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ISBN-10: ISBN-13: 1. Staffing Models and Strategy 1 2. Legal Compliance 39 3. Planning 81Contents 1. Staffing Models and Strategy: Chapter 1 from Staffing Organizations, Eighth Edition by Heneman, Judge, Kammeyer-Mueller, 2015 1 2. Legal Compliance: Chapter 2 from Staffing Organizations, Eighth Edition by Heneman, Judge, Kammeyer- Mueller, 2015 39 3. Planning: Chapter 3 from Staffing Organizations, Eighth Edition by Heneman, Judge, Kammeyer-Mueller, 2015 81 Credits ChaPter One Staffing Models and Strategy Learning Objectives and IntroductionLearning Objectives Introduction the nature of Staffing The Big Picture Definition of Staffing Implications of Definition Staffing System Examples Staffing Models Staffing Quantity: Levels Staffing Quality: Person/Job Match Staffing Quality: Person/Organization Match Staffing System Components Staffing Organizations Staffing Strategy Staffing Levels Staffing Quality Staffing ethics plan for the Book Summary Discussion Questions ethical Issues a pplications endnotes 0077862414_ch01_p001_043.indd 5 12/9/13 10:59 AM 6 Part One The Nature of Staffing Learning ObjeCtiveS and intr OduCtiOn Learning Objectives • Define staffing and consider how, in the big picture, staffing decisions matter • Review the five staffing models presented, and consider the advantages and disadvantages of each • Consider the staffing system components and how they fit into the plan for the book • Understand the staffing organizations model and how its various components fit into the plan for the book • Appreciate the importance of staffing strategy, and review the 13 decisions that staffing strategy requires • Realize the importance of ethics in staffing, and learn how ethical staffing practice is established introduction Staffing is a critical organizational function concerned with the acquisition, deploy- ment, and retention of the organization’s workforce. As we note in this chapter and throughout the book, staffing is arguably the most critical function underlying organizational effectiveness, because “the people make the place,” because labor costs are often the highest organizational cost, and because poor hiring decisions are not easily undone.

This chapter begins with a look at the nature of staffing. This includes a view of the “big picture” of staffing, followed by a formal definition of staffing and the implications of that definition. Examples of staffing systems are given. Five models are then presented to elaborate on and illustrate various facets of staffing. The first model shows how projected workforce head- count require- ments and availabilities are compared to determine the appropriate staffing level for the organization. The next two models illustrate staffing quality, which refers to matching a person’s qualifications with the requirements of the job or organi- zation. The person/job match model is the foundation of all staffing activities; the person/organization match model shows how person/job matching could extend to how well the person will also fit with the organization. The core staffing com- ponents model identifies recruitment, selection, and employment as the three key staffing activities, and it shows that both the organization and the job applicant interact in these activities. The final model, staffing organizations, provides the entire framework for staffing and the structure of this book. It shows that orga- nizations, human resources (HR), and staffing strategy interact to guide the con- duct of staffing support activities (legal compliance, planning, and job analysis) and core staffing activities (recruitment, selection, and employment); employee 0077862414_ch01_p001_043.indd 6 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 7 retention and staffing system management are shown to cut across both types of activities.

Staffing strategy is then explored in detail by identifying and describing a set of 13 strategic staffing decisions that confront any organization. Several of the deci- sions pertain to staffing levels, and the remainder to staffing quality. Staffing ethics—the moral principles and guidelines for acceptable practic\�e—is discussed next. Several pointers that help guide ethical staffing conduct are indi- cated, as are some of the common pressures to ignore these pointers and \�compro- mise one’s ethical standards. Suggestions for how to handle these pressures are also made. Finally, the plan for the remainder of the book is presented. The overall structure of the book is shown, along with key features of each chapter. the n ature Of Staffing the big Picture Organizations are combinations of physical, financial, and human capital. Human capital refers to the knowledge, skill, and ability of people and their motivation to use them successfully on the job. The term “workforce quality” refers to an orga- nization’s human capital. The organization’s workforce is thus a stock of human capital that it acquires, deploys, and retains in pursuit of organizational outcomes such as profitability, market share, customer satisfaction, and environmental sus- tainability. Staffing is the organizational function used to build this workforce through such systems as staffing strategy, HR planning, recruitment, selection, employment, and retention. At the national level, the collective workforces of US organizations total over 112 million (down from a peak of nearly 140 million in 2005), with employees spread across nearly 7.5 million work sites. The work sites vary considerably in size, with 18% of employees in work sites of fewer than 20 employees, 31% in work sites between 20 and 500 employees, and 51% in work sites over 500 employ - ees. 1 Each of these work sites used some form of a staffing process to acquire its employees. Even during the Great Recession, which began in 2007 and ended in 2009, and its slow recovery, there were more than 4 million new hire transactions nationally each month, or over 50 million annually. This figure does not include internal transfers, promotions, or the hiring of temporary employees, so the total number of staffing transactions was much greater than the 50 million figure. 2 Even in difficult economic times, staffing is big business for both organizations and job seekers. For most organizations, a workforce is an expensive proposition and cost of doing business. It is estimated that an average organization’s employee cost (wages or salaries and benefits) is over 22% of its total revenue (and generally a higher 0077862414_ch01_p001_043.indd 7 12/9/13 10:59 AM 8 Part One The Nature of Staffing percentage of total costs). 3 The percentage is much greater for organizations in labor- intensive industries—the service- providing as opposed to goods- producing industries—such as retail trade, information, financial services, professional and business services, education, health care, and leisure and hospitality. Since service- providing industries now dominate our economy, matters of employee cost and whether the organization is acquiring a high- quality workforce are of consider - able concern. A shift is gradually occurring from viewing employees as just a cost of doing business to valuing employees as human capital that creates competitive advantage for the organization. Organizations that deliver superior customer service, much of which is driven by highly knowledgeable employees with fine- tuned customer service skills, have a definite and hopefully long- term leg up on their competitors.

The competitive advantage derived from such human capital has important finan- cial implications. In addition to direct bottom- line implications, an organization’s focus on cre- ating an effective selection system also has more indirect implications for com- petitive advantage by enhancing employees’ well- being and retention. One recent study showed that employees who perceive their company uses effective selection practices such as formal selection tests and structured job interviews (practices that we will discuss in this book) are more committed to their organizations. In turn, those higher levels of commitment lead to more helping or citizenship behaviors on the part of employees, as well as stronger intentions to remain employed, both of which ultimately contribute to an organization’s bottom line. 4 Thus, organizations are increasingly recognizing the value creation that can occur through staffing. Quotes from several organization leaders attest to this, as shown in Exhibit 1.1. d efinition of Staffing The following definition of staffing is offered and will be used throughout this book: Staffing is the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organization’s effectiveness. This straightforward definition contains several implications which are identified and explained next. implications of d efinition acquire, d eploy, retain An organization’s staffing system must guide the acquisition, deployment, and retention of its workforce. Acquisition activities involve external staffing systems that govern the initial intake of applicants into the organization. These involve plan - ning for the numbers and types of people needed, establishing job requir\�ements in 0077862414_ch01_p001_043.indd 8 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 9 “Staffing is absolutely critical to the success of every company. To be competitive in today’s economy, companies need the best people to create ideas and execute them for th\�e organization. Without a competent and talented workforce, organizations will stagnate and eventually perish. The right employees are the most important resources of companies today.” a Gail Hyland- Savage, chief operating officer Michaelson, Connor & Boul—real estate and marketing “At most companies, people spend 2% of their time recruiting and 75% mana\�ging their recruiting mistakes.” b Richard Fairbank, CEO Capital One “I think about this in hiring, because our business all comes down to people. . . . In fact, when I’m interviewing a senior job candidate, my biggest worry is how good they are at hiring. I spend at least half the interview on that.” c Jeff Bezos, CEO Amazon.com—Internet merchandising “We missed a really nice nursing rebound . . . because we just didn’t do a good job hiring in front of it. Nothing has cost the business as much as failing to intersect the right people at the right time.” d David Alexander, president Soliant Health—health care “Organization doesn’t really accomplish anything. Plans don’t accomplish anything, either.

Theories of management don’t much matter. Endeavors succeed or fail because of the people involved. Only by attracting the best people will you accomplish great deeds.” e Gen. Colin Powell (Ret.) Former US secretary of state exhibit 1.1 the importance of Staffing to Organizational Leaders aG. Hyland- Savage, “General Management Perspective on Staffing; The Staffing Commandments,” in N. C. Burkholder, P. J. Edwards, Jr., and L. Sartain (eds.), On Staffing (Hoboken, NJ: Wiley, 2004), p. 280.

bJ. Trammell, “CEOs Must Bring Own Recruiting: 10 Rules for Building a Top-Notch Function,” Forbes, April 17, 2013 (www.forbes.com/sites/joeltrammell/2013/04/17/ceos-must-own-recruiting-10-rules-for- building-a-top-notch-function).

cG. Anders, “Taming the Out- of-Control In- Box,” Wall Street Journal, Feb. 4, 2000, p. 81.

dJ. McCoy, “Executives’ Worst Mistakes in Staffing,” Staffing Industry Review, Sept. 2010, pp. 1–2.

eC. Powell, “A Leadership Primer: Lesson 8,” Department of the Army (www.frontiercapital.com/ uploads/file/ColinPowellonLeadership%20PDF%20for%20Blog.pdf). 0077862414_ch01_p001_043.indd 9 12/9/13 10:59 AM 10 Part One The Nature of Staffing the form of the qualifications or KSAOs (knowledge, skill, ability, and other char - acteristics) needed to perform the job effectively, establishing the types of rewards the job will provide, conducting external recruitment campaigns, using selection tools to evaluate the KSAOs that applicants possess, deciding which applicants are the most qualified and will receive job offers, and putting together job offers that applicants will hopefully accept. Deployment refers to the placement of new hires in the actual jobs they will hold, something that may not be entirely clear at the time of hire, such as the specific work unit or geographic location. Deployment also encompasses guiding the movement of current employees throughout the organization through internal staffing systems that handle promotions, transfers, and new project assignments.

