Section 2

Strategy and HRM

Business Model:

How business creates value for customers profitably?
Contribution Margin
o Cost price – Variable cost
Gross Margin
o Number of pieces sold * Gross Margin

Strategic Management:

Artful planning and management
Skillful employment and coordination of tactics

Components of Strategic management process:

While trying to compete in the market, with what are we going to
compete? Is an important question to be addressed? Answer can be
Machines, people…

Role of Human resources in providing strategic competitive advantage

Emergent Strategies
o Strategies that evolve from grass roots of organization, can be
thought of what organizations actually do, rather than intended to
Intended Strategies
o Rational decision making process by top level managers aimed
towards a predetermined goal

Legal Environment:

Exposure control plan

Osha Inspections:

o Reviews the employer records of illness, death, injuries
o Factory visit
o Interview to employees
o Talk to Employer’s
Citations and penalties

Identifying and communicating hazard
Reinforcing safe practices
Promoting safety internationally

Lower Back Disability – LBD, Eye injuries

Activities of HRM: Strategic Management of HRM Function: .

3. 4. grow them and keep them Put our users first Put ur own oxygen mask before assisting others Be ready for change . Google Four pronged people operation strategy: 1. 2. Find them .

Measuring HRM Effectiveness:   Marketing the function o Does HRM contribute towards the bottom line of the business? Providing accountability o Is HRM is solving its objectives efficiently using its budget? Approach for Evaluating Efficiencies:   Internal Customer – employees Analytical approach o Cost benefit analysis .

Utility analysis  Estimates the financial impact of the employee behaviors o Wellness program – to reduce cost of healthcare o This approach can increase the effectiveness of the firm o But very complex to measure Group people based on task performance and people performance o  Improving HRM Effectiveness: HRM Effectiveness can be improved through .

  Process Redesign Though use of New technology – HRM Information Systems .


Workflow analysis and organization structure .Section 3: Analysis and Design of Work Job Analysis:  Analyses of existing jobs. and compensation. Job Design  Redesigning of existing jobs to make them more efficient and motivating to jobholders. to gather information for other human resource management practices such as selection. training. performance appraisal.

    Analysis work output Analyzing work process Analyzing work inputs Organizational Structure:    Centralization Departmentalization Structural Configuration .

    Unpredictable markets – Divisional Predictable markets – Functional Organization should have a mix of both centralized and decentralized o Shared service – Highly centralized – Eg: Payroll o Center of Excellence – Centralized o Third decentralized subunit Structure and Nature of Jobs: o Functional – jobs are narrow and highly specific .

Job Analysis:        This is needed for o Work redesign o Human resource planning o Selection o Training o Performance appraisal o Career planning o Job evaluation – Dollar value for each job Importance of Job analysis to Line managers Job description Job Specification – Skills that a person should posses Sources of job analysis information o Subject matter experts Job analysis methods o Position analysis questionnaire The occupational informational network Job Design .

2. 4. Skill variety Task identity Autonomy Feedback Task significance Biological Approach – Physical capabilities and limitations Perceptual Motor Approach  Mental capabilities and limitations .Motivational approach 1. 5. 3.

Human resource planning Forecasting Determining labor demand Determining labor supply Human resource recruitment process .

   Employment at will policies Due process policies Recruiters o Functional area o Traits o Realism o Enchasing Recruiter Impact .


0 – no relationship .Section 4: Selection and placement Standards for selection: 1. Reliability Validity Generalizability Utility Legality Reliability: Eg: Measuring height example – it varies all the time Estimating Reliability Measurement 1. -1 – Negative relationship Plotting two sets of numbers on a two dimensional graph helps us to understand the meaning of various levels of correlation coefficient. 2. 4. 3. Integrity 3. Intelligence 2. Standards for reliability:  . 5. Leadership ability Correlation Coefficient      Degree to which the two sets of numbers are related It gives the measure of strength of relationship in numerical form It varies between +1 to -1 +1 -> Strong relationship.

