA against Jersey City Medical Center. OSHA cited the
medical center – based in Jersey City, New Jersey – for electrical hazards after a
maintenance employee's fatal fall after receiving an electric shock. The judge also
affirmed OSHA's proposed penalties totaling $174,593.
 In June 2016, the decedent - who was untrained in electrical safety work practices -
was repairing a ceiling light fixture when the incident occurred. The judge found
that the employer willfully failed to train the employee for the hazardous electrical
work he was directed to perform. A three-day hearing was held in New York City in
April 2018, and the decision from OSHRC issued on June 17, 2019.
 "The outcome of this case shows the employer will be held accountable for
willfully exposing employees to serious hazards, and the U.S. Department of Labor
stands ready to litigate such issues when employers refuse to accept responsibility,"
said the Department's Regional Solicitor Jeffrey S. Rogoff, in New York.
 Georgia water services company cited after employee suffers heat-related injury at
Key West, Florida, worksite
 OSHA has cited Evoqua Water Technologies LLC – based in Thomasville, Georgia – for
failing to protect employees working in excessive heat. The company faces $21,311 in
penalties, including the maximum penalty allowed by law for the heat-related violation.
 An employee suffered heat exhaustion and was hospitalized after working in direct
sunlight and wearing required protective clothing during welding and fabrication work at
a Key West, Florida, worksite. On the day of the hospitalization, the heat index ranged
between 83 and 88 degrees. OSHA cited the employer for failing to protect workers
exposed to outdoor heat hazards, and failing to report a hospitalizaion within 24 hours, as
required.
 “Employers must take proper precautions when employees are working outdoors in
excessive heat conditions, including ensuring that workers have access to water, and take
frequent rest breaks in cool shaded areas,” said OSHA Area Director Condell Eastmond,
in Fort Lauderdale, Florida.
 OSHA conducts training and outreach on heat-related workplace hazards every spring
and summer. Information on establishing a heat illness prevention program, a video on
protecting workers from heat illness, and resources with other suggested best practices
are available on OSHA’s heat illness prevention page.
IN INDIA
News of workplace accidents appears every day in local media. Fifteen miners are
buried inside an illegal coalmine after a flood. An explosion in a shop results in 13
deaths. A building under construction collapses and kills seven workers. Two
sewer cleaners die of asphyxiation when the wall of the tunnel where they were
working collapses. It’s a steady stream so routine that it only attracts attention when
the figures are catastrophic
UNION MANAGEMENT RELATIONS
A union is a formal association of workers that promotes the interests of its members
through collective action. unions typically try to increase compensation, improve working
conditions, and influence workplace rules. When workers are represented by a union,
these issues are decided through collective bargaining agreements and specified in formal
contracts that have been negotiated by management and labor.
Union Membership in India
Trade Unions in India are registered and file annual returns under the Trade Union Act
(1926). The credit for the first association of Indian workers is generally given to
the Bombay Mill-Hand Association founded by N.M. Lokhande in 1890. This was in the
period just after the passing of the 'First' Factories Act in 1881 by the British Government
of the time. The following years saw the formation of several labour associations and
unions. The first clearly registered trade-union is considered to be the Madras Labour
Union founded by B.P. Wadia in 1918, while the first trade union federation to be set up
was the All India Trade Union Congress in 1920.
Central trade union organisations (CTUOs) of India
Local, firm-level or industry-level trade unions are often affiliated to larger
Federations. The largest Federations in the country represent labour at the
National level and are known as Central Trade Union Organisations (CTU
or CTUO). To acquire status as a CTUO, a trade union federation must have
a verified membership of at least 500,000 workers who are spread over a
minimum of four states and four industries (including agriculture).
Trade Unions Act, 1926
The primary function of the Trade Unions Act was to protect the interests of
workers against discrimination and unfair labor practice and also provide
them a blanket cover to stand up for their interests through the formation of
trade unions. Through this article, the rights and regulations of the Trade
unions Act have been covered including the scope and objectives of the act.
The trade Unions Act, 1926 provides for registration of trade unions with a view to
render lawful organisation of labour to enable collective bargaining. It also confers on a
registered trade union certain protection and privileges.

