Human Resources Management (eBook) : Meeting Other HR Goals

Human Resources Management (eBook) :
Meeting Other HR Goals
Lesson 5 Overview
Lesson 5 explores two other
important HR considerations
—collective bargaining and
labor relations and global
HR management—and
concludes with a summary
of how effective investment
in HRM and highperformance work systems are strategically imperative for
organizations. Chapter 15 explores HR activities in organizations where
employees belong to unions or are seeking to organize unions. It
describes the scope and impact of union activity and summarizes
related government laws and regulations. Chapter 16 begins by
describing how the global nature of business is affecting HRM in
modern organizations, and moves on to exploring how global differences
among countries affect an organization’s decisions about HR. The
lesson, and the course, ends with Chapter 9, which summarizes the role
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 1
of HRM in creating an organization that achieves a high level of
performance—measured in terms such as quality, long-term profits, and
customer satisfaction.
5.1 Summarize the scope and impact of union activity,
labor relations, and related government laws and
regulations on HRM
Collective Bargaining and Labor Relations
Read this section. Then, read Chapter 15 in your textbook.
Role of Unions and Labor Relations
The capitalist system originated in trade. As early as the 1600s, English
and Dutch merchants would buy shares in overseas trading ventures.
The shares would represent the value of the cargo or merchandise to be
traded or sold in distant markets. Profits on trade ventures were
distributed depending on the values of the shares held by the investors.
However, the modern labor movement originated as an international
response and reaction to the capitalist excesses of the Industrial
Revolution. As factories began to produce goods at an unprecedented
rate, antagonism arose between workers and management. It was in the
shareholders’ interest to pay workers as little as possible. It was in the
workers’ interest to strive for fair wages based on the market value of
their labor. In fact, at the outset of the Industrial Revolution, wages were
near abject poverty and working conditions were dismal. Child labor was
abused, worker safety provisions were weak or lacking, and 16-hour
days were common.
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In the United States and elsewhere, the labor movement was a gradual
and often bloody process of redress for these kinds of conditions. The
central feature of the movement became the organization of workers
into unions. As labor unions became a force, universities began training
managers in the field of labor relations. Labor relations involves three
levels of decisions:
Labor relations strategy: Organizations must decide if they’ll work
with unions or develop their business with nonunion workers.
Negotiating contracts: If unions are to represent company workers,
decisions must be made in negotiating labor contracts. Contract
issues include pay, working conditions, and benefits.
Administering contracts: The terms of labor contracts must be
enforced—both by union leaders and managers. Decisions must be
made about how that will be done.
National and International Unions
Craft unions have a long history. In medieval times, carpenters, stone
masons, metalsmiths, shoemakers, artists, and other trades were
organized under craft guilds. The guilds used an apprentice system to
train artisans and protect the guild’s market share. Craft unions work to
restrict artisan licensing under performance codes that justify and
maintain high wages. Conversely, industrial unions aim at organizing
large numbers of workers with a variety of occupations to influence
Earlier in the labor movement, most union members in the US worked
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for private-sector manufacturing, mining, and refining industries. Today,
most national unions are affiliated with the American Federation of
Labor and Congress of Industrial Organizations (AFL-CIO). The AFLCIO isn’t a union. It’s an association of unions formed to influence
business associations like the National Chamber of Commerce and the
National Association of Manufacturers. In 2005, several unions broke
away from the AFL-CIO to form an alliance called Change to Win. This
group, including four unions, represents more than 5.5 million workers.
Local Unions
Most national unions consist of local units. For example, CWA Local
2101 is part of the national CWA union of public and private
telecommunications workers and is based in Baltimore, MD. However,
local membership depends on the type of union. The jurisdiction of a
craft union might cover a city or region. An industrial union local may be
associated with a single large facility or several smaller enterprises in a
specific locality.
Union local members participate in union business in various ways.
They elect local officials, vote on proposals to strike, approve or
disapprove specifics of a labor contract under negotiation, and, typically,
elect a union steward. The union steward serves as a contact and
mediator between workers and management. Union local members can
go to the steward with complaints or questions. In turn, the steward will
communicate these reports to management.
Trends in Union Membership
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In the United States, union membership peaked in the 1950s. It’s been
declining ever since. Factors contributing to the decline in union
membership include the following:
Changes in the structure of the economy
Management efforts to control costs
Human resources practices
Government regulation
Figure 15.1 in your textbook graphs trends in US union membership for
wage and salary earners. Note that as overall union membership has
declined, union membership in the public sector has increased
remarkably. On the next page, Figure 15.2 compares union membership
in selected countries. The graph percentages measure union
membership and coverage. Coverage refers to the extension of unionstandard benefits to people who may or may not be union members. In
the United Kingdom and Canada, both union membership and coverage
are more than twice that of the United States. Although union members
are a small share of the US workforce, they’re a significant part of the
labor market for some industries. The “Did You Know?” feature in your
textbook presents some statistics on current US union members.
Unions in Government
Over one-third of government workers are union members, and a large
share are covered by collective bargaining agreements. The American
Federation of State, County, and Municipal Employees (AFSCME) has
more than 1.6 million members. Members include working and retired
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nurses, park rangers, school librarians, corrections officers, and many
other white-collar and clerical workers.
One reason that government union membership remains strong is that
regulations and laws support the right of government workers to
organize. Executive Order 10988 of 1962 established collective
bargaining rights for federal employees. By 1970, most states had
passed similar laws. Strikes are illegal for federal workers and state
workers in most states. At the local level, there are some exceptions,
with teachers and public service workers more likely to have the right to
strike, depending on the state.
Impact of Unions on Company Performance
Unions have both negative and positive effects on an organization’s
performance. However, most studies have found union workers to be
more productive than nonunion workers. Also, unions have been an
effective HR arm of many organizations. Under many contracts, unions
have been expected to recruit and train new employees through
apprenticeship programs.
Goals of Management, Labor Unions, and Society
Management Goals
The primary goal of management is to increase profits. In light of that
fact, managers worry that unions obstruct efforts to reduce labor costs
and raise the risk of work stoppages. Therefore, management focuses
on limiting increases in wages and benefits while maintaining as much
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control as they can over employment rules and schedules.
Labor Union Goals
In general, unions are focused on improving wages and working
conditions for union members. Additionally, union members are paid
better than nonunion workers. Also, unions are concerned with
sustaining union solidarity. Therefore, they favor pay based on seniority
rather than individuals’ performance.
Keeping up a flow of new union recruits is vital to union power. The
larger the union membership, the greater its effects on wages and
working conditions. To ensure a steady flow of new union members,
unions place a high priority on negotiating two types of contract
1. The check-off provision stipulates that the employer will
automatically deduct union dues from workers’ pay on behalf of the
2. Security provisions, which include the following:
a. In a closed shop, a person must be a union member before
they can be hired. For employees covered under the National
Labor Relations Act (NLRA) of 1935, closed shop provisions
are illegal.
b. In a union shop, new employees must join the union within a
specified time period, usually 30 days.
c. In an agency shop, the payment of union dues is required,
although the employee doesn’t have to join the union.
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d. Maintenance of membership rules doesn’t require union
membership. However, employees who join the union are
required to remain members for some time, such as the length
of the current labor contract.