Validity:   KPI has to actually measure the performance of the job Criterion related validation:   Show the relationship between test scores and job performance scores .


we use content validation method Gives situation that can occur at job and asks the potential candidate how he/she would respond Simulation games.Content Validation      The validation coefficient concept can be applied only when the sample size Is large When the sample size is small . ability at the time of hiring o Subjective judgement plays a large role . inferences from judges should be minimum. computer software for hiring Limitations o Person should have knowledge. skills. judgement should be based on concrete and observable behaviors Generalizability: .

color. if they show. enhances effectiveness of selecting person In real organizations More reliable. Validity coefficients are not situation specific Validity generalization is a three step process o Specific test is valid predictor of this job o Job is trying to fill is similar to job validated somewhere ( job nursing in small hospital to large hospitals) o Use a test that has already been validated (large hospitals) . It can’t be generalized. sex.   Can SAT test be used for other graduate programs also? No. extension of 1964 o Prevents discrimination against race. we need GMAT. GRE etc. valid and generalizable solution will have more utility value Performance in job is not normally distributed but takes the shape of power law Legality:    All selection methods should confront to the laws and regulations Eg: Racial discriminations huge cost involved. reputational damage Minority purchasing power is rising Federal Registration:   Civil rights act of 1991. religion. Utility:    Degree to which the information provided by selecting methods. then there has to be sufficient proof . we can use that for small hospitals. national origin Three significant difference from 1964 law o Customer preference is not acceptable. Content validity or criterionrelated could not show any difference on any person or community.

Types of Selection Methods:    Interviews o Subjective selection method o Costly o Experience based and future based questions o Train the interviewers References.Jury can decide for an individual who was emotionally injured due to discrimination. biographical data. and application blanks o Background checks are not effective in most cases Physical ability test o Muscular tension. American with disabilities act of 1991 o Employers should have reasonable accommodation to accommodate people with physical and mental disorders o    Executive orders:    It prohibits discrimination Government can suspend all dealings with the company while investigations are conducted. o It does race norming – so to have diversity in the institution or organization becomes difficult Employees should focus on maximizing performance and also focus on diversity Age discrimination in employment act in 1967 o If any neutral appearing process involves people only who are less than 40. Office of federal contract complaisance programs which issues guidelines to help companies comply. power. endurance o Cardiovascular endurance o Flexibility o Balance o Coordination . This can result in huge cost and poor public relations which will hinder their competition and growth in the market o Preferential treatment among minority is not allowed. then employer has to show the proof of why above 40 year people can’t be employed.

Females and disabilities people cant participate Is the physical test really required? Both civil rights act and ADA accepts employers to hire people who can do the job. o Disadvantages – lower validity of self-reports are due to  People don’t know what their own personalities are like  People personalities vary on different contexts  Context setting has to be done for job related personality tests . accepts written job description of essential functions of the job o There might be some risk involved if people are not physically fit and might hurt them Cognitive ability test o o o  o   o Have adverse impact on minority groups Personality inventories o Ability test – categorize people based on what they can do o Personality inventories – Categorize people based on what they are like o Validity coefficients with respect to personalities tend to be job specific o Emotional Intelligence  Self-awareness  Self-regulation  Self-motivation  Empathy  Social skills (manage emotions of other people) o This is important because of globalization of the jobs o High emotional intelligence and openness to experience are two most important predictors of adjustments and performance  Adjustment failure results in huge costs.

the test will show the future possibility of theft . costly  Competitions attract mostly male crowd than female o o  Validity coefficients are higher for curvilinear prediction instead of straight line prediction for ability People can easily cheat by giving socially acceptable Reponses Using this we can reject low scorers but not hire high scorers Among assessment centers the criterion validity tends to be very high o Problem solving ability is the most important skill tapped using this method Honesty test and drug test o Polygraph act 1988  No Polygraph test o Honesty test  Paper based test  Even if the candidate fakes.    Work o o o samples Simulation of the actual job in the pre-hiring state Temporary/ Contract jobs Competitions  Google code jam o Three drawbacks  Job specific  New test has to be deployed for each job/ non standardized format.

