Bovee/Thill, Business in Action 8/e, Global Edition Instructor’s Manual

Chapter 11
HUMAN RESOURCES MANAGEMENT

Chapter Overview

This chapter examines the critical business function of human resources

management. It highlights the challenges that firms face in today’s workplace and
discusses employment trends such as diversity and alternative work arrangements. It
then describes important HR practices such as recruiting, hiring, and training. Finally,
it explains different types of employee compensations and benefits.

Chapter Outline

I. Keeping Pace with Today’s Workforce

A. Human resources (HR) management is the specialized function of
planning how to obtain employees, oversee their training, evaluate them, and
compensate them
B. Contemporary staffing challenges include:
1. Aligning the workforce with organizational needs
2. Fostering employee loyalty
3. Monitoring workloads and avoiding employee burnout
4. Managing work-life balance – efforts to help employees balance the
competing demands of their personal and professional lives
a. HR attempts to improve quality of work life (QWL) – the overall
environment that results from job and work conditions
C. Human resource planning requires a lot of work. Many companies rely on
workforce analytics, a computer-based statistical approach to analyzing and
planning for workforce needs. Steps in human resource planning include:
1. Evaluating job requirements through the process of job analysis.
Through job analysis, HR develops:
a. A job description – a formal statement summarizing work tasks and
the conditions under which the employee will work
b. A job specification – a statement describing the type of personnel
the job requires, including skills, education, experience, and personal
attributes
2. HR must also forecast the numbers and types of employees who will be
needed at different times
a. An important factor in forecasting is turnover rate – the percentage
of the workforce that leaves every year
b. HR must also work with top executives to identify potential
replacements for specific employees such as senior executives. This
process is known as succession planning
c. To ensure an adequate supply of experienced employees, HR focuses
on employee retention – efforts to keep current employees

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d. If existing employees are not available, HR can look outside the

company for people to join the company as either permanent
employees or contingent employees – nonpermanent employees
such as temporary workers, independent contractors, and full-time
employees hired on a probationary basis
D. To meet the needs and demands of a diverse workforce, HR can adopt
alternative work arrangements, including:
1. Flextime – scheduling that allows employees to choose their own work
hours within certain limits
2. Telecommuting – working offsite using electronic communications
3. Job sharing – an alternative work arrangement that allows 2 people to
share a single full-time job

II. Managing a Diverse Workforce

A. Diversity includes all the characteristics and experiences that define people
as individuals
B. Diversity in the workforce presents managerial challenges, and some of the
most important diversity issues today include:
1. Age – cultural assumptions about age and seniority as well as different
values, expectations, and communication habits among generations
2. Gender – There are several significant issues to be addressed by HR,
including:
a. Sexism – discrimination on the basis of gender
b. The glass ceiling – an invisible barrier attributable to subtle
discrimination that keeps women and minorities out of top positions
in an organization
c. Sexual harassment – unwelcome sexual advances, requests for
sexual favors, or other verbal or physical conduct of a sexual nature
within the workplace
3. Race and ethnicity
4. Religion
5. Ability – addressing ways in which individuals with disabilities can
function effectively in the job
C. Many companies are establishing diversity initiatives – programs and
policies that help companies support diverse workforces and markets

III. Managing the Employment Life Cycle

A. The employment life cycle is comprised of three stages: hiring, termination,
and retirement
1. Hiring employees – The first stage is recruiting – the process of
attracting suitable applicants for an organization’s jobs
2. The second stage is termination – the processing of getting rid of an
employee. This usually assumes one of two forms:
a. Layoffs are the termination of employees for economic or business
reasons unrelated to employee performance
b. Firing employees – dismissing an employee for performance-related
reasons
3. The final stage of retirement offers a variety of challenges depending on
the industry and the company’s situation

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a. A company can also induce employees to leave by offering them

early retirement, using worker buyouts – financial incentives to
employees who voluntarily depart
b. The Age Discrimination in Employment Act (ADEA) outlaws
mandatory retirement (required dismissal of an employee who
reaches a certain age) unless an employer can demonstrate that age is
a valid qualification