All of these provisions are aimed at addressing the free-riderproblem. A
free rider is an employee who benefits from the presence of a union
without paying dues to belong to the union. If enough employees can
receive services without paying dues, the union might not have enough
financial resources to operate successfully.
Societal Goals
Early on in the labor movement, unions were seen as a way to balance
labor and management. More recently, concerns have been raised
questioning the effects of organized labor on corporate competitiveness
and setting flexible goals. Overall, even opponents of organized labor
recognize the need for unions. Senator Orrin Hatch’s words about the
need for unions, which can be found in Chapter 15 of your textbook,
imply that a society’s goal for unions is to ensure that workers have a
voice and that they’ll always be necessary as long as there are
employers who take advantage of workers.
Laws and Regulations Affecting Labor Relations
National Labor Relations Act
The National Labor Relations Act (NLRA) of 1935, also called the
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Wagner Act, marked a dramatic shift in the balance of power between
labor and management. It marked a crescendo of concern about the
nation’s economy during the Great Depression. Section 7 of the NLRA
gives employees the right to organize, form unions, and bargain
collectively through representatives of their choosing.
However, several kinds of employees aren’t covered by NLRA
regulations. They include supervisors, children employed by their
parents, independent contractors, and others.
Section 8(a) of the NLRA specifies and prohibits unfair labor practices.
Most of them are related to employer actions that restrict the labor rights
established in the bill. The “HR How To” feature in Chapter 15 has
excellent tips for avoiding unfair labor practices.
Laws Amending the NLRA
The Taft-Hartley Act of 1947 was, in effect, a legislative initiative aimed
at blunting the full force of the NLRA. The most striking effect of the
Taft-Hartley Act allowed the states to establish so-called right-to-work
laws. Right-to-work laws make union shops, agency shops, and
maintenance of membership rules illegal. Figure 15.3 in your textbook
identifies right-to-work states. They’re primarily in the Southeast, the
Mountain West, and the heartland prairie states. These are largely rural
regions with politically conservative views and lower wage expectations
than one finds in the Northeast or along the Pacific coast.
National Labor Relations Board
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The National Labor Relations Board (NLRB) enforces the provisions of
the Wagner Act. The board is a federal agency that consists of a fiveperson panel, a director, and 52 regional and other field offices.
Technically, the NLRB has jurisdiction only over employers engaged in
interstate commerce. However, that casts a very wide net. Most
businesses engage directly or indirectly in interstate commerce. The
NLRB doesn’t initiate investigations. It responds only to calls for an
investigation submitted by a relevant party—usually an employee. The
NLRB has two main functions:
Representative elections
Prevention of unfair labor practices
The NLRB has the authority to issue cease-and-desist orders for unfair
practices. The board can also reinstate employees and set aside the
results of an election found to have been conducted improperly.
Union Organizing
The Process of Organizing
Union organizing begins when union organizers get their message out
to employees. Traditionally, organizers approach workers and invite
them to sign an authorization card. If 30 percent of employees sign a
card, the organizing process can continue. If 50 percent or more of
employees sign an authorization card, the employer can be invited to
accept the union voluntarily. This doesn’t happen often, but if it does,
the NLRB certifies the union.
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If the employer refuses, or if fewer than 50 percent of employees signed
cards, the NLRB conducts a secret-ballot election, which is either a
consent election or a stipulation election. If the NLRB representative
detects irregularities in the election, arrangements are made for a new
election. Once a majority vote has been determined, the NLRB certifies
the union. The parties can then proceed to negotiate a labor contract.
Management Strategies
Union organizers argue that a union can improve workers’ wages, work
conditions, and benefits. Management strategies are designed to
counter those arguments. In big companies, pamphlets, audio-visual
presentations, and website promotions may be honed to a fine edge by
outside consultants, such as industrial psychologists. In a small
company, an owner or management representative may gather the
employees and argue the case against the union. However,
management frequently resorts to illegal means to fend off a union.
Employees stirring up pro-union sentiment are fired. Overt coercion and
intimidation may come into play.
Union Strategies
Beyond traditional person-to-person persuasion, union officials may
apply other tactics. One creative alternative is to offer employees
associate union membership. The memberships aren’t linked to the
employee’s workplace and they don’t allow the associate to get involved
in collective bargaining. Instead, they offer credit cards, discounts on
health or life insurance, and other types of benefits. The idea is to
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generate pro-union sentiment that can one day be harvested when
authorization cards are passed around.
Unions can also fund corporate campaigns aimed at generating public,
financial, and political pressure on employers while contracts are being
negotiated. Table 15.2 in your textbook lists what supervisors should
and should not do to discourage unions. Providing business information
and trying to solve employee problems are on the to-do list. Threats,
bribery, and expressing hostility to unions should be avoided.
Decertifying a Union
The Taft-Harley Act sparked the right-to-work movement. It also
stipulated that employees should be free to organize resistance to
unions and vote them out. This decertification process follows roughly
the same procedures as certification, but in reserve.
Collective Bargaining
Collective bargaining is the process of negotiating a labor contract.
Typical issues addressed are pay, benefits, hours, working conditions,
and dealing with employee grievances. Bargaining structures vary. In
some cases, the organizing process is limited to a narrow slice of
employees that wish to join a craft union. In other cases, several
different facilities within an organization are to be organized into a union.
Table 15.3 in your textbook lays out the broad range of issues typically
resolved through collective bargaining. Many of these issues—like
grievance procedures and pay structures—are directly related to the
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concerns of HR managers.
Bargaining over New Contracts
In general, labor and management representatives need to do their
homework before negotiations begin. Goals must be set. Performance
figures need to be gathered and assessed. Old contracts must be
reviewed for problems. Preparation is particularly important when a new
union is negotiating its first contract. Four basic approaches to contract
bargaining are
Distributive bargaining
Integrative bargaining
Attitudinal structuring
Intraorganizational bargaining
In reality, actual negotiations may involve all of these approaches.
When Bargaining Breaks Down—Work Stoppages
Although the majority of negotiations don’t end instrikes, negotiations
sometimes break down and union members vote to strike. One wellknown example is the Writers Guild strike, which suspended television
and film production for months. This occurred partially because there
were also sympathetic strikes by other unions associated with the
interests of the writers. Actors, production assistants, cinematographers,
costumers, set designers, and even grips, lighting technicians,
carpenters, and caterers rose up in support of the strike. As this
example illustrates, strikes directly and indirectly affect many people. In
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a lockout, the employer excludes workers from the workplace until they
meet certain conditions and may hire replacement workers.
Although work stoppages may bring parties back to the negotiating
table, they’re hard on both workers and employers. Because of this,
work stoppages involving 1,000 or more workers has declined steadily
since the 1970s to historically low levels today, as shown in Figure 15.4
in your textbook.
Alternatives to work stoppages include mediation, the use of fact-finders,
and arbitration. The fact-finder alternative is most often used in
negotiations with government bodies. A fact-finder should be a neutral
party. Both sides present arguments, facts of the case, and other
information before a government committee or panel—possibly even a
committee of the US Congress. Because these hearings are public, they
may increase pressure on the disputants to resolve their differences.
