Chapter 2 Understanding the Legal and Environmental Context of HRM

1. Chapter 2Understanding the Legal and Environmental Context of HRM

2. Chapter Outline • 2-1 Legal Issues in the Workplace • 2-2 Environmental Issues in the Workplace

3. 2-1 Legal Issues in the Workplace • HRM laws address: • Specific employment practices. • Broader issues such as employment discrimination, safety, privacy, and employees’ rights to due process.

4. 2-1a Equal Employment Opportunity • Passed by Congress in the 1960s. • Designed to eradicate employment discrimination based on race, color, sex, religion, national origin, age, and disability; these categories are referred to as protected classifications. • Protected groups are sub-categories of people within each protected classification.

6. 2-1a Equal Employment Opportunity (cont.) • Civil Rights Act of 1964 (Title VII): Entitles victims to relief in the form of legal costs and back pay. • Civil Rights Act of 1991: Addresses the issue of mixed-motive cases, in which employment decision is partly on a legitimate motive and partly on a discriminatory one. • Pregnancy Discrimination Act of 1978 • Immigration Reform and Control Act of 1986 • Age Discrimination in Employment Act of 1967 • Genetic Information Nondiscrimination Act (2008)

7. 2-1a Equal Employment Opportunity (cont.) • Americans with Disabilities Act of 1990 (Title I) • An individual is considered disabled if a physical or mental impairment “substantially limits” one or more major life activities. • To win a complaint, an individual must establish that, with accommodation, he or she is qualified to perform the essential functions of the job. • The employer must prove that the candidate is unable to perform the job satisfactorily even with reasonable accommodation or that the reasonable accommodation would impose “undue hardship.”

8. 2-1a Equal Employment Opportunity (cont.) • Two types of discrimination: • Intentional discrimination or disparate treatment • Treating people unfairly based on their membership in a protected group. • May also occur as the result of trying to ‘‘protect’’ the group members’ interests. • Unintentional discrimination or disparate impact • Any practice without business justification that has unequal consequences for people of different protected groups.

9. 2-1a Equal Employment Opportunity (cont.) • Discrimination and the courts • The plaintiff must establish a prima facie case of discrimination. • To establish a prima facie case, the plaintiff must present evidence that makes the employer’s actions appear discriminatory. • When a plaintiff establishes a prima facie case, the burden shifts to the employer to rebut the case by presenting evidence that justifies the fairness of its actions.

10. 2-1a Equal Employment Opportunity (cont.) • Establishing a prima facie case of intentional discrimination • Restricted company policy: Plaintiff proves that the company has a formal policy that restricts the selection of a protected group. • Discriminatory remarks: Plaintiff must produce evidence that certain biased remarks were made by the employer regarding the protected group.

11. 2-1a Equal Employment Opportunity (cont.) • Establishing a prima facie case of intentional discrimination – McDonnell-Douglas test: • Used to infer the presence of discriminatory intent when more direct evidence of discrimination is lacking. • Requires the plaintiff to show that he or she: • Belongs to the protected group in question. • Has applied for and is qualified for the job for which the employer was seeking applicants. • Was rejected. • After rejection, the position remained open or was filled by someone who was not a member of that protected group.

12. 2-1a Equal Employment Opportunity (cont.) • Establishing a prima facie case of unintentional discrimination – The four-fifths rule: • Helps determine whether between-group differences in hiring rates are large enough to be important. • Is calculated by comparing the hiring rate of the “disadvantaged” protected group with the rate of the “advantaged” group. • A prima facie case of discrimination is established when the hiring rate of the former group is less than four-fifths of the latter group.

13. 2-1a Equal Employment Opportunity (cont.) • Rebutting a prima facie case of intentional discrimination • Restricted company policy • When the employer has a policy that excludes an entire protected group, it uses the BFOQ defense. • BFOQ refers to "bona fide occupational qualification.” • The employer argues that it purposely discriminated against all members of a group for reasons including all or nearly all, authenticity, propriety, and safety. • Discriminatory remarks: Requires the employer to argue that the remarks were not very derogatory or that the person who made the remarks had no influence on the hiring decision.

14. 2-1a Equal Employment Opportunity (cont.) • Rebutting a prima facie case of intentional discrimination – The McDonnell-Douglas test • Employer must present evidence showing that its employment decision was based on legitimate, nondiscriminatory reasons. • The plaintiff could still win the case if they prove that the reason offered by the employer was merely a pretext or an excuse; the “real” reason for the action was discrimination.