Internal staffing systems mimic external staffing systems in many respects, such as planning for promotion and transfer vacancies, establishing job requirements and job rewards, recruiting employees for promotion or transfer opportunities, evaluating employees’ qualifications, and making job offers to employees for new positions. Retention systems seek to manage the inevitable flow of employees out of the organization. Sometimes these outflows are involuntary on the part of the employee, such as through layoffs or the sale of a business unit to another orga- nization. Other outflows are voluntary in that they are initiated by the employee, such as leaving the organization to take another job (a potentially avoidable turn- over by the organization) or leaving to follow one’s spouse or partner to a new geographic location (a potentially unavoidable turnover). Of course, no organiza- tion can or should seek to completely eliminate employee outflows, but it should try to minimize the types of turnover in which valued employees leave for “greener pastures” elsewhere—namely, voluntary- avoidable turnover. Such turnover can be very costly to the organization, as can turnover due to employee discharges and downsizing. Through various retention strategies and tactics, the organization can combat these types of turnover, seeking to retain those employees it thinks it can- not afford to lose.

Staffing as a Process or System Staffing is not an event, as in, “We hired two people today.” Rather, staffing is a process that establishes and governs the flow of people into the organization, within the organization, and out of the organization. Organizations use multiple inter - connected systems to manage the people flows. These include planning, recruit- ment, selection, decision making, job offer, and retention systems. Occurrences or actions in one system inevitably affect other systems. If planning activities show a forecasted increase in vacancies relative to historical standards, for example, the recruitment system will need to gear up for generating more applicants than previ- ously, the selection system will have to handle the increased volume of applicants needing to be evaluated in terms of their KSAOs, decisions about job offers may have to be sped up, and the job offer packages may have to be sweetened to entice 0077862414_ch01_p001_043.indd 10 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 11 the necessary numbers of new hires. Further, steps will have to be taken to retain the new hires and thus avoid having to repeat the above experiences in the next staffing cycle.

Quantity and Quality Staffing the organization requires attention to both the numbers (quantity) and the types (quality) of people brought into, moved within, and retained by the organiza- tion. The quantity element refers to having enough people to conduct business, and the quality element refers to having people with the requisite KSAOs so that jobs are performed effectively. It is important to recognize that it is the combination of sufficient quantity and quality of labor that creates a maximally effective staffing system.

Organization effectiveness Staffing systems exist and should be used to contribute to the attainment of organi- zational goals such as survival, profitability, and growth. A macro view of staffing like this is often lost or ignored because most of the day- to-day operations of staff- ing systems involve micro activities that are procedural, transactional, and routine in nature. While these micro activities are essential for staffing systems, they must be viewed within the broader macro context of the positive impacts staffing can have on organization effectiveness. There are many indications of this critical role of staffing. Leadership talent is at a premium, with very large stakes associated with new leader acquisition. Sometimes leadership talent is bought and brought fr\�om the outside to hopefully execute a reversal of fortune for the organization or a busi- ness unit within it. For example, in 2012, Yahoo brought in Marissa Mayer, a for - mer executive at Google, to turn around the aging tech giant. Organizations also acquire leaders to start new business units or ventures that will feed organizational growth. The flip side of leadership acquisition is leadership retention. A loom- ing fear for organizations is the unexpected loss of a key leader, particularly to a competitor. The exiting leader carries a wealth of knowledge and skill out of the organization and leaves a hole that may be hard to fill, especially with someone of equal or higher leadership stature. The leader may also take other key employees along, thus increasing the exit impact. Organizations recognize that talent hunts and loading up on talent are ways to expand organization value and provide protection from competitors. Such a strat- egy is particularly effective if the talent is unique and rare in the marketplace, valuable in the anticipated contributions to be made (such as product creations or design innovations), and difficult for competitors to imitate (such as through training current employees). Talent of this sort can serve as a source of competitive advantage for the organization, hopefully for an extended time period. 5 Talent acquisition is essential for growth even when it does not have such com- petitive advantage characteristics. As hiring has steadily picked up since the Great 0077862414_ch01_p001_043.indd 11 12/9/13 10:59 AM 12 Part One The Nature of Staffing Recession ended, many companies are scrambling to staff positions in order to keep up with demand. For example, Amazon, Oracle, and Microsoft are each attempting to fill a whopping 2,000 positions that all pay at least $60,000 a year. 6 Shortages in the quantity or quality of labor can mean lost business opportunities, scaled- back expansion plans, inability to provide critical consumer goods and ser - vices, and even threats to the organization’s survival. Finally, for individual managers, having sufficient numbers and types of employees on board is necessary for the smooth, efficient operation of their work units. Employee shortages often require disruptive adjustments, such as job reas- signments or overtime for current employees. Underqualified employees present special challenges to the manager, as they need to be trained and closely super - vised. Failure of the underqualified to achieve acceptable performance may require termination, a difficult decision to make and implement. In short, organizations experience and respond to staffing forces and recognize how critical these forces can be to organizational effectiveness. The forces mani- fest themselves in numerous ways: acquisition of new leaders to change the organi- zation’s direction and effectiveness, prevention of key leader losses, use of talent as a source of growth and competitive advantage, shortages of labor—both quantity and quality—that threaten growth and even survival, and the ability of individual managers to effectively run their work units. Staffing System examples Staffing j obs Without titles W. L. Gore & Associates is a Delaware- based organization that specializes in mak- ing products derived from fluoropolymers. Gore produces fibers (including dental floss and sewing threads), tubes (used, for example, in heart stents and oil explora- tion), tapes (including those used in space exploration), and membranes (used in Gore- Tex waterproof clothing). In its more than half- century history, Gore has never lost money. Gore employs over 9,000 workers and appears on nearly every “best place to work” list. What makes Gore so special? Gore associates argue that it’s the culture, and the culture starts with the hiring. Gore has a strong culture, as seen in its structure: a team- based, flat lattice structure that fosters personal initiative. At Gore, no employee can ever command another employee—all commitments are voluntary, and any employee can say no to any request. Employees are called “associates” and managers are called “spon- sors.” How do people become leaders at Gore? “You get to be a leader if your team asks you to lead them.” 7 Gore extends this egalitarian, entrepreneurial approach to its staffing process.

The focal point of Gore’s recruitment process is the careers section of its website, which describes its core values and its unique culture. The website also provides 0077862414_ch01_p001_043.indd 12 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 13 position descriptions and employee perspectives on working at Gore, complete with pictures of the associates and videos. Three Gore associates—Janice, Katrin, and Mike—work on Gore’s footwear products, striving to uphold the company’s “keep you dry” guarantee. As Mike notes, “The reasons that I chose Gore from the start are the same reasons why I stay at Gore today, and continue to have fun every day: It’s the people. Our team is a great team, and I think that is reflected or\� echoed across the entire enterprise.” Hajo, Alicia, and Austin make up a team working on the clinical product Thoracic Endoprosthesis. As Hajo notes, “When you come to work each day, you don’t have a boss to give you explicit instructions on what you need to accomplish.” Gore finds that its employee- focused recruitment efforts do not work for every- one, which is exactly what it intends. “Some of these candidates, or prospects in the fields we were recruiting for, told us ‘this company probably isn’t for me,’” says Steve Shuster, who helped develop the recruitment strategy. Shuster says that this self- selection is another benefit of its recruitment message. Potential recruits who prefer a more traditional culture quickly see that Gore isn’t for them. Shuster says, “Rather than have them go through the interview process and invest their time and our time, we wanted to weed that out.” Of course, Gore is a culture that fits many. Says Gore associate Hannah, who works on the company’s heart device team, “I feel like Gore is not just a job, that it’s more of a lifestyle and a huge part of my life.” 8 Pharmaceutical industry Managers Though Pfizer has been recognized by other pharmaceutical companies as a leader in selecting and developing its employees, it recently realized a need to dramati- cally overhaul its approach to staffing. Despite the previous success of its selec- tion efforts, “Pfizer was not focused on managing the external environment,” said Pfizer executive Chris Altizer. In the past, according to Altizer, Pfizer would project what kind of talent it would need in the next 10 years and then select employees whose skills matched the talent needs. Pfizer now believes the plan no longer works because there is increased global competition, especially from smaller start- up pharmaceutical firms that can rush products to market. That puts a premium on adaptability. To address changing market conditions, Pfizer now looks at hiring employees who can jump from one position to another. This means that Pfizer focuses less on job descriptions (i.e., hiring for skills that fit a specific job) and more on general competencies that will translate from job to job. According to Altizer, Pfizer needs “a person who can switch from working on a heart disease product to one that helps people stop smoking”—in other words, rather than relying on past experi- ence with one product (say, heart disease medications), Pfizer is looking for com- petencies that will allow the employee to quickly and proficiently move from one venture to the next. 9 0077862414_ch01_p001_043.indd 13 12/9/13 10:59 AM 14 Part One The Nature of Staffing Management t rainees Enterprise Rent- A-Car is a private company founded in 1957 with locations in the United States, Canada, the UK, Ireland, and Germany. Enterprise boasts that its 5,500 offices in the United States are located within 15 miles of 90% of the pop- ulation. Among its competitors, Enterprise frequently wins awards for customer satisfaction. To staff its locations, Enterprise relies heavily on recruiting recent college grad- uates. In fact, Enterprise hires more college graduates—often between 8,000 and 9,000 a year—than any other company. New hires enter Enterprise’s management training program, where they learn all aspects of running a branch, from taking res- ervations, picking up customers, developing relationships with car dealerships and body shops for future rentals, managing the fleet, handling customer issues, and even washing cars. Nearly all promotions at Enterprise occur from within and a\�re strictly performance based, allowing management trainees to see a clear path from their current position to higher positions such as assistant manager, branch man - ager, and area manager. Typically, the first promotion occurs within 9 to 12 months of being hired, which speeds the climb up the corporate ladder. To fill so many positions with college graduates, Enterprise relies on several strat - egies, including recruiting from an internship program of approximately 1,000 stu- dents a year, attending college recruitment fairs, using its website to highlight its performance- driven culture as well as employee testimonials, and devoting a large percentage of its television advertising to the NCAA basketball tournament that occurs each March and has a high college viewership. Although graduates’ grades are important to Enterprise, communication skills are even more essential, says Dylan Schweitzer, northeast manager of talent acquisition. Although the management trainee program at Enterprise has been described\� as a grueling process, with many trainees leaving prior to being promoted, its execu- tives often describe it as an “MBA without the IOU” because trainees gain first- hand experience in sales, marketing, finance, and operations. 10 Staffing M OdeLS Several models depict various elements of staffing. Each of these is presented and described to more fully convey the nature and richness of staffing the organization. Staffing Quantity: Levels The quantity or head- count portion of the staffing definition means organizations must be concerned about staffing levels and their adequacy. Exhibit 1.2 shows the basic model. The organization as a whole, as well as each of its units, forecasts workforce quantity requirements (the needed head count) and then compar\�es these with forecasted workforce availabilities (the likely employee head count) to deter - 0077862414_ch01_p001_043.indd 14 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 15 mine its likely staffing level position. If head- count requirements match availabili- ties, the organization will be fully staffed. If requirements exceed availabilities, the organization will be understaffed, and if availabilities exceed requirements, the organization will be overstaffed. Making forecasts to determine appropriate staffing levels and then developing specific plans are the essence of planning. Being understaffed means the organiza- tion will have to gear up its staffing efforts, starting with accelerated recruitment and carrying on through the rest of the staffing system. It may also require develop- ing retention programs that will slow the outflow of people, thus avoiding costly “turnstile” or “revolving door” staffing. Overstaffing projections signal the need to slow down or even halt recruitment, as well as to take steps to reduce head count, perhaps through early retirement plans or layoffs. Staffing Quality: Person/j ob Match The person/job match seeks to align characteristics of individuals with jobs in ways that will result in desired HR outcomes. Casual comments made about applicants often reflect awareness of the importance of the person/job match:

“Clark just doesn’t have the interpersonal skills that it takes to be a good cus- tomer service representative.” “Mary has exactly the kind of budgeting experi- ence this job calls for; if we hire her, there won’t be any downtime while she learns our systems.” “Gary says he was attracted to apply for this job because of its sales commission plan; he says he likes jobs where his pay depends on how well he performs.” “Diane was impressed by the amount of challenge and autonomy she will have.” “Jack turned down our offer; we gave him our best shot, but he just didn’t feel he could handle the long hours and amount of travel the job calls for.” Comments like these raise four important points about the person/job match.