The Act extends to the whole of India and applies to all kinds of unions of workers and
associations of employers, which aim at regularising labour management relations. A
Trade Union is a combination whether temporary or permanent, formed for regulating
the relations not only between workmen and employers but also between workmen and
workmen or between employers and employers.
DOMINATION BY POLITICAL PARTIES Every political party in the country has
sought to control as many trade unions as it can. The result is the existence of more
than a dozen important central federations—each working in close collaboration with
and under the guidance, if not under the direct control, of a separate political party.
The link between the AITUC and the Communist Party of India, the INTUC and the
Indian National Congress, the HMS and the socialist parties, CITU and the
Communist Party of India (Marxist), the BMS and the Bharatiya Janata Party, and the
UTUC and the small splinter parties of the left is well known.
SALIENT FEATURES OF INDUSTRIAL RELATIONS IN INDIA Some of the
more notable features of industrial relations in the country emerging from the
preceding discussions and a perusal of other relevant chapters may be summarized as
follows:
1. The main parties to industrial relations—the workers and their organizations, and
employers or their representatives are free to enter into mutual agreements for laying
down the terms and conditions of employment of workers or resolving their
differences. The agreements arrived at in the course of conciliation proceedings
known as ‘settlements’ are binding on all the workers of the concerned undertaking,
whereas agreements arrived at otherwise than in the course of conciliation
proceedings are binding only on the parties to the agreements.
Most of the collective agreements in the country are contracted at the level of
establishment or undertaking. This is done for ensuring their legal enforceability.
The government has provided a network of conciliation and adjudication machineries
under law for the settlement of industrial disputes. The parties are generally free to
utilize the services of the conciliation authorities, but considerable discretion vests in
the government to refer industrial disputes to adjudication authorities whose awards
have a legally binding character.
4. Considerable restrictions have been imposed under law on the workers going on
strike and employers declaring lock-out. These restrictions are more rigid in public
utility and essential services.
5. The government has also provided under law machineries such as works-
committee and grievance redressal committee to prevent industrial disputes from
arising.
6. Quite a number of schemes of workers’ participation in management sponsored by
the government have been experimented within the country from time-to-time, but
most of these have ended in failures. Only in a few establishments, where such
schemes have been adopted on the basis of collective agreements, these have been
functioning to the satisfaction of the parties
7.The government has set up tripartite bodies at various levels to enable the parties to
arrive at unanimous decisions on broader labour and industrial relations issues..
8. Quite a few labour laws in the country such as The Employees’ State Insurance
Act, 1948, Minimum Wages Act, 1948, and Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, have provided for the association of
representatives of workers and employers in their enforcement.
Industrial Disputes
Conflict, as one of the features of industrial relations, is a general concept. When it
acquires a concrete and specific manifestation, it becomes an industrial dispute, that is,
industrial conflict is general, whereas industrial dispute is specific. Industrial disputes
may be said to be disagreement or controversy between management and labour with
respect to wages, working conditions, other employment matters or union recognition.
FORMS OF STRIKE
1. Authorized and Unauthorized Strikes On the basis of the nature of initiation, strikes
may be classified as: (i) authorized and (ii) unauthorized strikes.
2. General and Particular Strikes
3. Sympathetic Strike: A sympathetic strike, as the term itself indicates, is conducted out
of sympathy for the cause of another group of workers, whether on strike or not. Thus,
the workers resorting to a sympathetic strike have no immediate grievance against their
employer. The strikers hope to strengthen the morale of the workers for whom they are
expressing their sympathy by going on a strike. A sympathetic strike is an expression of
solidarity with and support to a cause. T
4. Jurisdictional Strike: Jurisdictional strikes are conducted with a view to force an
employer to recognize or bargain with a particular trade union instead of another.
Two unions may claim to represent the same set of workers and may clamour for
recognition for this purpose. One of the contestants may go on strike to pressurize the
employer to accept its representational claim. As a matter of fact, two unions quarrel
for their respective jurisdictions and the strike is the result of this dispute. Hence,
such strikes are known as jurisdictional strikes.
5. Slow-down Strike
6. Quickie Strike
7. Work-to-rule
8. Political Strike
9. Gherao The practice involves confinement of authorities, mostly managerial
personnel, in their offices by agitating workers in connection with their demands and
preventing them from going out.
THE FACTORIES ACT, 1948
Objective of the Act: To ensure adequate safety measures and to promote the health
and welfare of the workers employed in factories.
To prevent haphazard growth of factories through the provisions related to the
approval of plans before the creation of a factory.
INDUSTRIAL DISPUTES ACT, 1947
The objective of the Industrial Disputes Act is to secure industrial peace and harmony
by providing machinery and procedure for the investigation and settlement of
industrial disputes by negotiations. The Act also lays down:
(a) The provision for payment of compensation to the Workman on account of
closure or lay off or retrenchment.
(b) (b) The procedure for prior permission of appropriate Government for laying off
or retrenching the workers or closing down industrial establishments
(c) (c) Unfair labour practices on part of an employer or a trade union or workers.
Objectives of Indian Industrial Dispute Act: 1.
To encourage good relations between labor and industries, and provide a medium of
settling disputes through adjudicator authorities.
2. To provide a committee for dispute settlement between industry and labor with the
right of representation by a registered trade union or by an association of employers.
3. Prevent unauthorized strikes and lockouts.
4. Reach out to labor that has been laid-off, unrightfully dismissed, etc. 5. Provide
labor the right to collective bargaining and promote conciliation.
New Indian Industrial Dispute Act Principles:
1. A permanent conciliation committee for the speedy settlement of industrial
disputes.
2. 2. Compulsory arbitration in public utility services and enforcement of
arbitration awards.
3. 3. Strikes during proceedings of conciliation and arbitration meetings are
prohibited.
4. 4. Set aside specific times for conciliation and arbitration meetings.
5. 5. Employers have to be obliged to communicate with labor unions.
6. 6. Mutual consultation has to be set up between industry and labor by the Works
Committee.
7. 7. Disputes between labor and industry have to be forwarded to an Industrial
Tribunal. If the Industrial tribunal fails to handle the case, the case should be
forwarded to the appropriate government
Methods of Settling Industrial Disputes
Collective Bargaining The emergence and stabilization of the trade union movement
has led to the adoption of collective bargaining as a method of settling differences
and disputes between the employer and his employees. Collective bargaining implies
the following main steps:
1. Presentation in a collective manner, to the employer, of the employees’ demands
and grievances.
2. 2. Discussions and negotiations on the basis of mutual give and take for settling
the grievances and fulfilling the demands.
3. 3. Signing of a formal agreement or an informal understanding when
negotiations result in mutual satisfaction.
4. 4. In the event of the failure of negotiations, a likely resort to strike or lock-out
to force the recalcitrant party to come to terms
The last step in the process of collective bargaining is a likely resort to coercive
measures, that is, strikes or lockouts. Strikes and lock-outs are an integral part of the
process of collective bargaining and may be viewed as a method of settling industrial
disputes, as war is a method for settling disputes between two or more nations. In the
present context of national sovereignty, war is still recognized as a legitimate
instrument of settling international disputes, however disastrous its consequences
may be for the humanity as a whole. Strikes and lock-outs are also recognized in
many countries as legitimate weapons in the armoury of labour and management,
however detrimental their consequences may be for the welfare of the community.
Voluntary Arbitration: The second way, in which the parties can settle disputes
without any state intervention, is voluntary arbitration. The parties, feeling that
mutual negotiations will not succeed and realizing the futility and wastefulness of
strikes and lockouts, may decide to submit the dispute to a neutral person or a group
of persons for arbitration. The neutral person hears the parties and gives his award,
which may or may not be binding on them. At the time of submitting a dispute to
arbitration, the parties may agree in advance to abide by the award of the arbitrator,
and thus, industrial peace is maintained, and the dispute is resolved.
The Gandhian technique of resolving industrial disputes accords a high place to
voluntary arbitration. The constitution of the Textile Labour Association,
Ahmedabad, provides for voluntary arbitration.
Many industrial disputes are settled today through voluntary arbitration. The
Industrial Disputes Act, 1938, and the Industrial Relations Act, 1946, of Maharashtra
recognized voluntary arbitration as a method along with others, for the settlement of
industrial disputes. The Industrial Disputes Act, 1947, provides for joint reference of
disputes, to arbitration.
The Code of Discipline (1958) also reiterated the faith of the parties in voluntary
arbitration in the event of the failure of mutual negotiations.
SETTLEMENT UNDER THE INFLUENCE OF THE STATE
Compulsory Establishment of Bipartite Committees
,The state has passed enactments requiring the establishment of bipartite committees
consisting of the representatives of workers and their employer at the plant or industrial
level. These bipartite committees are given the power to settle differences between the
workers and the employers as soon as they appear, and thereby they prevent them from
growing into big conflagrations. In India the Industrial Disputes Act, 1947, provides for
the compulsory formation of Works Committees in industrial establishments employing
100 or more people, if so required by the appropriate government.
Establishment of Compulsory Collective Bargaining
As the state encourages and requires the establishment of bipartite committees for the
purpose of composing grievances and differences between workers and their
employer, it may also think it advisable to encourage and, if necessary, to force
workers and employers to enter into formal collective bargaining through their
representatives.
The idea behind such a policy is to force the parties to seek to settle their differences
through mutual negotiations and discussions before they decide to resort to strikes or
lock-outs. Where the parties themselves have set up a machinery for collective
bargaining and negotiation, the imposition of collective bargaining by the state
becomes unnecessary.
But, if either or both the parties resist the establishment of collective bargaining and
the state feels that collective bargaining helps the peaceful and democratic conduct of
industrial relations, it may impose collective bargaining compulsorily. It was in this
frame of mind that the Federal Government of the United States under President
Roosevelt enacted the National Labour Relations Act, 1935, popularly known as the
Wagner Act.
Conciliation and Mediation : The third method used by the state for promoting a
peaceful settlement of industrial disputes is the provision of conciliation and mediation
services. There is no essential difference between conciliation and mediation and the two
terms are used interchangeably. However, some people tend to differentiate between the
two on the basis of the degree of the active role played by the third person. To some, the
conciliator is more active and more intervening than the mediator who is said to perform
a ‘go messenger’ service.
Voluntary Conciliation and Mediation :Under the method of voluntary conciliation and
mediation, the state sets up a conciliation and mediation machinery, consisting of
personnel trained in the art of conciliating disputes. The services of this machinery are
always available to the disputants.
Whenever they feel that the conciliator may help them in resolving their dispute or in
breaking a deadlock, they may call upon the services of the conciliation machinery. The
state provides the service without imposing any obligation on the disputants to use it.
Sometimes, the conciliator is empowered to be a little more active. They may inform the
parties that their services are available and also request them to keep them informed of
the developments in their negotiations.
Compulsory Conciliation and Mediation: In many countries, the state does not rest
content with the mere creation of a conciliation service. The state goes a step further; it
imposes an obligation on the parties to submit their dispute to the conciliation service
and makes it a duty of the latter to seek to conciliate the dispute. Meanwhile, the state
requires that the parties refrain from causing any work-stoppage for the purpose of
resolving the dispute, so long as the conciliation proceeding is going on.
Generally, there is a time limit for the conciliators and mediators to conclude their efforts
at conciliation. There are three main considerations for prohibiting the parties from
