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Solution Manual for Framework for Human Resource Management, A, 7/E 7th Edition : 0132576147

PART FOUR EMPLOYEE AND LABOR RELATIONS

C H A P T E R E i g h t

Ethics and
Fair Treatment in
Human Resource Management 8
Lecture Outline
Overview
Ethics and Fair Treatment at Work
Why Ethics?
The Meaning of Ethics
Ethics and the Law
What Shapes Ethical Behavior at Work?
Ethics, Fair Treatment, and Justice
Fairness, Bullying and Victimization
Why Treat Employees Fairly? In Brief: This chapter explores
Rights and Fairness issues, policies, and problems related
Employee Discipline and Privacy to ethics, fair treatment, discipline,
The Three Pillars and termination of employees. These
Non-punitive Discipline
issues have become more critical in
Electronic Employee Privacy
Managing Dismissals
today’s environment.
Termination at Will
Grounds for Dismissal
Avoiding Wrongful Discharge Suits Interesting Issues: With the recent
Severance Pay events at Enron, WorldCom, and
Personal Supervisory Liability other scandals, ethics has become a
The Termination Interview
major issue in today’s world. It is
Outplacement Counseling
Exit Interviews
worth discussing what has changed to
Layoffs and the Plant Closing Law make this an issue. Is there more
Managing Voluntary Employee Turnover and unethical behavior or have standards
Retention changed, or is it simply that today’s
Managing Voluntary Turnover media and communications shed
Retention Strategies more light on the problems?
A Comprehensive Approach to Retaining
Employees
Managing Involuntary Turnover
Talent Management and Employee Retention
Employee Engagement
Why Engagement is Important
Actions that Foster Engagement
Monitoring Employee Engagement

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ANNOTATED OUTLINE

I. Ethics and Fair Treatment at Work

A. Why Ethics? — Including a discussion of ethics in a human resource

book, helps understanding what oils the wheels that make businesses
work; it is not theoretical. In addition, managers’ decisions that impact
employees almost always hold ethical consequences, such as workplace
safety and employee theft.

B. The Meaning of Ethics — Ethics refers to “the principles of conduct

governing an individual or a group.” Ethical decisions also involve
morality, which is society’s accepted standard of behavior. It would
simplify things if it were always clear which decisions were ethical and
which were not. Unfortunately, it is not.

C. Ethics and the Law — The law is not the best guide about what is ethical,
because something may be legal but not right, and something may be right
but not legal. “Don’t lie, don’t cheat, and don’t steal.” We were all raised
with essentially the same values. Ethics means making decisions that
represent what you stand for, not just what is legal.

D. What Shapes Ethical Behavior at Work? — Research suggests the

following forces that contribute to ethical behaviors. 1) Ethical behavior
starts with moral awareness. In other words, does the person even
recognize that a moral issue exists in the situation? 2) Managers can do a
lot to influence employee ethics by carefully cultivating the right norms,
peer behavior, leadership, reward system, and culture. 3) Problems arise
when people undergo “moral disengagement.” Doing so frees them from
the guilt that would normally accompany violating one’s ethical standards.
4) The most powerful morality comes from within. 5) Unmet goals
pursued blindly can contribute to unethical behavior. 6) Offering rewards
for ethical behavior can backfire. 7) Don’t inadvertently reward someone
for bad behavior. 8) Punish unethical behavior and model ethical behavior.
9) Openly discuss ethics. 10) Watch for new employees altering their
moral compasses to “adjust” their behaviors to what is acceptable in their
new organization.

E. Companies that employees view as “fair and just” also tend to score
higher on ethics.

F. Fairness, Bullying and Victimization — Bullying involves singling out

someone to harass and mistreat them physically, emotionally, or
psychologically. It involves three things:

136 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

 1. Imbalance of power
2. Intent to cause harm
3. Repetition
In addition, bullying can take the form of:
1. Verbal
2. Social
3. Physical
4. Cyber bullying

Research Insight: Research has suggested that individuals with higher

intellectual capacity often suffer bullying in school. People with high
cognitive abilities who behaved more independently were more likely to
be victimized by bullying.

G. Why Treat Employees Fairly? — The golden rule is one obvious reason.
Workplace unfairness can be blatant. For example, some supervisors are
workplace bullies, yelling and ridiculing their subordinates. Not
surprisingly, employees of abusive supervisors are more likely to quit their
jobs, and to report lower job and life satisfaction and higher stress if they
remain in those jobs. College instructors completed surveys regarding the
extent to which they saw their colleges as treating them with procedural
and distributive justice. The former refers to fair processes while the latter
refers to fair outcomes. Results indicated that instructors who perceived
high distributive and procedural justice reported higher organizational
commitment.

