Fundamentals Human Resource Chapter16 - BrainMass · Blackmer/Dover Resources, which makes heavy-duty pumps, experienced some re- ... Bill Fowler, whose job involves the precision

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Noe−Hollenbeck−Gerhert−Wright: Fundamentals of Human Resource Management

V. Meeting Other HR Goals 16. Creating and Maintaining High−Performance Organizations

© The McGraw−Hill Companies, 2003

513

Chapter 16Creating and MaintainingHigh-PerformanceOrganizations

1. Define high-performance work systems and identify the elements of such asystem.

2. Summarize the outcomes of a high-performance work system.

3. Describe the conditions that create a high-performance work system.

4. Explain how human resource management can contribute to highperformance.

5. Discuss the role of HRM technology in high-performance work systems.

6. Summarize ways to measure the effectiveness of human resourcemanagement.

IntroductionBlackmer/Dover Resources, which makes heavy-duty pumps, experienced some re-sistance while trying to get performance improvements flowing.1 To boost efficiencyand cut inventory costs, the company redesigned its production process. Replacingjobs in which assemblers built most of each pump at a single workstation, Blackmerset up an assembly line. The redesign was done by consultants without input from theproduction workers. The results included slower production, higher costs, and lower

What Do I Need to Know? After reading this chapter, you should be able to:




job satisfaction. Workers who intimately knew their machines and products felt thattheir expertise no longer mattered.

With sales declining, the company hired a new president, Carmine Bosco. Boscobrought a desire to learn from workers. Under Bosco, workers provided ideas for cor-recting problems in the production system. Production workers still learn differentjobs so that they can move to different parts of the factory as needed. Not everyonelikes the change. Bill Fowler, whose job involves the precision cutting of metal shaftsfor the pumps, says, “I don’t want to move around, because I love my routine—ithelps me get through the day.” To avoid unfamiliar assignments, Fowler—a 24-yearveteran with a track record of working faster than his coworkers—keeps his extensiveknowledge to himself. He figures his strategy also prevents management from usinghis knowledge against him by raising production standards. In spite of Fowler’s reac-tion, Blackmer’s management believes that most employees will be won over to thespirit of knowledge sharing. The company intends to convince them by building trustand setting up the right incentives so that employees know they will be rewarded, notpunished, for sharing their know-how.

Blackmer’s efforts at achieving high performance show that technology alone can-not do the trick. Someone in the organization has to recognize how changes will af-fect the organization’s people. The organization must design work and performancemanagement systems so that they bring out the best in the employees. These chal-lenges are some of the most crucial responsibilities of human resource management.

This chapter summarizes the role of human resource management in creating anorganization that achieves a high level of performance, measured in such terms aslong-term profits, quality, and customer satisfaction. We begin with a definition ofhigh-performance work systems and a description of these systems’ elements and out-comes. Next, we identify the conditions that contribute to high performance. We ex-plain how the various HRM functions can contribute to high performance. Finally,we introduce ways to measure the effectiveness of human resource management.

High-Performance Work SystemsThe challenge facing managers today is how to make their organizations into high-performance work systems, with the right combination of people, technology, andorganizational structure to make full use of resources and opportunities in achievingtheir organizations’ goals. To function as a high-performance work system, each ofthese elements must fit well with the others in a smoothly functioning whole. Manymanufacturers use the latest in processes including flexible manufacturing technology,total quality management, and just-in-time inventory control (meaning parts andsupplies are automatically restocked as needed), but of course, these processes do notwork on their own; they must be run by qualified people. Organizations need to de-termine what kinds of people fit their needs, and then locate, train, and motivatethose special people.2 According to research, organizations that introduce integratedhigh-performance work practices usually experience increases in productivity andlong-term financial performance.3

Creating a high-performance work system contrasts with traditional managementpractices. In the past, decisions about technology, organizational structure, and hu-man resouces were treated as if they were unrelated. An organization might acquire anew information system, restructure jobs, or add an office in another country withoutconsidering the impact on its people.4 More recently, managers have realized that suc-cess depends on how well all the elements work together.

514 PART 5 Meeting Other HR Goals

high-performancework systemThe rightcombination ofpeople, technology,and organizationalstructure that makesfull use of theorganization’sresources andopportunities inachieving its goals.

LO1




Organizationalstructure

Informationsystems

Taskdesign

People(selection,

training, anddevelopment)

Rewardsystems

Organization’sgoals Performance

Elements of a High-Performance Work SystemAs shown in Figure 16.1, in a high-performance work system, the elements that mustwork together include organizational structure, task design, people (the selection,training, and development of employees), reward systems, and information systems,and human resource management plays an important role in establishing all these.

Organizational structure is the way the organization groups its people into useful di-visions, departments, and reporting relationships. The organization’s top managementmakes most decisions about structure, for instance, how many employees report toeach supervisor and whether employees are grouped according to the functions theycarry out or the customers they serve. Such decisions affect how well employees coor-dinate their activities and respond to change. In a high-performance work system, or-ganizational structure promotes cooperation, learning, and continuous improvement.

Task design determines how the details of the organization’s necessary activities willbe grouped, whether into jobs or team responsibilities. In a high-performance worksystem, task design makes jobs efficient while encouraging high quality. In Chapter 4,we discussed how to carry out this HRM function through job analysis and job design.

The right people are a key element of high-performance work systems. HRM has asignificant role in providing people who are well suited and well prepared for their jobs.Human resource personnel help the organization recruit and select people with theneeded qualifications. Training, development, and career management ensure thatthese people are able to perform their current and future jobs with the organization.

Reward systems contribute to high performance by encouraging people to strive forobjectives that support the organization’s overall goals. Reward systems include theperformance measures by which employees are judged, the methods of measuring per-formance, and the incentive pay and other rewards linked to success. Human resourcemanagement plays an important role in developing and administering reward systems,as we saw in Chapters 8 through 12.

The final element of high-performance work systems is the organization’s informa-tion systems. Managers make decisions about the types of information to gather andthe sources of information. They also must decide who in the organization shouldhave access to the information and how they will make the information available.

CHAPTER 16 Creating and Maintaining High-Performance Organizations 515

FIGURE 16.1Elements of a High-Performance WorkSystem




Modern information systems, including the Internet, have enabled organizations toshare information widely. HR departments take advantage of this technology to giveemployees access to information about benefits, training opportunities, job openings,and more, as we will describe later in this chapter.

Outcomes of a High-Performance Work SystemConsider the practices of steel minimills in the United States. Some of these millshave strategies based on keeping their costs below competitors’ costs; low costs letthem operate at a profit while winning customers with low prices. Other steel min-imills focus on “differentiation,” meaning they set themselves apart in some way otherthan low price—for example, by offering higher quality or unusual product lines. Re-search has found that the minimills with cost-related goals tend to have highly cen-tralized structures, so managers can focus on controlling through a tight line of com-mand. These organizations have low employee participation in decisions, relativelylow wages and benefits, and pay highly contingent on performance.5 At minimillsthat focus on differentiation, structures are more complex and decentralized, so au-thority is more spread out. These minimills encourage employee participation andhave higher wages and more generous benefits. They are high-performance work sys-tems. In general, these differentiator mills enjoy higher productivity, lower scraprates, and lower employee turnover than the mills that focus on low costs.

Outcomes of a high-performance work system thus include higher productivity andefficiency. These outcomes contribute to higher profits. A high-performance work sys-tem may have other outcomes, including high product quality, great customer satis-faction, and low employee turnover. Some of these outcomes meet intermediate goalsthat lead to higher profits (see Figure 16.2). For example, high quality contributes tocustomer satisfaction, and customer satisfaction contributes to growth of the business.Likewise, improving productivity lets the organization do more with less, which sat-isfies price-conscious customers and may help the organization win over customersfrom its competitors. Other ways to lower cost and improve quality are to reduce ab-senteeism and turnover, providing the organization with a steady supply of experi-enced workers. In the previous example of minimills, some employers keep turnoverand scrap rates low. Meeting those goals helps the minimills improve productivity,which helps them earn more profits.

In a high-performance work system, the outcomes of each employee and workgroup contribute to the system’s overall high performance. The organization’s indi-viduals and groups work efficiently, provide high-quality goods and services, and so


LO2

In a high-performancework system, all theelements—people,technology, andorganizational structure—work together forsuccess.





Interesting Jobs Satisfied Workers

Low Turnover

Lower Costs

Satisfied Customers Higher Profits

Low Absenteeism

Higher Sales

Innovation Greater Productivity

High Quality

KnowledgeSharing

FIGURE 16.2Outcomes of a High-Performance Work System

on, and in this way, they contribute to meeting the organization’s goals. When the or-ganization adds or changes goals, people are flexible and make changes as needed tomeet the new goals. For example, an especially important outcome of human resourcedepartments during the high-growth 1990s was obtaining enough talented employees.When the economy began to slow in 2000 and 2001, many organizations relied onHR departments to help them focus more on the efficiency of their workforces. Yetanother issue surfaced following the September 2001 terrorist attacks on the Penta-gon and World Trade Center: knowing that all the organization’s employees are safeand accounted for.6 As employers of people working at those locations struggled to lo-cate their employees on September 11, 2001, they appreciated more than ever the im-portance of having accurate data about all personnel, including up-to-date emergencycontact information. This tragic lesson illustrates the importance of good HR infor-mation systems as an outcome that helps an organization perform even under theworst circumstances.

Conditions that Contribute to High PerformanceCertain conditions underlie the formation of a high-performance work system. Table16.1 shows examples of such conditions—common practices in high-performing or-ganizations. These practices, such as those involving rewards, employee empower-ment, and jobs with variety, contribute to high performance by giving employeesskills, incentives, knowledge, anatomy—and satisfaction, another condition associ-ated with high performance. Finally, ethical behavior is a necessary condition of high

LO3




performance because it contributes to good long-term relationships with employees,customers, and the public.

