CH 6 BSAD 310 Fall 2019

Chapter 6
Human Resource
Decision-Making
in Organizations
Copyright ©2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

LEARNING OUTCOMES
2
Copyright © 2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part. HR5 | CH6
1. Discuss the role of ethics in human resource
decision-making
2. Describe the concept of rightsizing, and
identify organizational strategies for rightsizing
3. Describe how to manage termination and
retention
4. Describe the elements of voluntary turnover
5. Discuss the key human resource issues
during mergers and acquisitions

3
Ethics and Human Resource Management
• Ethics: Individual’s beliefs about what is
right and wrong and what is good and bad
• Formed by the societal context in which people
and organizations function
• May or may not coincide with the law
• Business ethics is complicated in the global
environment of modern business
• Nations and cultures differ in what they see as
acceptable behaviors relative to corruption,
exploitation of labor, and environmental impact
LO 1

4
Rightsizing
• Monitoring and adjusting the composition
of an organization’s workforce to its optimal
size
• Managing the workforce size involves:
• Layoffs or early-retirement programs to reduce
the size of the workforce
• Retention programs to maintain the size of the
workforce
• Use of temporary workers as a bridge between
the current state of affairs and growth or
reduction
LO 2

5
Dealing with Increased Demand for
Employees
• Overtime: Hours worked above the normal
40-hour workweek, for which there is
usually a pay premium
• The Fair Labor Standards Act stipulates
compensation at a rate of one and a half times
the normal hourly rate for employees who work
overtime
• Unionized organizations have contracts that
specify decision rules to be followed while
offering overtime
• Could lead to increased fatigue and anxiety
LO 2

6
Employees (Continued 1)
• Temporary employees
• Organizations can hire someone for only a
specific period of time
• Advantages
- Paid a lower rate
- Provide flexibility because an organization can
terminate their employment as work
demands mandate
• Disadvantage: Likely to be less productive than
permanent full-time employees of an
organization
LO 2

7
• Employee Leasing
• Paying a fee to a leasing company to provide a
pool of employees who are available on a
temporary basis
• Employees are:
- Required to handle most of the organization’s
work needs in specific areas
- Temporarily available and may cost more than
employees who are hired directly by the firm
- Likely to be less committed and attached to
the firm
LO 2

8
• Part-time workers: Individuals who are
regularly expected to work less than 40
hours a week
• Do not usually receive benefits
• Provide scheduling flexibility to the organization
that hires them
LO 2

9
Dealing with a Declining Need for Employees
• Cutting back on the contingent workforce
and retaining only permanent members
• Works best in cyclical industries
• Early retirement and natural attrition
• Organizations can try to provide incentives for
other employees to retire early, not replace
workers who leave voluntarily, or both
• Plans must be voluntary or the organizations
may encounter legal problems
LO 2

10
Strategies for Layoffs
• Layoffs lead some employees to:
• Sue the organization for wrongful termination
• Develop negative feelings toward their former
employer
• React aggressively or violently toward those
perceived to be responsible
LO 2

11
Types of Justice Related to Reactions to
Layoffs
• Employees’ perception of the justice
involved in the layoff process is a critical
determinant of their reactions
• Distributive justice: Perceptions that the
outcomes a person faces are fair when
compared to the outcomes faced by others
• Procedural justice: Perceptions that the process
used to determine the outcomes were fair
• Interactional justice: Quality of the
interpersonal treatment people receive when a
decision is implemented
LO 2

12
Critical Dimensions of Procedural Justice
• Voice: Perception that the person had some
control over the outcome or some voice in
the decision
• Consistency: Perception that the rules were
applied the same way to everyone involved
• Free from bias: Perception that the person
applying the rules had no vested interest in
the outcome of the decision
• Information accuracy: Perception that the
information used to make the decision was
accurate and complete
LO 2

13
Critical Dimensions of Procedural Justice
(Continued)
• Possibility of correction: Perception that
some mechanism exists to correct flawed or
inaccurate decisions
• Ethicality: Perception that the decision rules
conform to personal or prevailing standards
of ethics and morality
• Representativeness: Perception that the
opinions of the various groups affected by
the decision have been considered in the
decision
LO 2