Measure performance 3. Define performance 2. Set goals . Feedback performance Practice of performance management:   Companies use performance management to employee performance and make pay decisions Reviews mostly don’t help the employees future development Process of performance management   Once or twice a year formal appraisal or evaluation review meeting It is a process not an event 1.Section 6: Performance Management Three parts 1.

and new areas of emphasis. In addition to criticism. address the weakness 6. This increase the employee satisfaction of the system by 37%. modifying performance outcomes. adjusting types of feedback given. Identify needs. Goals behaviors and activities should be measurable and part of job description 3. recognition also should be in place. Performance measure criteria: .   2. regular feedbacks to employees 4. Providing consequences for achieving performance outcomes. Identify what the employee can do to capitalize the performance strength. Provide training. Understand the process which helps to achieve the set goals. Ask regular feedback about the performance management system Hilton developed a new performance management system where the employer and employee can have continuous performance evaluation process. necessary tools . Performance evaluation – Compare targeted goal and actual performance 5.

o Act on result of the analysis. Define ways to measure performance Strategic Congruence:    Critical success factor(CSF) – Behaviors towards CSF is measured How to measure customer loyalty . These use non-functional performance measures o Identify non-functional performance measure that links to company’s success o Use data’s from employee satisfaction surveys. employees satisfaction which directly impacts profitability.  Job analysis – one can analyze the job to determine what constitutes effective performance. customer satisfaction surveys o Do statistical analysis on the data and financial outcome o Revisit the model and do necessary changes if required. Validity . This will ensure model complies with the changing business requirements and situations. Appraisal system should be flexible and change with the changing companies strategies.

but it can’t be completely eliminated. which can’t be controlled. Contamination should be tried to reduce to the maximum extent.    Also known as content validity Contaminated measures the irrelevant aspects of the job that are not related. Reliability    Interrater Reliability o Two individuals rate the same employee and give the consistency in the result they give on the employee’s performance Internal consistency reliability o Extent to which all items are internally consistent is important Test – retest reliability . That’s beyond control Eg: Sales person’s sales depend on external factors also.

o Measure should be reliable over time Acceptability    Many performance measures are reliable and valid . interpersonal and outcome fairness Specificity . so they may not be used Procedural. but consume so much time.

focus also on good actions Focus on solving problems . so they won’t have much productivity loss Create the right context for discussion o Should find the correct place for discussion. It should also points out to the employees performance problems Approaches to measuring performance: Performance Feedback: Manager’s role in effective performance feedback process: Effective performance feedback gives the following recommendations:       Feedback should be given frequently.  The system should specify what the employee should do to help the company achieve the strategic goals. o Argument can focus on where the disagreement exists Encourage the employees to participate in the session o “Tell and sell” approach – Mangers tell their employees how they have rated them and justify the ratings o “Tell and listen” approach – Mangers tell their employees how they have rated them and ask their the employees side of story o Problem solving approach – Managers and employees work together to find solutions to the problem Recognize effective performance through praise o Don’t focus just on problems. may be not in the managers cabin o The meeting should be open dialogue Ask the employees to rate his or her performance before o It will help to find employees weakness. not once a year o Employees know what to expect o Managers can fix the deficiencies.

that will decrease the employees self-esteem. Peers a. should get information on the performance on all the below people before assessing an employee 1. o Find the cause of the problem and solve it Focus feedbacks on behavior or results and not on the person Minimize criticism Agree to specific goals and set a date to review progress o Goal setting results in increased satisfaction. motivation to improve. 300 point score which can be given by employees to their peers.Don’t try to punish the employees. and performance improvement. o    What mangers can do to dragonize performance problems and manage employee’s performance?   Diagnosing the cause for the poor performance Actions for managing employees performance Choosing a source for performance information: Performance information system should not rely just on the managers alone. Managers 2. . and increases defensiveness.

Customers o Expensive o Effective o To be used when  Employees job directly involves working with customer  Customer’s feedback on what products and services that the customer wants. Disadvantages: Employees can inflate their scores 5.  360 degree appraisals are majorly done for managers . Self a.3. Managers are also happy because performance management is not their whole responsibility anymore c. Subordinates a. Upward feedback 4. Employees can project their good deeds and requests training for their weakness b.

 .

. and increasing reliability and validity of ratings  We use simplifying mechanisms to make judgements. Facebook and other social media to give immediate feedback Electronic tracking and monitoring systems to measure the efficiency of work Reducing rater errors. politics.Use of technology in performance management:    Move to online performance system . this results in rater errors. paperless Using twitter.