H. Rights and Fairness — An increasingly litigious workforce is another

reason to be fair.

II. Employee Discipline and Privacy

A. Disciplining employees is one task that should follow ethical guidelines.

B. The Three Pillars

1. Rules — a set of clear disciplinary rules and regulations is the first

pillar. The purpose of the rules is to inform employees ahead of time
what is and is not acceptable behavior.

2. Penalties — A system of progressive penalties is a second pillar of

effective discipline. The severity of the penalty is usually a function of
the type of offense and the number of times the offense has occurred.

3. Appeals Processes — Even companies without unions may have a

very formalized appeals process. Some companies establish
independent ombudsmen, neutral counselors from outside the normal

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 chain of command to whom employees can turn for confidential
advice.

C. Non-Punitive Discipline — aims to avoid disciplinary problems. It does

this by gaining employees’ acceptance of the rules and by reducing the
punitive nature of the discipline itself.

D. Electronic Employee Privacy — The four main types of employee privacy

violations upheld by courts are intrusion, publication of private matters,
disclosure of medical records, and appropriation of an employee’s name or
likeness for commercial purposes. Background checks, monitoring off-
duty conduct and lifestyle, drug testing, workplace searches, and
monitoring of workplace activities trigger most privacy violations.

1. Extent — In one survey, more than half of employers said they were
monitoring their employees’ incoming and outgoing e-mail. Many
organizations use GPS units to monitor their truckers’ and street
sweepers’ whereabouts. Some employers check employees’ personal
blogs or Facebook sites, to see if they’re publicizing work-related
matters.

2. Legal Issues—Electronic eavesdropping is legal—up to a point. E-

mail service may be intercepted under federal law when it is to protect
the property rights of the provider. One reason for explicit policy
statements is the risk that employers may be liable for illegal acts
committed by their employees via e-mail or blogging.

III. Managing Dismissals

Dismissal is the most drastic disciplinary step the manager can take. Because
of this, special care is required to ensure that sufficient cause exists for it.
However, EEO and other laws and court rulings increasingly limit
management’s right to dismiss employees.

A. Termination at Will — Without a contract, either the employee or the

employer could terminate at will the employment relationship.

B. Termination at Will Exceptions — Wrongful discharge is a dismissal that

violates the law or that fails to comply with contractual arrangements,
either stated or implied. Statutory, common law, and public policy
exceptions to termination at will exist.

C. Grounds for Dismissal — There are four bases for dismissal. In dismissing
an employee, the employer should take care to ensure that all keys and
company property are returned, Internet passwords disabled, and
employee accounts inactivated.

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 1. Unsatisfactory Performance — occurs when there is persistent failure
to perform assigned duties or to meet prescribed job standards.

2. Misconduct — is a deliberate and willful violation of the employer’s

rules. Insubordination is a form of misconduct, referring to
rebelliousness or disobedience.

3. Lack of Qualifications for the Job — results from an employee’s

inability to do the work assigned even when he or she is diligent.

4. Changed Requirements (or elimination) of the Job — results from an

employee’s inability to do the job after the employer changed the
nature of the job.

5. Insubordination (a form of misconduct in the list above) includes

willful disregard or disobedience of the boss’s authority or legitimate
orders.

D. Avoiding Wrongful Discharge Suites — Wrongful discharge occurs when

an employee’s dismissal does not comply with the law or with the
contractual arrangement. Avoiding wrongful discharge suits requires a
two-pronged approach. First, set up employment policies and dispute
resolution procedures that make employees feel they are treated fairly.
Second, do the preparatory work, paying particular attention to the
employee handbook in order to avoid such suits.

E. Severance Pay — while not a legal requirement, makes good sense for
most employers in that it takes the sting out of dismissal. It is also a
common practice, depending on the reason for dismissal, such as
downsizings. Such payments are humanitarian, help bridge the gap to
future employment, and are good public relations.

F. Personal Supervisory Liability — Courts sometimes hold managers

personally liable for their supervisory actions. Managers should be fully
familiar with applicable federal, state, and local statutes and know how to
uphold their requirements. There are several ways to avoid creating
situations in which personal liability becomes an issue. 1) Follow
company policies and procedures. 2) Administer the discipline in a
manner that does not add to the employee’s emotional hardship. 3) Do not
act in anger, because doing so undermines the appearance of objectivity
and results in defensiveness or other undesirable employee behavior. 4)
Finally, utilize the HR department for advice regarding how to handle
difficult disciplinary matters.