causing work-stoppage and imposing this time limit. Firstly, it is felt that conciliation
will provide a cooling off period during which emotional tensions may subside and a
settlement can be arrived at. Secondly, it is felt that the freedom of the parties to settle
their disputes even by causing work-stoppage, should not be taken away from them for a
long period. Thirdly, it is argued that, if conciliation does not achieve an early break-
through, it is not very likely to succeed later
Conciliation and Mediation in Different Countries
Under the Industrial Disputes Act, 1947, giving of a notice of strike or lock-out in public
utility services, is obligatory on the parties before they go on a strike or declare a lock-
out. Under the rules, a copy of the notice has to be sent to the conciliator appointed by
the government for a particular geographical region or the industry where the parties are
located. When the conciliation officer receives such a notice, it is his legal responsibility
to seek to conciliate the dispute. The conciliation officer makes efforts to induce the
parties to come to a settlement.
In the event of a failure, he submits a report to the government, stating the facts of the
case and the reasons responsible for the failure. The government is free thereafter, to take
such steps as it deems fit for settling the dispute. The Act prohibits a strike or a lock-out
in a public utility service during the pendency of the dispute before a conciliation officer
and seven days after the conclusion thereof.
Similarly, the appropriate government may appoint a Board of Conciliation and refer to
it, a particular dispute that threatens industrial peace. The board of conciliation has been
vested with the power to enforce the attendance of the parties concerned for the purpose
of conciliating the dispute. Strikes and lock-outs are prohibited during the pendency of
the conciliation proceedings before the board of conciliation and seven days after the
conclusion thereof. The board of conciliation has the duty ‘to endeavour to bring about
the settlement of a dispute referred to it and for this purpose to investigate the dispute
and all matters affecting the merits and the right settlement thereof and to do all such
things as it thinks fit for purpose of inducing the parties to come to a fair and amicable
settlement of the dispute.
In Australia, under the Commonwealth Conciliation and Arbitration Act, commissioners
are empowered to intervene if no agreement is reached between the parties themselves.
The Act empowers the commissioners to convene a compulsory conciliation conference,
consisting of the representatives of employers and employees and presided over by a
commissioner, or on the commissioner’s authorization, by a conciliator. A memorandum
of agreement arrived at in the conciliation proceedings is, on the certification of the
commissioner, binding on the parties. If conciliation fails, the commissioner settles the
disputes by arbitration. In New South Wales, Queensland, South Australia, Conciliation
Committees or Conferences work in direct conjunction with the Courts of Arbitration.
In New Zealand, the Industrial Conciliation and Arbitration Act provides for the
establishment of Councils of Conciliation, consisting of equal number of representatives
of employers and workers concerned, to be presided over by a Conciliation
Commissioner who is a permanent official of the Department of Labour. In case no
agreement is voluntarily reached between a registered trade union and the employer
concerned, either side may refer the dispute to the Council of Conciliation. If the parties
so desire, a settlement arrived at in the process of conciliation may be made binding by
an award of the Arbitration Court. If no agreement or only an incomplete agreement is
reached, the dispute is referred to the Court of Arbitration for final disposal. Like India,
Australia and New Zealand provide for both compulsory and voluntary conciliation
ADJUDICATION OR COMPULSORY ARBITRATION IN INDIA
Though a small beginning in this direction was made by the Bombay Industrial Disputes
Act of 1938, which provided for the creation of a Court of Industrial Arbitration,
empowering it to decide cases relating to registration of unions, standing orders and
legality of strikes and so on, compulsory arbitration has essentially been a child of the
Second World War for the country as a whole.
Later, in January 1942, the Government of India amended the Defence of India Rules by
adding Rule 81-A in order to restrain strikes and lock-outs. This rule empowered the
government to prohibit strikes and lock-outs, refer any dispute to adjudication, require
employers to observe such terms and conditions of employment as might be specified
and enforce the decisions of the adjudicator. Later, the provincial governments were also
vested with similar powers. After the war, the Industrial Disputes Act, 1947, continued
the practice of adjudication and now it has become an important feature of the law
relating to the settlement of industrial disputes in the country.
The Industrial Disputes Act, 1947, as it stands amended till date, provides for three types
of adjudication authorities for the adjudication of industrial disputes, namely, Labour
Court, Tribunal and National Tribunal.
The Labour Court and the Tribunal can be established both by the central and state
governments, but the National Tribunal is set up only by the central government, to
adjudicate such disputes as involve any question of national importance or are of such a
nature that industrial establishments situated in more than one state are likely to be
interested in or affected by them.
The Labour Court is intended to adjudicate disputes relating to the propriety or legality
of an order passed by the employer under the standing orders, discharge or dismissal of
workmen, legality or otherwise of a strike or lock-out. The Tribunal and the National
Tribunal generally deal with such subject-matters as wages, bonus, profit-sharing,
rationalization, allowances, hours of work, provident fund, gratuity, etc.
Strikes and lock-outs are prohibited during the pendency of the proceedings before any
of the adjudication authorities, and two months after the conclusion of such proceedings
and during any period in which an award is in operation, in respect of any matter covered
by the award.
Some Pioneer Collective Agreements
1.Agreements between TISCO and the Tata Workers’ Union contracted from time-to-
time, but the Agreement of 1956 is of particular significance, as it embodied for the first
time in the country the closer association of employees with management . Other
subjects covered in the agreements have included wages, gratuity, bonus, housing and
welfare facilities, discipline, promotion, redressal of grievances, incentives and so on.
2. Agreements between Bata Shoe Co. Ltd., Calcutta and Bata Mazdoor Union,
Batanagar, (beginning from 1948 contracted at intervals). The subjects covered have
comprised wages, allowances, bonus, hours of work, leave, bonus, strike and lock-out,
standing orders, retiral benefits, disciplinary action and termination of service, grievances
and others
3.Agreement between the Indian Tea Association and the Indian Tea Planters’
Association representing the employers and Hind Mazdoor Sabha and Indian National
Trade Union Congress representing workers (1956) over the question of payment of
bonus.
Beginning from the 1960s, a number of comprehensive collective agreements were
reached between Telco and Telco Workers’ Union, and after the change of name from
Telco to Tata Motors Ltd. (2003), between Tata Motors Ltd. and Telco Workers’ Union.
These agreements, which have been in the form of settlements covered many areas such
as wage structure, benefits and facilities, productivity, discipline, job security, social
security, incentives, pension, grievances, training and development, and so on.
Appropriateness of the methods for settling industrial disputes In a large-scale industrial
establishment in Nasik, the only recognized union in the establishment placed a charter of
demands before the management which included (i) enhancement of minimum wages and
dearness allowance by 25 per cent, (ii) reduction of maximum daily hours of work from nine
to eight, (iii) a minimum of 15 per cent bonus, (iv) improvement in the quality of food in the
canteen and (v) provision of adequate safety equipment. The issue of enhancement of
minimum wage and dearness allowance was decided by mutual discussions between the
parties. The question of reduction in daily hours of work was jointly referred to a local
dignitary for disposal. The parties availed of the services of an official of the labour
department of the state during negotiations on the questions of quality of food in the canteen
and provision of safety equipment. On the request of the parties the question of minimum
bonus was referred to a state tribunal for decision.
Questions • What was the method used to resolve the issue of enhancement of minimum
wage and dearness allowance?
• What method of settlement was adopted in resolving the question of reduction in daily
hours of work?
• What term will you use for the method adopted in the resolution of the questions of quality
of food in the canteen and provision of safety equipment?
• What name will you give for the method in which the issue of bonus was referred to a state
tribunal for decision?
Collective Bargaining:
Collective bargaining is a process of discussion and negotiation between two parties, one
or both of whom is a group of persons acting in concert. The resulting bargain is an
understanding as to the terms and conditions under which a continuing service is to be
performed.... More specifically, collective bargaining is a procedure by which employers
and a group of employees agree upon the conditions of the work.
UNITS AND LEVELS OF COLLECTIVE BARGAINING
1. Plant or Establishment Level:
Bargaining between one employer/company on the one side, and one or more unions
established at the plant, locality, region, industry, nation level, or a group of workers, on
the other.
2. Local Level
Bargaining between one employer or a group of employers, or one or more employers’
associations on the one side, and one or more unions established at the plant, locality,
region, industry, nation level, or a group of workers, on the other.
Region/Area Level
Bargaining between one or more employers/companies or one or more employers’
associations at the region, industry or nation-level on the one side, and one or more
unions established at the plant, region/area, industry or nation level, on the other.
Industry Level
Bargaining between one or more employers/companies/corporations or one or more
employers’ associations on the one side, and one or more unions established at the
industry, nation, region/area or plant level, on the other.
National Level
Bargaining between one or more employers/companies/corporations or one or more
employers’ associations on one side, and one or more unions established at the
national, industry, region/area or plant level, on the other
Factors Influencing Bargaining Units and Levels:
Structure of Trade Union Organization;
One of the notable factors influencing the unit and level of collective bargaining has
been the structure of trade union organization. Where industrial unions at the plant level
are predominant, a single union may bargain for all the workers in the plant.
In such cases, the level of bargaining is plant, and the unit is confined to the
representatives of the employer and workers in the plant. When such unions are formed
at the industry level, bargaining may become more frequent, and the unit of bargaining
becomes wider.
On the other hand, where there is plurality of craft unions at the plant or industry level,
the number of bargaining units either at the plant or industry level is likely to be more.
In many cases, collective agreements contracted at the industry level are supplemented
by agreements at the plant level. In such cases, both the levels and units of bargaining
become diversified. Some trade unions are also formed at the regional level.
Here, the level of bargaining is region, and the unit will consist of the representatives of the
parties.
Nature of Ownership of Industrial Enterprises
The unit and level of bargaining are also related to the nature of ownership of industrial and
business enterprises and the structure of employers’ organizations. Where the ownership of
industrial enterprises is confined to an employer or company at the local level and there is
preponderance of plant-level industrial unions, the level of bargaining will be low and units
simple.
When a single employer owns a large number of establishments spread in different areas,
bargaining may take place at each of the establishments separately or a single agreement
applicable to all the plants may be contracted. Along with the formation of trade unions at
higher levels, the employers have also formed their organizations at industry, national and
regional levels.
These developments combined with the advent of large corporations have tended to
widen both the level and unit of bargaining. In some countries, as in India, a large
number of big-sized industrial undertakings have been established in the public sector.
This has necessitated the establishment of forums to ensure a broad uniformity in regard
to the terms and conditions of employment, and avoidance of wide disparities. To
achieve it, forums such as Bureau of Public Enterprises have come into existence. The
national unions on their part have combined together to counteract any move detrimental
to the interests of workers, and bargain at the national level.
Nature of Industrial Relations Laws and Governmental Policy
Both the levels and units of collective bargaining are profoundly influenced by the
contents of industrial relations laws and governmental policies. In many countries, these
laws regulate the selection of bargaining agent, recognition of representative unions,
disposal of representation cases, determination of bargaining units, registration of
collective agreements, unfair labour practices and other procedural aspects of collective
bargaining
Thus, in the United States, the Labour Management Relations Act, 1947 (Taft-Hartley
Act) which has established compulsory collective bargaining has vested wide powers in