14
Downsizing
• Most studies suggest that downsizing is an
ineffective strategy
• Firms should consider reducing plants and assets
rather than their workforce
• Can result in negative effects on stock prices
and other financial indexes
• Survivor syndrome can result in a drop in
the morale and commitment of employees
• Some alternatives to layoffs may result in
job loss
LO 2

15
Managing Involuntary Turnover
• Involuntary turnover: Terminating
employees whose services are no longer
desired
• Represents a failure in the HR system
• Managers should always start with an effort
to rectify the problem before termination
• Employee assistance programs (E A P s)
• Help employees and reduce the costs associated
with lost workdays and poor productivity
LO 3

16
Progressive Discipline
• Designed to try to improve performance
through the use of punishment
• Progressive disciplinary plans
• Organizational disciplinary programs where the
severity of punishment increases over time or
across the problem
• Steps involved include verbal warnings, written
warnings, suspension, and termination
LO 3

17
Employment at Will
• Employer can terminate any employee, at
any time, for any reason, or for no reason at
all
• Key to successful termination is documentation
• Some firms use positive discipline
• Emphasizes positive changes instead of
punishment
• Somewhat progressive in nature, with warnings
leading to eventual termination if the problem is
not corrected
LO 3

18
Employee Retention
• Ways of reducing the voluntary turnover of
desired employees
• HR analytics plays an important role in
predicting why people leave and then doing
something to retain them
• Regular employee satisfaction survey and exit
interviews provide valuable information
LO 3

19
Job Dissatisfaction
• Feelings of being unhappy with one’s job
• Major cause of voluntary turnover
• HR manager plays a major role in ensuring
that employees remain reasonably satisfied
with their jobs
• Increasing job satisfaction is complicated
• Economy and labor market play a role
• Causes: Nature of the work, pay and
benefits, and supervisors and coworkers
LO 4

20
Figure
6.1 A Model of the Turnover Process
LO 4

21
Effects of Job Dissatisfaction
• Organizational commitment
• Degree to which an employee identifies with an
organization and is willing to exert effort on
behalf of the organization
• Organizational citizenship behaviors (O C
B’s)
• Employee behaviors that are beneficial to the
organization but are not formally required as
part of an employee’s job
LO 4

22
Measuring and Monitoring Job Satisfaction
• Attitude surveys
• Job descriptive index (J D I): Assesses satisfaction
with specific job aspects such as pay, the work
itself, and supervision
- Does not have a single overall measure of job
satisfaction
• Instruments that include questions about
desired versus experienced levels of
satisfaction
• Example: Faces scale
LO 4

23
Retention Strategies
• Job enrichment
• Making work meaningful and giving more
autonomy and opportunity to use skills
• Realistic job previews (RJP’s)
• Preemployment previews that provide accurate
and realistic information to the job applicant
• Stock options
• Rights given to employees to purchase a certain
number of shares of stock at a given price
LO 4

24
Managing HR during Mergers and
Acquisitions
• Employees become concerned with job
security
• Mergers and acquisition threaten a worker’s
self-identity
• Important to build employee identification with
the new corporate identity
• HR managers can serve as the center of
communication
LO 5

KEY TERMS
25
• Ethics
• Rightsizing
• Overtime
• Employee leasing
• Part-time workers
• Distributive justice
• Procedural justice
• Interactional justice
• Involuntary turnover
• Punishment
• Discipline
• Progressive
disciplinary plans
• Verbal warnings
• Written warnings
• Suspension
• Termination
• Employment at will
• Job dissatisfaction
• Job embeddedness

KEY TERMS
26
• Organizational
commitment
• Organizational
citizenship behaviors
(O C B’s)
• Realistic job previews
(RJP’s)
• Stock options

SUMMARY
27
• Ethics is an important aspect of decision-
making that is separate from the law
• Size of a firm’s workforce must be adjusted
to fit the changing needs of the business
• HR plays an important role in employee
terminations and retention
• To manage voluntary turnover, it is
important to understand why people leave
• Mergers and acquisitions cause most stress
to employees due to imminent layoffs

CH 6 BSAD 310 Fall 2019

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CH 6 BSAD 310 Fall 2019