Contract Administration
Contract administration is the day-to-day monitoring and enforcement of
the terms of a labor contract. The process is easiest when the language
of the contract is clear. While contract administration may have to be
carried out in major disputes or strikes, the great majority of
administrative actions have to do with employee grievances. This
requires administering an established grievance procedure.
Steps in a typical grievance procedure generally begin with interactions
between the shop steward and the employee with the complaint. Often,
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the issue can be resolved at that level. If not, the next three steps
involve increasingly formal actions, such as a written grievance report
submitted to a production superintendent. If all else fails, the final step
may occur when the union appeals a grievance to an arbitration board.
A judgment reached through arbitration is legally binding.
Figure 15.5 in your textbook illustrates the steps in resolving an
employee grievance. Study it carefully.
Labor-Management Cooperation
The traditional view of labor-management relations maintains that the
parties are antagonists with opposed and conflicting interests. In recent
decades, however, there has been a drift toward exploring and
implementing strategies for labor-management cooperation. Research
suggests that employees familiar with the older view prefer the
cooperative approach. Cooperation between labor and management
can include the following:
Employee engagement in decision-making
Self-managing employee teams
Labor-management problem-solving teams
Broadly defined jobs
Sharing financial gains and business information with employees
Paradoxically, labor-management efforts to establish cooperative
relationships have run up against the NLRA stipulation forbidding
employer domination or interference in areas of wages, grievances, and
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working conditions. However, because the NLRB favors employee
participation in management decisions, paths around this obstacle can
and have been addressed. In the long run, the issue may boil down to
finding effective ways for managers and employees to share the same
goals and encourage equitable rewards all around.
Exercise: Collective Bargaining and Labor Relations
Fill in the blanks
1. The process of negotiating a labor contract is called _______.
2. During the first step in organizing a union, at least _______ percent
of employees must agree to sign an authorization card or the
organizing effort fails.
3. The _______ is responsible for determining an appropriate
bargaining unit and identifying employees who are eligible to
participate in organizing activities.
4. The two major functions of the NLRB are conducting and _______
worker elections aimed at organizing a union and preventing unfair
labor practices.
5. After the National Labor Relations Board has _______ a union,
collective _______ between union and management
representatives aims at agreeing on a labor contract that’s
agreeable to both parties.
6. Members of a/an _______ union, such as United Steel Workers,
are linked to each other because they work in a particular industry.
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7. The National Labor Relations Act, also called the _______ Act,
protects worker rights to organize a union, refrain from union
activities, strike, or join a union even if it’s not recognized by the
8. Contract administration amounts to interpreting and enforcing
provisions of a labor contract. As a rule, the administrative
approach to conflicts resolution involves a formalized _______
Assignment 5.1 Complete the Review and Discussion Questions at the
end of Chapter 15 in your textbook.
Exercise Answer Key:
Exercise: Collective Bargaining and Labor Relations
1. collective bargaining
2. 30
4. certifying
5. certified; bargaining
6. industrial
7. Wagner
8. grievance
Assignment 5.1
1. Employees typically join unions to ensure that they’ll have fair
representation in disputes with management and the opportunity for
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obtaining better pay and working conditions. Dissatisfaction with
wages, benefits, working conditions, and supervisory methods may
inspire employees to desire unionization at the organization.
2. Some managers would prefer for their organizations not to unionize
because they’re dubious of acquiring any organizational benefit
from it. They may perceive the necessary dealings with unions,
such as contract negotiations, as being time-consuming without
benefit. Additionally, managers may find less flexibility, higher wage
and benefit costs, and a negative impact on stock price and
profitability. On the other hand, having a unionized operation can
offer the employer a more satisfied group of employees. Unions
can have positive effects on productivity through reduced turnover
and less of a need for competition among individual employees.
3. Since 1950, the percentage of union membership has consistently
declined to approximately 14 percent of all employment. The
percentage of US workers who belong to unions is lower than in
many countries. More dramatic is the difference in “coverage”—the
percentage of employees whose terms and conditions of
employment are governed by a union contract, whether or not the
employees are technically union members. The HR department of
an international company would have to be aware of the union
contract and abide by its provisions. In other words, since these
international organizations would experience more exposure to
unions, they have to be more in tune with how the union operates.
4. Employers may not interfere with, restrain, or coerce employees in
exercising their rights to join or assist a labor organization or refrain
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from such activities.
5. They may not dominate or interfere with the formation or
activities of a labor union.
Employers may not discriminate in any aspect of employment
that attempts to encourage or discourage union activity, nor
may they discriminate against employees for providing
testimony related to enforcement of the National Labor
Relations Act (NLRA).
Employers may not refuse to bargain collectively with a labor
organization that has standing under the NLRA.
The NLRA supports the use of collective bargaining and sets
out the rights of employees, including the right to organize, join
a union, and go on strike. The NLRA prohibits unfair labor
practices by employers, including interfering with efforts to
form a labor union and discrimination against employees who
engage in union activities.
The legal requirements affecting unions set limits on union
structure and administration as well as how unions and
management interact.
The Taft-Hartley Act and the Landrum-Griffin Act establish
restrictions on union practices that restrain workers, such as
preventing employees from working during a strike or
determining whom an employer may hire. The Taft-Hartley Act
also permits state right-to-work laws.
6. For the organizing process to continue, at least 30 percent of the
employees will have to sign authorization cards. Next, the union
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organizers would set up an election. Recognition of a union can
occur in two ways—either by consent election or stipulation
election. Ways in which management may discourage the
organizing process include hiring consultants or distributing leaflets
and letters regarding management’s views of unions that are
supported by factual information.
7. Possible responses could include mediation, enlisting the services
of a fact-finder, or using arbitration methodology.
8. Strikes have become rare because they’re seldom seen as being in
the best interests of either party. Management may choose to
accept a strike when all other avenues, such as mediation or
arbitration, have failed to resolve the labor-management conflict.
9. There are four possible steps in a grievance procedure:
1. The employee talks to the supervisor about the problem.
2. If no satisfaction is derived in Step 1, the employee may
involve the union steward in further discussion.
3. If the problem remains unsolved and there’s no evident
contract violation, the union puts the grievance in writing and
submits it to a line manager.
4. The union steward meets with a management representative
to try and resolve the problem.
The advantages of resolving a grievance in the first step include a
reduction in delays and an avoidance of arbitration costs. A
supervisor should be “in tune” with her subordinates and be aware
of the provisions in the union contract. This awareness can assist
the supervisor with a speedy resolution (or even prevention) of
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10. Management gains a workplace environment characterized by
productivity, cooperation, creativity, and innovation. Additionally, by
demonstrating its support for worker training—mostly provided
through and by the union—management gains by having a highly
trained, skilled workforce. Workers gain because they get, possibly,
the best of both worlds. They enjoy the protections of union
membership, the compensation, and benefits that are
systematically and contractually negotiated, but they get to work in
an environment that’s encouraging, stimulating, and supportive.
11. The legal restrictions on labor-management cooperation involve
adherence to legal guidelines for the formation and utilization of
teams and forbid domination or interference with labor
organizations by the employer. The legal requirements for
employee empowerment procedures must be met.
5.2 Describe how the global nature of business affects
HRM in modern organizations
Managing HR Globally
Read this section. Then read Chapter 16 in your text.