the National Labour Relations Board (NLRB) in regard to the determination of the
bargaining unit, certification of bargaining agent and disposal of representation cases. In
the United Kingdom, the Trade Union and Labour Relations (Consolidation) Act, 1992,
and Employment Relations Acts extensively regulate procedural aspects of collective
bargaining.
In India, the Industrial Disputes Act, 1947, provides for the appointment of conciliation
officers and adjudication authorities—labour courts and tribunals by both central and
state governments, and national tribunals by the central government—for settlement of
industrial disputes. An amendment of the Act in 1982 makes it an unfair labour practice
for an employer to refuse to bargain collectively with recognized unions and for a
recognized union to refuse to bargain collectively with employer
SUBJECT MATTERS OF COLLECTIVE BARGAINING
During initial periods, the subject matters of collective bargaining were confined mainly to
wages and other pecuniary gains. Subsequently, hours of work and certain aspects of physical
working conditions also became subjects of joint negotiations. These include wages,
allowances, hours of work, physical working conditions, fringe benefits, incentive payments,
welfare amenities, economic security, job security, promotion, retiral benefits, discipline,
training, leave and holidays, discharge and dismissal, lay-off and retrenchment, overtime work
and payment, vacations, leave travel, technology and technological changes, production and
productivity, environment and so forth.
PRODUCTIVITY BARGAINING
Productivity bargaining is an aspect of collective bargaining which aims at improving
inefficient working methods by specifying changes in working practices. It is the process of
making negotiations between the two parties with the object of improving productive efficiency
and the rewards for increased productivity. The enforcement of productivity agreements is
considered the joint responsibility of the management and trade union. It is often considered
integrative bargaining because the parties appear to be more concerned with increasing the total
sum available for distribution. Productivity bargaining is more specific with respect to the
nature of achievement and reward and the time period involved.
Productivity Agreements in TISCO
The historic agreement between the Tisco and the Tata Workers’ Union, 1956, contains
important clauses relating to productivity. The agreement provides that the union, its
officers and representatives agree to give their full support and cooperation in the matter
of securing improvement in labour productivity. It further states that the parties agree on
the need to establish a standard force in each of the existing departments and declares that
such standard force will be fixed by the company for securing improvement in labour
productivity after consultation with the union.
The company assures the union that :
‘(i) there will be no retrenchment of existing employees;
(ii) those employees required for jobs other than those in which they are at present
employed will, wherever necessary, be trained for other jobs;
(iii) the present average earnings of employees transferred or under training will be
guaranteed to them’. The agreement also provides the details regarding the adjustment of
workforce in the event of redundancy in particular departments or sections.
Developments Since Independence
Formation and Strengthening of Workers’ and Employers’ Organizations
The post–Independence period witnessed the formation of new central federations of trade unions. In
addition to the earlier central federations, that is, AITUC (1920) and INTUC (1947), other central
federations of trade unions, such as HMS (1948), UTUC (1948), BMS (1955), CITU (1970), NLO
(1972), UTUC-LS and TUCC came to be formed.With the formation of these central federations, the
process of establishment of trade unions at the plant, region and industry levels was also accelerated.
Along with the formation of trade unions at higher levels, the employers also started organizing and
formed their associations and federations As a result, joint negotiations and bargaining increasingly
took place not only at the plant or establishment level, but also at industry, regional and national
levels.
Formation of Industrial Committees
The post–Independence period also witnessed the formation of tripartite industrial committees to
deliberate on the problems of particular industries. In 1948, industrial committees for plantations,
coal mining, cotton textiles, cement, and tanneries and leather goods manufactories came to be
formed. Subsequently, industrial committees were established for some other industries
Code of Discipline: The code of discipline adopted by the Indian Labour Conference in 1958
inter alia provided important guidelines relating to recognition of trade unions for the
purpose of collective bargaining, settlement of industrial disputes, work-stoppages, redressal
of grievances and unfair labour practices . The code, which the parties committed themselves
to observe, has had a notable bearing on various aspects of industrial relations including
collective bargaining in the country.
Central Wage Boards The central wage boards, which came to be established on an ad hoc
basis since 1957, owe their origin to the recommendations of the second five-year plan which
observed, . An authority like a tripartite wage board, consisting of equal representatives of
employers and workers and an independent chairman will probably ensure more acceptable
decision. Such wage boards should be instituted for individual industries in different areas’.
In pursuance of these recommendations, tripartite Central Wage Boards came to be set up for
a number of organized industries such as cotton textile, sugar, cement, jute, tea plantation,
coffee plantation, rubber plantation, iron and steel, coal mining, iron ore mining, limestone
and dolomite mining, engineering, ports and docks, heavy chemicals and fertilizers, leather
and leather goods, electricity undertakings and road transport industry. All the wage boards
were required to work out wage structure for the industry as a whole, but some of them were
asked to deal with the questions of bonus, gratuity and hours of work also
Economic and Industrial Reforms
In 1991, the Government of India introduced basic changes in the economic and industrial
policies. The broad features of the new policy have been privatization, liberalization and
globalization. Some specific measures introduced in pursuance of these policies include
substantial reduction in the coverage of industries for licensing and those hitherto exclusively
reserved for the public sector, disinvestment of equity of selected public sector undertakings,
liberalization of trade policies, and rationalization of customs and excise duties. Entrepreneurs
were expected to become more competitive nationally and internationally. Most of the
measures adopted in pursuance of these policies have been opposed by trade unions, very
often, in combination, and they launched nationwide strikes and bandhs at frequent intervals.
Employers in general, welcomed the policy of privatization and liberalization. Despite
opposition from trade unions, the government continued to go ahead with the new measures.
Whatever might be the attitude of the trade unions and employers towards these
measures, the process of privatization, liberalization and disinvestment of selected public
sector undertakings continued. In view of these developments, the employers and their
organizations have been vigorously demanding corresponding reforms in labour laws and
less governmental intervention in industrial relations and personnel matters. Although the
new economic and industrial policies started coming into operation since 1991, no
corresponding amendments in labour laws were introduced.
It was only in 1999, that the Government of India appointed the second National
Commission on Labour, the terms of reference of which inter alia included, ‘to suggest
rationalization of existing laws relating to labour in the organized sector so as to make
them more relevant and appropriate in the changing context of globalization and opening
up of the Indian economy’. The Commission submitted its report in June 2002.
However, the impact of these developments is being noticed in certain specific areas with
which both the employers and trade unions are directly concerned. Fierce competition and
rapid technological changes have created the problem of redundancy on a very large
scale. Besides, the industries have to face problems relating to skill-development and
training, productivity and quality of products, retiral and unemployment benefits, and
industrial unrest.
With the diminishing role of the government in industrial and personnel management matters, the role
of collective bargaining and joint negotiations for solving labour issues in industrial enterprises, is
likely to become more prominent, but on a different footing.
HURDLES TO COLLECTIVE BARGAINING IN INDIA
Voluntariness in Recognition of Unions The recognition of trade unions for the purpose of bargaining
has continued to be voluntary. There is no statutory compulsion for the employers to recognize
representative unions. They are only under moral obligation to do so under the Code of Discipline.
Although the Industrial Disputes Act, 1947, has made refusal to bargain collectively by the employer
with a recognized union and for a recognized union with the employer an unfair labour practice, the
provision does not have much significance in the absence of statutory obligation to recognize
representative unions for the purpose of bargaining.
Recognition of trade unions compulsorily, and clear-cut definitions of the roles of recognized and
minority unions, will provide a sound basis for the growth of collective bargaining in the country. In
this regard, the first National Commission on Labour recommended, ‘It would be desirable to make
recognition compulsory under a central law in all undertakings employing 100 or more workers or
where the capital invested is above a stipulated size. A trade union seeking recognition as a bargaining
agent from an individual employer should have a membership of at least 30 per cent of workers in the
establishment.
The minimum membership should be 25 per cent if recognition is sought for an industry in a local
area’. The second NCL (2002) has recommended compulsory recognition of representative trade unions
and has worked out a comprehensive draft legislation covering various aspects of industrial relations.
Ineffective Procedure for the Determination of Representative Union
Even where the employers are willing to recognize the representative unions, the determination of
the representative character of unions often becomes a very difficult task. For this purpose, the
procedure of verification of membership has been widely used. The procedure of ‘secret ballot’, as
is widely followed in Western countries, is seldom used in India. There is no law on the subject in
the country. The problem has become more acute on account of fierce rivalries and factionalism
engulfing a large number of trade unions in the country. Outside Leadership in Trade Unions.
Outside leadership
In the Indian trade union movement has also been a contributing factor. a large number of
trade unions are dominated by outside leaders who are also active workers of one political party or
the other. The rivalry and factionalism of the political parties are also reflected in the trade unions
Provision of Elaborate Adjudication Machineries
A network of adjudication machineries established under the Industrial Disputes Act, 1947,
and some state acts in the form of Labour Courts, Tribunals, National Tribunals and Industrial
Courts, have been in operation for more than half a century. Under these laws, the
government is empowered to refer industrial disputes to these authorities, whether the parties
like it or not. The adjudication awards are binding on the parties. Resort to strike or lock-out
is prohibited during the pendency of disputes before these authorities and the period of
operation of the awards. A large number of disputes are referred to these authorities every
year and, during their pendency, it is very difficult for the parties to enter into negotiations.
Restrictions on Strikes and Lock-outs In collective bargaining, right to strike and lock-out is
considered essential as the last weapon in the armoury of workers and employers, respectively.
Collective bargaining without this right has little significance. In India, considerable restrictions
have been imposed on the exercise of this right under the Industrial Disputes Act, 1947 , state
industrial relations laws and also occasionally, enforced Essential Services Maintenance Act.
Experience of the working of the industrial relations in the country shows that majority of
strikes in the country have taken place in utter defiance of the statutory restrictions. On 3
August 2003, the Supreme Court has observed that ‘the trade unions, which have a guaranteed
right for collective bargaining, have no right to go on strike’, and that ‘government employees
have no fundamental, legal or moral right to go on strike.
Comprehensive Coverage of Labour Laws
A number of protective, social security and welfare laws have been in operation in the country.
These laws cover a wide range of subjects of direct interests of industrial workers such as hours
of work, physical working conditions, wages, social security benefits, protection of service,
personnel matters, welfare amenities and holidays, among others.
Inadequate Unionization
In India, only a small percentage of workers has been organized on a regular basis.
Available figures show that less than 15 per cent workers in India are organized, as against
about 40 per cent in the United States and around 50 per cent in Great Britain. Also, the
average size of Indian trade unions is very small when compared to the that of unions in the
United States, Great Britain, France and many other European countries. The financial
condition of the Indian trade unions is also poor. Moreover, organizations of workers at the
industry or regional level are confined only to few industries. These features are not
congenial for the growth of collective bargaining in the country.
Employer and Employee Rights and Responsibilities