15. 2-1a Equal Employment Opportunity (cont.) • Rebutting a prima facie case of unintentional discrimination – The four-fifths rule • A firm must demonstrate that the procedure in question is a business necessity. • According to the CRA of 1991, when several selection devices are used, only those causing the disparate impact must be justified. • The exception to this rule occurs when the elements of a respondent’s decision-making process are not capable of separation for analysis; the decision-making process may be analyzed as one employment practice.

16. 2-1b Affirmative Action • Affirmative action programs aim to redress past discrimination against protected classes and correct racial and gender imbalances in the workforce. • It attempts to accomplish this aim through initiatives that are ‘‘color-conscious.’’ • Most firms are under no obligation to implement affirmative action programs.

17. 2-1b Affirmative Action (cont.) • Firms voluntarily implementing affirmative action believe that they can: • Attract and retain a larger and better pool of applicants. • Create a more diverse workforce. • Avoid discrimination lawsuits. • Improve the firm’s reputation within the community and its consumer base.

18. 2-1b Affirmative Action (cont.) • Affirmative action is implemented through two primary steps: • Utilization analysis • Developing an affirmative action plan (AAP)

19. 2-1b Affirmative Action (cont.) • Utilization analysis • A statistical procedure that compares the percentage of each protected group for each job category within the organization to that in the available labor market. • If the organizational percentage is less than the labor market percentage, the group is classified as being “underutilized.”

20. 2-1b Affirmative Action (cont.) • Affirmative action plan (AAP) • Affirmative action plans target the underutilized protected groups. • An AAP is a written statement that specifies how the organization plans to increase the utilization of targeted groups. • The AAP consists of three elements – goals, timetables, and action steps. • An AAP practice sometimes involves the use of preferential treatment.

22. 2-2 Environmental Issues in the Workplace • Cultural diversity • The changing nature of work • Mergers and takeovers • Corporate downsizing

23. 2-2a Cultural Diversity in the Workplace • To manage diversity effectively, an organization must be sensitive to the needs of new workers and seek to identify and eliminate barriers, if any. • Diversity training makes employees aware of their biases regarding minority groups and teaches them ways to overcome those biases.

24. 2-2a Cultural Diversity in the Workplace (cont.) • Breaking the “glass ceiling” – Helping minorities and women reach their career goals, and implementing promotion procedures that are less subject to bias. • Meeting the needs of older employees – Compensating for their diminishing skills, and placing them on jobs relying less on physical prowess and more on maturity and experience. • Implementing work and family programs – Introduction of nontraditional work arrangements such as telecommuting, flextime, and job sharing.

25. 2-2a Cultural Diversity in the Workplace (cont.) • Telecommuting: A nontraditional work arrangement in which employees work at home. • Limitations of telecommuting include lack of supervision and unavailability for meetings. • Flextime: Setting up a flexible work schedule in which workers put in their eight hours each day but choose their starting and ending times. • Job sharing: An alternate work schedule in which a full-time job is shared by two people.

27. 2-2b The Changing Nature of Work • The changing nature of work is attributed to technological changes and movement of jobs from manufacturing to service. • Training programs are initiated to provide employees with the skills needed to move into more technical and/or service-oriented jobs. • Firms are also offering literacy training programs to help workers overcome deficiencies in their basic skills before they can master the more advanced skills.

28. 2-2c Mergers and Takeovers • Occurrence of a merger or takeover can create problems like increased voluntary turnover and organizational conflict. • HRM practices that help restore employee loyalty and organizational commitment are increasingly important.

29. 2-2d Corporate Downsizing • The process of reducing the workforce size, called downsizing, usually takes the form of massive layoffs. • Factors triggering downsizing: • Decline or crisis in the firm. • Advent of technological advances. • Organizational restructuring, in which the structure of a firm is modified to become less hierarchical by cutting out the “layer” of middle management. • Downsizing can lead to poor employee morale and voluntary turnover.

31. 2-2d Corporate Downsizing (cont.) • One of management’s most difficult tasks is to reestablish morale and motivation following layoffs. • The management team must draft a new corporate mission statement that conveys the organization’s new vision and goals in an optimistic way. • To help employees who have lost their jobs, employers can provide services such as outplacement, relocation assistance, and personal and family counseling.