HRM in a Global Environment
The global economy we know today evolved through the interplay of
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imperialism and trade networks that go back many hundreds of years.
For example, the Roman Empire at its height united much of Europe and
other countries around the Mediterranean into a trade zone that reached
as far as Arabia, China, and India.
The current global economy emerged after World War II with the
creation of the World Bank and the International Monetary Fund (IMF). It
reached full flower after the fall of the former Soviet Union in 1991,
largely in the electronic communications revolution that brought us
personal computers and the internet. Politically and economically, the
global economy today is characterized by the following:
Complex trade relations among the dominant countries, emerging
economic giants, and less-developed countries. The emerging
economic giants include the US, China, India, Germany, and
Japan. The smaller but dynamic economic powers include Korea,
Singapore, and Thailand.
Free-trade blocs include the European Union (EU) and the North
American Free Trade Agreement (NAFTA). The EU includes nearly
all of the Western European countries. NAFTA includes Canada,
the United States, and Mexico.
Transnational trade regulation under the World Trade Organization
(WTO), which mediates trade disputes among more than 100
member countries
The free flow of capital across national borders, which facilitates
foreign investment, offshoring, and multinational arrangements that
distribute production tasks among several nations. For example,
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products stamped Made in Japan may include parts manufactured
in Indonesia, India, and Malaysia.
Multinational corporations (MNCs) that operate in many counties.
United States–based examples include IBM, McDonald’s, General
Motors, Coca-Cola, Exxon, and Archer-Daniels Midlands. Other
examples include Nestlé (Switzerland), Nokia (Finland), Daewoo
(South Korea) as well as Sony, Honda, Mitsubishi, Toyota, and
Nissan, which are all based in Japan.
Many of the giant corporations are banks linked through complex backand-forth flows of capital that create constantly fluctuating currency
values and international markets for equities—bonds, stocks, and so on.
Even “mom-and-pop” operations can do business anywhere on the
globe using computers and the internet. The growth of international
business activity has had, and will continue to have, major impacts on
Employees in an International Workforce
Organizations may operate in several countries. The parent country is
the country where a corporation is based. For example, an employee
who works for GE in a US facility and is a US citizen is a parent-country
national. A host country is a country—other than the parent country—in
which a foreign organization operates a facility. For example, a citizen of
Argentina who works in a local Coca-Cola bottling plant is a host-country
national. A third country is a country that’s neither a host country nor the
parent country. For example, US-based Goodyear might hire an
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Australian national to manage a Brazilian facility. The manager would be
a third-country national.
A company that operates overseas must decide whether to hire
employees who are parent-country, host-country, or third-country
nationals. Most often, they’ll select employees from all categories.
However, in general, employees assigned to work in a foreign country
are called expatriates.
Employers in the Global Marketplace
Organizations that aim to do business abroad become globalized in
successive steps. A company might begin by shipping products directly
to foreign customers. The company becomes an international
organization when its managers decide to set up facilities in one or more
foreign countries. Perhaps these could simply be service centers for the
products marketed overseas. The company goes multinational when it
begins operating facilities in several foreign countries to keep production
and distribution costs to a minimum. In general, multinationals aim to
move operations from high-cost to lower-cost locations. The costs in
question are mainly the costs of labor, but a favorable location may also
reduce distribution costs.
A global organization locates facilities and operations based on any
location’s potential to produce products or services effectively,
efficiently, and flexibly for different markets. While a multinational
company might see cultural differences as obstacles to be overcome,
the global organization uses cultural differences to its advantage.
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Production and design standards for products or services are tailored to
the culture of a specific market.
Figure 16.1 in your textbook illustrates levels of global participation, and
how employers do business globally, ranging from simply shipping
products to customers in other countries to transform the organization
into a truly global one.
Factors Affecting HRM in International Markets
Cultures vary along specific and identifiable dimensions. Business (and
HRM) practices that work well in one culture may fall flat in another
culture. There are several dimensions to consider:
Individualism versus collectivism
Power distance
Uncertainty avoidance
Long-term/short-term orientation
HRM practices that don’t consider cultural differences are likely to run
into trouble. The “HR Oops!” feature in your textbook highlights some
cross-cultural management blunders and what was learned from them.
Education and Skill Levels
A general trend for the global economy as a whole is an increasing
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 25
demand for knowledge workers. To the extent that educational
attainment in different countries runs counter to that trend, there may be
difficulties in recruiting qualified applicants. Underdeveloped countries
afflicted with poverty or civil unrest may be unlikely to provide a suitable
labor force. Laborers may have to be imported. On the other hand,
some countries, like India, offer fairly high skill levels for lower wages.
Economic System
Socialist countries provide greater access to well-educated people
because education is free, while capitalist countries limit access to
higher education due to high tuition costs. In general, socialist systems
take a higher percentage of each worker’s income as salaries increase.
Capitalist systems tend to let workers keep more of their earnings. In
this way, socialism redistributes wealth from high earners to the poor,
whereas capitalism rewards individual accomplishments.
Political-Legal System
Government laws and regulations tend to reflect a country’s culture and
affect HR policies of hiring, discrimination, termination, organized labor
rights, and training. In Europe, the power of socialist parties makes a
difference. For example, it’s taken for granted in Western Europe that
labor representatives should be present on corporate boards of
HR Planning in a Global Economy
When organizations decide to operate internationally, HR professionals
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must help with decisions related to the following issues:
Recruiting employees for offshore facilities
Choosing locations and weighing advantages and disadvantages of
foreign options
Profitably outsourcing or offshoring organizational functions
Developing processes for hiring and terminating workers. (For
example, US labor laws allow US companies to hire people for
peak seasons and lay them off during slack seasons. This practice
is forbidden in some other countries.)
Selecting Employees in a Global Labor Market
A company doing business abroad must understand local business and
social customs. To address that need, companies often hire local
employees who better understand worker inclinations and expectations.
This can be a more cost-effective strategy than assigning parent-country
employees overseas.
In some cases, the best solution is hiring immigrant employees. This is
done most often through importing highly-skilled knowledge workers and
immigrant workers from host countries where they’re employed in one of
the company’s foreign facilities.
Whether an organization imports immigrants or hires third-party or
parent country nationals, criteria have been established based on
factors associated with success overseas. Research has shown that an
employee’s success in completing an overseas assignment depends
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greatly on the comfort and support of his or her spouse and family. The
“HRM Social” feature in Chapter 16 of your textbook discusses the use
of online communities to support expatriate spouses. Personality is also
a major success predictor. Employees who are extroverted, agreeable,
and conscientious are more likely to cope well with the emotional
adjustment cycle that accompanies posting to a foreign country.
The four-step emotional adjustment cycle starts with a honeymoon
phase, wherein excitement and euphoria are the dominant emotions.
This brief phase is followed by culture shock, learning, and adjustment.
Figure 16.2 in your textbook illustrates the emotional cycle associated
with a foreign assignment. An alternative to foreign immersion is having
employees become virtual expatriates. They visit the country periodically
while carrying out routine business via phone or video conferences and
Training and Developing a Global Workforce
Training and development programs should implement learning goals
that will be effective for all participating employees, regardless of their
country of origin. Also, when employees are assigned or transferred
abroad, they must be trained to handle the challenges of living in a
foreign country. Training should be fitted to cultures. Table 16.1 in your
textbook summarizes the effects of culture on training design.