Statutory rights are the result of specific laws or statutes passed by federal, state, or local
governments.
Rights are offset by responsibilities, which are obligations to perform certain tasks and duties.
Contractual Rights:
Contracts formalize the employment relationship. An employee’s contractual rights are based on a
specific contract with an employer.
Employment Contracts: Traditionally, executives and senior managers have negotiated individual
employment contracts, but they are now becoming more common for highly specialized
professional and technical employees who have scarce skills.
An employment contract is a formal agreement that outlines the details of employment. An
employment agreement should address all particulars of the employment relationship, including:
• Base pay and incentive compensation
• Basic and supplementary benefits and perquisites
• Key job functions and performance criteria
• Contract term
• Terms and conditions for terminating employment.
Companies are more likely to use a formal employment contract when employees are hired
from outside the organization rather than being internally promoted, the employment
situation is highly risky and uncertain, and compensation is unusually generous.
Noncompete Agreements
Employment contracts may include noncompete agreements, which prohibit individuals who
leave an organization from working with an employer in the same line of business for a
specified period of time. A noncompete agreement may be presented as a separate contract or
as a clause in an employment contract. Though primarily used with newly hired employees,
some firms have required current employees to sign noncompete agreements.
Intellectual Property An area often covered in employment contracts is protection of
intellectual property and trade secrets. A 1996 law made theft of trade secrets a federal
crime punishable by fines up to $5 million and 15 years in jail. Employer rights in this area
include the following:
• The right to keep trade secrets confidential
• The right to have employees bring business opportunities to the employer first before
pursuing them elsewhere
• A common-law copyright for works and other documents prepared by employees for their
employers. The primary objectives of using employment contracts to help protect trade
secrets are to notify workers that they will be privy to sensitive information on the job, to
limit employees’ discussion of trade secrets and competitive actions, and to indicate that
innovations made by employees on the job fall under the management and control of the
organization.
Implied Contracts
An implied contract is an unwritten agreement created by the actions of the parties involved.
Such promises establish employee expectations, especially if there has been a long-term
business relationship.
Rights Affecting the Employment Relationship
Employment at will (EAW) is a common-law doctrine stating that employers have the right
to hire, fire, demote, or promote whomever they choose, unless there is a law or a contract
to the contrary, and employees can quit at any time with or without notice.
An EAW statement in an employee handbook usually contains wording such as the
following: The Company does not offer permanent or guaranteed employment. Either the
Company or the employee can terminate the employment relationship at any time, with or
without cause, with or without notice. This is called Employment at Will.
This employment-at-will relationship exists regardless of any other written statements or
policies contained in this Handbook or any other Company documents or any verbal
statement to the contrary.
EAW and the Courts The courts have recognized certain exceptions to EAW as follows:
• Public policy exception: This exception to EAW holds that employees can sue if fired for a
reason that violates public policy. For example, an employee who was fired for filing a
complaint with OSHA can sue the employer.
• Implied contract exception: This exception to EAW holds that employees should not be
fired as long as they perform their jobs. Long service, promises of continued employment,
and lack of criticism of job performance imply continuing employment.
• Good-faith and fair-dealing exception: This exception to EAW suggests that a covenant of
good faith and fair dealing exists between employers and at-will employees. If an employer
breaks this covenant by unreasonable behavior, the employee may seek legal recourse. Over
the past several decades, many state courts have revisited and revised EAW contractual
provisions. Some courts have placed limits on the doctrine, including situations when
employers act harmfully toward workers.
Constructive Discharge
Closely related to wrongful discharge is constructive discharge, which is the process of
deliberately making conditions intolerable to get an employee to quit. Under normal
circumstances, an employee who resigns rather than being dismissed cannot later collect
damages for violation of legal rights. An exception to this rule occurs when the courts find
that the working conditions were made so intolerable as to force a reasonable employee to
resign. Dangerous duties, insulting comments, and failure to provide reasonable work are
examples of actions that can lead to a claim of constructive discharge.