First, jobs are characterized by their requirements (e.g., interpersona\�l skills, previ- ous budgeting experience) and embedded rewards (e.g., commission sales plan, challenge and autonomy). Second, individuals are characterized by their level of Projected Staffing Requirements Overstaffed Fully Staffed Understaffed Projected Staffing Availabilities Compare exhibit 1.2 Staffing Quantity 0077862414_ch01_p001_043.indd 15 12/9/13 10:59 AM 16 Part One The Nature of Staffing qualification (e.g., few interpersonal skills, extensive budgeting experience) and motivation (e.g., need for pay to depend on performance, need for challenge \�and autonomy). Third, in each of the previous examples the issue was the likely degree of fit or match between the characteristics of the job and the person. Fourth, there are implied consequences for every match. For example, Clark may not perform very well in his interactions with customers; retention might quickly bec\�ome an issue with Jack.

These points and concepts are shown more formally through the person/job match model in Exhibit 1.3. In this model, the job has certain requireme\�nts and rewards associated with it. The person has certain qualifications, referred to as KSAOs, and motivations. There is a need for a match between the person and the job. To the extent that the match is good, it will likely have a positive impact on HR outcomes, particularly with attraction of job applicants, job performanc\�e, reten- tion, attendance, and satisfaction. There is a need for a dual match to occur: job requirements to KSAOs, and job rewards to individual motivation. In and through staffing activities, there are attempts to ensure both of these. Such attempts collectively involve what will be referred to throughout this book as the matching process. Several points pertaining to staffing need to be made about the person/job match model. First, the concepts shown in the model are not new. 11 They have been used exhibit 1.3 Person/j ob Match 0077862414_ch01_p001_043.indd 16 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 17 for decades as the dominant way of thinking about how individuals successfully adapt to their work environments. The view is that the positive interaction of indi- vidual and job characteristics creates the most successful match. Thus, a person with a given package of KSAOs is not equally suited to all jobs, because jobs vary in the KSAOs required. Likewise, an individual with a given set of needs or moti- vations will not be satisfied with all jobs, because jobs differ in the rewards they offer. Thus, in staffing, each individual must be assessed relative to the require- ments and rewards of the job being filled.

Second, the model emphasizes a dual match of KSAOs to requirements and motivation to rewards. Both matches require attention in staffing. For example, a staffing system may be designed to focus on the KSAOs/requirements match by carefully identifying job requirements and then thoroughly assessing app\�licants relative to these requirements. While such a staffing system may accurately iden- tify the probable high performers, problems could arise. By ignoring or \�down- playing the motivation/rewards portion of the match, the organization may have difficulty getting people to accept job offers (an attraction outcome) or having new hires remain with the organization for any length of time (a retention outcome). It does little good to identify the likely high performers if they cannot be induced to accept job offers or to remain with the organization. Third, job requirements should be expressed in terms of both the tasks involved and the KSAOs needed to perform those tasks. Most of the time, it is difficult to establish meaningful KSAOs for a job without having first identified the job’s tasks. KSAOs usually must be derived or inferred from knowledge of the tasks. An exception to this involves very basic or generic KSAOs that are reasonably deemed necessary for most jobs, such as literacy and oral communication skills. Fourth, job requirements often extend beyond task and KSAO requirements.

For example, the job may require punctuality, good attendance, safety toward fellow employees and customers, and travel. Matching an individual to these requirements must also be considered when staffing the organization. Travel requirements of the job, for example, may involve assessing applicants’ avail- ability for, and willingness to accept, travel assignments. Integrating this with the second point above, travel issues, which frequently arise in the consulting indus- try, play a role in both the attraction process (getting people to accept)\� and the retention process (getting people to stay). “Road warriors,” as they are sometimes termed, may first think that frequent travel will be exciting, only to discover later that they find it taxing. Finally, the matching process can yield only so much by way of impacts on the HR outcomes. The reason for this is that these outcomes are influenced by factors outside the realm of the person/job match. Retention, for example, depends not only on how close the match is between job rewards and individual motivation but also on the availability of suitable job opportunities in other organizations and labor markets. As hiring begins to improve and unemployment continues to drop, 0077862414_ch01_p001_043.indd 17 12/9/13 10:59 AM 18 Part One The Nature of Staffing organizations are likely to face increased retention pressures as other opportunities present themselves to employees that were not previously present when economic conditions were poorer. Staffing Quality: Person/Organization Match Often the organization seeks to determine how well the person matches not only the job but also the organization. Likewise, applicants often assess how well they think they will fit into the organization, in addition to how well they match the spe- cific job’s requirements and rewards. For both the organization and the applicant, then, there may be a concern with a person/organization match. 12 Exhibit 1.4 shows this expanded view of the match. The focal point of staffing is the person/job match, and the job is the bull’s eye of the matching target. Four Organizational exhibit 1.4 Person/Organization Match 0077862414_ch01_p001_043.indd 18 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 19 other matching concerns involving the broader organization also arise in staffing:

organizational values, new job duties, multiple jobs, and future jobs.

Organizational values are norms of desirable attitudes and behaviors for the organization’s employees. Examples include honesty and integrity, achievement and hard work, and concern for fellow employees and customers. Though such values may never appear in writing, such as in a job description, the likely match of the applicant to them is judged during staffing. New job duties are tasks that may be added to the target job over time. Organiza- tions desire new hires who will be able to successfully perform these new duties as they are added. In recognition of this, job descriptions often contain the catchall phrase “and other duties as assigned.” These other duties are usually vague at the time of hire, and they may never materialize. Nonetheless, the organization would like to hire people it thinks could perform these new duties. Having such people will provide the organization the flexibility to complete new tasks without having to hire additional employees. As we will discuss later in this book, certain types of individuals are better than others at adapting to changing circumstances, an\�d organizations with evolving job duties are well advised to select them. Flexibility concerns also enter the staffing picture in terms of hiring people who can perform multiple jobs. Small businesses, for example, often desire new hires who can wear multiple hats, functioning as jacks- of-all-trades. Organizations experiencing rapid growth may require new employees who can handle several job assignments, splitting their time among them on an as- needed basis. Such expecta- tions obviously require assessments of person/organization fit. Future jobs represent forward thinking by the organization and the person as to which job assignments the person might assume beyond the initial job. Here the applicant and the organization are thinking of long- term matches over the course of transfers and promotions as the employee becomes increasingly seasoned for the long run. As technology and globalization cause jobs to change at a rapid pace, more organizations are engaging in “opportunistic hiring,” where an individual is hired into a newly created job or a job that is an amalgamation of previously distributed tasks. In such cases, person/organization match is more important than person/job match. 13 In each of the four concerns, the matching process is expanded to consider requirements and rewards beyond those of the target job as it currently exists.

Though the dividing line between person/job and person/organization matching is fuzzy, both types of matches are frequently of concern in staffing. Ideally, the orga- nization’s staffing systems focus first and foremost on the person/job match. This will allow the nature of the employment relationship to be specified and agreed to in concrete terms. Once these terms have been established, person/organization match possibilities can be explored during the staffing process. In this book, for simplicity’s sake, we will use the term “person/job match” broadly to encompass both types of matches, though most of the time we will be referring to t\�he match with the actual job itself. 0077862414_ch01_p001_043.indd 19 12/9/13 10:59 AM 20 Part One The Nature of Staffing Staffing System Components As noted, staffing encompasses managing the flows of people into and within the organization, as well as retaining them. The core staffing process has several com- ponents that represent steps and activities that occur over the course of these flows.

Exhibit 1.5 shows these components and the general sequence in which they occur.

As shown in the exhibit, staffing begins with a joint interaction between the applicant and the organization. The applicant seeks the organization and job oppor - tunities within it, and the organization seeks applicants for job vacancies it has or anticipates having. Both the applicant and the organization are thus “players” in the staffing process from the very beginning, and they remain joint participants throughout the process. At times, the organization may be the dominant player, such as in aggressive and targeted recruiting for certain types of applicants. At other times, the applicant may be the aggressor, such as when he or she desperately seeks employment with a particular organization and will go to almost any length to land a job with it. Most of the time, the staffing process involves a more balanced and natural interplay between the applicant and the organization. The initial stage in staffing is recruitment, which involves identification and attraction activities by both the organization and the applicant. The organization j exhibit 1.5 Staffing System Components 0077862414_ch01_p001_043.indd 20 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 21 seeks to identify and attract individuals so that they become job applicants. Activi- ties such as advertising, job fairs, use of recruiters, preparation and distribution of informational brochures, and “putting out the word” about vacancies among its own employees are undertaken. The applicant identifies organizations with job opportunities by reading advertisements, contacting an employment agency, mass mailing résumés to employers, and so forth. These activities are accompanied by attempts to make one’s qualifications (KSAOs and motivation) attractive to organi- zations, such as by applying in person for a job or preparing a carefull\�y constructed résumé that highlights significant skills and experiences.