Cross-Cultural Preparation
Cross-cultural preparation may often involve training for family members
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as well as for the employee. The learning process has three phases:
Preparation for departure should include language instruction and
orientation to a foreign country’s culture. The US government, the
Department of State, and various private companies provide
excellent tools for language instruction. Cultural-orientation
sessions can be greatly enhanced if people from that culture are
available as teachers or consultants.
The assignment itself must be clearly understood. Formal
instruction should relate the assignment to the organization’s goals
and strategies. Mentors may be provided who can help familiarize
employees with a particular foreign culture.
Preparation for return home mainly involves keeping in touch. As
the assignment proceeds, employees and their families can receive
company newsletters and articles from the employees’ hometown
Some survey reports have shown the United States to be one of the
most challenging foreign assignments. Foreigners tend to get distorted
views of life in the US from Hollywood films and TV shows. They may be
fearful of getting mugged on a subway or becoming victims of police
brutality. Perhaps, above all, foreigners have trouble relating to the
relentless pace of daily life, especially in urban areas.
Performance Management Across National Boundaries
The principles of performance management tend to apply regardless
of where people work. However, there’s no question that what’s
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 29
appropriate in one culture may be inappropriate in another. For example,
language and gestures that are fine in Denmark may be found insulting
or obscene in Saudi Arabia.
Compensating an International Workforce
The basic challenge for HR specialists when offering benefits,
establishing pay structures, and setting up standards for incentive pay is
reconciling the striking differences among countries and cultures.
Internationally, pay structures vary immensely. What’s considered a fair
wage in Jakarta, Indonesia, would be considered outrageously exploitive
in Frankfurt, Germany. In general, wage disparity among countries can
be quite difficult to reconcile. For example, let’s say a French company
wants to transfer an engineer from Lyon to Budapest, Hungary. Typical
pay for engineers is much lower in Hungary than it is in France. If the
salary offered to a French expat engineer is similar to the standard
salary for engineers in Hungary, the offer is almost certain to be
declined. On the other hand, if the agreed-upon salary is commensurate
with French standards, the Frenchman’s Hungarian colleagues will
consider his salary excessive and unfair. Figure 16.3 in your textbook
compares the earnings for selected occupations in three countries:
Germany, South Korea, and Mexico.
Incentive pay in the US and Europe differs with respect to stock options.
In the US, the relationship between measures of company performance
and levels of executive compensation are often either weak or
nonexistent. In Europe, on the other hand, stock option incentives are
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 30
linked directly to performance measures, such as an increase in the
company’s share value.
Employee benefits disparities are also striking. For example, 90 percent
of Swiss workers have pension plans, and all workers have them in
France. In the US, many full-time employees have no pension benefits.
Paid vacation time is also more generous in European countries than it
is in the US. This is the case even though Americans work far more
hours per year than workers in France, Norway, the Netherlands, or the
United Kingdom. Further, most developed countries have some form of
nationalized health care system that’s available simply based on
citizenship. Figure 16.4 in your textbook compares the hours worked per
year in eight countries.
International Labor Relations
Organized labor influences are stronger in European countries than they
are in the US, and this fact affects labor relations wherever Americanbased multinational parent companies operate in European host
countries. However, this is only one kind of issue confronting HR
specialists. Differences in labor law must also be reconciled. Rules for
organizing differ, as do approaches to labor negotiating. For example, in
the US, collective bargaining usually involves a union and a specific
company. In Germany, unions negotiate with entire industries. Further,
in some cultures, cooperative approaches to labor-management
relations may be standard. In others, the competitive rivalry of labor and
management interests may be foremost. Finally, in some countries,
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 31
labor unions are nonexistent.
Managing Expatriates
Selecting Expatriate Managers
A successful expat manager is sensitive to the host country’s cultural
norms, sufficiently flexible to adapt to those norms, and strong enough
to cope with culture shock. According to expatriates, the most important
qualities for an expatriate manager are the family situation, flexibility and
adaptability, job knowledge and motivation, relational skills, and
openness to other cultures. Table 16.2 in your textbook lists topics for
assessing candidates for overseas assignments.
Preparing Expatriates
Given that a selected manager will already have the requisite job skills,
the focus of preparation is cross-cultural training. The thrust of the
training is giving trainees an appreciation of the host culture, enabling
them to adapt to different behavioral norms. Interestingly, this requires
an increased awareness of one’s own culture. Unconscious behaviors
and attitudes must be brought to light to better understand how they
differ in the host culture. One may learn, for example, that the outgoing
personality style favored in the US is seen as abrasive and rude in other
cultures. Vital aspects of cross-cultural training include the following:
Becoming familiar with business etiquette, like when to shake
hands, when to bow formally, how to address a colleague or
superior, and, perhaps, when not to tell a joke
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Getting practical information on housing, schools, shopping, and
health care resources
Obtaining language training—even if one already has a passing
familiarity with the language of the host country, additional study
and practice can be important. In other cases, the host country
language presents serious challenges to American English
speakers. Examples might include Hindi, Urdu, Russian, or Arabic.
Regardless, intense language training can give an expat an
important edge.
Figure 16.5 in your textbook offers interesting reading. It highlights some
impressions of Americans by visitors to the US.
Managing expatriates’ performance mainly involves a periodic flow of
emails and phone conversations between the expat and superiors in the
parent country. The objective is assessing and appraising the expat’s
performance relative to the mission’s goal, offering suggestions, and
sometimes deciding when or if to broaden the expat’s authority. If
training foreign workers is the goal, appraisals of that process are also in
Compensating Expatriates
The essence of compensating managerial expatriates is determining the
equivalent buying power of an employee’s home country salary in
relationship to host country costs of housing, taxes, goods and services,
and a reserve for other expenses. Most organizations use a balance
sheet approach to determine the total amount of expatriates’ pay
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packages. Basically, the objective is to ensure that expatriates’ living
standards while abroad are reasonably similar to what they enjoy in their
home country. Figure 16.6 in your textbook shows how a compensation
balance sheet is used for determining expatriate compensation. Figure
16.7 shows a sample international assignment allowance form. The “Did
You Know” feature in Chapter 16 shows the most expensive cities to live
in, distributed over three continents.
Helping Expatriates Return Home
Helping expatriates return home may not be as simple as it might seem.
An expat who has been abroad for several years will experience culture
shock in reverse. That shock may be amplified by changes in the expat’s
home culture during the absence. Also, in many cases, the expat’s
standard of living may be reduced. Many foreign posts include luxuries
such as servants, a chauffeur, and membership in exclusive clubs. Two
strategies can assist the repatriation process:
Communication: Expats should receive a steady flow of
communication from the parent company and their home
community. At the same time, however, the expat should be
responsible for maintaining contact with company managers and
executives at home.
Validation: Recognizing and praising an expat’s contribution while
abroad is important. In short, validation accelerates and eases the
process of repatriation.
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Exercise: Managing HR Globally
Fill in the blanks.
1. _______ in the United States and Europe differs with respect to
stock options.