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 G. The Termination Interview — Guidelines include: 1) Plan the interview
carefully, 2) get to the point, 3) describe the situation, 4) listen, 5) review
all elements of the severance package, and 6) identify the next steps to
provide some structure to the employee being terminated.

1. Outplacement Counseling — is a systematic process by which

someone you’ve terminated is trained and counseled in the techniques
of conducting a self-appraisal and securing a new job appropriate to
his/her needs and talents.

2. Exit Interviews — Many employers conduct exit interviews with

employees who are leaving the firm. They aim to elicit information
about the job or related matters that might give the employer a better
insight into what is right—or wrong—about the company.

H. Layoffs and the Plant Closing Law

1. The Plant Closing Law (the Worker Adjustment and Retraining

Notification (WARN) Act) — requires employers of 100 or more
employees to give 60 days’ notice before closing a facility or starting a
layoff of 50 people or more. It simply gives employees time to seek
other work or retraining by giving them advance notice of the
shutdown and is usually temporary.

2. The Layoff Process — There is a survivor mentality (or guilt) that

exists among those who remain where there have been layoffs. The
first place to look, when preparing for a large-scale layoff, especially,
is to the performance appraisal of each employee.

3. Layoff Effects — It’s not surprising that layoffs tend to result in

deleterious psychological and physical health outcomes for employees
who lose their jobs as well as for the survivors who face uncertainty
and discomfort. Alternatives to layoffs make particular sense for high
performance work system-type firms that depend on employee
expertise.

I. Adjusting to Downsizings and Mergers

Firms often use downsizing—reducing, usually dramatically, the number

of people the firm employs—to better their financial position. Yet many
firms discover operating earnings don’t rise after major cuts. Low morale
among those remaining may be part of the problem. Regardless of why
you’re downsizing, think through the process, both to avoid unnecessary
consequences and to ensure the process is fair. Some guidelines for
implementing a reduction in force are provided. The process should
involve: (1) make sure you let go the right people; (2) comply with all

140 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

 applicable laws; (3) execute the dismissals in a just and fair manner; and
(4) manage security issues.

IV. Managing Voluntary Employee Turnover and Retention

A. Involuntary employee dismissals and layoffs are two reasons why

employees leave their firms. Voluntary turnover is the rate at which
employees leave their firms and varies significantly between industry
sectors.

B. Effective management of voluntary turnover is an important aspect of

management. Reasons given for leaving include pay, promotions, work-
life balance, career development, and health care benefits.

C. Retention Strategies — are a talent management issue. Identifying the

issues is a first step to developing a retention strategy. Open door policies
and anonymous hotlines can also contribute but only if the organization
pays attention to and reacts to the information employees provide.

D. A Comprehensive Approach to Retaining Employees — Effective

retention begins with proper selection and hiring. The other elements
include: professional growth; providing career direction; meaningful work
and ownership; recognition and rewards; culture and environment;
promoting life/work balance; and acknowledging achievements.

E. Managing Involuntary Turnover — Dismissals and layoffs are inevitable

due to job restructuring, competitive pressures and other reasons. Layoffs
due to performance issues are sometimes avoidable.

F. Talent Management and Employee Retention — requires focusing

augmented efforts on the most important employees.

G. Job Withdrawal — represent “actions intended to place physical or

psychological distance between employees and their work environments.”

H. Dealing with Job Withdrawal — The most effective ways to develop

withdrawal-reducing strategies is by reducing a job’s negative effects and
increasing its positive effects. Examples of such effects are provided.

V. Employee Engagement

A. Why Engagement is Important — Many employee behaviors, including

turnover and withdrawal, reflect the degree to which employees are

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 “engaged." That is, people who are engaged feel an obligation, promise or
agreement to execute the scope of their promise.

B. Actions that Foster Engagement — involve understanding how they and

their departments contribute to their company’s success and get a sense of
accomplishment from the work they do.

C. Monitoring Employee Engagement — An example of what the consulting

firm Accenture is provided that includes assessing employee’s pride,
looking at who stays with the company, and the extent to which
employees take an active role in the overall success of the organization.

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KEY TERMS

Ethics The principles of conduct governing an individual or group.

Bullying Singling out someone to harass and mistreat.

Discipline A systematic process that encourages employees to behave

sensibly at work.

Guaranteed fair Employer programs that are aimed at ensuring that all employees
treatment are treated fairly, generally by providing formalized,
well-documented, and highly publicized vehicles through which
employees can appeal any eligible issue.

Terminate at will The employee could resign, or the employer could dismiss the
employee for any reason, at will.

Insubordination Willful disregard or disobedience of the boss’s authority or

legitimate orders; criticizing the boss in public.