Gradually, recruitment activities phase into the selection stage and its accom- panying activities. Now, the emphasis is on assessment and evaluation. For the organization, this means the use of various selection techniques (interviews, appli- cation blanks, and so on) to assess applicant KSAOs and motivation. Data from these assessments are then evaluated against job requirements to determine the likely degree of person/job match. At the same time, the applicant is assessing and evaluating the job and organization on the basis of the information gathered from organizational representatives (e.g., recruiter, manager with the vacancy, and other employees), written information (e.g., brochures, employee handbook), informal sources (e.g., friends and relatives who are current employees), and visual inspec- tion (e.g., a video presentation, a work site tour). This information, along with a self- assessment of KSAOs and motivation, is evaluated against the applicant’s understanding of job requirements and rewards to determine whether a good person/job match is likely. The last core component of staffing is employment, which involves decision making and final match activities by the organization and the applicant. The orga- nization must decide which applicants to allow to continue in the process and which to reject. This may involve multiple decisions over successive selection steps or hurdles. Some applicants ultimately become finalists for the job. At that point, the organization must decide to whom it will make the job offer, what the content of the offer will be, and how it will be drawn up and presented to the appli- cant. Upon the applicant’s acceptance of the offer, the final match is complete, and the employment relationship is formally established. For the applicant, the employment stage involves self- selection, a term that refers to deciding whether to continue in the staffing process or drop out. This decision may occur anywhere along the selection process, up to and including the moment of the job offer. If the applicant continues as part of the process through the final match, the applicant has decided to be a finalist. His or her attention now turns to a possible job offer, possible input and negotiation on its content, and making a final decision about the offer. The applicant’s final decision is based on overall judgment about the likely suitability of the person/job match. Note that the above staffing components apply to both external and internal staffing. Though this may seem obvious in the case of external staffing, a brief elaboration may be necessary for internal staffing, where the applicant is a current 0077862414_ch01_p001_043.indd 21 12/9/13 10:59 AM 22 Part One The Nature of Staffing employee and the organization is the current employer. As we discussed above, Enterprise Rent- A-Car staffs the overwhelming majority of its managerial posi- tions internally. Job opportunities (vacancies) exist within the organization and are filled through the activities of the internal labor market. Those activities involve recruitment, selection, and employment, with the employer and the employee as joint participants. As another example, at the investment banking firm Goldman Sachs, candidates for promotion to partner are identified through a multistep pro- cess. 14 They are “recruited” by division heads identifying prospective candidates for promotion (as in many internal staffing decisions, it is assumed that all employees are interested in promotion). Candidates are then vetted on the basis of input from senior managers in the firm and are evaluated from a dossier that contains the candi- date’s photograph, credentials, and accomplishments. After this six- month process, candidates are recommended for partner to the CEO, who then makes the final deci- sion and offers partnership to those lucky enough to be selected (partners average $7 million a year, plus perks). When candidates accept the offer of partnership, the final match has occurred, and a new employment relationship has been established. Staffing Organizations The overall staffing organizations model, which forms the framework for this book, is shown in Exhibit 1.6. It depicts that the organization’s mission, along with its goals and objectives, drives both organization strategy and HR and staffing strategy, which interact with each other when they are being formulated. Staff- ing policies and programs result from such interaction and serve as an overlay to both support activities and core staffing activities. Employee retention and staffing system management concerns cut across these support and core staffing activities.

Finally, though not shown in the model, it should be remembered that staffing levels and staffing quality are the key focal points of staffing strategy, policy, and programs. A more thorough examination of the model follows next.

Organization, hr, and Staffing Strategy Organizations formulate strategy to express an overall purpose or mission and to establish broad goals and objectives that will help the organization fulfill its mis- sion. For example, a newly formed software development company may have a mission to “help individuals and families manage all of their personal finances and records through electronic means.” With this mission statement, the organiza- tion might develop goals and objectives pertaining to product development, sales growth, and competitive differentiation through superior product quality and cus- tomer service. Underlying these objectives are certain assumptions about the size and types of workforces that will need to be acquired, trained, managed, rewarded, and retained.

HR strategy represents the key decisions about how these workforce assumptions will be handled. Such HR strategy may not only flow from the organization strat- 0077862414_ch01_p001_043.indd 22 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 23 egy but also may actually contribute directly to the formulation of the organiza- tion’s strategy.

Consider again the example of the software development company and its objec- tive pertaining to new product development. Being able to develop new products assumes that sufficiently qualified product- development team members are avail- able internally and externally, and that assurances from the HR department about availability may have been critical in helping the organization decide on its prod- uct development goals. From this general assumption, HR strategy may suggest (1)  obtaining new, experienced employees from other software companies rather than going after newly minted college and graduate school graduates, (2) building a new facility for software development employees in a geographic area that is an attractive place to work, raise families, and pursue leisure activities, (3) develop- ing relocation assistance packages and family- friendly benefits, (4) offering wages and salaries above the market average, plus using hiring bonuses to help lure new employees away from their current employers, (5) creating special training bud- gets for each employee to use at his or her own discretion for skills enhancement, and (6) putting in place a fast- track promotion system that allows employees to rise Organization Mission Goals and Objectives Or ganization Strategy s e i t i v i t c A g n i f f a t S e r o C s e i t i v i t c A t r o p p u S HR and Staffing Strategy Staffing Policies and Programs Staffing System and Retention Management Legal compliance Planning Job analysis and rewards Recruitment: external, internal Selection: measurement, external, internal Employment: decision making, final match exhibit 1.6 Staffing Organizations Model 0077862414_ch01_p001_043.indd 23 12/9/13 10:59 AM 24 Part One The Nature of Staffing upward in either their professional specialty or the managerial ranks. In all these ways, HR strategy seeks to align acquisition and management of the workforce with organization strategy.

Staffing strategy is an outgrowth of the interplay between organization strategy and HR strategy, described above. It deals directly with key decisions regarding the acquisition, deployment, and retention of the organization’s workforces. Such decisions guide the development of recruitment, selection, and employment pro- grams. In the software development company example, the strategic decision to acquire new employees from the ranks of other organizations may lead the organi- zation to develop very active, personalized, and secret recruiting activities for lur - ing these experienced people away. It may also lead to the development of special selection techniques for assessing job experiences and accomplishments. In such ways, strategic staffing decisions shape the staffing process.

Support a ctivities Support activities serve as the foundation and necessary ingredients for the conduct of core staffing activities. Legal compliance represents knowledge of the myriad laws and regulations, especially equal employment opportunity and affirmative action (EEO/AA), and incorporation of their requirements into all phas\�es of the core staffing activities. Planning serves as a tool for first becoming aware of key external influences on staffing, particularly economic conditions, labor markets, and labor unions. Such awareness shapes the formulation of staffing levels—both requirements and availabilities—the results of which drive planning for the core staffing activities. Job analysis represents the key mechanism by which the orga- nization identifies and establishes the KSAO requirements for jobs, as well as the rewards that the jobs will provide, both first steps toward filling projected vacan- cies through core staffing activities. Returning to our example of the software development company, if it meets vari- ous size thresholds for coverage (usually 15 or more employees), it must ensure that the staffing systems to be developed comply with all applicable federal, state, and local laws and regulations. Planning activities will revolve around first determining the major types of jobs that will be necessary for the product development venture, such as computer programmers, Internet specialists, and project managers\�. For each job, a forecast must be made about the number of employees needed and the likely availability of individuals both externally and internally for the job. Results of such forecasts serve as the key input for developing detailed staffing plans for the core staffing activities. Finally, job analysis will be needed to specify for each job exactly which KSAOs and rewards will be necessary for these sought- after new employees.

Once all these support activities are in place, the core staffing activities can begin.

Core Staffing a ctivities Core staffing activities focus on recruitment, selection, and employment of the workforce. Since staffing levels have already been established as part of staffing 0077862414_ch01_p001_043.indd 24 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 25 planning, the emphasis shifts to staffing quality to ensure that successful person/ job and person/organization matches will be made. Accomplishment of this end result will require multiple plans, decisions, and activities, ranging from recruit- ment methods, communication with potential applicants with a special rec\�ruitment message, recruitment media, types of selection tools, deciding which app\�licants will receive job offers, and job offer packages. Staffing experts and the hiring man- ager will be involved in these core staffing activities. Moreover, it is likely that the activities will have to be developed and tailor- made for each type of job.

Consider the job of computer programmer in our software development com- pany example. It will be necessary to develop specific plans for issues such as the following: Will we recruit only online, or will we use other methods such as news- paper ads or job fairs (recruitment methods)? What exactly will we tell applicants about the job and our organization (recruitment message), and how will we deliver the message, such as on our website or in a brochure (recruitment media\�)? What specific selection tools—such as interviews, assessments of experience, work sam- ples, and background checks—will we use to assess and evaluate the applicants’ KSAOs (selection techniques)? How will we combine and evaluate all the infor - mation we gather on applicants with these selection tools and then decide which applicants will receive job offers (decision making)? What exactly will we put in the job offer, and what will we be willing to negotiate (employment)?

Staffing and r etention System Management The various support and core staffing activities are quite complex, and they must be guided, coordinated, controlled, and evaluated. Such is the role of staffing sys- tem management. In our software development company example, what will be the role of the HR department, and what types of people will be needed to de\�velop and manage the new staffing systems (administration of staffing systems)? How will we evaluate the results of these systems—will we collect and look at cost- per-hire and time- to-hire data (evaluation of staffing systems)? Data such as these are key effective indicators that both general and staffing managers are attuned to. Finally, voluntary employee departure from the organization is usually costly and disruptive, and it can involve the loss of critical talent that is difficult to replace.

Discharges can also be disruptive. Unless the organization is downsizing, replace- ments must be found in order to maintain desired staffing levels. The burden for such replacement staffing can be substantial, particularly if the turnover is unantici- pated and unplanned. Other things being equal, greater employee retention means less staffing, and thus effective retention programs complement staffing programs. In our software development company example, the primary focus will likely be on “staffing up” in order to keep producing existing products and developing new ones. Unless attention is also paid to employee retention, maintaining adequate staff- ing levels and quality may become problematic. Hence, the organization will need to monitor the amount and quality of employees who are leaving, along with the reasons they are leaving, in order to learn how much of the turnover is voluntary and 0077862414_ch01_p001_043.indd 25 12/9/13 10:59 AM 26 Part One The Nature of Staffing avoidable; monitoring discharges will also be necessary. With these data, tailor- made retention strategies and programs to better meet employees’ needs can be developed.