Teamwork and EmpowermentAs we discussed in Chapter 2, today’s organizations empower employees. They expectemployees to make more decisions about how they perform their jobs. One of themost popular ways to empower employees is to design work so that it is performed byteams. On a work team, employees bring together various skills and experiences toproduce goods or provide services. The organization may charge the team with mak-ing decisions traditionally made by managers, such as hiring team members and plan-ning work schedules. Teamwork and empowerment contribute to high performancewhen they improve job satisfaction and give the organization fuller use of employees’ideas and expertise.

For empowerment to succeed, managers must serve in linking and coordinatingroles7 and providing the team with the resources it needs to carry out its work. Themanager should help the team and its members interact with employees from otherdepartments or teams and should make sure communication flows in both direc-tions—the manager keeps the team updated on important issues and ensures that theteam shares information and resources with others who need it. Along with these ef-forts at coordination, the team’s manager should help team members resolve problemsas needed. To provide such help, the manager may have to refer team members to re-sources outside the team or organization.

Knowledge SharingFor the last decade, managers have been interested in creating a learning organiza-tion, that is, an organization in which people continually expand their capacity toachieve the results they desire.8 The people in a learning organization are constantly


• Teams perform work.• Employees participate in selection.• Employees receive formal performance feedback and are actively involved in

the performance improvement process.• Ongoing training is emphasized and rewarded.• Employees’ rewards and compensation relate to the company’s financial

performance.• Equipment and work processes are structured and technology is used to

encourage maximum flexibility and interaction among employees.• Employees participate in planning changes in equipment, layout, and work

methods.• Work design allows employees to use a variety of skills.• Employees understand how their jobs contribute to the finished product or

service.• Ethical behavior is encouraged.

TABLE 16.1Conditions for HighPerformance

SOURCE: Based on J. A. Neal and C. L. Tromley, “From Incremental Change to Retrofit: CreatingHigh-Performance Work Systems,” Academy of Management Executive 9 (1995), pp. 42–54; M. A.Huselid, “The Impact of Human Resource Management Practices on Turnover, Productivity, andCorporate Financial Performance,” Academy of Management Journal 38 (1995), pp. 635–72.

learningorganizationAn organization inwhich peoplecontinually expandtheir capacity toachieve the resultsthey desire.




learning. Their learning results from monitoring the business environment, taking ininformation, making decisions, and making changes in the organization based onwhat they learn. An organization’s information systems, discussed later in this chap-ter, have an important role in making this learning activity possible. Information sys-tems capture knowledge and make it available even after individual employees whoprovided the knowledge have left the organization. Ultimately, people are the essen-tial ingredients in a learning organization. They must be committed to learning andwilling to share what they have learned. A learning organization has the key featuresidentified in Figure 16.3: continuous learning, generation and sharing of knowledge,thinking that is critical and systematic, a culture that values learning, encouragementof flexibility and experimentation, and appreciation of the value of each employee.

Continuous learning is each employee’s and each group’s ongoing efforts to gatherinformation and apply the information to their decisions. In many organizations, theprocess of continuous learning is aimed at improving quality. To engage in continu-ous learning, employees must understand the entire work system they participate in,the relationships among jobs, their work units, and the organization as a whole. Em-ployees who continuously learn about their work system are adding to their ability toimprove performance.

Knowledge is most valuable to the organization when it is shared. Therefore, tocreate a learning organization, one challenge is to shift the focus of training awayfrom merely teaching skills and toward a broader focus on generating and sharingknowledge.9 In this view, training is an investment in the organization’s human re-sources; it increases employees’ value to the organization. Also, training contentshould be related to the organization’s goals. Human resource departments can sup-port the creation of a learning organization by planning training programs that meetthese criteria, and they can help to create systems for creating, capturing, and sharingknowledge.

Critical, systematic thinking occurs when organizations encourage employees to seerelationships among ideas and to test assumptions and observe the results of their ac-tions. Reward systems can be set up to encourage employees and teams to think innew ways.


LearningOrganization

Continuouslearning

Knowledgegenerationand sharing

Critical, systematicthinking

Learning culture

Valuing ofemployees

Encourgementof flexibility andexperimentation

FIGURE 16.3Key Features of aLearning Organization

SOURCE: Adapted from M. A. Gephart, V. J. Marsick, M. E. Van Buren, and M. S. Spiro,“Learning Organizations Come Alive,” Training and Development 50 (1996), pp.34–45.

continuous learningEach employee’sand each group’songoing efforts togather informationand apply theinformation to theirdecisions in alearningorganization.




A learning culture is an organizational culture in which learning is rewarded, pro-moted, and supported by managers and organizational objectives. This culture may bereflected in performance management systems and pay structures that reward em-ployees for gathering and sharing more knowledge. A learning culture creates theconditions in which managers encourage flexibility and experimentation. The organiza-tion should encourage employees to take risks and innovate, which means it cannotbe quick to punish ideas that do not workout as intended.

Finally, in a learning organization, employees are valued. The organization recog-nizes that employees are the source of its knowledge. It therefore focuses on ensuringthe development and well-being of each employee.

An example of a learning organization is Viant, a consulting firm that specializesin building e-businesses.10 When employees join the company, they start in the homeoffice in Boston, where they learn team skills, the company’s consulting strategy, andthe organization’s culture. There they meet members of upper management. On thejob, Viant employees work in settings that encourage interaction; no walls separatedesks, and snack areas are located conveniently nearby. Performance reviews empha-size growth in employees’ skills, and the company rewards knowledge sharing with in-centives in the form of stock options. Before each project, consultants complete abrief document describing the knowledge they need, the knowledge they can use fromother projects, what they need to create, and what they hope to learn that they canshare with their colleagues. These documents are posted on Viant’s internal website.Every six weeks, Viant’s knowledge management group posts an online summary ofwhat has been learned.

Job SatisfactionA condition underpinning any high-performance organization is that employees ex-perience job satisfaction—they experience their jobs as fulfilling or allowing them tofulfill important values. Research supports the idea that employees’ job satisfactionand job performance are related.11 Higher performance at the individual level shouldcontribute to higher performance for the organization as a whole. One study lookedat job satisfaction in teachers and the overall performance of their schools.12 It founda significant link between teachers’ satisfaction and their schools’ performance ac-cording to a variety of measures, including students’ behavior and academic achieve-ment. More recently, a study by Watson Wyatt Worldwide found that companies withhigh employee commitment (which includes employees’ satisfaction with their jobsand the company) enjoyed higher total returns to shareholders, a basic measure of acompany’s financial performance.13

Chapter 10 described a number of ways organizations can promote job satisfaction.They include making jobs more interesting, setting clear and challenging goals, andproviding valued rewards that are linked to performance in a performance manage-ment system that employees consider fair.

Some organizations are moving beyond concern with mere job satisfaction and aretrying to foster employees’ passion for their work. Passionate people are fully engagedwith something so that it becomes part of their sense of who they are. Feeling this wayabout one’s work has been called occupational intimacy.14 People experience occupa-tional intimacy when they love their work, when they and their coworkers care aboutone another, and when they find their work meaningful. Human resource managershave a significant role in creating these conditions. For example, they can select peo-ple who care about their work and customers, provide methods for sharing knowledge,





design work to make jobs interesting, and establish policies and programs that showconcern for employees’ needs. Such efforts may become increasingly important as thebusiness world increasingly uses employee empowerment, teamwork, and knowledgesharing to build flexible organizations.15

These trends rely on positive employee relationships. Perhaps that is why, whenthe Gallup Organization studied more than 105,000 employees, it found that one ofthe 13 circumstances associated with high productivity was “having a best friend atwork.”16 A case in point is David Liggett, who developed important friendships atwork. Those friends encouraged him, provided helpful feedback, and pitched inwhenever one of the friends needed help to meet a deadline. Fifteen years after meet-ing, the friends continue to get together.

EthicsIn the long run, a high-performance organization meets high ethical standards. Ethics,defined in Chapter 1, establishes fundamental principles for behavior, such as honestyand fairness. Organizations and their employees must meet these standards if they areto maintain positive long-term relationships with their customers and their community.

Ethical behavior is most likely to result from values held by the organization’s lead-ers combined with systems that promote ethical behavior. Charles O. Holliday Jr., thechairman and chief executive officer of DuPont Company, is an example of an exec-utive who cares about ethics. For Holliday, ethics is a matter of behaving in ways thatpromote trust: “Just saying you’re ethical isn’t very useful. You have to earn trust bywhat you do every day.”17 Holliday experienced this kind of leadership himself whenhe first joined DuPont. The CEO at that time, Dick Heckert, told him, “This com-pany lives by the letter of its contracts and the intent of those contracts,” speakingwith such conviction that he imprinted the lesson on Holliday’s mind.

A number of organizational systems can promote ethical behavior.18 These includea written code of ethics that the organization distributes to employees and expectsthem to use in decision making. Publishing a list of ethical standards is not enough,however. The organization should reinforce ethical behavior. For example, perfor-mance measures should include ethical standards, and misdeeds should receive swiftdiscipline, as described in Chapter 10. The organization should provide channels em-ployees can use to ask questions about ethical behavior or to seek help if they are ex-pected to do something they believe is wrong. Organizations also can provide train-ing in ethical decision making.

As these examples suggest, ethical behavior is a human resource management con-cern. The systems that promote ethical behavior include such HRM functions as


Research has found thatteachers’ job satisfactionis associated with highperformance of theschools where they teach.What are other ways inwhich organizations canpromote and foster jobsatisfaction?




training, performance management, and discipline policies. In today’s business cli-mate, ethical behavior also can affect recruiting. Recent scandals such as those at En-ron and Arthur Andersen have hastened the collapse of some companies and putthousands of employees out of work. (The second case at the end of this chapter de-scribes the situation at Arthur Andersen.) Job candidates want to avoid employerswhose misdeeds might cost them their jobs and their reputations. Many job candi-dates have asked recruiters how well their organizations promote ethical behavior.19

At United Technologies, for example, Patrick Gnazzo says the company’s formal prac-tices to promote ethics are “a great recruiting tool.” United Technologies and manyother companies are finding that ethical behavior and the reputation for it help themkeep the best employees as well as the best customers.