IV. Developing and Evaluating Employees

A. The effort to develop and evaluate employees includes providing
performance appraisals, managing training and development programs, and
promoting and reassigning employees
B. To evaluate and improve employee performance, managers use performance
appraisals – periodic evaluations of employees’ work according to specific
criteria
1. A multidimensional review in which an employee receives feedback from
his/her supervisor as well as subordinates, peers, and outside
stakeholders such as customers is known as a 360-degree review
2. Workers’ performance can also be monitored using electronic
performance monitoring (EPM) – real time, computer-based
evaluations that measure data input, email scanning, etc.
C. HR is also responsible for employee training and development
1. Training usually begins with employee orientation programs – training
designed to acclimate new employees to the organization
2. Other forms of training should continue throughout the employee’s
career, and to determine what training is needed, an HR department may
maintain a skills inventory – a list of the skills a company needs along
with the specific skills that individual employees currently possess
D. As employees grow and develop, promotion and/or reassessment may be
needed
1. A company may adopt a “promote from within” policy to try and fill
positions internally before seeking applicants outside the company
2. It may also become necessary to reassign employees if an individual is
given a job beyond his/her competence or the job changes and the
employee no longer possesses the needed skill set

V. Administering Employee Compensation

A. One of HR’s most significant responsibilities is administering employee
compensation – the combination of direct payments such as wages and
salary, and indirect payments such as employee benefits
B. There are two kinds of monetary compensation:
1. Salary – fixed cash compensation for work, independent of the number
of hours worked
2. Wages – cash payments based on the number of hours an employee has
worked or the number of units an employee has produced
C. Companies can also provide managers and employees with incentives to
encourage productivity, innovation, and commitment to work, including:
1. Bonus – a payment in addition to the regular wage or salary that serves
as a reward for achievement
2. Commissions – a form of compensation based on a percentage of sales
made

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3. Profit sharing – a system in which a portion of the company’s profits

are distributed to employees
4. Gain sharing – a system that ties rewards to profits or cost savings
achieved by meeting specific goals
5. Pay for performance – an incentive program that requires employees to
accept a lower base pay but rewards them with bonuses, commissions, or
stock options if they reach agreed-upon goals
6. Knowledge-based pay – a system in which pay is tied to an employee’s
acquisition of knowledge or skills

VI. Employee Benefits and Services

A. Employee benefits are compensation other than wages, salaries, and
incentive programs
B. Employee benefits may be offered as preset packages or as flexible plans
known as cafeteria plans, in which an employee can personalize his/her
benefit package
C. The benefits most commonly provided by employers are insurance,
retirement benefits, employee stock-ownership plans, stock options, and
family benefits
1. Insurance – life, health, dental, vision, disability and long-term care
insurance
2. Retirement plans, company-sponsored programs for providing retirees
with income, may include:
a. Pension plans – traditional, defined-benefit retirement plans in
which an employer specifies how much they will pay employees
upon retirement
b. 401(k) plan – a defined-contribution retirement plan in which
employers often match a percentage of the amount employees invest
in the plan
c. Employee stock-ownership plan (ESOP) – a program in which a
company places stock in trust, with each eligible employee entitled
to a certain portion
3. Stock options grant employees the right to purchase a set number of
shares of the employer’s stock at a specified price called the grant or
exercise price within a certain period of time
4. Family benefits include paid vacation and sick leave, child-care
assistance, elder-care assistance, tuition loans and reimbursements, and
employee assistance programs (EAPs) which offer private and
confidential counseling to employees with personal problems
5. Companies with 50 or more employees are also required to provide up to
12 weeks of unpaid leave per year in accordance with the guidelines of
the Family Medical Leave Act (FMLA)

Learning Catalytics is a "bring your own device" student engagement, assessment,

and classroom intelligence system. It allows instructors to engage students in class
with real-time diagnostics. Students can use any modern, web-enabled device
(smartphone, tablet, or laptop) to access it. For more information on using Learning
Catalytics in your course, contact your Pearson Representative.

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Classroom Activities

In-Class Activity: Job Description vs. Job Specification

Goal: Show students a real-life example of a job advertisement and have them
identify the portions of the ad that correspond to job description and job
specification.