If these are effective, strains on the staffing system will be lessened. The remainder of the book is structured around and built on the staffing organi- zations model shown in Exhibit 1.6. Staffing Strategy As noted, staffing strategy requires making key decisions about the acquisition, deployment, and retention of the organization’s workforce. Thirteen such decisions are identified and discussed below. Some decisions pertain primarily to staffing levels, and others pertain primarily to staffing quality. A summary of the decisions is shown in Exhibit 1.7. While each decision is shown as an either- or, each is more appropriately thought of as lying on a continuum anchored at the ends by\� these either- or extremes. When discussing the decisions, continued reference is made to the software development company example. Staffing Levels a cquire or d evelop talent A pure acquisition staffing strategy would have an organization concentrate on acquiring new employees who can “hit the ground running” and be at peak per - Staffing Levels   • Acquire or Develop  Talent   •  Hire Yourself or Outsource   •  External or Internal Hiring   •  Core or Flexible  Workforce   •  Hire or Retain   •  National or Global   •  Attract or Relocate   •  Overstaff or Understaff   •  Short- or   Long- Term Focus Staffing Quality   •  Person/Job or Person/Organization Match   •  Specific or General KSAOs   •  Exceptional or  Acceptable Workforce Quality   •  Active or Passive Diversity exhibit 1.7 Strategic Staffing d ecisions 0077862414_ch01_p001_043.indd 26 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 27 formance the moment they arrive. These employees would bring their talents with them to the job, with little or no need for training or development. A pure develop- ment strategy would lead to acquisition of just about anyone who is willing and able to learn the KSAOs required by the job. Staffing strategy must position the organization appropriately along this “buy or make your talent” continuum. For critical and newly created positions, such as might occur in the software develop- ment company example, the emphasis would likely be on acquiring talent because of the urgency of developing new products. There may be no time to train, and qualified internal candidates may not be available.

hire yourself or Outsource Increasingly, organizations are outsourcing their hiring activities, meaning they use outside organizations to recruit and select employees. Although there are varia- tions of staffing outsourcing (we will have more to say about it in Chapter 3), in some cases, an organization wholly cedes decision- making authority to the vendor.

Why might an organization do this? First, it may believe that the vendor can do a better job of identifying candidates than the organization itself can do. This is par - ticularly true for small and mid- sized companies that lack a professional HR func- tion. Second, in labor shortages, an organization may not be able to recruit enough employees on its own, so it may supplement its recruiting or selection efforts with those of a vendor that specializes in staffing. Finally, outsourcing may also have advantages for legal compliance, as many vendors maintain their own procedures for tracking compliance with equal- opportunity laws.

external or internal hiring When job vacancies occur or new jobs are created, should the organization seek to fill them from the external or internal labor market? While some mixture of exter - nal and internal hiring will be necessary in most situations, the relati\�ve blend could vary substantially. To the extent that the organization wants to cultivate a stable, committed workforce, it will probably need to emphasize internal hiring. This will allow employees to use the internal labor market as a springboard for launching long- term careers within the organization. External hiring might then be restricted to specific entry- level jobs, as well as newly created ones for which there are no acceptable internal applicants. External hiring might also be necessary \�when there is rapid organization growth, such that the number of new jobs created outstrips internal supply.

Core or flexible Workforce The organization’s core workforce is made up of individuals who are viewed (and view themselves) as regular full- time or part- time employees of the organization.

They are central to the core goods and services delivered by the organization. The flexible workforce is composed of more peripheral workers who are used on an as- needed, just- in-time basis. They are not viewed (nor do they view 0077862414_ch01_p001_043.indd 27 12/9/13 10:59 AM 28 Part One The Nature of Staffing themselves) as regular employees, and legally, most of them are not even employ- ees of the organization. Rather, they are employees of an alternative organization such as a staffing firm (temporary help agency) or independent contractor that provides these workers to the organization. The organization must decide whether to use both core and flexible workforces, what the mixture of core versus flexible workers will be, and in what jobs and units of the organization these mixtures will be deployed. Within the software development company, programmers might be considered part of the core workforce, but ancillary workers (e.g., clerical) may be part of the flexible workforce, particularly since the need for them will depend on the speed and success of new product development.

hire or r etain There are trade- offs between hiring strategies and retention strategies for staffing.

At one extreme, the organization can accept whatever level of turnover occurs and simply hire replacements to fill the vacancies. Alternatively, the organization can seek to minimize turnover so that the need for replacement staffing is held to a minimum. For example, SAS Institute, a company that frequently finds itself on Fortune magazine’s “100 Best Companies to Work For” list, has an annual turn- over rate of less than 3%, meaning that fewer than 3 out of 100 of its employees leave voluntarily within a 12-month period. The company’s ability to retain its employees at such a high level is likely due in part to the generous perks it offers, including subsidized Montessori child care, unlimited sick time, a free \�health care center, and four cafeterias serviced by a local organic farm. 15 Since these strategies have costs and benefits associated with them, the organization could conduct an analysis to determine these and then strive for an optimal mix of hiring and reten- tion. In this way the organization can control its inflow needs (replacement staff- ing) by controlling its outflow (retention).

n ational or global As we noted earlier, one form of outsourcing is when organizations outsource staffing activities. Of course, many organizations outsource more than staffing activities—technical support, database management, customer service, and man- ufacturing are common examples. A growing number of computer- chip makers, such as IBM, Intel, and Motorola, contract with outside vendors to manufacture their chips; often these companies are overseas. Offshoring is related to, but distinct from, outsourcing. Whereas outsourcing is moving a business process (service or manufacturing) to another vendor (whether that vendor is inside or outside the organization’s home country), offshoring is the organization setting up its own operations in another country (the organization is not contracting with an outside vendor; rather, it is establishing its own operations in another country). In the computer- chip example, outsourcing would be if the organiza- tion, say, IBM, contracted with an outside vendor to manufacture the chips. Off- 0077862414_ch01_p001_043.indd 28 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 29 shoring would be if IBM set up its own plant in another country to manufacture the chips.

Increasingly, US organizations are engaged in both overseas outsourcing and offshoring, a trend spurred by three forces. First, most nations have lowered trading and immigration barriers, which has facilitated offshoring and overseas outsourc- ing. Second, particularly in the United States and western Europe, organizations find that by outsourcing or offshoring, they can manufacture goods or provide services more cheaply than they can in their own country. Third, some organizations cannot find sufficient talent in their home countries, so they have to look elsewhere.

Many high- tech companies in the United States and western Europe are facing severe talent shortages. Siemens, the German engineering giant, has 2,500 p\�ositions for engineers open in Germany alone. These shortages have required many compa- nies like Siemens to outsource overseas, to offshore, or to do both. 16 attract or r elocate Typical staffing strategy is based on the premise that the organization can induce sufficient numbers of qualified people to come to it for employment. Another version of this premise is that it is better (and cheaper) to bring the\� labor to the organization than to bring the organization to the labor. Some organizations, both established and new ones, challenge this premise and choose locations where there are ample labor supplies. The shift of lumber mills and automobile manufacturing plants to the southern United States reflects such a strategy. Likewise, the growth of high technology pockets such as Silicon Valley reflects the establishment or movement of organizations to geographic areas where there is ready access to highly skilled labor and where employees would like to live, usually locations with research universities nearby to provide the needed graduates for jobs. The software development company, for example, might find locating in such an area very desirable.

Overstaff or understaff While most organizations seek to be reasonably fully staffed, some opt for being over- or understaffed. Overstaffing may occur when there are dips in demand for the organization’s products or services that the organization chooses to ride out.

Organizations may also overstaff in order to stockpile talent, recognizing that the staffing spigot cannot be easily turned on or off. Alternatively, understaffing may occur when the organization is confronted with chronic labor shortages, such as is the case for nurses in health care facilities. Also, prediction of an economic downturn may lead the organization to understaff in order to avoid future lay- offs. Finally, the organization may decide to understaff and adjust staffing level demand spikes by increasing employee overtime or using flexible staffing arrange - ments such as temporary employees. Many have blamed the slow job recovery following the Great Recession on the reluctance of companies to put themselves 0077862414_ch01_p001_043.indd 29 12/9/13 10:59 AM 30 Part One The Nature of Staffing in an overstaffing situation, instead asking current employees to work longer hours in order to handle increased demand in the company’s products or services.

The software development company might choose to overstaff in order to retain key employees and to be poised to meet the hopeful surges in demand as its new products are released.

Short- or Long- term f ocus Although any organization would want to have its staffing needs fully anticipated for both the short term and the long term, optimizing both goals is difficult, so trade- offs are often required. In this case, it often means addressing short- term labor shortages by identifying and developing talent for the long term. When forced to choose, organizations focus on their short- term needs. This is under - standable because labor shortages can be debilitating. Even when the overall economy is sluggish, the pool of qualified applicants may be thin. One recruiting expert noted, “The weak labor market has really increased the noise level as more unqualified candidates apply for a decreasing number of job openings.” 17 So, even in periods of economic duress, a labor shortage can happen in any industry.

When business leaders in the trucking industry were asked to identify their top business concerns, 86% of executives listed the unavailability of drivers as one of their top three concerns. 18 Balanced against this short- term “crisis management” focus are long- term con- cerns. Organizations with a long- term view of their staffing needs have put in place talent management programs. In some cases, this means thinking about the\� strate- gic talent, or future skill, needs for the entire organization. Bringing to mind John Maynard Keynes’s comment, “In the long run we are all dead,” the problem with a long- term focus is that long- term needs (demand) and availability (supply) are often unclear. Often, it seems as if calls for an upcoming labor shortage due to baby\� boomer retirements never end. As Peter Cappelli concludes, “They’ve been pre- dicting a labor shortage since the mid-1990’s and guess what, it’s not happening.” The Bureau of Labor Statistics (BLS) estimates that by 2018, the total\� labor force will shrink markedly, causing future labor shortages. However, BLS economist Ian Wyatt admits that whereas population and labor force growth can be forecasted fairly accurately, labor demand estimates are far less reliable. The future demand for workers “is a very tough question to answer,” Wyatt said. “Perhaps because of this, while most organizations are aware of projected labor shortages, many fewer have any concrete plans to do anything about it.” 19 These long- term forecasting difficulties notwithstanding, growth will occur in some skill areas, while others will decrease in demand. Employers who make no efforts to project future supply and demand risk having their strategies derailed by lack of available labor. As a result of a lack of planning, some companies are facing unanticipated skilled labor shortages. For example, Linda Fillingham can- not find skilled laborers to work in her family’s Bloomington, Illinois, steel plant. 0077862414_ch01_p001_043.indd 30 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 31 Fillingham expresses puzzlement as to her labor shortage, given the alleged lack of job growth in manufacturing: “It’s there if you want to do it,” she says. Perhaps long- term planning would have avoided or ameliorated Fillingham’s dilemma. 20 Staffing Quality Person/j ob or Person/Organization Match When acquiring and deploying people, should the organization opt for a person/ job or person/organization match? This is a complex decision. In part, a person/job match will have to be assessed any time a person is hired to perform a finite set of tasks. In our software company example, programmers might be hired to do pro- gramming in a specific language such as Java, and most certainly the organization would want to assess whether applicants meet this specific job requirement. On the other hand, jobs may be poorly defined and fluid, making a person/job match infeasible and requiring a person/organization match instead. Such jobs are often found in technology and software development organizations.

