CHAPTER 7 Employee Relations Purpose and Perspective This chapter focuses on the delicate balance of power, responsibility, and accountability that resides in the relationships a company develops with employees. First, we explore the many issues related to the social responsibilities employers have to their employees, including the employee-employer contract, workforce reduction, wages and benefits, labor unions, health and safety, equal opportunity, <a href="/keyword/sexual-harassment/" >sexual harassment</a> , whistle-blowing, diversity, and work/life balance. In these sections, we discuss a number of significant laws that affect companies' human resources programs. Finally, we look at the concept of employer of choice and what it takes to earn that designation. Lecture Outline I. Employee Stakeholders There are many issues that may seem subtle and, at times, unimportant but are related to the responsibilities that employees, government, and other stakeholders expect of employing organizations. Responsibilities to Employees A. Economic Issues 1. Employee-Employer Contract a. There has been a dramatic shift in the contract that exists between employee and employer. b. A psychological contract is largely unwritten and includes the beliefs, perceptions, expectations, and obligations that comprise an agreement between individuals and the organizations that employ them. (1) When promises and expectations are not met, a psychological contract breach occurs and employees may become less loyal, inattentive to work, or otherwise dissatisfied with the employment situation. (2) When employers present information in a credible, competent, and trustworthy manner, employees are more likely to be supportive of and committed to the organization. c. The relationship between employer and employee has evolved greatly since the late 1800s. (1) Until the early 1900s, the relationship between employer and employee was best characterized as a master-servant relationship. (2) In the 1920s and 1930s, employees assumed a relationship with employers that was more balanced in terms of power, responsibilities, and obligations. (3) The 1950s brought criticism of white-collar work as being draining on employees' time, energy, and personalities. (4) Organizational researchers and managers in the 1960s began to question authoritarian behavior and consider participatory management styles that assumed employees were motivated and eager to assume responsibility for work. (5) A study done in the 1970s confirmed that employees wanted interesting work and a chance to demonstrate their skills through increased participation, freedom, and democracy at work. II. B. By the 1980s, a family analogy with a focus on employee welfare and business ethics was being used to describe the workplace. (7) The total quality management (TQM) movement increased empowerment and teamwork on the job throughout the 1990s and led the charge toward workplaces simultaneously devoted to employee achievement at work and at home. (8) Cost-cutting necessary for global competitiveness in the 1990s effectively ended the loyalty and commitment-based contracts that employees had developed with employers. 2. Workforce Reduction a. Workforce reduction is the process of eliminating employment positions b. This strategy, sometimes called downsizing or rightsizing, usually entails employee layoffs, terminations, incentives for early retirement, and hiring freezes. The strategy is sometimes necessary in a highly competitive business environment. Table 7.2 lists three common downsizing tactics, including workforce reduction, organization redesign, and systemic redesign. c. This may have profound implications for the welfare of employees, their families, and the economic prospects of a geographic region and other constituents, as well as for the corporation itself. d. The impact of the workforce reduction process depends on a host of factors, including corporate culture, long-term plans, and creative calculations on both quantitative and qualitative aspects of the workplace. (1) A comprehensive plan must be developed that takes into account the financial implications and qualitative and emotional toll of the reduction strategy. (2) The organization should assist employees who must make a career transition as a result of the reduction process. e. Companies must be willing to accept the consequences of terminating employees, including the loss of intellectual capital. f. While workforce reduction has negative effects, it has also shifted the psychological contract and power between employee and employer, and therefore employees can potentially mitigate the onset and impact of downsizing. (1) All employees should understand how their skills and competencies affect business performance. (2) Employees should strive for cost-cutting and conservation strategies regardless of the employer's current financial condition. (3) Employees should be able to fulfill diverse and varying roles within the organization. Legal Issues In the past, employment was primarily governed by the concept of employment at will, a common-law doctrine that allows either the employer or employee to terminate the relationship at any time so long as it does not violate an employee contract. Today, laws and statutes may limit total discretion in this regard. (6) 1. Wages and Benefits 2. 3. 4. The Fair Labor Standards Act (FLSA) of 1938 prescribed minimum wage and overtime pay, record keeping, and child-labor standards for most private and public employers. (1) The federal government periodically revises the minimum wage. (2) Most employees (other than executives, outside salespeople, administrators, and professionals) must be paid overtime for more than forty hours of work per week. (3) The FLSA also put restrictions on child labor. b. The Employee Retirement Income Security Act (ERISA) of 1974 set uniform minimum standards to assure that employee benefit plans are established and maintained in a fair and financially sound manner. (1) A key provision relates to vesting, the legal right to pension plan benefits. c. The Family and Medical Leave Act (FMLA) of 1993 requires certain employers to provide up to twelve weeks of unpaid, job-protected leave to eligible employees for certain family and medical reasons. Labor Unions a. The National Labor Relations Act (NLRA) of 1935 legitimized the rights of employees to engage in collective bargaining and to strike. Health and Safety a. In 1970, the Occupational Safety and Health Act (OSHA) sought to ensure safe and healthy working conditions for all employees by providing specific standards that employers must meet. b. The Occupational Safety and Health Administration, also known as OSHA, oversees these regulations and has significant power. (1) OSHA recently proposed rules to increase employer responsibility for ergonomics, the design, arrangement, and use of equipment to maximize productivity and minimize fatigue and physical discomfort. c. An emerging issue in the area of health and safety is the increasing rate of violence in the workplace, which can be divided into three categories. (1) Crimes are committed by strangers and intruders in the workplace. (2) Violent acts are committed by nonemployees, such as customers, patients, students, and clients, who have expected or normal contact with employees. (3) Finally, coworkers commit violence against one another often as a result of disagreements and stress in the workplace. Equal Opportunity a. Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of race, national origin, color, religion, and gender. b. Other legislation has been passed to prohibit discrimination related to pregnancy, disabilities, age, and other factors. c. To ensure that they build balanced workforces, many companies have initiated affirmative action programs, which involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, sex, or other characteristics. a. d. 5. 6. Affirmative action programs must be carefully implemented. (1) There must be a strong reason for developing an affirmative action program. (2) Affirmative action programs must apply only to qualified candidates. (3) They must be limited and temporary, and therefore cannot include &quot;rigid and inflexible quotas.&quot; e. The Equal <a href="/keyword/employment-opportunity-commission/" >employment opportunity commission</a> (EEOC) monitors compliance with Title VII. <a href="/keyword/sexual-harassment/" >sexual harassment</a> a. The government describes <a href="/keyword/sexual-harassment/" >sexual harassment</a> as follows: &quot;Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitutes <a href="/keyword/sexual-harassment/" >sexual harassment</a> when submission to or rejection of this conduct explicitly or implicitly affects an individual's employment, unreasonably interferes with an individual's work performance, or creates an intimidating, hostile, or offensive work environment.&quot; b. There are two general categories of <a href="/keyword/sexual-harassment/" >sexual harassment</a> : quid pro quo and hostile work environment. (1) Quid pro quo <a href="/keyword/sexual-harassment/" >sexual harassment</a> is a type of sexual extortion, where there is a proposed or explicit exchange of job benefits for sexual favors. (2) Hostile work environment <a href="/keyword/sexual-harassment/" >sexual harassment</a> is less direct than quid pro quo harassment and can involve epithets, slurs, negative stereotyping, intimidating acts, graphic materials that show hostility toward an individual or group, and other types of conduct that affect the employment situation. c. Recent U.S. Supreme Court decisions on <a href="/keyword/sexual-harassment/" >sexual harassment</a> have helped to interpret the realm of responsibility for <a href="/keyword/sexual-harassment/" >sexual harassment</a> . (1) Employers are liable for the acts of supervisors. (2) Employers are liable for <a href="/keyword/sexual-harassment/" >sexual harassment</a> by supervisors that culminates in a tangible employment action (loss of job, demotion, etc.). (3) Employers can be liable for a hostile environment created by a supervisor in certain situations. (4) Finally, claims of hostile environment <a href="/keyword/sexual-harassment/" >sexual harassment</a> must be severe and pervasive in order to be viewed as actionable by the courts. Whistle-blowing a. An employee who reports individual or corporate wrongdoing to either internal or external sources is considered a whistle-blower. b. Whistle-blowers have been retaliated against, demoted, fired, and even worse; therefore, legislation has been enacted to protect those who report illegal behavior. Ethical Issues 1. Training and Development a. Firms that value employees as individuals often fund initiatives to develop employees' skills, knowledge, and other personal characteristics. b. Professionals appreciate and respect a training and development focus from their employers. c. Through formal training and development classes, workers get a better sense of where they fit and how they contribute to the overall organization. d. Training and development activities require resources and the commitment of all managers to be successful. 2. Diversity a. Initiatives in workplace diversity focus on recruiting and retaining a diverse workforce as a business imperative. With diversity programs, companies assume an ethical obligation to employ and empower individuals regardless of age, gender, ethnicity, physical or mental ability, or other characteristics b. Many firms embrace employee diversity to deal with customer and supplier diversity. c. Although workplace diversity reaps benefits for both employees and employers, it also brings challenges that must be addressed. d. Conflicting views and voices of different generations abound in the workplace today, creating a special focus on generational differences and their effect on workplace behaviors. e. The diversity message will not be taken seriously unless top management and organizational systems fully support a diverse workforce. 3. Work/Life Balance a. Increasing numbers of women in the workplace have brought challenges in work/life balance. b. This balance is not just an issue for women; men also have multiple roles that can create the same types of stress and conflict. c. Work/life programs, which are characterized by flexibility, assist employees in balancing work responsibilities with personal and family responsibilities. d. In developing a work/life program, companies need to consider their employee base and the types of support they are likely to need and appreciate. D. Philanthropic Issues 1. In social responsibility, philanthropic responsibilities are primarily directed outside the organization, so they are not that focused on employees. 2. However, employees benefit from participating in volunteerism and other philanthropic projects. III. Strategic Implementation of Responsibilities to Employees A. A company's responsibilities toward employees are varied and complex. B. An employer of choice is an organization of any size in any industry that is able to attract, optimize, and retain the best employee talent over the long term. C. One traditional way of strengthening employee-employer relationships is through employee stock ownership plans (ESOPs). D. Best practices of employers of choice include activities to foster openness, community, creativity, loyalty, responsibility, individuality, and teamwork. C.