Approaches to reduce Rater Errors:    Rater error training o Show them video of where the rater error has occurred . and train o Reducing rating errors can result in reducing accuracy also Frame of reference training/rater accuracy training o To emphasize multidimensional nature of performance o To get raters understand and use the same idea of high. Manager has to justify his ratings o Managers should . job related rating scales are used Calibration meetings o Performance is evaluated across managers and to reduce influence of rating errors and politics on appraisal process o A way to discuss employee performance .Appraisal Politics:  Evaluators purposefully distorts a rating to achieve personal or company goals. manager. his manager and external consultant. with a goal of ensuring similar standards are applied to their evaluations o Meeting is attended by HR. medium . low performance when making evaluations o Give examples for each dimension and then say which dimension does that example suite o Raters are held accountable for their ratings.

Comparative a. Objective Feedback o Feedback from work process itself using statistical tools . Productivity measurement and evaluation system 5. Behaviorally anchored scales b. Mixed standard scales 3. The Quality Approach a. Forced distribution c.Approaches for measuring performance: 1. Objectives b. learning and growth. Behaviorally observation scales c. Subjective feedback a. Paired comparison 2. Customer orientation b. Managers feedbacks 2. Results a. customer. Attribute a. Graphic rating scales b. Balanced scorecard – Financial. internal or operation. A prevention approach to errors Feedback Methods: 1. Behavioral a. Competency models – skills knowledge and abilities 4. c. Ranking b. Continuous improvement c.

so requires close scrutiny It is a symbol of status and success to employees .Best appraisal process should focus on Section 7: Compensation and Benefits Pay has    Impact on employees attitudes and behavior’s Significant organizational cost.

they also compare what others doing the same job as them are getting paid . relative pay External Equity – What employees in the other companies similar to their work are getting paid – Market pay survey Internal Equity – What employees within the company but with different jobs are getting paid. over rewarded inequality results If equal.Pay Structure Focus:   Why this pay for this job How individual salaries are decided Equity theory and Fairness: Equity Theory:  People evaluate fairness of their situation by comparing them with those of the other people    If less. no change in attitude or behavior Ways to restore equity: .Counterproductive       Reducing the input – Not working as hard Increasing one’s outcomes – such as by theft Leaving the situation – leaving the organization People compare their pay with the others in the same field. Under rewarded inequality results If more.

its ok that their salary is above the competitor in the market. but productivity may also be low. social security and unemployment compensation o Few countries where the wages are really low.Chrysler When the demand is elastic – demand varies based on the price Components that make Labor Cost o Average cost per employee – major  Direct – wages.Developing Pay Levels: Market pressures:      Product market competition Market price of any product depends on the cost of production It plays an upper bound on the salary level Cost of Labor -> resulted in increase in price of the car in US Big three – GE. But even then it is profitable to more there o China is becoming a less preferred place for manufacturing Labor Market Competition   The amount that organization pay to compete against other companies that hire similar employees. Ford . Deciding what to pay   Efficiency wage theory: o Wage influences the workers productivity The employees as they are paid more than the market rates. salaries and bonuses  Indirect – Health insurance. tend to work more to retain that . It plays a lower level on the salary level Employees as a resource   Employees are not just cost but resources If employees are talented and it results in increase in revenue.

Only job evaluation. no pay survey. first the evaluate scores. o For each factor. used in pay surveys that have relatively stable content and are common to many organizations.  Weights can also be derived empirically – statistical methods . o Revenue/labor cost o Revenue/employees Rate Ranges:   Different employees in the same job may have different pay rates This happens in white collar jobs mostly Key jobs and Non-key jobs:   Bench mark. and that can’t be directly valued or compared through the use of market surveys.Market pay surveys: Benchmarking:     Comparing the organizations practice against those of competitors Product market comparison are important when o Labor cost is major of total cost o Product demand is elastic o Supply of labor is inelastic o Employee skills are specific to product market Labor market comparison o Attracting and retaining employees is difficult o Cost of recruiting replacements is very high To find out what organizations are getting in return . then find weights  A priori weights – Expert judgements about the importance of the each factor. Jobs that are unique to organizations. Job Evaluation:    An administrative procedure to measure internal job worth Compensable factors o The characteristics of jobs that an organization values and chooses to pay for Point factor system o Job evaluation points for each compensable factors. then they have to be paid in a similar way. Developing a Job Structure:   Relative worth of various jobs in the organization. Both pay survey and job evaluation can be done. CIO and Managing director of one particular department if they are performing jobs which are of same worth.

Developing a pay structure: Market survey data: .