Time Limit: 15 minutes

Details:
1. Ask students to name their favorite company in the world (e.g., Google,
Apple, BMW, Costco, etc.) and then have the class vote to determine the
most popular company for the class. (5 minutes)
2. Go to the company’s website (e.g., using a laptop with Internet connection
and a projector). On the company’s website, find a job advertisement, which
may be located in most cases by clicking on the link “careers.” (If it is not
possible to do an Internet search in real time in the classroom, have students
conduct research before the class period and bring the job ads to school). (5
minutes)
3. Ask students to identify which portion of the job ad is considered job
description and which portion of the ad is considered job specification.
Remind students that job descriptions typically include the duties and
responsibilities of the job, while job specifications typically entail the
qualifications (e.g., education, experience, etc.) the job requires. (5 minutes)

End-of-Chapter

Behind the Scenes

For Zappos, Finding the Right Employees Means Rejecting the Old Way of
Doing Business

Critical Thinking Questions

11-1 Not all potentially good employees have a bubbly, goofy personality of the
type that Zappos likes to attract. Would it be wise for the company to
reject a candidate solely on the basis of a shy, introverted personality?
Would it be discriminatory to do so?
Students’ responses will vary depending on personal opinions. Answers will
likely reference that while a shy, introverted candidate might have good skills,
he or she would likely not thrive in and protect the unconventional Zappos
culture that is so important to the company, and such a big part of its success. It
would not necessarily be discriminatory to reject a candidate whose personality
did not fit the desired profile, as it is integral to a positive and productive work
environment, and therefore a requisite for the job. (LO: 11.1; AACSB: Ethical
understanding and reasoning)

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11-2 What are the potential risks of emphasizing personality, particularly

offbeat personality, in the recruiting process?
Students’ responses will vary depending on personal opinions. Answers may
reference the fact that emphasizing personality over other areas could result in
hiring employees who don’t possess the requisite skills and experience to be
successful in the position. (LO: 11.1; AACSB: Reflective thinking)

11-3 How should a positive, upbeat culture handle the inevitable

disappointments and tragedies that happen in any company, from the
need to terminate low performers to the death of an employee.
Students’ responses will vary depending on personal opinions. Answers might
reference the fact that these issues should be dealt with openly and honestly, to
prevent any suspicion or lingering bad feelings. They might include the idea
that the negative issue could be put into a broader context, to show the silver
lining, if applicable, or at least the path forward to a better place. (LO: 11.1;
AACSB: Reflective thinking)

Learn More Online

Visit Inside Zappos (http://jobs.zappos.com), the careers portion of the Zappos
website and read the various department descriptions in the Choose Your Team
section. How do these descriptions and the profiles of various team members
appeal to potential employees? Could they potentially turn off some job seekers?
If so, would this necessarily be a bad thing? Which of the Zappos teams would
you choose if you were applying at the company?
Students’ responses will depend, in large part, on the material currently posted on the
website. (LO: 11.1; AACSB: Reflective thinking)

Test Your Knowledge

Questions for Review

11-4 Give examples of possible employee benefits.
Examples of most commonly provided employee benefits could include
insurance, retirement benefits, employee stock-ownership plans, stock options,
and family benefits. (LO: 11.1)

11-5 What are some strategic staffing alternatives that organizations use to
avoid overstaffing and understaffing?
To avoid overstaffing and understaffing, organizations are hiring more part-
time employees, using temporary staffing services, outsourcing tasks to other
organizations, and offering flextime, telecommuting, and job sharing. (LO:
11.1)

11-6 What is the purpose of conducting a job analysis? What are some of the
techniques used for gathering information?
Job analysis provides a formal and objective method of evaluating job
requirements. The information-gathering techniques include interviewing
employees, monitoring or observing employee activities, and having
employees keep diaries of work activities. (LO: 11.1)

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11-7 How do defined benefit plans differ from defined contribution plans?
Defined benefit plans are retirement plans in which companies specify how
much they will pay employees upon retirement. Defined contribution plans are
those in which companies specify how much they will put into the retirement
fund, without guaranteeing any specific payouts during retirement. (LO: 11.6)

11-8 What is a job specification?