HRM’S Contribution to High PerformanceManagement of human resources plays a critical role in determining companies’ suc-cess in meeting the challenges of a rapidly changing, highly competitive environ-ment.20 Compensation, staffing, training and development, performance manage-ment, and other HRM practices are investments that directly affect employees’motivation and ability to provide products and services that are valued by customers.A study by Watson Wyatt Worldwide found that significant improvements in majorHR practices, including reward systems, recruitment, and employee retention, led tosignificant increases in the value of a company’s stock.21 Table 16.2 lists examples ofHRM practices that contribute to high performance.

Research suggests that it is more effective to improve HRM practices as a wholethan to focus on one or two isolated practices, such as the organization’s pay structureor selection system.22 Also, to have the intended influence on performance, the HRMpractices must fit well with one another and the organization as a whole.23 An exam-ple of an organization that has achieved this fit is FedEx, described in the nearby “BestPractices” box.

Job DesignFor the organization to benefit from teamwork and employee empowerment, jobsmust be designed appropriately. Often, a high-performance work system places em-


LO4

• HRM practices match organization’sgoals.

• Individuals and groups shareknowledge.

• Work is performed by teams.• Organization encourages continuous

learning.• Work design permits flexibility in

where and when tasks areperformed.

• Selection system is job related andlegal.

• Performance management systemmeasures customer satisfaction andquality.

• Organization monitors employees’satisfaction.

• Discipline system is progressive.• Pay systems reward skills and

accomplishments.• Skills and values of a diverse

workforce are valued and used.• Technology reduces time and costs

of tasks while preserving quality.

TABLE 16.2HRM Practices ThatCan HelpOrganizationsAchieve HighPerformance




At FedEx, the well-knownprovider of express packagedelivery, human resourcemanagement uses a strategybased on the company’sphilosophy that “employeesshould be doing the kind ofwork they want to do.” Tomatch candidates with the rightjobs, the company hosts avirtual career center on itswebsite (www.fedex.com). Thecareer center invites visitors toidentify their ideal job bychoosing location, type of work,and other variables from drop-down lists. Candidates alsoenter information about theirskills. As new positions becomeavailable, FedEx uses thissystem to sort through the dataand find candidates with theright interests and skills.

According to FedEx, theonline recruiting produces apool of candidates who aremore intelligent than average,even for jobs requiring manuallabor. Their intelligencecontributes to FedEx’sperformance at all levels.According to Larry McMahan,the company’s vice president ofhuman resources performanceand support, “Brighter peopleare better employees in everycategory, in every way. They’resafer, don’t take as much time

encouraging good attendance.To correct a problem with highabsenteeism, the companyadopted a policy for sick leave.Employees receive five days ofpaid sick leave. If they are sicklonger, they may use vacationdays. If they use fewer than fivedays, the company pays themfor unused sick days at the endof the year. When the companyadopted this policy,unscheduled medical absencesfell by almost one-third. FedExalso helps employees get backto work after an injury. Thecompany helps disabledemployees coordinate theirmedical benefits, encouragesthem to stick to their treatmentplan, and provides answers toquestions about the health caresystem. When employees canreturn to work but still mustrestrict their activities, thecompany tries to arrange forjobs they can handle as theyfinish their recovery.

Together, HR programs andpolicies at FedEx bring talentedpeople onboard, then motivatethem and provide them withresources they need to do theirjobs.

SOURCE: C. M. Solomon, “HR’s Pushfor Productivity,” Workforce, August2002, pp. 28–33.

off from work, and are betterperformers.”

The selection process atFedEx builds on its electronicrecruiting. Candidates takeskills tests that measure theirreasoning, reading, and mathskills. The company alsomeasures physical abilities andconducts background checks.From the test results, hiringmanagers can select the mostqualified candidates.

FedEx’s award-winningtraining programs prepareemployees for their jobs. Firstcomes an orientation program,which lasts up to one month.Electronic instruction materialstell employees about FedExand the employee’s job inrelation to the compnay.Additional training preparesemployees for specific kinds ofjobs. Couriers, for example,receive an additional threeweeks of training. Managersreceive 6 to 10 weeks oftraining during their first yearwith FedEx. Each year afterthat, they participate in another40 hours of training. Thetraining program supports thecompany’s position tht better-informed employees will bebetter-performing employees.

Human resource policies alsocontribute to productivity by

ployees in work teams where employees collaborate to make decisions and solve prob-lems. A good example of this approach to job design is GE Fanuc Automation NorthAmerica, a joint venture between General Electric Company and FANUC Ltd. of Japan.24 GE Fanuc Automation employs 1,500 people and maintains a strong

523

BESTPRACTICES

HR Policies Deliver High Performance for FedEx




commitment to quality. Its work design is based on the principle that employees whoare closest to the work have the best ideas for improvement. To encourage these em-ployees to contribute their ideas, the venture organized work into more than 40 workteams. The teams set their own goals and measure their success based on factors re-lated to the venture’s business goals. Each team spends at least one hour per weekmeasuring performance relative to the goals and discussing ways to improve. Eachfunction team within the business has a dedicated HR manager who helps the teamdevelop its strategies, accompanies the team on sales calls, and supports the team asneeded.

Recruitment and SelectionAt a high-performance organization, recruitment and selection aim at obtaining the kinds of employees who can thrive in this type of setting. These employees areenthusiastic about and able to contribute to teamwork, empowerment, and knowl-edge sharing. Qualities such as creativity and ability to cooperate as part of a teammay play a large role in selection decisions. High-performance organizations need se-lection methods that identify more than technical skills like ability to perform ac-counting and engineering tasks. Employers may use group interviews, open-endedquestions, and psychological tests to find employees who innovate, share ideas, andtake initiative.

Training and DevelopmentWhen organizations base hiring decisions on qualities like decision-making and team-work skills, training may be required to teach employees the specific skills they needto perform the duties of their job. Extensive training and development also are partof a learning organization, described earlier in this chapter. And when organizationsdelegate many decisions to work teams, the members of those teams likely will bene-fit from participating in team development activities that prepare them for their rolesas team members. In the previous example of GE Fanuc Automation North America,training supports the effectiveness of the joint venture’s work teams. All GE Fanucemployees receive more than 100 hours of training.25

Employee development is an important factor in IBM’s top ranking in a study ofthe “Top 20 Companies for Leaders,” jointly conducted by Hewitt Associates andChief Executive magazine. According to Randall MacDonald, IBM’s senior vice presi-dent of human resources, IBM had determined that leadership was one of four areasit had to focus on to achieve high performance. So the company charged all its ex-isting leaders with developing future leaders. Once a year, IBM calls together its topmanagers to select candidates for leadership development, and they work with thecandidates to create a development plan that meets their personal goals. By makingleadership development a part of the company’s routine processes, IBM removes thefear that coaching one’s replacement threatens one’s own career. MacDonald pointsout that planning for leadership is at least as important as other types of planning:“The [chief financial officer], when he gives one of our line guys $3 billion to go builda new plant, he doesn’t say, ‘Go build the plant and do what you want with it.’ No,that CFO and that line person are going to manage that asset. . . . Whatever hap-pened to the concept of people being our most important asset? Well if they are, weought to manage them.”26






To create high-performance worksystems, organizationsshould establishperformance goals thatare linked to meetingcustomers’ needs.Customers can beexternal or internal, suchas the ones pictured hereattending atraining/orientationsession conducted bysomeone in thecompany.

Individuals’behaviors

Individuals’skills and abilities

Objectiveresults

Situation(organizational culture,

economy, etc.)

Organization’s goals

Performance ManagementIn a high-performance organization, employees know the organization’s goals andwhat they must do to help achieve those goals. HR departments can contribute to thisideal through the design of the organization’s performance management system. Aswe discussed in Chapter 8, performance management should be related to the orga-nization’s goals. For example, teamwork is central to the success of the joint ventureat GE Fanuc Automation. Therefore, managers must support their teams, and supportof teamwork is one performance measure in the managers’ performance evaluations.27

At Extreme Logic, high performance comes from clear communication about whatkinds of behavior are needed. On its intranet, the Atlanta-based software companypublishes attributes and behaviors associated with success in each job, as well as theperformance standard for each attribute and behavior. Employees can go online at anytime to gauge whether they are meeting those standards.28

To set up a performance management system that supports the organization’s goals,managers need to understand the process of employee performance. As shown in Fig-ure 16.4, individual employees bring a set of skills and abilities to the job, and by ap-plying a set of behaviors, they use those skills to achieve certain results. But successis more than the product of individual efforts. The organization’s goals should influ-ence each step of the process. The organization’s culture and other factors influencethe employees’ abilities, behaviors, and results. Sometimes uncontrollable forces suchas the current economic conditions enter the picture, it mustn’t be forgotten—for

FIGURE 16.4Employee Performance asa Process




example, a salesperson can probably sell more during an economic expansion thanduring an economic slowdown.

This model suggests some guidelines for performance management. First, each as-pect of performance management should be related to the organization’s goals. Busi-ness goals should influence the kinds of employees selected and their training, the requirements of each job, and the measures used for evaluating results. Generally, thismeans the organization identifies what each department must do to achieve the de-sired results, then defines how individual employees should contribute to their de-partment’s goals. More specifically, the following guidelines describe how to make theperformance management system support organizational goals:29

• Define and measure performance in precise terms. Focus on outcomes that can be defined in terms of how frequently certain behaviors occur. Include criteria thatdescribe ways employees can add value to a product or service (such as throughquantity, quality, or timeliness). Include behaviors that go beyond the minimumrequired to perform a job (such as helping coworkers).