Pay policy line:  Mathematical expression that expresses the relationship between job pay and job evaluations The curvilinear function: Second Approach:  Pay policy line is used to derive pay rates for both key and non-key jobs First Approach:  Pay policy line is used to derive pay rates for non-key jobs Third Approach:  Pay grades: o Jobs of similar worth or content grouped together for pay administration purposes.  Range spread: o The distance between the minimum and maximum levels in the pay grades Disadvantage o Some jobs will be underpaid and some overpaid  Conflicts between Pay surveys and job evaluation:  More supply less demand – Less salary than predicted by pay line .

expectancy. Pay Structure and Geographic Region:   Pay has to be in align with the purchasing power of that city Living cost has to be factored in while deciding the pay levels while hiring How does pay affect individual employees? Reinforcement Theory:   Performance -> reward . but decrease intrinsic motivation (like performing interesting work) Eg: Child reading book example. future high performance is very likely. Behaviors are function of expectation and motivation.  Less supply more demand – More salary than predicted by pay line Many a times external comparisons get more weight because of competitive pressures Monitoring Compensation Efforts:  Compa-ratio o Index of correspondence between actual and intended pay Compa pay is less than 1 -> actual pay is less than the policy Compa pay is greater than 1 -> actual pay is more than the policy Globalization. expectancy. . Expectancy Theory:     Motivation is a function of valence. Very important If a high performance is followed by a reward. instrumentality. motivation is a function of valence. instrumentality. Increased amount of reward to performance will increase the motivation and performance This is questioned by cognitive evaluation theory -> monetary rewards may increase extrinsic motivation (like rewards).

variable benefits based on company’s performance .Agency Theory: .Risk and reward trade off      Principals: o A person who directs other persons behavior – owner Agents o A person who is expected to act on the behalf of the principal – managers This incurs a lot of agency cost. risk taking. o Principals and agents might have different goals o Principals might not have idea about extent to which the agent is pursuing or achieving the principals goals Behaviour based -> agent no risk Outcome based -> risk is transferred to the agent o This risk has to be compensated by wage increase Organization and Compensation Strategy: Growth Strategy: Innovation. and new markets is liked to a pay strategy that shares risk with employees  Low fixed income. but can have stock options.

Pay structure should not just focus on one KPI Merit Pay:  Merit pay is based on the performance . great motivation Balance scorecard – structured approach to balancing objectives.Pay per performance programs: Incentive intensity: Promise and peril: Sales jobs -> High incentive – outcome based Programmer -> Performance based   Greater incentive .

  There must be a balance between the individual and group objectives Employees access fairness based on distributive – how much they receive and procedural – what process was used to decide that .

 .

why my salary is cut now? In manufacturing units like FORD. this reduces the net income.    Profit sharing may not result in the required motivations. when profits decline Employee focuses on the organization benefits rather than selfish individual benefits Ownership:    Employee focuses on the organization benefits rather than selfish individual benefits This supports agency theory where managers are made to think like owners Financial accounting standards board – companies should expense options on their financial statements. when there is downturn. . this will not work out Helps to curb labor costs. I did my job well. This is less favorable of companies to provide stock options.

group sharing. Gain Sharing.  Size of tax depends on employers rating. as the risk is more Encourages employees to participate in decision making process.Tax free  Cost to employer is based on the following:  Nature of work – risk attached to it  State where work Is located  Employers experience rating  Disability insurance o May be short term or long term . Incentives and Team awards    More controllable nature of the performance and frequency of payout.    An employee stock ownership plan (ESOP) is a retirement plan in which the company contributes its stock (or money to buy its stock) to the plan for the benefit of the company's employees Difficult for employees if the company performs badly Employers must pay high. it improves performance Group incentives and Team awards Balance scorecard: It’s better to have a mixture of all the above Benefits:  Social insurance – Legally required o Old age o Unemployment  To offset lost income during involuntary unemployment  To help unemployed workers find new jobs  To provide incentive for employers to stabilize jobs  To preserve investments in workers skills by providing income during short term layoffs. based on layoffs  Taxable incomes o Survivors – workers compensation  Injuries and death  Disability income . This is only for on group/department etc.

o Employer does not have to calculate age. age etc o Prevents from investment risk  Defined contribution o Not like defined benefits plan. special retirement benefit levels based on combination of past salary.o  Needs to be coordinated with social security disability benefits. . salary etc to design the retirement benefit plan o It does not promise a specific benefit level upon retirement. o Hospital o Supplementary medical Private group insurance o Lower than the individual insurance bcoz of economies of scale     Retirement Pay for time not worked Family and friend policies Defined Benefit: o Guarantied benefit plan . experience.