A job specification is a statement describing the kind of person who would be
best for a given job. It includes the skills, education, and previous experience
that the job requires. (LO: 11.2; AACSB: Diverse and multicultural work
environments)

Questions for Analysis

11-9 What benefits could helping employees balance their work and personal
lives have on the overall business?
Allowing employees to work flexibly in order to better balance work and home
commitments, such as childcare, may mean that employees are more
productive when they are at work, more committed to the organization, and are
more motivated and less likely to suffer from stress. (LO: 11.5; AACSB:
Analytical thinking)

11-10 Why do some employers offer comprehensive benefits even though the
costs of doing so have risen significantly in recent years?
Even though the costs of providing employee benefits are on the rise, so are
the costs of recruiting, hiring, and training employees in today’s tight labor
market. As a result, some employers have found that it actually costs them
less to retain current employees by offering comprehensive benefits. (LO:
11.6; AACSB: Analytical thinking)

11-11 Why would HR managers be concerned with employee retention? Use

examples.
Employee retention is important for HR managers, as the cost associated with
recruiting new employees is high and, therefore, avoided. Students may
consider the alternative side of this argument, and suggest that employee
turnover can be beneficial as it allows new people with new ideas to come into
the organization and fill vacated posts. (LO: 11.6; AACSB: Analytical
thinking)

11-12 Why is it in a company’s best interests to break down the glass ceiling?
Visit MyBizLab for suggested answers. (LO: 11.2; AACSB: Diverse and
multicultural work environments)

11-13 Ethical Considerations. Corporate headhunters have been known to raid

other companies of their top talent to fill vacant or new positions for their
clients. Is it ethical to contact the CEO of one company and lure him or
her to join the management team of another company?
Visit MyBizLab for suggested answers. (LO: 11.3; AACSB: Ethical
understanding and reasoning)

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Questions for Application

11-14 Assume you are the manager of human resources at a manufacturing
company that employs about 500 people. A recent cyclical downturn in
your industry has led to financial losses, and top management is talking
about laying off workers. Several supervisors have come to you with
creative ways of keeping employees on the payroll, such as exchanging
workers with other local companies. Why might you want to consider this
option? What other options exist besides layoffs?
Adopting a no-layoff policy makes sense for a number of reasons. The first is
that the layoffs will likely damage company morale, which can lead to lower
quality and lost sales. A second reason is that the company may need to hire
more employees when business picks up again. Although you may be able to
rehire some laid-off employees, you will also incur the financial and time
costs associated with recruiting and training completely new employees. A
third reason is that finding ways to keep the employees will earn their loyalty
and respect, which can translate into increased productivity, greater
innovation, and lower costs in the long run. (LO: 11.3; AACSB: Application
of knowledge)

11-15 When you begin interviewing as you approach graduation, you will need
to analyze job offers that include a number of financial and nonfinancial
elements. Which of these aspects of employment are your top three
priorities: a good base wage, bonus, or commission opportunities, profit-
sharing potential, rapid advancement opportunities, flexible work
arrangements, good healthcare insurance coverage, or a strong
retirement program? Which of these elements would you be willing to
forego in order to get your top three?
Students’ answers will vary depending on personal preferences. (LO: 11.5;
AACSB: Reflective thinking)

11-16 What steps could you take as the owner of a small software company to
foster “temporary loyalty” from the independent programmers you
frequently hire for short durations (one to six months)?
Visit MyBizLab for suggested answers. (LO: 11.1; AACSB: Application of
knowledge)

11-17 Concept Integration. Of the five levels in Maslow’s hierarchy of needs,

which is satisfied by offering salary? By offering healthcare benefits? By
offering training opportunities? By developing flexible job descriptions?
Salaries and healthcare benefits satisfy only the first level of Maslow’s
hierarchy of needs, survival. Training opportunities and flexible job
descriptions offer challenges to employees which satisfy the highest level of
need, self-fulfillment. (LO: 11.1, 11.5, 11.6; AACSB: Application of
knowledge)

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Expand Your Knowledge

Discovering Career Opportunities

If you pursue a career in human resources, you’ll be deeply involved in helping
organizations find, select, train, evaluate, and retain employees. You have to like
people and be a good communicator to succeed in HR. Is this field for you? Find ads
seeking applicants for positions in the field of human resources, and then answer the
following questions.