• Link performance measures to meeting customer needs. “Customers” may be the orga-nization’s external customers, or they may be internal customers (employees re-ceiving services from a coworker). Service goals for internal customers should berelated to satisfying external customers.

• Measure and correct for the effect of situational constraints. Monitor economic condi-tions, the organization’s culture, and other influences on performance. Measures ofemployees’ performance should take these influences into account.

This approach gives employees the information they need to behave in ways thatcontribute to high performance. In addition, organizations should help employeesidentify and obtain the abilities they need to meet their performance goals.

CompensationOrganizations can reinforce the impact of this kind of performance management bylinking compensation in part to performance measures. Chapter 12 described a num-ber of methods for doing this, including merit pay, gainsharing, and profit sharing. Asmall manufacturer called Headsets.com improved productivity by linking bonuses tosales volume; employees share a fixed percentage of the company’s total sales.30 Em-ployees at Headsets.com can see that if the company grows by hiring more workers,rather than by using the same number of workers to produce and sell more, the bonuswill be divided among more people. They can earn a bigger bonus if they get the sameresults by working more efficiently. Since starting this bonus plan, Headsets.com hasbeen able to grow more profitably. Compensation systems also can help to create theconditions that contribute to high performance, including teamwork, empowerment,and job satisfaction. For example, as discussed in Chapter 12, compensation can belinked to achievement of team objectives.

Organizations can increase empowerment and job satisfaction by including em-ployees in decisions about compensation and by communicating the basis for deci-sions about pay. When the organization designs a pay structure, it can set up a taskforce that includes employees with direct experience in various types of jobs. Someorganizations share financial information with their employees and invite them torecommend pay increases for themselves, based on their contributions. Employeesalso may participate in setting individual or group goals for which they can receivebonuses. Research has found that employee participation in decisions about pay poli-





A learning organization usesinformation technology toencourage employees to shareinformation with each other, andHR professionals can helpestablish these applications.Here are some ideas:

• Set up an intranet that allowsemployees to store and shareknowledge through Webpages and e-mail.

• Publish directories listing whatemployees do, what kinds ofknowledge they have, andhow to contact them.

• Develop “informationalmaps,” or charts that identify

time off from work to acquireknowledge or studyproblems. Establish policiesfor sabbaticals, attendanceat training programs, andother time away from theworkplace for learning, andcommunicate these on theintranet.

• Create an online library oflearning resources, such asjournals, technical manuals,training opportunities, andseminars. These can beavailable through theorganization’s intranet.

where specific knowledge isstored in the organization.

• Create the position of chiefinformation officer, whichincludes the responsibilityfor cataloging informationand enabling the sharing ofinformation within theorganization.

• When employees attendtraining programs, requirethat they give theircoworkers presentations orpost summaries on theintranet of what they havelearned from the programs.

• Allow employees to take

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HRHOW TO

Using Information Systems in a LearningOrganization

cies is linked to greater satisfaction with the pay and the job.31 And as we discussedin Chapter 11, when organizations explain their pay structures to employees, thecommunication can enhance employees’ satisfaction and belief that the system is fair.

HRM TechnologyHuman resource departments can improve their own and their organization’s perfor-mance by appropriately using new technology. New technology usually involves au-tomation—that is, using equipment and information processing to perform activitiesthat had been performed by people. Over the last few decades, automation has im-proved HRM efficiency by reducing the number of people needed to perform routinetasks. Information technology also provides ways to build and improve systems forknowledge generation and sharing, as part of a learning organization. The “HR How-To” box describes some ways of using information technology to create and shareknowledge.

HRM ApplicationsAs computers become ever more powerful, new technologies continue to be introduced.In fact, so many HRM applications are developed for use on personal computers thatpublications serving the profession (such as HR Magazine and Personnel Journal) de-vote annual issues to reviewing this software. Some of the technologies that have

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been widely adopted are transaction processing, decision support systems, and expertsystems.32

Transaction processing refers to computations and calculations involved in re-viewing and documenting HRM decisions and practices. It includes documenting de-cisions and actions associated with employee relocation, training expenses, and en-rollments in courses and benefit plans. Transaction processing also includes theactivities required to meet government reporting requirements, such as filling outEEO-1 reports, on which employers report information about employees’ race andgender by job category. Computers enable companies to perform these tasks more ef-ficiently. Employers can fill out computerized forms and store HRM information indatabases (data stored electronically in user-specified categories), so that it is easier tofind, sort, and report.

Decision support systems are computer software systems designed to help man-agers solve problems. They usually include a “what if?” feature that managers can useto enter different assumptions or data and see how the likely outcomes will change.This type of system can help managers make decisions for human resource planning.The manager can, for example, try out different assumptions about turnover rates tosee how those assumptions affect the number of new employees needed. Or the man-ager can test a range of assumptions about the availability of a certain skill in the la-bor market, looking at the impact of the assumptions on the success of different re-cruiting plans. Possible applications for a decision support system include forecasting(discussed in Chapter 5) and succession planning (discussed in Chapter 9).

Expert systems are computer systems that incorporate the decision rules used bypeople who are considered to have expertise in a certain area. The systems help usersmake decisions by recommending actions based on the decision rules and the infor-mation provided by the users. An expert system is designed to recommend the sameactions that a human expert would in a similar situation. For example, an expert sys-tem could guide an interviewer during the selection process. Some organizations useexpert systems to help employees decide how to allocate their money for benefits (asin a cafeteria plan) and help managers schedule the labor needed to complete proj-ects. Expert systems can deliver both high quality and lower costs. By using the deci-sion processes of experts, an expert system helps many people to arrive at decisionsthat reflect the expert’s knowledge. An expert system helps avoid the errors that canresult from fatigue and decision-making biases, such as biases in appraising employeeperformance, described in Chapter 8. An expert system can increase efficiency by en-abling fewer or less-skilled employees to do work that otherwise would require manyhighly skilled employees.

In modern HR departments, transaction processing, decision support systems, andexpert systems often are part of a human resource information system. Also, thesetechnologies may be linked to employees through a network such as an intranet. In-formation systems and networks have been evolving rapidly; the following descrip-tions provide a basic introduction.

Human Resource Information SystemsA standard feature of a modern HRIS is the use of relational databases, which storedata in separate files that can be linked by common elements. These common ele-ments are fields identifying the type of data. Commonly used fields for an HR data-base include name, Social Security number, job status (full- or part-time), hiring date,position, title, rate of pay, citizenship status, job history, job location, mailing address,


transactionprocessingComputations andcalculations involvedin reviewing anddocumenting HRMdecisions andpractices.

decision supportsystemsComputer softwaresystems designed tohelp managers solveproblems byshowing how resultsvary when themanager altersassumptions or data.

expert systemsComputer systemsthat supportdecision making byincorporating thedecision rules usedby people who areconsidered to haveexpertise in acertain area.




birth date, and emergency contacts. A relational database lets a user sort the data byany of the fields. For example, depending on how the database is set up, the usermight be able to look up tables listing employees by location, rates of pay for variousjobs, or employees who have completed certain training courses. This system is farmore sophisticated than the old-fashioned method of filing employee data by name,with one file per employee.

The ability to locate and combine many categories of data has a multitude of usesin human resource management. Databases have been developed to track employeebenefit costs, training courses, and compensation. The system can meet the needs ofline managers as well as the HR department. On an oil rig, for example, managementmight look up data listing employee names along with safety equipment issued andappropriate skill certification. HR managers at headquarters might look up data onthe same employees to gather information about wage rates or training programsneeded. Another popular use of an HRIS is applicant tracking, or maintaining andretrieving records of job applicants. This is much faster and easier than trying to sortthrough stacks of résumés. Nike, for example, had to throw away most of the 35,000unsolicited résumés it received until it began using the Resumix applicant trackingprogram.33 With relational databases, HR staff can retrieve information about specificapplicants or obtain lists of applicants with specific skills, career goals, work history,and employment background. Such information is useful for HR planning, recruit-ment, succession planning, and career development. Taking the process a step further,the system could store information related to hiring and terminations. By analyzingsuch data, the HR department could measure the long-term success of its recruitingand selection processes.

Human Resource Management Online: E-HRMDuring the last decade or so, organizations have seen the advantages of sharing in-formation in computer networks. At the same time, the widespread adoption of theInternet has linked people around the globe. As we discussed in Chapter 2, more andmore organizations are engaging in e-HRM, providing HR-related information overthe Internet. Because much human resource information is confidential, organiza-tions may do this with an intranet, which uses Internet technology but allows accessonly to authorized users (such as the organization’s employees). For HR professionals,Internet access also offers a way to research new developments, post job openings,trade ideas with colleagues in other organizations, and obtain government docu-ments. In this way, e-HRM combines company-specific information on a secure in-tranet with links to the resources on the broader Internet.


Apple’s recruiting homepage. Online recruitingoffers potential benefitsfor companies. Employerscan retrieve résumés attheir own websites. Theycan also use onlinetesting services to helpmake selection decisions.Potential employeesbenefit because they canread more about thecompany directly on thesite and easily apply orsubmit their résumé.




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The promise and challenge ofInternet technology inorganizations is that it enablesthem to review and restructuretheir processes, including thoseof human resourcemanagement. OracleCorporation is among thecompanies that have realizedgreat improvements inefficiency from applying thistechnology to HRM. Using e-business software has savedOracle over a billion dollars,and a significant part of thesavings came from thetransformation of HRM.

Oracle, the world’s secondlargest independent softwarecompany, must manageadministrative activities for ahuge global workforce. Notsurprisingly for a technologyleader, the company does soefficiently through its use ofautomation to create a “B2E”

Oracle Spells Human Resource Management “B2E”

resource staff can meet theneeds of more employees—1staffer for every 3,000employees. This efficiency hasenabled Oracle to grow inother departments withoutincreasing the budget forhuman resource management.At the same time, the focus ofHRM has shifted frompaperwork to business success.In the words of JoyceWesterdahl, Oracle’s vicepresident of human resources,“We will continue to add moreand more capabilities toempower employees andmanagers with the tools andknowledge they need to be aseffective and as productive aspossible.”