Specific or general KS aOs Should the organization acquire people with specific KSAOs or more general ones?

The former means focusing on job- specific competencies, often of the job knowl- edge and technical skill variety. The latter requires a focus on KSAOs that will be applicable across a variety of jobs, both current and future. Examples of such KSAOs include flexibility and adaptability, ability to learn, written and oral communication skills, and algebra/statistics skills. An organization expecting rapid changes in job content and new job creation, such as in the software company example, might position itself closer to the general competencies end of the continuum.\� exceptional or a cceptable Workforce Quality Strategically, the organization could seek to acquire a workforce that is preeminent KSAO- wise (exceptional quality) or that is more “ballpark” variety KSAO- wise (acceptable quality). Pursuit of the exceptional strategy would allow the organiza- tion to stock up on the “best and the brightest” with the hope tha\�t this exceptional talent pool would deliver truly superior performance. The acceptable strategy means pursuit of a less high- powered workforce and probably a less expensive one as well. If the software development company is trying to create clearly innovative and superior products, it will likely opt for the exceptional workforce quality end of the continuum.

a ctive or Passive diversity The labor force is becoming increasingly diverse in terms of demographics, val- ues, and languages. Does the organization want to actively pursue this diversity in the labor market so that its own workforce mirrors it, or does the organization 0077862414_ch01_p001_043.indd 31 12/9/13 10:59 AM 32 Part One The Nature of Staffing want to more passively let diversity of its workforce happen? Advocates of an active diversity strategy argue that it is legally and morally appropriate and that a diverse workforce allows the organization to be more attuned to the diverse needs of the customers it serves. Those favoring a more passive strategy suggest that diversification of the workforce takes time because it requires substantial planning and assimilation activity. In the software company illustration, an active diversity strategy might be pursued as a way of acquiring workers who can help identify a diverse array of software products that might be received favorably by various seg- ments of the marketplace. Staffing ethiCS Staffing the organization involves a multitude of individuals—hiring managers, staffing professionals, potential coworkers, legal advisors, and job applicants.

During the staffing process, all of these individuals may be involved in recruit- ment, selection, and employment activities, as well as decision making. Are there, or should there be, boundaries on these individuals’ actions and decisions? The answer is yes, for without boundaries, potentially negative outcomes and harm- ful effects may occur. For example, staffing is often a hurried process, driven by tight deadlines and calls for expediency (e.g., the hiring manager who says to the staffing professional, “Just get me someone now—I’ll worry about how good they are later on”). Such calls may lead to negative consequences, including hiring someone without proper assessment and subsequently having him or her perform poorly, ignoring the many applicants who would have been successful performers, failing to advance the organization’s workforce diversity initiatives and possible legal obligations, and making an exceedingly generous job offer that provides the highest salary in the work unit, causing dissatisfaction and possible turnover among other work unit members. Such actions and outcomes raise staff- ing ethics issues.

Ethics involves determining moral principles and guidelines for acceptable practice. Within the realm of the workplace, ethics emphasizes “knowing organiza- tional codes and guidelines and behaving within these boundaries when faced with dilemmas in business or professional work.” 21 More specifically, organizational ethics seeks to do the following:

• Raise ethical expectations • Legitimize dialogue about ethical issues • Encourage ethical decision making • Prevent misconduct and provide a basis for enforcement While organizations are increasingly developing general codes of conduct, it is unknown whether these codes contain specific staffing provisions. Even the gen- 0077862414_ch01_p001_043.indd 32 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 33 eral code will likely have some pertinence to staffing through provisions on such issues as legal compliance, confidentiality and disclosure of information, and use of organizational property and assets. Individuals involved in staffing should know and follow their organization’s code of ethics. As pertains to staffing specifically, there are several points that can guide a person’s ethical conduct. These points are shown in Exhibit 1.8 and elaborated on below.

The first point is that the person is serving as an agent of the organization and is duty bound to represent the organization first and foremost. That duty is to bring into being effective person/job and person/organization matches. The second point indicates that the agent must avoid placing his or her own interest, or that of a third party (such as an applicant or friend), above that of the orga- nization. Point three suggests that even though the HR professional represents the organization, he or she should remember that the applicant is a participant\� in the staffing process. How the HR professional treats applicants may well lead to reactions by them that are favorable to the organization and further its interests, let alone those of applicants. Point four reminds the HR professional to\� know the organization’s staffing policies and procedures and adhere to them. The fifth point indicates a need to be knowledgeable of the myriad laws and regulations govern- ing staffing, to follow them, and to seek needed assistance in their interpretation and application. Point six guides the HR professional toward professional codes of conduct pertaining to staffing and HR. For example, the Society for Human Resource Management (SHRM) has a formal code of ethics. The Society for Industrial and Organizational Psychology (SIOP) follows the ethics code of the American Psychological Association (APA) and has issued a set of professional principles to guide appropriate use of employee selection procedures. The sev- enth point states that there is considerable useful research- based knowledge about the design and effectiveness of staffing systems and techniques that should guide 1. Represent the organization’s interests.

2. Beware of conflicts of interest.

3. Remember the job applicant.

4. Follow staffing policies and procedures.

5.  Know and follow the law.

6. Consult professional codes of conduct.

7. Shape effective practice with research results.

8. Seek ethics advice.

9. Be aware of an organization’s ethical climate/culture. exhibit 1.8 Suggestions for ethical Staffing Practice 0077862414_ch01_p001_043.indd 33 12/9/13 10:59 AM 34 Part One The Nature of Staffing staffing practice. Much of that research is summarized in usable formats in this book. The eighth point suggests that when confronted with ethical issues, it i\�s appropriate to seek ethical advice from others. Handling troubling ethic\�al issues alone is unwise.

The final point is that one must be aware of an organization’s climate and cul- ture for ethical behavior. Organizations differ in their ethical climate/culture, and this has two implications for staffing. 22 First, an organization may have expecta- tions for how staffing decisions are made. How an organization communicates with recruits (including those who are rejected) and whether selection deci\�sions are made hierarchically or collaboratively are two examples of ethical staffing issues that may well vary from organization to organization. Second, an organization’s ethics climate may well affect which staffing decisions are made. An organization that has high expectations for ethics may weight selection information differently (placing more weight on, say, background checks) than an organization with more typical expectations. In both of these ways, one needs to realize that while some ethics considerations are universal, in other cases, what is considered ethical in one climate may be \�seen as a breach of ethics in another. It should be recognized that many pressure points on HR professionals may cause them to compromise the ethical standards discussed above. Research sug- gests that the principal causes of this pressure are the felt need to follow a boss’s directive, meet overly aggressive business objectives, help the organization sur - vive, meet scheduling pressures, be a team player, save jobs, and advance the boss’s career. 23 The suggestions for ethical staffing practice in Exhibit 1.8 are a guide to one’s own behavior. Being aware of and consciously attempting to follow these consti- tute a professional and ethical responsibility. But what about situations in which ethical lapses are suspected or observed in others? One response to the situation is to do nothing—neither report nor att\�empt to change the misconduct. Research suggests a small proportion (about 20%)\� choose to ignore and not report misconduct. 24 Major reasons for this response include a belief that no action would be taken, a fear of retaliation from one’s boss or senior management, not trusting promises of confidentiality, and a fear of not being seen as a team player. Against such reasons for inaction must be weighed the harm that has, or could, come to the employer, the employee, or the job applicant. More- over, failure to report the misconduct may well increase the chances that it wi\�ll be repeated, with continuing harmful consequences. Not reporting miscond\�uct may also conflict with one’s personal values and create remorse for not having done the right thing. Finally, a failure to report misconduct may bring penalties to oneself if that failure subsequently becomes known to one’s boss or senior management. In short, “looking the other way” should not be viewed as a safe, wise, or ethical choice. 0077862414_ch01_p001_043.indd 34 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 35 A different way to handle unethical staffing practices by others is to seek advice from one’s boss, senior management, coworkers, legal counsel, ethics offi- cer or ombudsperson, or an outside friend or family member. The guidelines in Exhibit 1.8 can serve as a helpful starting point to frame the discussion and make a decision about what to do. At times, the appropriate response to others’ misconduct is to step i\�n directly to try to prevent or rectify the misconduct. This would be especially appropriate with employees whom one supervises or with coworkers. Before taking such an action, it would be wise to consider whether one has the authority and resources to \�do so, along with the likely support of those other employees or coworkers. PL an fOr the bOOK The book is divided into six parts:

1. The Nature of Staffing 2. Support Activities 3. Staffing Activities: Recruitment 4. Staffing Activities: Selection 5. Staffing Activities: Employment 6. Staffing System and Retention Management Each chapter in these six parts begins with a brief topical outline to help the reader quickly discern its general contents. The “meat” of the chapter comes next. A chap- ter summary then reviews and highlights points from the chapter. A set of discussion questions, ethical issues to discuss, applications (cases and exercises), and detailed endnotes complete the chapter. The importance of laws and regulations is such that they are considered first in Chapter 2 (Legal Compliance). The laws and regulations, in particular, have become so pervasive that they require special treatment. Therefore, Chapter 2 reviews the basic laws affecting staffing, with an emphasis on the major federal laws and regulations pertaining to EEO/AA matters generally. Specific provisions relevant to staffing are covered in depth. Each subsequent chapter has a separate section labeled “Legal Issues,” in which specific legal topics relevant to the chap- ter’s content are discussed. This allows for a more focused discussion of legal issues while not diverting attention from the major thrust of the book. The endnotes at the end of each chapter are quite extensive. They are drawn from academic, practitioner, and legal sources with the goal of providing a bal- anced selection from each of these sources. Emphasis is on the inclusion\� of recent references of high quality and easy accessibility. An overly lengthy list of refer - ences to each specific topic is avoided; instead, a sampling of only the best avail- able is included. 0077862414_ch01_p001_043.indd 35 12/9/13 10:59 AM 36 Part One The Nature of Staffing The applications at the end of each chapter are of two varieties. First are cases that describe a particular situation and require analysis and resp\�onse. The response may be written or oral (such as in class discussion or a group presenta- tion). Second are exercises that entail small projects and require active practice of a particular task. Through these cases and exercises the reader becomes an active participant in the learning process and is able to apply the concepts pr\�ovided in each chapter. Su MMary At the national level, staffing involves a huge number of hiring transactions each year, is a major cost of doing business (especially for service- providing industries), and can lead to substantial revenue and market value growth for the organization.