11-18 What educational qualifications, technical knowledge, or specialized skills

are applicants for these jobs expected to have? How do these
requirements fit with your background and educational plans?
Students’ answers will vary according to student choices. (LO: 11.3; AACSB:
Reflective thinking)

11-19 Next, look at the duties mentioned in the ad for each job. What do you
think you would be doing on an average day in these jobs? Does the work
in each job sound interesting and challenging?
Students’ answers will vary according to student choices. (LO: 11.3; AACSB:
Reflective thinking)

11-20 Now think about how you might fit into one of these positions. Do you
prefer to work alone, or do you enjoy teamwork? How much paperwork
are you willing to do? Do you communicate better in person, on paper, or
by phone? Considering your answers to these questions, which of the HR
jobs seems to be the closest match for your personal style?
Students’ answers will vary according to student choices. (LO: 11.3; AACSB:
Reflective thinking)

Improving Your Tech Insights: Telecommuting Technologies

Thanks to mobile communication and cloud computing, working without going to the
office is easier than ever before. When they’re used successfully, telecommuting
technologies can reduce facility costs, put employees closer to customers, reduce
traffic and air pollution, give companies access to a wide range of independent talent,
and let employees work in higher-salary jobs while living in lower-cost areas of the
country. In the future, these technologies have the potential to change business so
radically they could even influence the design of entire cities. With less need to pull
millions of workers into central business districts, business executives, urban
planners, and political leaders have the opportunity to explore such new ideas as
telecities – virtual cities populated by people and organizations who are connected
technologically, rather than physically.

Telecommuting offers compelling benefits, but it must be planned and managed

carefully. Conduct some online research to find out what experts believe are the keys
to success. Start with the Telework Coalition, www.telcoa.org. You can also find
numerous articles in business publications (search for both “telecommuting” and
“telework”). In a brief email message to your instructor, provide four or five
important tips for ensuring successful telecommuting work arrangements.
Students’ emails will vary depending on their choices of research sites. (LO: 11.1;
AACSB: Information technology)

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Practice Your Skills

Sharpening Your Communication Skills

Public companies occasionally need to issue news releases to announce or explain
downturns in sales, profits, demand, or other business factors. Search the web to
locate a company that has issued a press release that recently reported lower earnings
or other bad news and access the news release on the firm’s website. You can also
search for press releases at www.prnewswire.com or www.businesswire.com. How
does the headline relate to the main message of the release? Does the company come
right out and deliver the bad news, or build up to it by explaining the circumstances
behind it first? What does the company do to present the bad news in a favorable
light, if applicable—and does this effort seem sincere and ethical to you? In a brief
message to your instructor, give your assessment of how well the press release
conveys the bad news without being overly negative or falsely positive.
Students’ answers will vary depending on the press releases selected. (LO: 11.3;
AACSB: Written and oral communication)

Building Your Team Skills

Appraisals or performance monitoring is an important part of employment. With this
in mind, work in pairs to conduct an appraisal of your efforts so far at college or
university. Take turns to apprise the class of each other’s efforts so far. As part
of the appraisal or performance monitoring process, you should also look to
build a personal development plan based on the findings from your appraisal
session.

Outcomes from the task would perhaps include a completed appraisal document
which suggests targets that should have been met, along with comments on how well
the particular objective has been met. Students should also produce a personal
development plan. (LO: 11.3; AACSB: Written and oral communication)

Developing Your Research Skills

Locate the 5 best companies in 2015 at Forbes (print or online editions) at
http://www.forbes.com/sites/kathryndill/2014/12/10/the-best-places-to-work-in-2015/
Various policies implemented had resulted in high engagements and satisfaction
among different generations in the workplace. These innovative companies are
actively pursuing workforce diversity initiatives as a strategic opportunity. Equal
gender opportunities in recruiting, promotion, returning women at the workforce,
higher women representation at the board will remain one of the key interests for the
management to retain local talents.

11-21 What are the workforce initiatives that are implemented that enable the
companies to emerge as the best companies in 2015? Compare the
rankings in 2014. Were there any significant changes on the workforce
diversity initiatives? In what way(s), had the initiatives differ?
Students should be reminded that the list consists of diverse industries. For
example, tech companies, consulting companies, health care companies,
consumer goods companies, retail companies and auto companies. Every
industry may have the ability to offer various forms of workforce diversity
according to the needs of the employees, tasks specifications and the nature of
the industry. Although the answers in the articles may not directly relate to the

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specific diversity initiatives discussed in Chapter 11, discussions along with

any other factors related to the articles are highly encouraged. For example,
students should be reminded of the equal gender opportunities in various
levels of management as the strategic direction of the workforce. (LO: 11.2;
AACSB: Diverse and multicultural work environments)