Wrongful discharge An employee dismissal that does not comply with the law or does
not comply with the contractual arrangement stated or implied by
the firm via its employment application forms, employee manuals,
or other promises.

Termination interview The interview in which an employee is informed of the fact that
he/she has been dismissed.

Outplacement counseling A systematic process by which a terminated person is trained and

counseled in the techniques of self-appraisal and securing a new
position.

Exit interview An interview with employees who are leaving the firm. The aim is
to elicit information that might give the employer a better insight
into what is right—or wrong— about the company.

Layoff A situation in which there is a temporary shortage of work, and

employees are told there is no work for them but that management
intends to recall them when work is again available.

Downsizing Refers to the process of reducing, usually dramatically, the number

of people employed by the firm.

Job withdrawal Actions intended to place physical or psychological distance

between employees and their work environments

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Engagement Refers to being psychologically involved in, connected to, and
committed to getting one’s job done.

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DISCUSSION QUESTIONS

1. Provide three examples of behaviors that would probably be unethical but legal, and
three that would probably be illegal but ethical. Student answers will vary but can
include: abortion is legal in some places, but some consider it unethical. The death penalty is
also legal in many states, but a number of individuals consider it unethical. Keeping money
that someone dropped is legal, but again, many would find it unethical. Smoking cigarettes in
public is legal in some places, but some may find it disrespectful and perhaps even unethical.
Examples of illegal but ethical behaviors may include: making personal long-distance calls
using company phones, duplicating company-owned software for use at home without a
license, falsifying the number of hours worked, or much more serious and illegal practices,
such as embezzling money from the business, or falsifying business records. The discussion
should include the differences between ethics and morality and the differences between
values and attitudes and beliefs.

2. List 10 things your college or university does to encourage ethical behavior by students
and/or faculty. Student answers will vary but should include references to published codes
of conduct and ethics. You may wish to discuss an example of what a student would be
subjected to if discovered plagiarizing or cheating on a test and why he or she should go
through such a process.

3. You need to select a nanny for your or a relative’s child, and want someone ethical.
Based on what you read in this chapter, what would you do to help ensure you ended up
hiring someone ethical? Asking questions of the candidates and former employers would be
a good starting place. Questions having to do with moral awareness would be useful. In other
words, does the person even recognize that a moral issue exists in a given situation? To what
extent is a given candidate morally disengaged? For example, you’re more likely to harm
others or treat them badly when you view them as “outsiders.” Ask nanny candidates what
they would do if a child from a family of a different race or religion wanted to play with the
child in the household. Ask what they consider to be fair treatment and ask for a specific
example of where they had to treat others fairly in a given difficult situation.

4. Explain how you would ensure fairness in disciplining, discussing particularly the
prerequisites to disciplining, disciplining guidelines, and the discipline without
punishment approach. A fair discipline process is based on three prerequisites: rules and
regulations, a system of progressive penalties, and an appeals process. Inform employees
ahead of time as to what is and is not acceptable behavior. Progressive penalties range from
oral warnings to written warnings to suspension from the job to discharge; the severity is a
function of the severity of the offense and, in some cases, the number of times the offense
has occurred. Discipline guidelines include the need to determine whether there was “just
cause” for disciplinary action by: 1) using discipline in line with the way management
usually responds to similar incidents; 2) warning the employee of the consequences of the
alleged misconduct; 3) punishing for violation of rules that are “reasonably related” to the
efficient and safe operation of the work environment; 4) investigating adequately; and (5)
applying rules and employee’s past history. Fairness is built into the system of discipline

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 without punishment in that the punitive nature of discipline is reduced while there is an
attempt to gain the employee’s acceptance of the rules.

5. Why is it important to manage dismissals properly? With the increased likelihood that
terminated employees will sue for wrongful discharge, the employer must manage dismissals
properly to be prepared to defend the company in the courts. In addition, proper handling of
discharged former employees contributes to creating a positive image of the company in the
community.

INDIVIDUAL AND GROUP ACTIVITIES

1. Working individually or in groups, interview managers or administrators at your

college in order to identify the employee discipline process. Do they think it is effective?
What does the employee (or faculty members) think of the programs in use? Depending
on the organization chosen, the response here should be quite individualized. Check student
answers for evidence that they applied the principles of this chapter in that they sought to
identify methods of two-way communications that are listed in the text. Seek to engage in
discussion if there are discrepancies between the managers’ views of effectiveness of the
program and the employees’ views. What causes these discrepancies?

2. Working individually or in groups, obtain copies of the student handbook for your
college and determine to what extent there is a formal process through which students
can air grievances. Do you think the process should be an effective one? Based on your
contacts with other students, has it been an effective grievance process? Why or why
not? Again, depending on the organization, the answers will be different. Check student
answers for understanding of the principle elements of grievance procedures or guaranteed
fair-treatment programs.