2. When employees return from a foreign posting, they may suffer
_______ in reverse.
3. The _______ is the country where a corporation is based.
4. Preparation for departure, preparation for the _______, and
preparation for the return are all phases of cross-cultural
5. Factors other than culture that affect human resources managers in
international markets include education and skill levels, _______
conditions, and political-legal systems in host countries.
6. Most organizations use a/an _______-sheet approach to determine
the total compensation package for employees posted abroad.
7. The emotional cycle expatriates go through when taking on a
foreign assignment begins with a/an _______ phase, followed by
culture shock, _______, and, at last, adjustment.
8. Expatriates are most likely to do a good job abroad if they have
three kinds of _______ skills, one of which is an ability to foster
relationships with host-country nationals.
Assignment 5.2 Complete the Review and Discussion Questions at the
end of Chapter 16 in your textbook.
Exercise Answer Key:
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Exercise: Managing HR Globally
1. Incentive pay
2. culture shock
3. parent country
4. assignment
5. economic
6. balance
7. honeymoon; learning
8. adaptation
Assignment 5.2
1. A parent country is the country in which an organization’s
headquarters is located. A host country is a country—other than the
parent country—in which an organization operates a facility. A third
country is a country that’s neither the parent country nor the host
country of an employer. In the example provided the parent country
is the US, as Cold Cola has its headquarters there. The host
countries are Greece and Indonesia, as the organization operates
facilities in both of those countries. Hong Kong is a third country, as
one of the managers came from there. The manager would be a
third country national.
2. HR challenges facing companies that expand into foreign markets
by exporting include preparing to draw from a larger labor market
that will include individuals with diverse backgrounds and education
levels. As the organizations continue to expand into the
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 36
international marketplace, HR challenges become more intense.
These challenges include deciding on choices for location and
determining availability of suitable human resources. If the
companies become global, there’s an increased need for HRM
practices that encourage flexibility and are based on an in-depth
knowledge of differences among countries. Global organizations
must be able to recruit, develop, retain, and use managers who can
get results across national boundaries.
3. Responses will vary.
4. Some other factors affecting HRM in an international organization
include the acquisition of suitable human resources, selection of
managers who can function in a variety of settings, and providing
adequate compensation packages that take into account the
different pay rates, tax systems, and costs of living.
5. Suggested answers include:
Developing extensive preparations to prevent possible layoffs
Planning alternatives to layoffs
Providing employees with job or position options
6. Possible responses include the fact that host-country nationals are
already familiar with the country’s laws, culture, and values, and
also are proficient in the language.
7. Suggestions for possible cultural issues that should be taken into
account include: educational level, religious beliefs, and availability
of all workers to receive the training.
8. Pay structures can differ substantially among countries in terms of
pay level and the relative worth of jobs. Organizations must decide
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carefully whether to set pay levels and differences in terms of what
workers are used to in their own countries or in terms of what
employees’ colleagues earn at headquarters. Advantages of setting
compensation according to the labor markets in the countries
where the employees live and work may include maintaining human
resource availability for vacant positions, while disadvantages may
include decreasing the candidate pool. Advantages of setting
compensation according to the labor market in the company’s
headquarters may include availability of the best potential
candidates, while disadvantages may include excessive costs
being incurred. Most likely, the best arrangement would be different
for the company’s top executives and its production workers. This is
due in part to the fact that these positions are distinctly different
from each other.
9. Successful expatriates should possess abilities such as
competency in the area of expertise, communication capability in
the foreign language, flexibility, tolerance of ambiguity, sensitivity to
cultural differences, willingness to learn about the foreign country’s
culture and customs, and motivation to succeed. Support from
family members is of paramount importance to expatriate success.
10. Some possible reasons for high expatriate failure rates include
insufficient preparation before departure, lack of family support, and
feeling isolated. HR departments could prevent potential failure by
providing a mentor for the relocating employee, keeping the
expatriate well-informed of home-country changes, and providing
training to family members to help with the adjustment.
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5.3 Explain how HRM can contribute to a highperformance work system
Building and Maintaining a High-Performance Organization
Read this section. Then, read Chapter 9 in your textbook.
High-Performance Work Systems
In traditional managerial practice, decisions about HR, organizational
structure, and adaptations of technology were treated as more or less
unrelated. The opposite is true of high-performance work systems. The
essential nature of a high-performance organization is the finely tuned
integration of organizational elements, from company structure to job
design to selecting employees and beyond. A high-performance
organization is a system, not an assembly of parts and pieces.
The elements of a high-performance work system include the following:
Organizational structure
Task design
The right people
Rewards systems
Information systems
Figure 9.1 in your textbook illustrates the components of a high-
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 39
performance work system.
Outcomes of a High-Performance Work System
Figure 9.2 in your textbook shows the relationships among the elements
of a high-performance system. Outcomes of a high-performance work
system include interesting jobs, satisfied workers, low absenteeism, and
therefore, lower costs. High quality, combined with satisfied workers,
generates satisfied customers, which leads to higher sales and higher
Conditions that Contribute to High Performance
There are four vital dimensions related to producing conditions for a
high-performance system:
Teamwork and empowerment
Knowledge sharing
Job satisfaction
Ethical behavior
Teamwork and Empowerment
As mentioned in Lesson 1, employers increasingly seek to empower
employees to make decisions related to their job tasks. A basic strategy
to achieve that is the use of work teams. Consider these preview points:
Empowerment and teamwork increase productivity to the extent
that they improve job satisfaction and better utilize employees’
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 40
talents and skills.
The empowerment process requires managers to link and
coordinate team members’ roles while providing the team with all
the resources it will need.
In a high-performance system, all employees, not just managers or
task experts, are empowered to solve problems.
Employees who come up with innovations are rewarded with
Knowledge Sharing
For more than a decade, employers have been interested in developing
learning organizations. Key features of a learning organization include
the following:
Continuous learning: To do this effectively, employees must
understand the entire work system, including relationships among
jobs and work units (such as teams). For employees, the objective
of continuous learning is ever-increasing knowledge that can
enhance their skills in service to organizational goals.
Shared knowledge: A narrow focus on job-related training is
replaced by training that encourages sharing knowledge and
teamwork. Recall the cliché often used by coaches: “There’s no I in
the word team.”
Critical, systematic thinking: Employees are encouraged to detect
relationships among ideas or patterns in performance data to
search out innovative solutions.
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 41
A learning culture: A learning culture creates and promotes
conditions that encourage flexibility and experimentation. Risktaking is encouraged, even though some tentative experiments may
not work out as hoped. (The best learning sometimes comes from
making mistakes.)
Valued employees: Management recognizes that the foundation of
the organization’s performance is the collective knowledge of its
Job Satisfaction
Research supports the contention that job satisfaction is positively
related to productivity, customer satisfaction, and shareholder return on
investment. Similar relationships have been found in nonprofit and
government organizations. The “Did You Know?” feature in Chapter 9
shows that only 33 percent of US workers describe themselves as
Some organizations are striving to go beyond mere job satisfaction to
foster employee passion for their jobs. To feel this way about one’s work
is also referred to as occupational intimacy. In any case, the art of
enhancing job satisfaction can grow in importance as organizations turn
to employee empowerment, teamwork, and knowledge sharing to create
flexible, competitive organizations.