SOURCE: C. Collett, “Business toEmployee: Automating the HRFunction,” CMA Management 75, no. 7(October 1, 2001), p. 20.

(business-to-employee)relationship. Oracle has movedroutine, day-to-dayadministrative tasks online. Avariety of self-service tools letmanagers and employees findanswers and provideinformation on their computers.Before the change, HR staff hadbeen spending 6 out of every10 hours on simpleadministrative tasks. Byautomating those tasks, HRprofessionals have freed upmore time to focus on activitiesthat are more directlyproductive—for instance,recruiting, staffing, training, andcompensation.

The savings of the B2Eapproach go straight toOracle’s bottom line. To carryout all the HRM tasks, Oracleonce needed an HR staffperson for every 800employees. Now the human

E-HRM

A benefit of e-HRM is that employees can help themselves to the information theyneed when they need it, instead of contacting an HR staff person. For example, em-ployees can go online to enroll in or select benefits, submit insurance claims, or fillout employee satisfaction surveys. This can be more convenient for the employees, aswell as more economical for the HR department. The “e-HRM” box describes howOracle Corporation has obtained these benefits by moving many HRM services on-line. Similarly, at Cisco Systems, many HR activities are automated online.34 Whenemployees join the company, they log on, visit the “New Hire” page, and sign up forbenefits. They also see that the website is the place to file expense reports, look upproject information, and more. The site lets employees know when it is time for theirperformance review and lets them start the process with their supervisor. The em-ployee reviews an evaluation form, studies the expected behaviors, fills in needed in-formation, and sends the form to the supervisor. If the form requires information from




someone else in the company, the supervisor clicks on a link to request that informa-tion. The supervisor receives any requested information, completes the appraisalform, and meets with the employee to discuss the review. So much of the process isautomated that supervisors have more time to focus on the actual meeting with theemployee.

Most administrative and information-gathering activities in human resource man-agement can be part of e-HRM. For example, online recruiting has become a signifi-cant part of the total recruiting effort, as candidates submit résumés online. Employ-ers go online to retrieve suitable résumés from job search sites or retrieve informationfrom forms they post at their own websites. For selection decisions, the organizationmay have candidates use one of the online testing services available; these servicesconduct the tests, process the results, and submit reports to employers. Online ap-praisal systems can help managers make pay decisions consistent with company poli-cies and employee performance. Many types of training can be conducted online, aswe discussed in Chapter 7. Online surveys of employee satisfaction can be quick andeasy to fill out. Besides providing a way to administer the survey, an intranet is an ef-fective vehicle for communicating the results of the survey and management’splanned response.

Not only does e-HRM provide efficient ways to carry out human resource func-tions, it also poses new challenges to employees and new issues for HR managers toaddress. The Internet’s ability to link people anytime, anywhere has accelerated suchtrends as globalization, the importance of knowledge sharing within organizations,and the need for flexibility.35 These trends, in turn, change the work environment foremployees. For example, employees in the Internet age are expected to be highlycommitted but flexible, able to move from job to job. Employees also may be con-nected to the organization 24/7. In the car, on vacation, in airports, and even in thebathroom, employees with handheld computers can be interrupted by work demands.Organizations depend on their human resource departments to help prepare employ-ees for this changing work world through such activities as training, career develop-ment, performance management, and benefits packages that meet the need for flexi-bility and help employees manage stress.

Effectiveness of Human Resource ManagementIn recent years, human resource management at some organizations has responded tothe quest for total quality management by taking a customer-oriented approach. Foran organization’s human resource division, “customers” are the organization as awhole and its other divisions. They are customers of HRM because they depend onHRM to provide a variety of services that result in a supply of talented, motivated em-ployees. Taking this customer-oriented approach, human resource management de-fines its customer groups, customer needs, and the activities required to meet thoseneeds, as shown in Figure 16.5. These definitions give an organization a basis fordefining goals and measures of success.

One company that uses this approach is Whirlpool Corporation. The company’sHR managers identify their customer, define the need they can satisfy or the valuethey can provide, and identify the methods they must use to satisfy the customer.When Whirlpool planned to start a centralized service center, its plan called for


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hiring of 100 to 150 employees as call takers to process service requests from cus-tomers owning Whirlpool appliances and to schedule service calls. Whirlpool gave anHR manager the responsibility for developing a selection system for call takers. Themanager determined the customer in this instance was the operations manager incharge of phone service and the need was the delivery of qualified call takers. To meetthis need, the HR manager decided to use a combination of structured interviews andpaper-and-pencil tests. The company can evaluate the success of this program interms of whether it efficiently produces enough qualified call takers.

Depending on the situation, a number of techniques are available for measuringHRM’s effectiveness in meeting its customers’ needs. These techniques include re-viewing a set of key indicators, measuring the outcomes of specific HRM activity, andmeasuring the economic value of HRM programs.

Human Resource Management AuditsAn HRM audit is a formal review of the outcomes of HRM functions. To conductthe audit, the HR department identifies key functions and the key measures of busi-ness performance and customer satisfaction that would indicate each function is suc-ceeding. Table 16.3 lists examples of these measures for a variety of HRM functions:staffing, compensation, benefits, training, appraisal and development, and overall effectiveness. The audit may also look at any other measure associated with success-ful management of human resources—for instance, compliance with equal employ-ment opportunity laws, succession planning, maintaining a safe workplace, and posi-tive labor relations. An HRM audit using customer satisfaction measures supports thecustomer-oriented approach to human resource management.

After identifying performance measures for the HRM audit, the staff carries out theaudit by gathering information. The information for the key business indicators is usu-ally available in the organization’s documents. Sometimes the HR department has tocreate new documents for gathering specific types of data. The usual way to measure


Who Are OurCustomers?Line managersStrategic plannersEmployees

What Do OurCustomers Need?Committed employeesCompetent employees

How Do We MeetCustomer Needs?Qualified staffingPerformance managementRewardsTraining and development

Human Resource Management

FIGURE 16.5Customer-Oriented Perspective of Human Resource Management

HRM auditA formal review ofthe outcomes ofHRM functions,based on identifyingkey HRM functionsand measures ofbusinessperformance.





TABLE 16.3Key Measures of Success for an HRM Audit

BUSINESS INDICATORS CUSTOMER SATISFACTION MEASURES

SOURCE: Reprinted with permission excerpts from Chapter 1.5, “Evaluating Human Resource Effectiveness,” pp. 187–227, byAnne S. Tsui and Luis R. Gomez-Mejia, from Human Resource Management: Evolving Roles and Responsibilities; edited by LeeDyer. Copyright © 1988 by The Bureau of National Affairs, Inc., Washington DC 20037.

Average days taken to fill open requisitionsRatio of acceptances to offers madeRatio of minority/women applicants torepresentation in local labor marketPer capita requirement costsAverage years of experience/education of hires perjob family

Anticipation of personnel needsTimeliness of referring qualified workers to linesupervisorsTreatment of applicantsSkill in handling terminationsAdaptability to changing labor market conditions

Staffing

Per capita (average) merit increasesRatio of recommendations for reclassification tonumber of employeesPercentage of overtime hours to straight timeRatio of average salary offers to average salary incommunity

Fairness of existing job evaluation system inassigning grades and salariesCompetitiveness in local labor marketRelationship between pay and performanceEmployee satisfaction with pay

Compensation

Average unemployment compensation payment(UCP)Average workers’ compensation payment (WCP)Benefit cost per payroll dollarPercentage of sick leave to total pay

Promptness in handling claimsFairness and consistency in the application ofbenefit policiesCommunication of benefits to employeesAssistance provided to line managers in reducingpotential for unnecessary claims

Benefits

Percentage of employees participating in trainingprograms per job familyPercentage of employees receiving tuition refundsTraining dollars per employee

Extent to which training programs meet the needsof employees and the companyCommunication to employees about availabletraining opportunitiesQuality of introduction/orientation programs

Training

Distribution of performance appraisal ratingsAppropriate psychometric properties of appraisalforms

Assistance in identifying management potentialOrganizational development activities provided byHRM department

Employee appraisal and development

Ratio of personnel staff to employee populationTurnover rateAbsenteeism rateRatio of per capita revenues to per capita costNet income per employee

Accuracy and clarity of information provided tomanagers and employeesCompetence and expertise of staffWorking relationship between organizations andHRM department

Overall effectiveness





Summary

1. Define high-performance work systems and identify theelements of such a system.A high-performance work system is the right combina-tion of people, technology, and organizational structurethat makes full use of the organization’s resources and

opportunities in achieving its goals. The elements of ahigh-performance work system are organizational struc-ture, task design, people, reward systems, and informa-tion systems. These elements must work together in asmoothly functioning whole.

customer satisfaction is to conduct surveys. Employee attitude surveys, discussed inChapter 10, provide information about the satisfaction of these internal customers.Many organizations conduct surveys of top line executives to get a better view of howHRM practices affect the organization’s business success.

Analyzing the Effect of HRM ProgramsAnother way to measure HRM effectiveness is to analyze specific programs or activi-ties. The analysis can measure a program’s success in terms of whether it achieved itsobjectives and whether it delivered value in an economic sense. For example, if theorganization sets up a training program, it should set up goals for that program, suchas the training’s effects on learning, behavior, and performance improvement (re-sults). The analysis would then measure whether the training program achieved thepreset goals.

The analysis can take an economic approach that measures the dollar value of theprogram’s costs and benefits. Successful programs should deliver value that is greaterthan the programs’ costs. Costs include employees’ compensation as well as the coststo administer HRM programs such as training, employee development, or satisfactionsurveys. Benefits could include a reduction in the costs associated with employee ab-senteeism and turnover, as well as improved productivity associated with better se-lection and training programs.