Just Cause Just cause is reasonable justification for taking employment-related action. Union
contracts typically require an employer to provide a “good reason” for disciplinary actions
such as dismissal, but this protection does not exist in at-will situations. Even though
definitions of just cause vary, the overall concern is fairness. To be viewed by others as just,
any disciplinary action must be based on facts in the individual case. Violations of these
requirements can result in legal action.
Due Process
Due process, like just cause, is about fairness. Due process protects employees from
unjust or arbitrary discipline or termination. Due process occurs when an employer is
determining if there has been employee wrongdoing and uses a fair process to give an
employee a chance to explain and defend his or her actions. This typically involves
thoroughly investigating all employment actions and giving individuals an opportunity
to express their concerns to objective reviewers of the facts in the situation.
Organizational Justice
Organizational justice is the fairness of decisions and resource allocations in an
organization. Employees’ perceptions of fairness and justice in the workplace influence
their attitudes and behaviors.
Procedural justice is the perceived fairness of the processes used to make decisions about
employees.
Distributive Justice
Second, people obviously prefer favorable outcomes for themselves. They decide the
favorability of their outcomes by comparing them with the outcomes of others, given
their relative situations. This decision involves the concept of distributive justice, which
is the perceived fairness in the distribution of outcomes.
Interactional justice is the extent to which a person affected by an employment decision
feels treated with dignity and respect. Is an adequate explanation provided to explain the
decision?
Open door policy:
Numerous employers use an open-door policy, which allows workers who have a
complaint to talk directly to someone in management. However, this policy can be
mishandled, so union-free firms benefit from having formal complaint procedures that are
well defined to provide a more systematic due process for employees than do open-door
policies.
Alternative Dispute Resolution
1. Arbitration
2. Peer Review Panels
3. Ombuds Some organizations ensure process fairness through ombuds— individuals
outside the normal chain of command who act as independent problem solvers for
both management and employees.
Managing Individual Employee and Employer Rights Issues
1. Privacy Rights and Employee Records
The Privacy Act of 1974 was enacted to protect individual privacy right. It includes
provisions affecting HR recordkeeping systems. This law applies only to federal agencies
and to organizations supplying services to the federal government. However, similar laws
in some states, while somewhat broader in scope, have also been passed. For the most
part, state rather than federal law regulates private employers on this issue.
2. Employee Medical Records:The Health Insurance Portability and Accountability Act
(HIPAA) also includes regulations designed to protect the privacy of employee medical
records. Both paper and electronic files must be safeguarded. As a result of all the legal
restrictions, many employers have established several separate files on each employee.
Security of Employee Records: It is important to establish access restrictions and
security procedures for employee records to protect the privacy of employees and
protect employers from potential liability for improper disclosure of personal
information. Individuals’ Social Security numbers, personal addresses, and other
contact information should be protected.
Employees’ Free Speech Rights
Questions of free speech can arise over the right of employees to advocate
controversial viewpoints at work. Numerous examples can be cited. For instance, can
an employee of a tobacco company join in antismoking demonstrations outside of
work? Can a disgruntled employee at a union-free employer wear a union badge or a
cap at work? Can an employer discipline employees in these situations? The answer
is likely “yes” if the disciplinary actions can be justified by job-related reasons and
the company follows a due process procedure. In one U.S. case, a court ruled against
a white worker who displayed Confederate flags on his toolbox, which offended
some African-American employees. The court said that the worker’s free speech right
was not violated when the employer fired him for refusing to remove the flags
Whistle-Blowing and Employee Protection: Individuals who report real or perceived
wrongs committed by their coworkers or employers are called whistleblowers.
Several laws, such as the Sarbanes-Oxley Act and the Dodd-Frank Act, protect corporate
whistle-blowers.
For instance, the Sarbanes-Oxley Act is intended to remedy companies’ ethical breaches
by requiring organizations to properly report financial results, encouraging ethical
business practices, and providing protection for whistle-blowers.
The Dodd-Frank Act also protects whistle-blowers and provides financial incentives to
individuals who report wrongdoing. In addition to paying fines, a company that is found
guilty of retaliation is required to (1) reinstate the individual back to his or her job, (2)
provide back pay or double back pay to make up for lost compensation, and (3) cover
any costs associated with legal counsel.
Employers need to address two key questions in regard to whistle-blowing: (1) When do
employees have the right to speak out, with protection from retribution? (2) When do
employees violate the confidentiality of their jobs by speaking out?
Employee Rights and Personal Behavior Issues
Counterproductive Behavior:
Employers may decide to review unusual behavior by employees both on and off the job.
The occurrence of various counterproductive behaviors such as bullying, substance abuse,
stealing, and sabotage can potentially hurt companies and their employees.
Dress and Body Appearance Limitations Employers have put limits on employees’ dress
and appearance in some situations, including items such as visible tattoos, certain clothing
and accessories, and body piercings. Having a written dress policy is recommended to
ensure consistency, safety, and fair treatment. One industry in which dress and appearance
codes and policies are important is the food and beverage industry.
For instance, a pizza firm prohibits visible tattoos and many kinds of body piercing.
To comply with civil rights laws, special consideration should be given to assessing
religious or ethnic attire.
Weapons in the Workplace
Companies face a vexing situation regarding employees who legally own firearms and
believe they have the right to bring them to work. Highly publicized cases of employees
who open fire in the workplace, especially in response to being terminated, make
everyone aware of the dangers of weapons. Although U.S. citizens have a constitutional
right to bear arms, does that right transfer to the workplace? In private-sector workplaces,
it does not.
Employer Investigations
Conducting Work-Related Investigations: Workplace investigations can be conducted by
internal or external personnel. Often, HR staff and company security personnel lead
internal investigations. In the past, the use of outside investigators such as the police,
private investigators, or attorneys was restricted by the Fair Credit Reporting Act.
However, passage of the Fair and Accurate Credit Transactions (FACT) Act changed the
situation, and now employers can hire outside investigators without first notifying the
individuals under investigation or getting their permission.
Laws Addressing Drug Testing: The ADA specifies that alcoholism is a disability but that
dependency on illegal drugs is not. Individuals in treatment or in a recovery program for
an addictive substance are protected by provisions in the ADA. However, employees who
are not capable of working because they are under the influence, have poor attendance
records, or are poor performers regardless of their drinking and/or drug problems are
subject to disciplinary action.
In India It is not compulsory for an employer to conduct employee drug testing. In order
to test job applicants/employees for substance abuse, the concerned individual must be
handed an offer letter first. Where permitted by law, candidates may be screened.
In India, the Narcotic Drugs & Psychotropic Substances Act, 1985, says that drug (236
substances banned under NDPS) sale, possession and consumption of any amount are
criminal offences.
Termination Issues:
Terminations occur for a wide range of reasons. For instance, excessive violations of
attendance policies commonly lead to employee terminations.
Other causes involve breaking company rules, behavioral issues such as sexual
harassment and other unethical acts, and poor execution of work-related duties.
Misconduct due to substance abuse and addiction can also lead to termination,
particularly in jobs that require driving.
Terminating an employee should be done face-to-face. Using email or voicemail to
terminate an employee is too impersonal but may be necessary when dealing with remote
workers. Another concern is when managers must terminate potentially violent
employees.
Managers must be careful not to move forward with these terminations too hastily, and
they should get assistance from individuals in security, HR, and legal counsel when
handling such cases. Utilizing an employee assistance program (EAP) professional can
also help defuse a potentially violent situation
One difficult phase of employee termination is the removal of dismissed employees and
their personal possessions from company facilities. The standard advice from legal experts
is to physically remove the employee as quickly as possible. Ex-employees are often
escorted out of the building by security guards. Some firms allow terminated employees to
return to their desks, offices, or lockers to retrieve personal items under the observation of
security personnel and the department supervisor/manager, but this means the ex-employee
may be seen by and talk to coworkers while still upset or angry. It is unwise to give
terminated employees access to computer systems or company databases after they are
terminated, so HR should work closely with IT to immediately block ex-employees’ sign-
on credentials.
Separation Agreements In some termination situations, formal contracts may be used. One
type is a separation agreement, an agreement in which a terminated employee agrees not to
sue the employer in exchange for specified benefits, such as additional severance pay or
other consideration. For such agreements to be legally enforceable, the consideration is
usually additional benefits not part of a normal termination package
Companies have every right to protect their intellectual property and trade secrets. In fact, they have a
responsibility to shareholders to do so because this proprietary information is often the source of competitive
advantage. Careful safeguarding of secrets is an important part of ensuring the sustainability of the firm. But
what exactly qualifies as a trade secret?
For instance, one fast food company advertises its “secret sauce,” and a producer of baked beans’ “secret
family recipe” has been widely featured in its television commercials. Would anyone argue that the search
algorithm developed and used by Google is a trade secret? Probably not. Trade secrets are pretty broadly
defined and can include things like customer lists, recipes, formulas, and software. So, is a sandwich recipe a
trade secret? Jimmy John’s management certainly thinks so. The recipe consisting of a quarter pound of
roast beef with provolone cheese on a pita is a trade secret in the company’s eyes. The New Jersey–based
sandwich company requires all of its workers—including entry-level workers who are earning starting
wages—to sign a stringent “noncompetition” clause as part of the hiring process. When employees sign the
agreement, they agree not to work “at any business which derives more than 10% of its revenue from selling
submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches.” That would seem to cover an
awful lot of establishments, from direct competitors in the food industry to the gas stations, convenience
stores, and the neighborhood hospital cafeteria. Former employees are prohibited from working in such a
place for two years after they leave Jimmy John’s employment. The geographic limit is set at three miles of
either the Jimmy John’s location where the individual previously worked or any other Jimmy John’s shop
(there are 2,000 U.S. store locations). That’s a fairly broad swath of geography. Because Jimmy John’s
operates in 43 states, it is difficult to state without exception that the noncompete clause would not be upheld
in a court proceeding. However, most legal experts believe that it is overly broad and the company would be
unlikely to prevail in a lawsuit. It hasn’t been tested in court yet.
Why would a company implement and require such a tough restriction on low-wage
workers? That is anybody’s guess, and the company’s management wouldn’t respond
to reporters who uncovered the story. So, we can only speculate on why such a policy
exists. Lawmakers have become interested in the case because it appears to almost
border on intimidation and bullying of workers. Companies are certainly free to set
policies and practices to protect legitimate business concerns. But it seems to be a
stretch to consider meat, cheese, and bread as anything special that needs the special
protection of a noncompete agreement.
Question. Based on your understanding of this case, what possible reasons could
Jimmy John’s management have for adopting this policy? If you were the HR
manager at Jimmy John’s, what pros and cons would you point out to management in
terms of the effect of having this policy?
CHAPTER 5
Predictive HR analytics defined:
The systematic application of predictive modelling using inferential statistics to
existing HR people related data in order to inform judgements about possible causal
factors driving key HR-related performance indicators.
 HR INFORMATION SYSTEMS AND DATA