Staffing is defined as “the process of acquiring, deploying, and retaining a work- force of sufficient quantity and quality to create positive impacts on the organiza- tion’s effectiveness.” The definition emphasizes that both staffing levels and labor quality contribute to an organization’s effectiveness, and that a concerted set of labor acquisition, deployment, and retention actions guides the flow of people into, within, and out of the organization. Descriptions of three staffing systems help highlight the definition of staffing. Several models illustrate various elements of staffing. The staffing level model shows how projected labor requirements and availabilities are compared to derive staffing levels that represent being overstaffed, fully staffed, or understaffed. The next two models illustrate staffing quality via the person/job and person/organization match. The former indicates there is a need to match (1) the person’s KSAOs to job requirements and (2) the person’s motivation to the job’s rewards. In the person/ organization match, the person’s characteristics are matched to additional factors beyond the target job, namely, organizational values, new job duties for the tar - get job, multiple jobs, and future jobs. Effectively managing the matching process results in positive impacts on HR outcomes such as attraction, performance, and retention. The core staffing components model shows that there are three basic activities in staffing: recruitment (identification and attraction of applicants), selec- tion (assessment and evaluation of applicants), and employment (decision making and final match). The staffing organizations model shows that organization, HR, and staffing strategies are formulated and shape staffing policies and programs.

In turn, these meld into a set of staffing support activities (legal compliance, plan- ning, and job analysis), as well as the core activities (recruitment, selection, and employment). Retention and staffing system management activities cut across both support and core activities. 0077862414_ch01_p001_043.indd 36 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 37 Staffing strategy is both an outgrowth of and a contributor to HR and organiza- tion strategy. Thirteen important strategic staffing decisions loom for any organiza- tion. Some pertain to staffing level choices, and others deal with staffing quality choices. Staffing ethics involves determining moral principles and guidelines for prac- tice. Numerous suggestions were made for ethical conduct in staffing, and many pressure points for sidestepping such conduct are in operation. There are appropri- ate ways to handle such pressures, which will be discussed. The staffing organizations model serves as the structural framework for the book.

The first part treats staffing models and strategy. The second part treats the sup- port activities of legal compliance, planning, and job analysis. The next three parts treat the core staffing activities of recruitment, selection, and employment. The last section addresses staffing systems and employee retention management. As mentioned previously, each chapter has a section labeled “Legal Issues,” as well as discussion questions, ethical issues questions, applications, and endnot\�es. diSCuSSiO n QueStiOnS 1. What are potential problems with having a staffing process in which vacan- cies are filled (1) on a lottery basis from among job applicants, or (2) on a \� first come–first hired basis among job applicants?

2. Why is it important for the organization to view all components of staff- ing (recruitment, selection, and employment) from the perspective of the job applicant?

3. Would it be desirable to hire people only according to the person/organization match, ignoring the person/job match?

4. What are examples of how staffing activities are influenced by training activ- ities? Compensation activities?

5. Are some of the 13 strategic staffing decisions more important than others?

If so, which ones? Why? ethiC aL iSSueS 1. Assume that you are either the staffing professional in the department or the hiring manager of a work unit. Explain why it is so important to represent the organization’s interests (see Exhibit 1.8). What are some possible conse- quences of not doing so? 0077862414_ch01_p001_043.indd 37 12/9/13 10:59 AM 38 Part One The Nature of Staffing 2. One of the strategic staffing choices is whether to pursue workforce diversity actively or passively. First suggest some ethical reasons for active pursuit of diversity, and then suggest some ethical reasons for a more passive approach.

Assume that the type of diversity in question is increasing workforce repre- sentation of women and ethnic minorities. aPPLiC atiOnS Staffing for your Own j ob instructions Consider a job you previously held or your current job. Use the staffing compo- nents model to help you think through and describe the staffing process that led to your getting hired for the job. Trace and describe the process (1) from your own perspective as a job applicant and (2) from the organization’s perspective. Listed below are some questions to jog your memory. Write your responses to these ques- tions and be prepared to discuss them.

applicant Perspective Recruitment:

1. Why did you identify and seek out the job with this organization?

2. How did you try to make yourself attractive to the organization?

Selection: 1. How did you gather information about the job’s requirements and rewards?

2. How did you judge your own KSAOs and needs relative to these require- ments and rewards?

Employment: 1. Why did you decide to continue on in the staffing process, rather than drop out of it?

2. Why did you decide to accept the job offer? What were the pluses and minuses of the job?

Organization Perspective Even if you are unsure of the answers to the following questions, try to answer them or guess at them.

Recruitment: 1. How did the organization identify you as a job applicant?

2. How did the organization make the job attractive to you? 0077862414_ch01_p001_043.indd 38 12/9/13 10:59 AM ChaPter One Staffing Models and Strategy 39 Selection:

1. What techniques (application blank, interview, etc.) did the organization use to gather KSAO information about you?

2. How did the organization evaluate this information? What did it see as your strong and weak points, KSAO- wise?

Employment: 1. Why did the organization continue to pursue you as an applicant, rather than reject you from further consideration?

2. What was the job offer process like? Did you receive a verbal or written offer (or both)? Who made the offer? What was the content of the offer?

r eactions to the Staffing Process Now that you have described the staffing process, what are your reactions to it?

1. What were the strong points or positive features of the process?

2. What were the weak points or negative features of the process?

3. What changes would you like to see made in the process, and why? Staffing Strategy for a n ew Plant Household Consumer Enterprises, Inc. (HCE) specializes in the design a\�nd pro- duction of household products such as brooms, brushes, rakes, kitchen utensils, and garden tools. It has its corporate headquarters in downtown Chicago, with manu- facturing and warehouse/distribution facilities throughout the north- central region of the United States. The organization recently changed its mission from “provid- ing households with safe and sturdy utensils” to “providing households with visu- ally appealing utensils that are safe and sturdy.” The new emphasis on “visually appealing” will necessitate new strategies for designing and producing products that have design flair and imagination built into them. One strategy under consid- eration is to target various demographic groups with different utensil designs. One group is 25- to 40-year-old professional and managerial people, who are believed to want such utensils for both their visual and conversation- piece appeal.

A tentative strategy is to build and staff a new plant that will have free rein in the design and production of utensils for this 25–40 age group. To start, the plant will focus on producing a set of closely related (design-wise) plastic\� products:

dishwashing pans, outdoor wastebaskets, outdoor plant holders, and watering cans.

These items can be produced without too large a capital and facilities investment, can be marketed as a group, and can be on stores’ shelves and on HCE’s store website in time for Christmas sales. The facility’s design and engineering team has decided that each of the four products will be produced on a separate assembly line, though the lines \�will 0077862414_ch01_p001_043.indd 39 12/9/13 10:59 AM 40 Part One The Nature of Staffing share common technology and require roughly similar assembly jobs. Following the advice from the HR vice president, Jarimir Zwitski, the key jobs in the plant for staffing purposes will be plant manager, product designer (computer-assisted design), assemblers, and packers/warehouse workers. The initial staffing level for the plant will be 150 employees. Because of the riskiness of the venture and the low initial margins that are planned on the four products due to high start- up costs, the plant will run continuously six days per week (i.e., a 24/6 schedul\�e), with the remaining day reserved for cleaning and maintenance. Pay levels will be at the low end of the market, except for product designers, who will be paid above mar - ket. Employees will have limited benefits, namely, health insurance with a 30% employee copay after one year of continuous employment and an earned time- off bank (for holidays, sickness, and vacation) of 160 hours per year. They will not receive a pension plan. The head of the design team, Maria Dos Santos, and Mr. Zwitski wish to come to you, the corporate manager of staffing, to share their preliminary thinking and ask you some questions, knowing that staffing issues abound for this new venture.

They ask you to discuss the following questions with them, which they have sent to you in advance so you can prepare for the meeting:

1. What geographic location might be best for the plant in terms of attract\�ing sufficient quantity and quality of labor, especially for the key jobs?

2. Should the plant manager come from inside the current managerial ranks o\�r be sought from the outside?

3. Should staffing be based on just the person/job match or also on the person/ organization match?

4. Would it make sense to initially staff the plant with a flexible workforce by using temporary employees and then shift over to a core workforce if it looks like the plant will be successful?

5. In the early stages, should the plant be fully staffed, understaffed, or overstaffed?

6. Will employee retention likely be a problem, and if so, how will this affect the viability of the new plant?

Your task is to write out a tentative response to each question that will be the basis for your discussion at the meeting. endn OteS 1. “2010 County Business Patterns,” United States Census Bureau (www.census.gov/econ/susb/), accessed 8/27/13.

2. M. deWolf and K. Klemmer, “Job Openings, Hires, and Separations Fall During the Recession,” Monthly Labor Review, May 2010, pp. 36–44.

3. Saratoga Institute, The Saratoga Review (Santa Clara, CA: author, 2009), p. 10. 0077862414_ch01_p001_043.indd 40 12/9/13 10:59 AM 4. R. R. Kehoe and P. M. Wright, “The Impact of High- Performance Human Resource Practices on Employees’ Attitudes and Behaviors,” Journal of Management, 2013, 39, pp. 366–391.

5. J. B. Barney and P. M. Wright, “On Becoming a Strategic Partner: The Role of Human Resources in Gaining Competitive Advantage,” Human Resource Management, 1998, 37(1), pp. 31–46; C. G. Brush, P. G. Greene, and M. M. Hart, “From Initial Idea to Unique Advantage: The Entre- preneurial Challenge of Constructing a Resource Base,” Academy of Management Executive, 2001, 15(1), pp. 64–80.

6. J. Smith, “The Companies Hiring the Most Right Now,” Forbes, Mar. 28, 2013 (www.forbes.com/ sites/jacquelynsmith/2013/03/28/the-companies-hiring-the-most-right-now-\�2/), accessed 8/27/13.

7. C. Fleck, “Not Just a Job,” Staffing Management, 2010, 6(1), (www.shrm.org); G. Hamel, “Inventing the Future of Management,” Oct. 25, 2010, Ross School of Business, University of Michigan (www.bus.umich.edu/NewsRoom/ArticleDisplay.asp?news_id=20780).