3. Working individually or in groups, determine the nature of the academic process in

your college. Do you think it is effective? Based on what you read in this chapter, would
you recommend any modifications? Student answers should reflect an understanding of the
principle of fairness in disciplining, discipline guidelines, and discipline without punishment.

146 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

4. What are the techniques you would use as alternatives to traditional discipline? What
do such alternatives have to do with “organizational justice”? Why do you think
alternatives like these are important, given industry’s need today for highly committed
employees? Coaching, mentoring, performance improvement plans, and other methods of
improving an employee’s performance can help retain employees. Often, poor performance
is not the result of “bad” employees, but the product of poor management communication of
expectations, poor processes, or other factors beyond the control of the employee. These
cases point out the need for an organizational justice that concentrates on identifying the
process problem rather than finding a scapegoat to fire.

5. Many rightfully offer IBM as an example of an employer that works hard to improve
employee retention and engagement. Browse through the employment pages of IBM’s
website (such as www-03.ibm.com/employment/build_your_career.html). In this
chapter, we discussed actions employers can take to improve employee retention and
engagement. From the information on IBM’s Web pages, what is IBM doing to support
retention and engagement? Student answers will vary but should include some of the basic
elements from this chapter such as “…gain knowledge in your field of expertise, work in a
stimulating environment, and be rewarded for outstanding performance.”

APPLICATION EXERCISES

Case Incident: Enron, Ethics, and Organizational Culture

1. Based on what you read in this chapter, summarize in one page or less how you would
explain Enron’s ethical meltdown. Student answers will vary. However, they should show
a clear understanding of the concepts covered in the chapter and how to apply those to the
Enron case. Their response should center on organizational culture. Ethics codes do not
always have the desired effect because it is not what the boss says, but what they do that is
important for ethical behavior.

2. It is said that when one securities analyst tried to confront Enron’s CEO about the
firm’s unusual accounting statements, the CEO publicly used vulgar language to
describe the analyst, and that Enron employees subsequently thought doing so was
humorous. If true, what does that say about Enron’s ethical culture? The response
should demonstrate a clear understanding of organizational culture.

3. This case and this chapter both had something to say about how organizational culture
influences ethical behavior. What role do you think culture played at Enron? Give five
specific examples of things Enron’s CEO could have done to create a healthy ethical
culture. Organizational culture was a central tenant of unethical behavior. Despite having a
code of ethics, a reporting system, as well as training, Enron’s culture tolerated unethical
behavior. Enron’s leaders could have clarified behavioral expectations, used signs and
symbols to communicate the message, provided physical support for ethical values, used
illustrative stories to communicate specific behaviors desired, and participated in organizing
rites and ceremonies.

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Solution Manual for Framework for Human Resource Management, A, 7/E 7th Edition : 0132576147

Continuing Case: Carter Cleaning Company

1. What would you do and why? The focus here should be on creating a reasonable policy and
publicizing it. A clear explanation as to why it is important to be customer-focused and view
their place of business through the eyes of their customers should be provided.

2. Should a disciplinary system be established at Carter Cleaning Centers? Yes. This will
provide structure and guidelines that will help employees know what to do in varying
conditions. Rules, penalties and the appeals process should be included in the system.

3. If so, what should it cover? How would you suggest it deal with a situation such as the
one with the errant counter people? Since the counter people did not have a discipline
system to guide them, a discussion should be held first with the store manager and then with
the manager and the employees. They should be provided with information about the system
and the reasons why customer perceptions of their place of business are important.

4. How would you deal with the store manager? The store manager was unaware of any
policies affecting such behavior. However, once a policy is put into place, the store manager
would need to support company policy and coach and counsel employees to help them
overcome what had come to be acceptable.

Experiential Exercise: The Cloning Dilemma

Purpose: The purpose of this exercise is to provide you with some experience in analyzing and
handling an ethics-based situation.

Required Understanding: Students should be thoroughly familiar with the following case,
“Botched Batch.” However, do not read the “Award” or “Discussion” sections until after the
groups have completed their deliberation.

How to Set up the Exercise: Divide the class into groups of four or five students. Each group
should take the arbitrator’s point of view and assume that they are to analyze the case and make
the arbitrator’s decision. Review the case again at this point, but please do not read the award
and discussion. Each group should answer the following questions: 1) What would your decision
be if you were the arbitrator? Why? 2) Do you think that following their experience in this
arbitration the parties will be more or less inclined to settle grievances by themselves without
resorting to arbitration?

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