11-22 What would be the main constraint(s) of the small-medium size (SME)
companies to achieve high engagements of workforce diversity at work
place? How important are these initiatives to SMEs as opposed to global
companies?
Student answers will vary. Students may discuss the financial constraints and
the level of uncertainty of business environments in various industries and
how these uncertainties could promote or discourage various workforce
diversity plans. Intense competition can also affect the companies from
engaging diversity initiatives in the workplace. Students may provide logical
answers which relate to the priorities of SMEs and global companies. (LO:
11.2; AACSB: Analytical thinking)

11-23 Locate the 5 best local companies in your home country in the
newspapers (print or online editions). In what ways are the changes in the
workforce differs? Do you think the leaders of the company will promote
or discourage workforce diversity at workplace? Why?
Student answers will vary. Students may draw information from various
sources and provide interpretations from the articles. Students should be
encouraged to discuss challenges, opportunities and emerging trends of
various strategic workforce diversity embraced by the management of the
company. (LO: 11.3; AACSB: Analytical thinking)

MyBizLab Assisted-Graded Assignments

11-24 How is management likely to change as companies increasingly use
contingent workers over full-time employees?
Visit MyBizLab for suggested answers. (LO: 11.1; AACSB: Analytical
thinking)

11-25 What are some of the ways that pay-for-performance schemes could
backfire if a company doesn’t set them up carefully or effectively manage
the factors that affect employee performance?
Visit MyBizLab for suggested answers. (LO: 11.5; AACSB: Reflective
thinking)

CHECKPOINTS

LEARNING OBJECTIVE 11.1: Identify four contemporary staffing challenges,

and explain the process of planning for a company’s staffing needs.

Critical thinking:
(1) How can alternative work arrangements also help companies reduce costs and
their impact on the environment?

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Alternative work arrangements can help companies reduce costs by reducing their
energy costs (e.g., via telecommuting) and by reducing attrition rates (e.g., via job
sharing). They can also reduce companies’ impact on the environment by reducing
the number of employees who commute, and avoiding the air pollution that would
have resulted.

(2) How can electronic communication technologies contribute to employee burnout?

Electronic communication technologies such as emails and smart phones allow
employees to be plugged in 24/7, which makes it difficult for them to separate work
life from personal life, and creates a feeling that work never ends. Such feelings can
contribute to work-related stress and contribute to employee burnout.

It’s your business:

(1) Would you prefer to work as an independent contractor or a permanent
employee? What do you see as the advantages and disadvantages of each mode of
work?
Students’ answers will vary depending on personal preferences.

(2) Would you function well as a full-time telecommuter? Why or why not?
Students’ answers will vary depending on personal opinions.

LEARNING OBJECTIVE 11.2: Discuss the challenges and advantages of a

diverse workforce, and identify five major dimensions of workforce diversity.

Critical thinking:
(1) How could a company benefit by investing in assistive technologies for its
workers?
By investing in assistive technologies for its workers, a company can create a vital
link for employees with disabilities, giving them opportunities to pursue a greater
range of career paths and giving the company access to a broader base of talent.

(2) How might socioeconomic diversity in a company’s workforce create both

challenges and opportunities for the company?
Socioeconomic diversity in a company’s workforce might create challenges for the
company because supervisors may face the challenge of communicating with
employees who have different socioeconomic backgrounds from their own,
motivating them, and fostering cooperation and harmony among them. Teams within
the company also face the challenges of having employees with different
socioeconomic backgrounds working together closely. Such socioeconomic diversity
might also create opportunities for the company in that the company might benefit
from a socioeconomically diverse workforce that offers a broad spectrum of
viewpoints and ideas, helps the company better understand and identify with diverse
markets (i.e., customers of various socioeconomic backgrounds), and enables the
company to benefit from a wider range of employee talents.

It’s your business:

(1) What general opinions do you have of the generation that is older than you and
the generation that is younger than you? What experiences and observations shaped
these opinions?
Students’ answers will vary depending on personal opinions.

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(2) Do you believe that any aspect of your background or heritage has held you back
in any way in college or at work? Why?
Students’ answers will vary depending on personal opinions.