In general, HR departments should be able to improve their performance throughsome combination of greater efficiency and greater effectiveness. Greater efficiencymeans the HR department uses fewer and less-costly resources to perform its func-tions. Greater effectiveness means that what the HR department does—for example,selecting employees or setting up a performance management system—has a morebeneficial effect on employees’ and the organization’s performance.

HRM’s potential to affect employees’ well-being and the organization’s perfor-mance makes human resource management an exciting field. As we have shownthroughout the book, every HRM function calls for decisions that have the potentialto help individuals and organizations achieve their goals. For HR managers to fulfillthat potential, they must ensure that their decisions are well grounded. As an exam-ple, we discussed telework in Chapter 4, as an option for work design that many or-ganizations have embraced to promote greater productivity and job satisfaction. Atthe same time, a review of the research literature shows that these assumptions abouttelework’s benefits are largely untested.36 Telework is but one example of an issue thatcan dramatically affect employees’ lives and organizations’ success yet remains openfor future investigation. The field of human resource management provides tremen-dous opportunity to future researchers and managers who want to make a differencein many people’s lives.





2. Summarize the outcomes of a high-performance worksystem.A high-performance work system achieves the organi-zation’s goals, typically including growth, productivity,and high profits. On the way to achieving these overallgoals, the high-performance work system meets suchintermediate goals as high quality, innovation, cus-tomer satisfaction, job satisfaction, and reduced absen-teeism and turnover.

3. Describe the conditions that create a high-performancework system.Many conditions contribute to high-performance worksystems by giving employees skills, incentives, knowl-edge, autonomy, and employee satisfaction. Teamworkand empowerment can make work more satisfying andprovide a means for employees to improve quality andproductivity. Organizations can improve performanceby creating a learning organization, in which peopleconstantly learn and share knowledge so that they con-tinually expand their capacity to achieve the resultsthey desire. In a high-performance organization, em-ployees experience job satisfaction or even “occupa-tional intimacy.” For long-run high performance, or-ganizations and employees must be ethical as well.

4. Explain how human resource management can con-tribute to high performance.Jobs should be designed to foster teamwork and em-ployee empowerment. Recruitment and selectionshould focus on obtaining employees who have thequalities necessary for teamwork, empowerment, andknowledge sharing. When the organization selects forteamwork and decision-making skills, it may have toprovide training in specific job tasks. Training also isimportant because of its role in creating a learning or-ganization. The performance management systemshould be related to the organization’s goals, with a fo-

cus on meeting internal and external customers’ needs.Compensation should include links to performance,and employees should be included in decisions aboutcompensation. Research suggests that it is more effec-tive to improve HRM practices as a whole than to fo-cus on one or two isolated practices.

5. Discuss the role of HRM technology in high-per-formance work systems.Technology can improve the efficiency of the humanresource management functions and support knowl-edge sharing. HRM applications involve transactionprocessing, decision support systems, and expert sys-tems, often as part of a human resource informationsystem using relational databases, which can improvethe efficiency of routine tasks and the quality of deci-sions. With Internet technology, organizations can usee-HRM to let all the organization’s employees helpthemselves to the HR information they need wheneverthey need it.

6. Summarize ways to measure the effectiveness of humanresource management.Taking a customer-oriented approach, HRM can im-prove quality by defining the internal customers whouse its services and determining whether it is meetingthose customers’ needs. One way to do this is with anHRM audit, a formal review of the outcomes of HRMfunctions. The audit may look at any measure associ-ated with successful management of human resources.Audit information may come from the organization’sdocuments and surveys of customer satisfaction. An-other way to measure HRM effectiveness is to analyzespecific programs or activities. The analysis can measuresuccess in terms of whether a program met its objectivesand whether it delivered value in an economic sense,such as by leading to productivity improvements.

Review and Discussion Questions

1. What is a high-performance work system? What are itselements? Which of these elements involve human re-source management?

2. As it has become clear that HRM can help create andmaintain high-performance work systems, it appearsthat organizations will need two kinds of human re-source professionals: One kind focuses on identifyinghow HRM can contribute to high performance. Theother kind develops expertise in particular HRM func-tions, such as how to administer a benefits programthat complies with legal requirements. Which aspect ofHRM is more interesting to you? Why?

3. How can teamwork, empowerment, knowledge shar-ing, and job satisfaction contribute to high perfor-mance?

4. If an organization can win customers, employees, or in-vestors through deception, why would ethical behaviorcontribute to high performance?

5. How can an organization promote ethical behavioramong its employees?

6. Summarize how each of the following HR functionscan contribute to high performance.a. Job designb. Recruitment and selection





c. Training and developmentd. Performance managemente. Compensation

7. How can HRM technology make a human resource de-partment more productive? How can technology im-prove the quality of HRM decisions?

8. Why should human resource departments measuretheir effectiveness? What are some ways they can goabout measuring effectiveness?

What’s Your HR IQ?

The student CD-ROM offers two more ways to checkwhat you’ve learned so far. Use the Self-Assessment exer-cise to test your ethical judgment. Then go online with

the Web Exercise to learn more about global organizationsthat have high-performance work systems.

Hanging in the New York office of Keefe, Bruyette &Woods Inc. is a painting of the American flag. A closelook reveals that the stripes are in fact names. These arethe 67 people who worked at KBW’s offices on the 88thand 89th floors of the World Trade Center and died onSeptember 11, 2001. The flag is the only obvious referenceto the tragedy. Indeed, to all appearances, KBW—whichmakes its money by researching, trading, and advisingbanks and financial-services firms—is prospering. It’s a bit-tersweet success. “No matter what horrible things you’vebeen through, life goes on,” says President Andrew M.Senchak. “It’s horrifying and glorious at the same time.”

Going on meant rebuilding the shattered firm, whichwas among the hardest hit. Since that day, as they havegrieved for their lost colleagues, Senchak, CEO John G.Duffy, and their staff have done more. Today, the recon-stituted KBW employs more people, takes in just as muchin commissions, and covers almost as many stocks as it didwhen the Twin Towers fell. Revenues are down 13 percentfrom a year ago, but that’s an impressive achievementgiven the economic climate. The firm’s resurrection is aresult of Herculean efforts by surviving employees, plusdozens of outsiders, some of whom radically changed theirlives to join. And, Duffy says, KBW “caught some breaksalong the way.”

The first two weeks were the toughest. The companyhad lost its co-chairman, a third of its staff, and all of itsNew York documents and computer files. Senchak—thenKBW’s vice chairman and the man who ran the companywhile Duffy was home mourning the death of his son,Christopher, an employee—recalls those early days as“fundamental chaos. There was no road map for what wehad to do.” Still, order soon emerged. KBW set up tempo-rary digs at the offices of Wachtell, Lipton, Rosen & Katz,a midtown law firm where Senchak had been on the

morning of September 11. KBW also shipped traders up toits Boston offices until securing temporary space at theBanc National de Paris.

A huge hurdle was filling the vacancies, a task madeimmeasurably simpler when Wall Street veterans, ex-Keefe employees, and even rivals began offering their ser-vices. One such person was Michael Corasaniti, anex–portfolio manager for Newberger Berman LLC whohad quit the rat race to teach part-time at Columbia Uni-versity, work at boutique research shop Graham FisherCompany, and spend more time with his young son. As hescanned the list of missing employees on KBW’s website,Corasaniti realized the firm needed his help. “It was like aphone call from God,” he says.

Corasaniti’s decision to accept a job as director of re-search marked a turning point. His presence promptedformer colleagues to come aboard, too. First to sign upwere two of Corasaniti’s partners from Graham Fisher.“That was huge,” says Duffy. “It sent the message thatKeefe was in good enough shape to join.” KBW’s reputa-tion for solid research helped, too. Before long, most ofMorgan Stanley’s San Francisco bank-analyst team hadjoined. Then two UBS Warburg analysts came on. “It waslike a waterfall,” says Corasaniti.

As KBW set about rebuilding its business, employeeshad to be creative. At Wachtell Lipton, where the invest-ment bankers set up shop, there weren’t enough phones togo around. So they used public ones to contact clients.“You’d see this Harvard MBA go into a booth, open hisbriefcase, and put the finishing touches on a deal,” saysSenchak. “Then he’d leave, and another banker would gointo the same booth.”

Whatever it took to keep deals flowing, they did. ByDecember 2001, KBW had closed 13, including a record-setting deal with First Tennessee National Corporation

BusinessWeek Case

From Devastation to High Performance





(FTN). The complicated deal with FTN required coordi-nating 85 small banks and creating and selling three typesof bonds. “Everyone at Keefe worked around the clock,”says Gary Grear, president of FTN Financial SecuritiesCorporation, FTN’s investment bank. “They were goingto get that deal done.”

There has been no letup this year [2002]. Corasanitihas taken up the goals laid out by his late predecessor,David S. Berry. “David projected 10 percent growth for2002. I want his budget met,” he says. That has put astrain on the new researchers. “No one has gotten a vaca-tion since they got here,” says Corasaniti. “Maybe in lateSeptember they can have a little time off.”

While KBW seems back on track, its execs concedetheir work is far from finished. In early September, con-struction at the new headquarters on Seventh Avenue and51st Street still wasn’t complete. Wires hung from the ceil-ing. Doors were barricaded with Wet Cement signs. Duffy’soffice was a cramped, unadorned space filled with boxes.

There is a nagging worry they all share: What if oper-ating in crisis mode was the easy part?

SOURCE: H. Timmons, “Keefe Bruyette: Up from Ground Zero,”BusinessWeek Online, September 16, 2002, www.businessweek.com.

Questions1. In terms of human resource management, what do you

think were the biggest challenges facing Keefe,Bruyette & Woods in the weeks after September 11,2001? Will the focus of HRM at the firm need tochange in the future? Why or why not?

2. In the period described by this case, what elements ofa high-performance work system do you see? Which ofthe conditions that contribute to high performance arepresent?