HR Information Systems:
1. HR Data Base (Such as SAP or Oracle)
Example: Age, gender, education, salary, performance ratings, disabilities, tenure,
sickness, absence, country location etc.
2. Employee attitude survey data
Example: Job strain level, employee engagement, job satisfaction and perception of
justice.
3. Customer satisfaction survey data
Customer ratings on specific services
4. Sales performance data
Examples: Average monthly sales, Number of new customers introduced,
Operational performance data:
Examples: Supermarket scan rates, average number of calls dropped out, average
number of queries resolved on first contact, time taken to onboard a new customer.
Analysis Software Options:
1. SPSS
2. Minitab
3. SAS
4. R
5. JASP
6. Python
Statistical significance
The basic idea behind statistical significance is linked to hypothesis testing. This involves
developing a research hypothesis and what is called a null hypothesis . To test the
research hypothesis, we carry out particular statistical analysis on the associated data and
obtain a test statistic. The test statistic then tells us whether a particular patten of results
can be relied upon and if it is robust enough for us to make various assumptions about
what is going on in our population or whether it is more likely that we came by our
particular set of findings by chance alone.
If there is strong evidence from our data that there is something really meaningful going
on and our test indicates that a finding is unlikely to have occurred by chance alone, we
would say that we have grounds to reject the null hypothesis in favor of a research
hypothesis.
Example
Research Hypothesis : attendance at a customer – service training course by sales
employee will increase customer satisfaction survey scores.
Null hypothesis: attendance at customer service training course by sales employees will
have no impact on customer satisfaction survey scores.
The statistical test would produce a test statistic, from which we could determine whether
the result is statistically significant. If the test did indicate ‘statistical significance’ we
would have grounds to reject the null hypothesis.
The criterion used for testing significance is 95 percent confidence. So if we can be at least
95 percent confident that the pattern of data would be unlikely to occur by chance . We
would say that the finding is statistically significant.
A 5 percent likelihood is presented as 0.05 probability . This is called a p-value. So,
p<0.05.
Examples of key HR analytic metrics.
Predictive HR analytics experts do not have standard metrics or measures that are
always used-each project is likely to have indicators and measures specific to the
project. However, there are key metrics that any HR analyst should be familiar with.
Some examples are given below:
1. Recruitment metrics
Cost per hire: Recruitment budget in a given period divided by the number of
employees hired in a given period.
2. Employee flows
Which involves calculation of number of members who left during period divided by
the average number of members during this period.
Turnover costs
Assumptions will often be made when calculating this; the actual cost of replacing a member
of staff may include the cost per hire. A calculation should be included to incorporate the
cost of induction as well as training. More advanced metrics should include cost of lower
productivity of the joiner.
Revenue metrics
The measures here will vary depending on the context. A key metric might involve measures
of revenue/income over time relating to certain units (with each employee or average per
employee or a total or average per team.
Performance Metrics
Example indices include performance appraisal ratings, peer feedback, sales figures, calls
speed, call numbers.
Productivity oriented metrics
Important with these is that a measure of output over time (hour/day/week) associated with
particular units (with each employee /total or average per unit).
Sickness absence
It includes an indication of the number of days sick over a given time (per
week/month/year)relating to identified units (average per employee/average per team).
Analytics team can also use sickness absence rates at organizational level( the percentage of
annual days lost due to sickness (total days lost x average cost of a working day in the
organization).
Engagement metrics:
There are many ways to measure engagement .Engagement measures are generally
tapped at the individual level. It involves an average score per unit (work unit such as a
team).
Types of data
Categorical variable types.
A categorical data is one that is made up of categories. For example, we talk about ‘role
level’ in the diversity case study when analyzing the prevalence of women in the senior
level roles. The role levels existing in the organization are ; clerical; administrative,
consultant, senior consultant, principal consultant and partner. Each employee is one or
the other , there is no overlap. There is no immediate quantitative or numerical value.
And clearly because these types of variables have no numerical value it is not possible to
add, subtract, multiply or divide them.
Binary variable
Binary variables are categorical variables that are unique in that they name only two
distinct entities or idea. Binary variables are also referred to as binomial or dichotomous.