Ethical behavior builds trust, and trust enhances an organization’s
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 42
image and may attract talented employees who value ethical standards.
Ethical behavior is a major HRM concern.
Efforts to promote ethical behavior in an organization generally begin
with drafting a code of ethics. However, this won’t be enough unless the
importance of the code is conveyed to all levels of the organization, and
breaches of ethical conduct are identified and addressed swiftly.
HRM’s Contribution to High Performance
Effective HR practices are vital to an organization’s competitiveness and
performance. However, based on research findings, narrow focuses on
particular areas, like pay structure or employee selection, aren’t the best
way to go. HR practices are more likely to boost organizational
performance when focuses fit together well and are in line with the
organization’s goals.
The “HR Oops!” feature in Chapter 9 of your textbook illustrates the
advantage of prioritizing succession planning and leadership
development: Few companies feel prepared for future talent needs.
Failing to take proactive steps now can result in big disadvantages with
competitors later. Table 9.1 in your textbook summarizes HRM practices
that can help organizations achieve high performance.
HRM practice can contribute to high performance in the following ways:
Job design can help when tasks and role relationships are
structured in ways appropriate to employee empowerment and
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 43
Recruitment and selection processes need to be geared to more
than finding people who have a suitable background for a particular
job. This means identifying candidates who are creative, capable of
initiative, and capable of cooperative efforts in team settings.
Psychological and personality tests can help.
Extensive training and development are part and parcel of a
learning organization. Therefore, employee development is a major
focus for HR professionals. A high-performance organization has a
major interest in investing in employee training that can produce
future leaders.
Performance management is a process. The process involves
encouraging and moderating individuals’ skills and abilities and
employees’ behaviors to produce the objective results needed to
fulfill an organization’s goals. Put another way, performance
management consists of HR strategies for achieving organizational
Guidelines for creating a performance management system that
supports organizational goals include defining and measuring
performance in concise terms, linking performance measures to
customer needs, and measuring and correcting for the effects of
constraints such as economic limitations or the nature of the corporate
culture. Figure 9.3 in your textbook graphically depicts employee
performance as a process.
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Compensation is mentioned in Lesson 4, which covers methods for
linking pay to performance. Many of these methods apply directly to
creating HR policies related to high performance by individuals or
teams. Job satisfaction and performance are enhanced by employee
empowerment that includes participation in pay decisions.
HRM Technology
In general, the technology used by HR managers involves the
automation of routine tasks by way of computers, networked computers,
and software developed for HRM applications:
Transaction processing is math applied to reviewing and
documenting HR decisions and practices. These might include
employee relocations, benefits allocations, training expenses, and
other sorts of transactions.
Decision support systems are types of software designed to help
managers make decisions. They can allow a decision-maker to
assess hypothetical “what-if” scenarios. For example, if incentive
pay is increased in the sales department, what’s the probability that
sales will increase sufficiently to offset the added cost?
Expert systems are computer software configurations that
incorporate decision rules used by people who are experts in their
field. An expert system is designed to recommend the same actions
that a human expert would make, given specified conditions,
variables, and constraints. In short, one accesses the virtual expert,
inputs relevant data, states the specific problem, and asks for
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 45
Human resource information systems (HRIS) incorporate all the
previous systems. An HRIS system depends on relational
databases, in which data stored in different files can be linked or
related to each other to produce reports, tables, graphs, or other
data displays. Data stored in a particular file is organized into fields.
Fields typically include things like employee names, job status,
Social Security number, hiring date, pay rate, and so on. So, for
example, if you wanted to relate hiring date to pay rate, you could
create a graph. You might find that new hires earn lower or higher
rates as a function of time on the job, depending on the established
pay structure.
Human resource management online (e-HRM): As mentioned in
Lesson 1, more companies are engaged in sharing HR data over
the Internet, although intranets may be used to ensure compliance
with employee privacy requirements or provisions. Effects of eHRM include allowing employees to access HRM data directly,
such as the company’s pay structure, permitting administrative and
data gathering activities by HR departments, and linking people all
over the globe. E-HRMs create virtual companies that exist
because managers and employees are linked by the internet,
regardless of their geographic location.
Effectiveness of HRM
Measuring the effectiveness of HRM depends primarily on HRM audits
or on analyzing the effects of HRM programs. In either approach, HR
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 46
professionals identify their “customers” as the organization as a whole or
its divisions. The customer concept is employed because the
organization is dependent on HR activities to provide talented and
motivated employees. Table 9.2 in your textbook summarizes a
customer-oriented perspective on HRM.
Human Resource Management Audits
An HRM audit is a formal review of HRM function outcomes. Functions
include staffing, compensation, benefits, training, employee appraisal,
development, and overall effectiveness as reflected by such markers as
turnover rates, absenteeism rates, and net income per employee. The
audit may also assess EEO compliance, labor relations, succession
planning, and workplace safety maintenance.
Table 9.3 in your textbook summarizes key measures of success for an
HRM audit. Information for the audit is gathered from available
documents or database files, documents specifically designed for an
audit, and surveys.
Analyzing the Effect of HRM Programs
Specific programs or activities can be analyzed, and that analysis might
be focused on a program’s success in realizing goals. Training
programs can be analyzed by measuring their results in terms of
enhanced productivity, fewer on-the-job accidents, or reduced instances
of sexual harassment. An analysis focused on economic value can
compare the program costs in dollars relative to benefits reckoned in
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 47
Exercise: Building and Maintaining a High-Performance
Fill in the blanks.
1. A/an _______ system is designed to recommend the same actions
that a human expert would make, given specified conditions,
variables, and constraints.
2. Information needed for an HRM _______ is usually available in
company documents.
3. Guidelines for ensuring that a performance management system
supports organizational goals include linking performance
measures to the satisfaction of _______.
4. A study by Watson Wyatt Worldwide found that companies with
high levels of _______ had higher levels of return for shareholders.
5. Interesting jobs, satisfied workers, low absenteeism, and lower
costs lead to satisfied _______ and lower employee _______.
6. In HRM technology, _______ processing refers to the computations
and calculations in documenting and reviewing human resource
practices and decisions.
7. A corporation can increase worker empowerment and job
satisfaction by including employees in decisions about _______
and by communicating with employees about the reasons behind
pay decisions.
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 48
8. Key features of a learning organization include engagement in
_______ learning along with shared knowledge, a learning culture,
widespread critical thinking, and valuing _______.
Assignment 5.3 Complete the Review and Discussion Questions at the
end of Chapter 9 in your textbook.
Exercise Answer Key:
Exercise: Building and Maintaining a High-Performance
1. expert
2. audit
3. customer needs
4. employee commitment
5. customers; turnover
6. transaction
7. compensation (or pay)
8. continuous; employees
Assignment 5.3
1. A high-performance work system is the combination of people,
technology, and organizational structure that makes full use of the
organization’s resources and opportunities in achieving its goals.
The elements of a high-performance work system are
organizational structure, task design, people, reward systems, and
information systems. These elements must work together in a
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 49
smoothly functioning system. All of the elements identified involve
and are influenced by human resource management.
2. Responses will vary.
3. Teamwork and empowerment can make work more satisfying and
provide a means for employees to improve quality and productivity.