3. Why do you think the firm’s people are worried that“operating in crisis mode” might be “the easy part”?What can be “easy” about a crisis? What principles ofhigh-performance organizations might help in this sit-uation?

Case: A Giant Falls

Arthur Andersen, once a giant of the accounting world,crumbled into bankruptcy in a scandal that made interna-tional headlines. The firm bears the name of its founder,Arthur Andersen, a principled accountant who founded itto conduct audits. Basically, auditing involves reviewing asample of a client’s paperwork to make sure transactionsare being recorded properly. Andersen had a reputation forstrictly adhering to auditing principles. If a client threat-ened to go elsewhere unless Andersen signed off on ques-tionable reports, Andersen would say good-bye. Thanks toAndersen’s good reputation, the small Chicago firm grewto one of the nation’s Big Eight (and eventually, as firmsmerged, Big Six and Big Five).

From its early days, Andersen’s firm offered more ser-vices than auditing. If an audit uncovered a problem, thefirm offered to develop solutions—that is, it offered busi-ness consulting. During the 1980s, Andersen succeeded sowell at developing computerized business solutions that itsauditing became more automated and less profitable. In aclimate where Andersen’s consultants were generating farmore profits than the auditors, tension developed betweenthe two groups.

The differences between the auditors and the consul-tants involved more than profitability. The two groups rep-resented wholly different cultures. For an auditor, inde-pendence and accuracy are core values. The quality of anauditor’s work depends on accurate reporting of the facts asthey are, not as the client wishes them to be. Consultantsmust care about accuracy, too, but a consultant’s aim is to

improve the client’s success. The consultant is more di-rectly committed to the client’s interests. Also, consultantsbuild their practice by looking for areas in which they canhelp organizations improve, so Andersen’s consultantswere more oriented to selling than its auditors were. Thesedifferences shaped the way the auditors and consultantsmade decisions. In the words of Gresham Brebach, a headof consulting for Andersen during the 1960s, “Whenyou’ve got a gray area, the auditors would always push youtoward . . . the conservative view.” Consultants, in con-trast, are “there to influence change, to convince the clientto do something different, not to conform or comply.”

As the consultants’ role grew, the firm went hunting fordramatic revenue growth. In the 1970s, the firm’s Detroitoffice, headed by Dick Measelle, won the account of theshort-lived DeLorean Motor Company, owned by theflamboyant John DeLorean. Tipped off by the motor com-pany’s own financial executives, auditors discovered thatDeLorean was charging a wide range of personal expensesto the company. But when Measelle and other Andersenauditors met with DeLorean, they accepted the CEO’s ex-planations and let the expenses stand. Later, DeLorean’scompany collapsed, leaving the British government empty-handed after giving tens of millions of dollars in loans andgrants to bring a DeLorean plant to Belfast. The Britishgovernment sued Andersen for vouching for DeLoreanrather than disclosing the questionable accounting. An-dersen settled the suits—and promoted Measelle. He be-came the head of Andersen’s U.S. audit division in 1987,





and two years later, he took the helm of Andersen’s world-wide audit and tax practice.

Measelle and CEO Larry Weinbach charged Jim Ed-wards, head of the U.S. audit practice, with making thatpractice more profitable. They encouraged Edwards and hismanagers to reduce the number of auditors, often throughretirement incentives for the most experienced auditors—the ones most steeped in the old auditing culture. To winmore business from existing clients, the audit practice of-fered internal auditing, which studies a company’s financialstatements to answer management questions such aswhether the company is operating efficiently. Traditionally,companies use their own accountants for internal audits,and outside auditors review the books to report on the fair-ness and accuracy of the financial statements. When An-dersen began doing internal audits, it typically would putthe client’s accountants on its own payroll.

The pressure on the auditors continued to intensify.The consulting business eventually dwarfed auditing; itthen split away from Andersen to operate as a separatecompany named Accenture. Growth had to come fromthe audit division. The company rewarded partners whobrought in new business, even when audits failed to un-cover scandalous problems, including the collapse of Lin-coln Savings and Loan in 1992, allegations of fraudagainst Waste Management Inc. in 1999, and the collapseof Enron Energy Services in 2001. Settling the associatedlawsuits cost the firm tens of millions of dollars.

The Enron collapse was the final straw. Andersen em-ployees worked at Enron’s Houston headquarters, and for-mer Andersen employees were on Enron’s payroll doing in-ternal audits. The close ties between the auditor and itsimportant client (Enron paid Andersen $58 million in 2000alone) made it difficult for Andersen’s auditors to be impar-tial. As Enron crafted questionable deals in an apparent ef-fort to hide losses, Andersen’s auditors felt pressured to go

along. Patricia Grutzmacher, a former senior manager atAndersen who worked on the Enron account, testified thatwhen auditors insisted on unfavorable requirements, Enronmanagers would call Andersen senior partners and persuadethem to overrule the auditors’ advice. Carl Bass, an auditorand member of Andersen’s Professional Standards Group,remained steadfast, but Enron eventually persuaded Ander-sen to exclude him from the account.

When Enron’s schemes began to unravel and its stockplunged, many people questioned Andersen’s role in sign-ing off on Enron’s financial statements. The scandal wors-ened following publicity that Andersen employees hadbeen shredding documents related to the Enron account.In light of Andersen’s earlier questionable practices, in-cluding the audit of Waste Management, the Justice De-partment indicted Andersen for obstruction of justice.

The mighty accounting firm could not withstand thisblow to its reputation. On June 15, 2002, a jury found An-dersen guilty of obstruction of justice, and on August 31,Andersen shut down its auditing business.

SOURCE: “Civil War Splits Andersen,” Chicago Tribune, September 2, 2002,sec. 1, pp. 1, 14–15; “Ties to Enron Blinded Andersen,” Chicago Tribune,September 3, 2002, sec. 1, pp. 1, 8–9; “Repeat Offender Gets Stiff Justice,”Chicago Tribune, September 4, 2002, sec. 1, pp. 1, 12–13.

Questions1. What elements and conditions of a high-performance

work system did Arthur Andersen possess? Which didit lack?

2. How would human resource management at ArthurAndersen have needed to change when the firm’s goalsshifted from an emphasis on independence and techni-cal skill to an emphasis on profit growth?

3. How could human resource management have pro-moted ethical behavior and affected the course ofevents described in this case?

1. T. Aeppel, “On Factory Floors, Top Workers Hide Se-crets to Success,” The Wall Street Journal, July 1, 2002,pp. A1, A10.

2. S. Snell and J. Dean, “Integrated Manufacturing andHuman Resource Management: A Human CapitalPerspective,” Academy of Management Journal 35(1992), pp. 467–504.

3. M. A. Huselid, “The Impact of Human ResourceManagement Practices on Turnover, Productivity,and Corporate Financial Performance,” Academy ofManagement Journal 38 (1995), pp. 635–72; U.S. De-partment of Labor, High-Performance Work Practicesand Firm Performance (Washington, DC: U.S. Gov-ernment Printing Office, 1993).

4. R. N. Ashkenas, “Beyond the Fads: How LeadersDrive Change with Results,” Human Resource Plan-ning 17 (1994), pp. 25–44.

5. J. Arthur, “The Link between Business Strategy andIndustrial Relations Systems in American SteelMini-Mills,” Industrial and Labor Relations Review 45(1992), pp. 488–506.

6. “9/11: A Look Back,” Human Resource Executive,2002, pp. 1, 26+.

7. D. McCann and C. Margerison, “Managing High-Performance Teams,” Training and Development Jour-nal, November 1989, pp. 52–60; S. Sheman, “Secretsof HP’s ‘Muddled’ Team,” Fortune, March 18, 1996,pp. 116–20.

Notes





8. T. Stewart, “Brace for Japan’s Hot New Strategy,”Fortune, September 21, 1992, pp. 62–76.

9. T. T. Baldwin, C. Danielson, and W. Wiggenhorn,“The Evolution of Learning Strategies in Organiza-tions: From Employee Development to Business Re-definition,” Academy of Management Executive 11(1997), pp. 47–58; J. J. Martocchio and T. T. Bald-win, “The Evolution of Strategic OrganizationalTraining,” in Research in Personnel and Human Re-source Management 15, ed. G. R. Ferris (Greenwich,CT: JAI Press, 1997), pp. 1–46.

10. T. Stewart, “The House That Knowledge Built,” For-tune, October 2, 2000, pp. 278–80; Viant website,www.viant.com.

11. T. A. Judge, C. J. Thoresen, J. E. Bono, and G. K. Pat-ton, “The Job Satisfaction–Job Performance Rela-tionship: A Qualitative and Quantitative Review,”Psychological Bulletin 127 (2001), pp. 376–407; R. A.Katzell, D. E. Thompson, and R. A. Guzzo, “How JobSatisfaction and Job Performance Are and Are NotLinked,” Job Satisfaction, ed. C. J. Cranny, P. C.Smith, and E. F. Stone (New York: Lexington Books,1992), pp. 195–217.

12. C. Ostroff, “The Relationship between Satisfaction,Attitudes, and Performance,” Journal of Applied Psy-chology 77, no. 6 (1992), pp. 963–74.

13. Watson Wyatt Worldwide, WorkUSA 2002: Weather-ing the Storm (Watson Wyatt, October 2002, www.humancapitalonline.com).

14. P. E. Boverie and M. Kroth, Transforming Work: TheFive Keys to Achieving Trust, Commitment, and Passionin the Workplace (Cambridge, MA: Perseus Publish-ing, 2001), pp. 71–72, 79.

15. R. P. Gephart Jr., “Introduction to the Brave NewWorkplace: Organizational Behavior in the Elec-tronic Age,” Journal of Organizational Behavior 23(2002), pp. 327–44.

16. S. Shellenbarger, “Along with Benefits and Pay-checks, Employees Value Workplace Friends,” TheWall Street Journal Online, February 20, 2002,http://online.wsj.com.