LEARNING OBJECTIVE 11.3: Describe the three phases involved in managing

the employment life cycle.

Critical thinking:
(1) Why would a company spend money on outplacement counseling and other
services for laid-off employees?
A company would spend money on outplacement counseling and other services for
laid-off employees to help ease the pain of layoffs as well as to minimize the chances
of wrongful discharge lawsuits.

(2) Why would a company spend money to induce retirement-age employees to stay
on board for a while, rather than simply hiring younger employees to take their
place?
In this case, it may be cheaper to spend money to induce retirement-age employees to
stay on board for a while rather than to hire young employees, train them, and bring
them up-to-speed.

It’s your business:

(1) What impression would a potential employer get from studying your current
online presence?
Students’ answers will vary depending on personal situations.

(2) Have you ever been interviewed over the phone or via computer? If so, did you
feel you were able to present yourself effectively without face-to-face contact?
Students’ answers will vary depending on personal experiences.

LEARNING OBJECTIVE 11.4: Explain the steps used to develop and evaluate
employees.

Critical thinking:
(1) How can employers balance the need to provide objective appraisals that can be
compared across the company’s entire workforce with the desire to evaluate each
employee on an individual basis?
Employers can balance such need and desire by on one hand using a standard
company performance appraisal form to ensure objectivity and consistency across the
entire organization or providing individualized evaluation through multidimensional
reviews such as the 360-degree review of each employee, and through using
technologies such as electronic performance monitoring.

(2) Beyond increasing their skill and knowledge levels, how can training improve
employees’ motivation and job satisfaction? (Review Chapter 10 if you need to.)
Training can improve employees’ motivation and job satisfaction by giving them a
sense that they are constantly learning and growing on the job. That propels them

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towards the highest levels of Maslow’s Hierarchy of Needs, namely “esteem” and
“self-actualization.”

It’s your business:

(1) Have you ever had a performance appraisal that you felt was inaccurate or unfair?
How would you change the process as a result?
Students’ answers will vary depending on personal experiences.

(2) Do the methods your college or university uses to evaluate your performance as a
student accurately reflect your progress? What changes would you make to the
evaluation process?
Students’ answers will vary depending on personal experiences at their colleges or
universities.

LEARNING OBJECTIVE 11.5: Describe the major elements of employee

compensation.

Critical thinking:
(1) What are some potential risks or limitations of performance-based pay systems?
Some potential risks or limitations may be: a) incentives are not closely linked to
actions within employees’ control; and b) incentives are not complemented with
effective feedback systems to let employees know how they are performing
throughout the performance measurement period.

(2) How does equity theory (see Chapter 10) explain the anger some employees feel
about the compensation packages their company CEOs receive?
Equity theory suggests that employee satisfaction depends on the perceived ratio of
inputs to outputs. If an employee works side by side with a CEO, working for the
same company and giving a similar amount of effort, only to learn that the CEO
earns significantly more money, she might not be satisfied in her work or motivated
to continue working hard. The employee may perceive a state of inequity and may
not be happy with the situation.

It’s your business:

(1) If you worked for a large corporation, would a profit-sharing plan motivate you?
Why or why not?
Students’ answers will vary depending on personal opinions.

(2) What questions would you ask before you accepted a sales position in which most
of your compensation would be based on commissions, rather than base salary?
Students’ answers will vary depending on personal opinions.

LEARNING OBJECTIVE 11.6: Identify the most significant categories of

employee benefits and services.

Critical thinking:
(1) Why are stock options a controversial employee benefit, particularly for top
executives?

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 Bovee/Thill, Business in Action 8/e, Global Edition Instructor’s Manual

Stock options are controversial particularly for top executives because: a) from the
executive’s point of view, there is no real risk associated with stock options; and b)
this lack of risk exposure can lead to riskier decision making by the executives, as
indicated by research.

(2) What are the risks of investing in an ESOP?

The risks of investing in an ESOP include: a) employees may be terminated before
the options vest; and b) stock prices may stay below the exercise price, leaving the
stock options worthless.

It’s your business:

(1) Would you take stock options in lieu of a higher salary? Why or why not?
Students’ answers will vary depending on personal opinions.

(2) Would you be willing to forego health insurance or a retirement plan for higher
salary or wages? Why or why not?
Students’ answers will vary depending on personal opinions.

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