Human Resource Employment Systems

1. Human Resource Employment Systems HR Management MBAO 6030 MBAO 6030 Human Resource Management

2. Human Resource Employment Systems Human Resource Employment Systems control: • HR inflows • HR internal flows • HR outflows In terms of the quantity, quality and speed of deploying Human Resources where they are needed. MBAO 6030 Human Resource Management

3. Entry Level Human Resource Employment Systems In and Out System MBAO 6030 Human Resource Management

4. Entry Level Human Resource Employment Systems Up and Out System MBAO 6030 Human Resource Management

5. Entry Level Human Resource Employment Systems Lifelong System MBAO 6030 Human Resource Management

6. HR Employment Systems Work Configuration Choices: Job or Work? • Full-time Job • Contingent Job – part-time, temp, or intern • Work – independent contractor or outsource service MBAO 6030 Human Resource Management

7. HR Employment Systems Employment-At-Will • Legal principle that assumes either party in employment relationship enters it voluntarily and can terminate it or any reason or no reason • U.S. courts accept with some exceptions • Outside U.S. it is not widely accepted MBAO 6030 Human Resource Management

8. HR Employment Systems Employment-At-Will Exceptions (based on case law) • Implied ContractExample: promise of job security in job interview or explicit guarantee of “just cause” standard of evidence for termination in employee handbook. • “Good faith and fair dealing”Employer cannot act in bad faith or malice when discharging employee • Public policy exceptionEmployees enjoy statutory rights that cannot be denied, such as filing workers’ compensation claims, jury duty, or whistleblower disclosures (some state laws). MBAO 6030 Human Resource Management

9. HR Employment Systems Legal Restrictions on Employee Activity in Labor Market • Non-compete • Non-disclosure • Non-solicitation MBAO 6030 Human Resource Management

10. Social capital Firm Specific Knowledge Seniority Privileges Re-location costs HR Employment Systems Transaction costs to Changing Jobs: Why employees need a Minimum Wage Premium to change jobs MBAO 6030 Human Resource Management

11. HR Employment Systems Critical Thinking Questions: • Lifelong employment systems have many benefits. Yet why are many U.S. firms that have previously adopted these policies, now deciding to abandon them or greatly restrict their scope to employees? (Ex. IBM, HP, AT&T, etc). • What type of employees are most vulnerable to an employer’s use of Employment-At-Will in the market? Which employees are least vulnerable? What remedy do these differences suggest? MBAO 6030 Human Resource Management

12. HR Employment Systems What is an “Efficient” Employment Relationship? • Lack of barriers to the re-deployment of labor – implying a flexible labor force • Incentives for the firm to invest in human capital • Employees willing to make tradeoffs between their own self-interest and for the common good of the firm – random acts of “merit” MBAO 6030 Human Resource Management

13. Benefits Amortize recruiting costs Amortize training costs Accurate assessment of employee abilities/perf. Accurate view of employee fit & motivation Employee loyalty is cultivated Flexible employee responses to change Maintains strong cultures Costs Less flexible for cutting labor costs Greater difficulty in getting rid of poor fit or poor performing employees Takes more effort to learn from the external market HR Employment Systems Costs and Benefits of Long-term Employment MBAO 6030 Human Resource Management

14. HR Employment Systems Critical Thinking Questions • Under what kinds of circumstances may an employer find it rational to exploit its employees? Can you give an example of this? MBAO 6030 Human Resource Management

15. HR Employment Systems: Justice Being treated fairly is important to all employees and is a way to evaluate the quality of the implementation of effective HR policies. Distributive Justice – fairness of the outcomes that are experienced by employees (pay, resources, etc.) Basis of distributive Justice: • Equity – outcomes in proportion to the inputs • Equality – everybody receives equal outcomes • Need - outcomes in proportion to need MBAO 6030 Human Resource Management

16. HR Employment Systems: Justice Procedural Justice – fair procedures can influence the perception of fair outcomes. Unattractive outcomes will be more readily accepted when they are reached by applying procedural justice. This is a critical element of all HR policies. Examples: • Valid criteria used to evaluate performance • Give prior notification for change of a policy • Avoid conflicts of interest (e.g., nepotism) • Competent decision makers or judges • Employee input is sought out and utilized • Opportunity to appeal unfavorable decisions MBAO 6030 Human Resource Management

17. HR Employment Systems: Justice Critical Thinking Question: • What aspects of fair procedures would you be concerned about when applying discipline to an employee? MBAO 6030 Human Resource Management

18. HR Employment Systems: Employee Voice Possible employee reactions to a dissatisfying outcome are: • Exit • Voice • Loyalty • If the outcome is unfair, loyalty is not likely, and voice allows you to retain a good employee. • Individual voice vs. Collective voice: Employees are more likely to to voice their opinions when they feel secure as being a member of an organization that protects the rights of employees such as a union. MBAO 6030 Human Resource Management

19. HR Employment Systems: Employee Voice Why Do Employees Join Unions? • Formal means to have voice in firm governance • To improve their economic welfare • Employee advocate for justice and fairness What do Employees give up when they join a union? • Individuality – “free agent” or market solution • Union dues • Requirement to share the burden of collective disputes, such as strikes and picket activity MBAO 6030 Human Resource Management

20. HR Employment Systems: Union Impacts Union Impact on Management • Higher wages and benefits for union employees • Seniority used to determine work assignments, promotions, transfers, shifts, layoffs, rewards) • More formalized work rules in labor contract • Lower employee turnover rates • Formal grievance procedure ending in arbitration • Increased propensity for strikes • Loss of management power • Mixed impact on productivity and profits MBAO 6030 Human Resource Management

21. HR Employment Systems: Union Impacts Critical Thinking Question • How does the union act as a stimulus to improve employee productivity? Explain how this can be possible, despite the fact that unions use their bargaining power to pressure the employer to improve the economic benefits to the employees. MBAO 6030 Human Resource Management

22. HR Employment Systems: High Commitment HR High Commitment Human Resource Management System characteristics: • Employees work for best interests of the organization based on understanding those interests • Employees are flexible in how they are deployed • Employees are fully engaged – both physically and mentally and their ideas and opinions are solicited and used. MBAO 6030 Human Resource Management

23. HR Employment Systems: High Commitment HR Means to Achieve High Commitment HR System • Emphasis on teamwork • Information sharing and open communication • Egalitarian approach with few status distinctions • Employees share rewards in firm’s financial success • Significant employee contributions are recognized and celebrated • Extensive screening of prospective employees • Employment security is provided to employees • Broadly defined job roles MBAO 6030 Human Resource Management