eg: human capital Informal learning complements formal training. Knowledge contributes to informal learning. . employee management and knowledge management should be aligned to business strategy Formal and informal learning contributes to development of intangible assets. Training(formal and informal learning).Section 5: Training and Employee Development      Continuous learning. thereby giving them tactical knowledge which they can’t acquire through formal training.

and evaluation ( ADDIE ) Training Process:   Training process should be systematic Needs Assessment o To determine if the training is necessary . Design. Implementation.Designing formal training activities:  Two types of training design process o Instructional System Design (ISD) o Analysis. Development .

Training Process: . Not all pressure points can be addressed by training.

Organizational Analysis: .

output.Factors to be considered before choosing training as a solution to any pain point:    The company’s strategic direction Training resources Support of managers and peers for training activities. consequences. Person Analysis   If employees need skills and knowledge that can be obtained by training But if they don’t perform due to input. or feedback is inadequate then training will not solve the problem .

Training Methods: .

Video and audio for training.Audio visual training – DVD. mobile apps can be used for training . internet.

Behavior Modelling  For teaching interpersonal skills .

Advice for choosing training methods .

Special Training Issues: Employee Development:    It’s is future oriented Not necessarily based on current job Helps to move to other jobs in the organization .

Career patterns   Expert career patterns o Doctors. Lawyers Other pattern o Continuously change Approaches to Employee Development:  Formal education  Assessment .

  o Personality tests and Inventories o Assessment centre tests for management jobs and skills to work in teams  personality skills  Administrative skills  Interpersonal skills Job experiences Interpersonal relationships .


Protégé .

Benefits of Mentoring: Section 8: Managing global human resources Current Global Changes     European Union – 15 countries North American free trade agreement The growth of Asia General agreement on tariffs and trade o World trade organization Factors affecting HRM in global markets .

 Culture o Hofstede’s cultural dimensions .

  Political and legal o Fair labor standards act  Minimum wage for many jobs Economic system o Socialism o Communalism o Capitalism Managing Employees in a Global Context     Parent country Host country Third Country – other than parent and host country Expatriate Types of Expatriates .

Managing Expatriates in global markets:   Selection of Expatriate managers Characteristics of Global manager o Self-dimension o Relationship dimension o Perception dimension . Global companies emphasize localization based on host countries market.Inpatriates: Managers from host countries becoming their corporate headquarters staff Multinational vs global:  Multinational develop identical products and distribute worldwide.

Cultural Quotient – CQ for expatriate managers

Training and development of Expatriates
Compensation for Expatriates
Reacculturation of Expatriates

The process by which a person joins an unfamiliar social group by learning
its language, customs, and social processes
Reverse cultural shock happens – Repatriation process
Two characteristics in transition process
o Communication
 Amount of information he receives and recognizes changes
when he is abroad
o Validation
 Amount of recognition when he returns home

Section 9: Employee separation and retention

Principles of justice

Managing Voluntary turnover

   It is a function of values Values are different to different employees and employers Perception of the situation .

  Sources of job dissatisfaction Unsafe working conditions Personal dispositions  Tasks and roles – Job rotation   o Supervisors and co-workers Pay and benefits Measuring and monitoring job satisfaction:    Job Descriptive Index – JDI Pay satisfaction questionnaire Survey feedback interventions Labor Relations Framework .

Goals and Strategy    Society – US Capitalism Management Labor Unions Union Structure Administration and Membership    National and International Unions Local Unions Union Security .

Taft-Hartley act Free riders:  Employees who are not part of union. but benefit from union activities Union Membership has declined:       Structural changes in the economy o Manufacturing to service Increased employer resistance o Foreign competition Substitution with HRM Substitution with government regulation Worker views o No much class distinction in US.Under 1947. comparing to Europe Union actions and industry structure o Corruption in unions o Not changing according to the changes in economic structure Labor relation outcomes    Strikes Wages and Benefits Productivity .

Unions increase productivity  Voicing the problem rather than Exiting  Seniority based promotions – less competitions and more information sharing  Shock effect on management – good standards and working conditions Profits and stock performance o Increase Union . decrease profits o  .