17. C. Hymowitz, “CEOs Must Work Hard to MaintainFaith in the Corner Office,” The Wall Street Journal,July 9, 2002, p. B1.

18. K. Maher, “Wanted: Ethical Employer,” The WallStreet Journal, July 9, 2002, pp. B1, B8.

19. Ibid.20. W. F. Cascio, Costing Human Resources: The Financial

Impact of Behavior in Organizations, 3rd ed. (Boston:PWS-Kent, 1991); Watson Wyatt Worldwide, Wat-son Wyatt’s Human Capital Index: Human Capital as aLead Indicator of Shareholder Value, 2001/2002 SurveyReport (Watson Wyatt, October 2002, www.human-capitalonline.com).

21. Watson Wyatt, Watson Wyatt’s Human Capital Index.22. B. Becker and M. A. Huselid, “High-Performance

Work Systems and Firm Performance: A Synthesis ofResearch and Managerial Implications,” in Researchin Personnel and Human Resource Management 16, ed.G. R. Ferris (Stamford, CT: JAI Press, 1998), pp.53–101.

23. B. Becker and B. Gerhart, “The Impact of HumanResource Management on Organizational Perfor-mance: Progress and Prospects,” Academy of Manage-ment Journal 39 (1996), pp. 779–801.

24. G. Flynn, “HR Leaders Stay Close to the Line,”Workforce, February 1997, p. 53; General ElectricCompany, “World Class Excellence,” GE Fanuc Cor-porate Profile, GE website, www.ge.com/gemis/gefanuc.

25. Flynn, “HR Leaders Stay Close to the Line”; GE,“World Class Excellence.”

26. “Leadership: Ripe for Change,” Human Resource Ex-ecutive, 2002, pp. 60, 62+ (interview with RandallMacDonald).

27. Flynn, “HR Leaders Stay Close to the Line”; GE,“World Class Excellence.”

28. C. M. Solomon, “HR’s Push for Productivity,” Work-force, August 2002, pp. 28–33.

29. H. J. Bernardin, C. M. Hagan, J. S. Kane, and P. Vil-lanova, “Effective Performance Management: A Fo-cus on Precision, Customers, and Situational Con-straints,” in Performance Appraisal: State of the Art inPractice, ed. J. W. Smither (San Francisco: Jossey-Bass, 1998), p. 56.

30. J. Bailey, “Entrepreneurs Share Their Tips to Boost aFirm’s Productivity,” The Wall Street Journal, July 9,2002, p. B4.

31. L. R. Gomez-Mejia and D. B. Balkin, Compensation,Organizational Strategy, and Firm Performance(Cincinnati: South-Western, 1992); G. D. Jenkinsand E. E. Lawler III, “Impact of Employee Participa-tion in Pay Plan Development,” Organizational Be-havior and Human Performance 28 (1981), pp. 111–28.

32. R. Broderick and J. W. Boudreau, “Human ResourceManagement, Information Technology, and theCompetitive Edge,” Academy of Management Execu-tive 6 (1992), pp. 7–17.

33. J. Cohan, “Nike Uses Resumix to Stay Ahead in theRecruitment Game,” Personnel Journal, November1992, p. 9 (supplement).

34. Solomon, “HR’s Push for Productivity,” p. 31.35. Gephart, “Introduction to the Brave New Work-

place.”36. D. E. Bailey and N. B. Kurland, “A Review of Tele-

work Research: Findings, New Directions, andLessons for the Study of Modern Work,” Journal ofOrganizational Behavior 23 (2002), pp. 383–400.




540

During the Industrial Revolution acentury ago, workplace injuries wereso commonplace that they were sim-ply considered one of the hazards ofhaving a job. Children and adultswere often maimed or disfigured infactory accidents. Today, strict regula-tions cover safety in the workplace,guided by the U.S. Department of La-bor’s Occupational Safety and HealthAdministration (OSHA). But duringthe past couple of decades, as industryitself has changed, a different type ofinjury has emerged: musculoskeletaldisorders (MSDs). MSDs are injuriesresulting from overexertion and repet-itive motion, such as constantly lift-ing heavy loads or grabbing and twist-ing a piece of machinery. People whosit at computer workstations all dayare susceptiable to MSDs as well, par-ticularly carpal tunnel syndrome,which affects the nerves of the hand,wrist, and arm. According to OSHA,about one-third of repetitive stress in-juries, or 600,000, are serious enoughto require time off the job, whichmeans that businesses pay for these in-juries not only in medical costs but inlost productivity. They can also con-tribute to high employee turnover. Noone disputes that these injuries occur.But various experts, industry leaders,and politicians argue about how se-vere the injuries are, who should payfor them, what should be done aboutthem, and who takes ultimate respon-sibility for the safety of workers.

One aspect of the whole issue ofworkplace injuries is ergonomics—“the applied science of equipment de-sign, intended to reduce operator fa-tigue and discomfort, or as OSHA

Workplace Ergonomics Is Good Business

the National Association of Manufac-turers, argued that “there’s a centralflaw here and that is that there is noscientific—or no consensus in the sci-entific or medical community aboutthe causes of ergonomics injuries.”Debates over the proposed rules’ meritwere further clouded by the SmallBusiness Administration’s predictionthat implementing the standardswould cost industries $18 billion;OSHA had forecast a mere $4.2 bil-lion.

Just before he left office, PresidentBill Clinton signed the bill into law,which was overturned by incomingPresident George W. Bush and thenew Congress. Calling the workplacesafety regulations “unduly burden-some and overly broad,” Bush signedthe measure to roll back the newrules.

Where do these actions leaveworkers and businesses in regard toworkplace injuries? Legally, businessesare not required to redesign work sys-tems or continue full pay and benefitsfor an extended period after a work-related injury. But if the goal of acompany is to find and keep the bestemployees, perhaps developing goodergonomic practices makes good busi-ness sense. The high cost of treatmentand turnover, not to mention loweredproductivity, points toward preven-tion as a competitive strategy. “Goodergonomics in the office should not bea big burden on a company and maybe a way to retain good employees,”notes Peter Budnick, president andCEO of Ergo Web Inc., an ergonomicsconsulting firm in Utah. Gary All-read, program director at the Institute

puts it, the science of fitting the jobto the worker,” explains news corre-spondent Gwen Ifill. Ergonomics in-volves everything from developingnew equipment, including desk chairsthat support the back properly andflexible splints to support the wristwhile typing, to designing better waysto use the equipment, such as theproper way to hold a computermouse. Ergonomics standards are“about helping real people sufferingreal problems, problems like back in-juries and carpal tunnel syndrome,tendonitis—not minor aches orpains, but serious, life-altering in-juries,” notes Alexis Herman, formerSecretary of Labor.

Several years ago, OSHA proposednew guidelines for better ergonomicstandards, targeting jobs where work-ers perform repetitive tasks, whetherthey are engaged in poultry processingor delivering packages. The proposalrequired employers that received re-ports from workers who were sufferingfrom MSDs to respond promptly withan evaluation and follow-up healthcare. Workers who needed time offcould receive 90 percent of their payand 100 percent of their benefits. Notsurprisingly, arguments for and againstthe proposal broke out. OSHAspokesperson Charles Jeffers claimedthat the guidelines “will save employ-ers $9 billion every year from whatthey’ve currently been spending onthese problems.” Peg Seminario of theAFL-CIO noted that the guidelinesdid not go far enough, since they didnot cover “workers in construction,agriculture, or maritime, who havevery serious problems.” Pat Cleary, of

VIDEOCASE




for Ergonomics at The Ohio StateUniversity, remarks, “In my opinion,there’s enough research out there toshow that implementing some ofthese types of controls can signifi-cantly reduce workers compensationcosts. . . . [But] there are also a lot ofcompanies that aren’t as concernedabout the health and welfare of theiremployees, so they’re not attuned tothe things that can be done” to mini-mize workplace repetitive stress in-juries. In fact, they may not even re-alize that shifting an employee’scomputer screen from the side to dire-clty in front of the employee could ac-tually prevent an injury.

So perhaps the more savvy compa-nies can use good erogonomics as acompetitive strategy—to retain thebest workers, boost morale, and even

“OSHA Releases Final Version of WorkplaceErgonomics Rules,” Computerworld, November 13,2000, www.computerworld.com; “WorkingBetter,” Online NewsHour, video transcript,November 22, 1999, www.pbs.org.

QUESTIONS1. Do you agree or disagree that er-

gonomics in the workplace shouldbe covered by federal regulations?Explain your answer.

2. Choose a job with which you arefamiliar and discuss the possibili-ties for repetitive stress injuriesthat could occur on this job andways they could be prevented.

3. Imagine that you are the humanresource manager for a companythat hires workers for the job de-scribed in question 2. What stepsmight you encourage company of-ficials to take to identify and pre-vent potential MSDs?

enhance productivity. “Employershave every incentive to protect em-ployees,” says Tim Hammonds, presi-dent of the Food Marketing Institute.To that end many supermarkets andgrocery stores have already put er-gonomics programs in place to pre-vent workplace injuries—with orwithout federal regulations.

SOURCE: “Ergonomics Rules,” Workforce, June19, 2001, www.workforce.com; Jennifer Jones,“Bush Expected to Rescind OSHA Rules,”InfoWorld, March 22, 2001, www.cnn.com; MikeAllen, “Bush Signs Repeal of Ergonomics Rules,”Washington Post, March 21, 2001,www.washingtonpost.com; James Kuhnhenn,“House Joins Senate in Repeal of WorkplaceErgonomics Rules,” San Jose Mercury News,www.siliconvalley.com; Kathy Kiely, “HouseVotes to Repeal Ergonomics Rules,” USA Today,March 7, 2001, www.usatoday.com; David Espo,“Senate Votes to Repeal Ergonomics Rules,”ABCNews.com, March 6, 2001,www.abcnews.go.com; Patrick Thibodeau,

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