Jobs should be designed to foster teamwork and employee
empowerment. When all of these factors are combined, employees
tend to have better satisfaction, which results in a high probability of
better performance.
4. Responses will vary.
5. A number of organizational systems can promote ethical behavior.
These include a written code of ethics that the organization
distributes to employees and expects them to use in decision
making. Publishing a list of ethical standards isn’t enough, however.
The organization should reinforce ethical behavior. It should
provide channels employees could use to ask questions about
ethical behavior or to seek help if they’re expected to do something
they believe is wrong. Organizations can provide training in ethical
6. Possible responses could be as follows:
a. Job design places employees in teams where they collaborate
to make decisions and solve problems.
b. Recruitment and selection aim at obtaining the kinds of
employees who can thrive in a high-performance work setting.
c. Training and development focus on preparing employees to
strive forward in a high-performance atmosphere.
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 50
d. Performance management reinforces the organization’s goals
and what must be accomplished to meet those goals.
e. Compensation reinforces appropriate employee behaviors.
7. Technology can improve the efficiency of the human resource
management functions and support knowledge sharing. HRM
applications often involve transaction processing, decision support
systems, and expert systems. These can improve the efficiency of
routine tasks and the quality of decisions. Often, these applications
are part of a human resource information system using relational
databases. With internet technology, organizations can use e-HRM
to let all the organization’s employees help themselves to the HR
information at any time they need it.
8. Taking a customer-oriented approach, HRM can improve quality by
defining the internal customers who use its services and
determining whether it’s meeting those customers’ needs. One way
to do this is with an HRM audit, a formal review of the outcomes of
HRM functions. The audit may look at any measure associated with
the successful management of human resources. Audit information
may come from the organization’s documents and surveys of
customer satisfaction. Another way to measure HRM effectiveness
is to analyze specific programs or activities. The analysis can
measure success in terms of whether a program met its objectives
and whether it delivered value in an economic sense, such as by
leading to productivity improvements.
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 51
Lesson 5 Review
Flash Cards
1. Term: Unions
Definition: Organizations formed for the purpose of representing their
members’ interests in dealing with employers.
2. Term: Labor Relations
Definition: Field that emphasizes skills managers and union leaders
can use to minimize costly forms of conflict (such as strikes) and seek
win-win solutions to disagreements.
3. Term: Craft Union
Definition: Labor union whose members all have a particular skill or
4. Term: Industrial Union
Definition: Labor union whose members are linked by their work in a
particular industry.
5. Term: American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO)
Definition: An association that seeks to advance the shared interests of
its member unions at the national level.
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 52
6. Term: Union Steward
Definition: An employee elected by union members to represent them
in ensuring that the terms of the labor contract are enforced.
7. Term: Checkoff Provision
Definition: Contract provision under which the employer, on behalf of
the union, automatically deducts union dues from employees’
8. Term: Closed Shop
Definition: Union security arrangement under which a person must be a
union member before being hired; illegal for those covered by the
National Labor Relations Act.
9. Term: Union Shop
Definition: Union security arrangement that requires employees to join
the union within a certain amount of time (30 days) after beginning
10. Term: Agency Shop
Definition: Union security arrangement that requires the payment of
union dues but not union membership.
11. Term: Maintenance of Membership
Definition: Union security rules not requiring union membership but
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 53
requiring that employees who join the union remain members for a
certain period of time.
12. Term: National Labor Relations Act (NLRA)
Definition: Federal law that supports collective bargaining and sets out
the rights of employees to form unions.
13. Term: Right-to-Work Laws
Definition: State laws that make union shops, maintenance of
membership, and agency shops illegal.
14. Term: National Labor Relations Board (NLRB)
Definition: Federal government agency that enforces the NLRA by
conducting and certifying representation elections and investigating
unfair labor practices.
15. Term: Corporate Campaigns
Definition: Bringing public, financial, or political pressure on employers
during union organization and contract negotiation.
16. Term: Collective Bargaining
Definition: Negotiation between union representatives and
management representatives to arrive at a contract defining conditions
of employment for the term of the contract and to administer that
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 54
17. Term: Strike
Definition: A collective decision by union members not to work until
certain demands or conditions are met.
18. Term: Lockout
Definition: An employer’s exclusion of workers from a workplace until
they meet certain conditions.
19. Term: Fact Finder
Definition: Third party to collective bargaining who reports the reasons
for a dispute, the views and arguments of both sides, and possibly a
recommended settlement, which the parties may decline.
20. Term: Grievance Procedure
Definition: The process for resolving union management conflicts over
interpretation or violation of a collective bargaining agreement.
21. Term: Parent Country
Definition: The country in which an organization’s headquarters is
22. Term: Host Country
Definition: A country (other than the parent country) in which an
organization operates a facility.
23. Term: Third Country
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 55
Definition: A country that’s neither the parent country nor the host
country of an employer.
24. Term: International Organization
Definition: An organization that sets up one or a few facilities in one or
a few foreign countries.
25. Term: Multinational Company
Definition: An organization that builds facilities in a number of different
countries in an effort to minimize production and distribution costs.
26. Term: Global Organization
Definition: An organization that chooses to locate a facility based on
the ability to produce a product or service effectively, efficiently, and
flexibly, using cultural differences as an advantage.
27. Term: Transnational HRM System
Definition: Type of HRM system that makes decisions from a global
perspective, includes managers from many countries, and is based on
ideas contributed by people representing a variety of cultures.
28. Term: Culture Shock
Definition: Disillusionment and discomfort that occur during the process
of adjusting to a new culture.
29. Term: Cross-Cultural Preparation
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 56
Definition: Training to prepare employees and their family members for
an assignment in a foreign country.
30. Term: Repatriation
Definition: The process of preparing expatriates to return home from a
foreign assignment.
31. Term: Learning Organization
Definition: An organization that supports lifelong learning by enabling
all employees to acquire and share knowledge.
32. Term: Continuous Learning
Definition: Each employee’s and group’s ongoing efforts to gather
information and apply the information to their decisions in a learning
33. Term: Employee Engagement
Definition: The degree to which employees are fully involved in their
work and the strength of their job and company commitment.
34. Term: Brand Alignment
Definition: The process of ensuring that HR policies, practices, and
programs support or are congruent with an organization’s overall culture
(or brand), products, and services.
35. Term: Transaction Processing
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 57
Definition: Computations and calculations involved in reviewing and
documenting HRM decisions and practices.
36. Term: Decision Support Systems
Definition: Computer software systems designed to help managers
solve problems by showing how results vary when the manager alters
assumptions or data.
37. Term: Expert Systems
Definition: Computer systems that support decision making by
incorporating the decision rules used by people who are considered to
have expertise in a certain area.
38. Term: HR Dashboard
Definition: A display of a series of HR measures, showing the measure
and progress toward meeting it.
39. Term: HRM Audit
Definition: A formal review of the outcomes of HRM functions, based
on identifying key HRM functions and measures of business
40. Term: HR Analytics
Definition: Type of assessment of HRM effectiveness that involves
determining the impact of, or the financial cost and benefits of, a
program or practice.
© 2021 Penn Foster Human Resources Management (eBook) (v2) : Lesson 5 : Page 58
) : L
5 : P
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