Nominal variable
Nominal variables are categorical variables that name three or more distinct entities.
They are in no particular order and each value is mutually exclusive.

Ordinal variables
It is a categorical data for which there is a meaningful order. So it increases or decreases
in order
For Example:
Role Level: 1) Graduate 2) Consultant 3) Senior Consultant 4) Managing Consultant 5)
Vice Principal.
Because they are names only, we cannot perform any arithmetic on them.
Continuous Variables types
There are two types of continuous variables:
Interval variables and ratio variables.
Interval data is measured on a numeric scale. The numbers are continuous – so as well as
knowing the order, interval data records the exact value. This means that, unlike ordinal
data where there is a limited set of responses, with interval data the value could be
anything on scale.
Daily temperature: Some examples might be 21.4, 37.8, 16.0 etc. it could take any value
on a temperature scale.

Start Date: Some examples might be 6/6/2019, 28/9/2013, 4/5/2021

We can measure the difference between two dates, we cannot add or multiply this data.
We have the ability to quantify the difference between each value. Interval data lacks a
zero starting point, which makes comparison of the magnitude not possible.
Ratio Variable: Ratio data is similar to interval data in that it is a continuous numerical
value but unlike interval data there is a defined zero point.
e.g; Annual salary, Height, Weight.
These values are meaningful numerically and can be added, subtracted, divided and
multiplied
Dependant variable Independent variables Analysis test What type of question is it trying
to explore?

Categorical Categorical and only one IV Chi-Square analysis It explores whether the frequencies
and the proportions found across
categories might vary or be linked to
another category

Continuous or together continuous Logistic regression analysis Logistical regression analysis

and categorical attempts to predict the likelihood of
something in particular
occurring( Whether someone leaves
the organization or stays) based on
possible characteristics
Dependant variable Independent variables Analysis test What type of question is it trying to
explore?

Continuous DV (Interval or Ratio and Categorical Binary IV Independent Samples t-test It explores whether two groups of data differ
sometimes Ordinal) on some dimension?

2-Category -Time Based Paired sample T-test It explores whether two separate times of
Binary IV-Group A at time 1 data collection of the same group differ or
versus Group A at Time 2 are the same across time
Dependant variable Independent variables Analysis test What type of question is it trying to explore?

Continuous DV (Interval or Ratio and Categorical IV with three or more One-way independent ANOVA It explores whether three or more groups of data
sometimes Ordinal) groups differ on some continuous dimension, eg are the
HR function’s employees more engaged than
those from finance or marketing.

Category -Time based IV with One-way repeated measures It explores whether three or more separate times
three or more time points (Group ANOVA of data collection differ or are same across time.
A at time 1 versus Group A at
Time 2 versus Group A at Time 3

Continuous DV and only one

other continuous IV If you want to look at the degree to which two
continuous variables are related in some way; the
co-relations explore the relationship between two
Perason’s Corelation or simple variables; with simple regression you might be
linear regression making some assumptions about which variable
could be caused or predicted by the other.
Dependent variable Independent Analysis Test What type of
Variable question is it trying
to explore
Continuous DV Time based Repeated measures It explores whether
(Interval or Ratio-and categorical IV with ANOVA. two or more separate
sometimes ordinal) two or more time The DV metric will times of data
points –Time one have been collected collection differ –has
versus time 2 in on more than two there been a change in
combination with one occasions with the some metric over
or more categorical same objects but the time. This approach
IVS (eg; Gender) sample can be broken also enables you to
into one or more other explore whether
category various comparator
groups vary in the
degree to which each
differs across time.
( male vs female;
received training vs
not; HR vs MKT vs
Finance)
Dependent variables Independent variables Analysis Test Which type of question
is it trying to explore

Two or more continuous Multiple regression To predict and account for

IVs (linear) a variation in a continuous
dependent variable by
exploring the degree to
which two or more other
causal factors /IVS share
variance with this DV.
Might the variation in$
sales an employee
achieves in a week be
linked with the number of
hours worked or age of
employee
Dependent variables Independent Analysis Test Which type of
variables question is it trying
to explore

Continuous DV Both Categorical and Multiple regression Multiple regression:

(Interval or Ratio-and continuous IVS (linear) as above-with the
sometimes ordinal) difference that some
of the IV’s included
represent the
membership of a
particular category or
group . If the number
of categories is above
2 than dummy
variables have to be
created.