8. “Mike’s Story,” W. L. Gore & Associates (www.gore.com/en_xx/careers/associatestories/ comfort/comfort_mike.html); “Hajo’s Story,” W. L. Gore & Associates (www.gore.com/en_xx/ careers/associatestories/lives1/lives1_hajo.html); “Our Culture,” W. L. Gore & Associates, Inc., 2010 (www.gore.com).

9. J. Marquez, “A Talent Strategy Overhaul at Pfizer,” Workforce Management, Feb. 12, 2007, pp. 1, 3.

10. A. Fisher, “Graduating This Spring? How to Stand Out From the Crowd,” Fortune, Mar. 1, 2013 (http://management.fortune.cnn.com/2013/03/01/college-grad-job-search-tips/), accessed 8/28/13; S. Pathak, “Frat Boys Get an MBA Without the IOU at Enterprise,” Sales Job Watch, Mar. 3, 2011 (http://sales-jobs.fins.com/Articles/SB129866279544689937/Frat-Boys-Get-an-MBA- Without-the-IOU-at-Enterprise), accessed 8/28/13.

11. D. F. Caldwell and C. A. O’Reilly III, “Measuring Person- Job Fit With a Profile- Comparison Pro- cess,” Journal of Applied Psychology, 1990, 75, pp. 648–657; R. V. Dawis, “Person-Environment Fit and Job Satisfaction,” in C. J. Cranny, P. C. Smith, and E. F. Stone (eds.), Job Satisfaction (New York: Lexington, 1992), pp. 69–88; R. V. Dawis, L. H. Lofquist, and D. J. Weiss, A Theory of Work Adjustment (A Revision) (Minneapolis: Industrial Relations Center, University of Minnesota, 1968).

12. T. A. Judge and R. D. Bretz, Jr., “Effects of Work Values on Job Choice Decisions,” Jour - nal of Applied Psychology, 1992, 77, pp.  1–11; C. A. O’Reilly III, J. Chatman, and D. F.

Caldwell, “People and Organizational Culture: A Profile Comparison Approach to Assessing Person- Organization Fit,” Academy of Management Journal, 1991, 34, pp. 487–516; A. L.

Kristof, “Person-Organization Fit: An Integrative Review of Its Conceptualizations, Measure- ment, and Implications,” Personnel Psychology, 1996, 49, pp. 1–50; A. K. Brown and J. Bills- berry, Fit: Key Issues and New Directions (Malden, MA: John Wiley & Sons, 2013).

13. L. L. Levesque, “Opportunistic Hiring and Employee Fit,” Human Resource Management, 2005, 44, pp. 301–317.

14. S. Craig, “Inside Goldman’s Secret Rite: The Race to Become Partner,” Wall Street Journal, Oct. 13, 2006, pp. A1, A11.

15. “100 Best Companies to Work For,” Fortune, 2012 (http://money.cnn.com/magazines/fortune/ best-companies/2012/), accessed 8/28/13.

16. M. Kessler, “More Chipmakers Outsource Manufacturing,” USA Today, Nov. 16, 2006, p. B1; C. Dougherty, “Labor Shortage Becoming Acute in Technology,” New York Times, Mar. 10, 2007, pp. 1, 4.

17. B. Leonard, “Economic Climate Provides Chance to Refine Recruiting Practices,” Staffing Man- agement, July 14, 2009 (www.shrm.org). ChaPter One Staffing Models and Strategy 41 0077862414_ch01_p001_043.indd 41 12/9/13 10:59 AM 42 Part One The Nature of Staffing 18. S. Wisnefski, “Truckers’ Worries: Fuel, Driver Short- fall,” Wall Street Journal, Oct. 25, 2006, p. B3A.

19. K. R. Lewis, “Recession Aside, Are We Headed for a Labor Shortage?” The Fiscal Times, Aug. 26, 2010 (www.thefiscaltimes.com); K. Gurchiek, “Few Organizations Planning for Talent Shortage as Boomers Retire,” SHRM News, Nov. 17, 2010 (www.shrm.org).

20. C. Bowers, “Skilled Labor Shortage Frustrates Employers,” CBS Evening News, Aug. 11, 2010 (www.cbsnews.com/stories/2010/08/11/eveningnews/main6764731.shtml?tag=mncol;lst;1).

21. www.shrm.org/kc.

22. A. Ardichvili and D. Jondle, “Ethical Business Cultures: A Literature Review and Implications for HRD,” Human Resource Development Review, 2009, 8(2), pp. 223–244.

23. J. Joseph and E. Esen, 2003 Business Ethics Survey (Alexandria, VA: Society for Human Resource Management, 2003), pp. 1–10.

24. Joseph and Esen, 2003 Business Ethics Survey, pp. 10–11. 0077862414_ch01_p001_043.indd 42 12/9/13 10:59 AM ChaPTer TwO Legal Compliance Learning objectives and Introduction Learning Objectives Introduction the employment relationship Employer–Employee Independent Contractors Temporary Employees Unpaid Interns and Trainees Laws and regulations Need for Laws and Regulations Sources of Laws and Regulations eeo/aa Laws: General provisions and enforcement General Provisions Enforcement: EEOC Enforcement: OFCCP eeo/aa Laws: Specific Staffing provisions Civil Rights Acts (1964, 1991) Age Discrimination in Employment Act (1967) Americans With Disabilities Act (1990, 2008) Genetic Information Nondiscrimination Act (2008) Rehabilitation Act (1973) Executive Order 11246 (1965) other Staffing Laws Federal Laws State and Local Laws Civil Service Laws and Regulations Legal Issues in remainder of Book 0077862414_ch02_p044_088.indd 47 11/19/13 12:53 AM Summary Discussion Questions ethical Issues applications endnotes 0077862414_ch02_p044_088.indd 48 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 49 Learning ObjeCTiveS and inTr OduCTiOn Learning Objectives • Contrast legal differences among employees, independent contractors, and temporary employees • Appreciate why staffing laws are necessary, and their sources • Review six major federal equal employment opportunity and affirmative action laws • Distinguish between disparate treatment and adverse (disparate) impact approaches to enforcement • Examine specific staffing provisions of the six major laws • Look at other important staffing laws and regulations • Gain an overview of legal issues covered in Chapters 3–14 introduction When the organization selects people to do work for it, a legal employment rela- tionship is established. The selected people may be employees, independent con- tractors, or temporary employees. Laws are needed to define how the employer may use each type of worker, as well as the rights of each type. In addition, laws have been developed to create fairness and nondiscrimination in staffing. The laws and accompanying regulations prohibit discrimination on the basis of many protected characteristics, such as race, sex, and disability. Actions based on these characteristics must be removed from staffing practices and decisions. Instead, employers must focus on job- related KSAOs (knowledge, skill, ability, and other characteristics) as the bases for those practices and decisions. Employers that ignore or sidestep these laws and regulations could potentially face stiff penalties. This chapter begins by discussing the formation of the employment relationship from a legal perspective. It first defines what an employer is, along with the rights and obligations of being an employer. The employer may acquire people to work for it in the form of employees, independent contractors, and temporary employ- ees. Legal meanings and implications for each of these terms are provided. The employment relationship has become increasingly regulated, and reasons for the myriad laws and regulations affecting the employment relationship are sug- gested. Next, the major sources of the laws and regulations controlling the employ- ment relationship are indicated. Equal employment opportunity and affirmative action (EEO/AA) laws and regulations have become paramount in the eyes of many who are concerned with staffing organizations. The general provisions of six major EEO/AA laws are sum- marized, along with indications of how these laws are administered and enforced.

While voluntary compliance is preferred by the enforcement agencies, if it fails, 0077862414_ch02_p044_088.indd 49 11/19/13 12:53 AM 50 ParT Tw O Support Activities litigation may follow. Litigation is based on the key concepts of disparate treat- ment and disparate impact.

For these same six laws, their specific (and numerous) provisions regarding staffing are then presented in detail. Within this presentation the true scope, com- plexity, and impact of the laws regarding staffing become known. Attention then turns to other staffing laws and regulations. These include myriad federal laws, state and local laws, and civil service laws and regulations. These laws, like federal EEO/AA laws, have major impacts on staffing activities. Finally, the chapter concludes with a discussion of the “Legal Issues” section that appears at the end of each of the remaining chapters. In these sect\�ions, specific topics and applications of the law are presented. Their intent is to provide guidance and examples (not legal advice, per se) regarding staffing practices that are permis- sible, impermissible, and required. The eMPLO yMenT reL aTiO nShiP From a legal perspective, the term “staffing” refers to formation of the employment relationship. That relationship involves several types of arrangements between the organization and those who provide work for it. These arrangements have special and reasonably separate legal meanings. This section explores those arrangements:

employer–employee, independent contractor, temporary employee, and unpaid interns and trainees. 1 employer–employee By far the most prevalent form of the employment relationship is that of employer– employee. This arrangement is the result of the organization’s usual staffing activities—a culmination of the person/job matching process. As shown in Exhibit 2.1, the employer and the employee negotiate and agree on the terms and conditions that will define and govern their relationship. The formal agreement represents an employment contract, the terms and conditions of which represent the promises and expectations of the parties (job requirements and rewards, and KSAOs and motivation). Over time, the initial contract may be modified due to changes in requirements or rewards of the current job, or employee transfer or promotion. Either party may terminate the contract, thus ending the empl\�oyment relationship.

Employment contracts come in a variety of styles. They may be written or oral (both types are legally enforceable), and their specificity varies from extensive to bare bones. In some instances where the contract is written, terms and c\�onditions are described in great detail. Examples of such contracts are collective bargaining agreements and contracts for professional athletes, entertainers, and upper- level executives. At the other extreme, the contract may be little more than some simple 0077862414_ch02_p044_088.indd 50 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 51 oral promises about the job, such as certain wages and hours, agreed to with a handshake.

From a legal perspective, an employer is an entity that employs others (employ- ees or independent contractors) to do its work or work in its behalf. When these “others” are employees, the employer has the right to specify both the work output (results) expected and the work methods to be followed. In exchange for this right to control employees, the employer incurs certain legal responsibilities and liabili- ties. Specifically, the employer is (1) required to withhold employee payroll taxes (income, Social Security), (2) required to pay taxes (unemployment compensation, employer’s share of Social Security and Medicare), (3) covered under the myriad laws and regulations governing the employment relationship, and (4) liable for the acts of its employees during employment. When and how the employment relationship ends is very important to the employer and the employee. For the employer, it bears on the degree of staff- ing flexibility possible to quickly terminate employees without constraint. For the employee, the issue is the degree of continued employment and job security that will be expected. Under the common- law principle of employment- at-will, in the absence of any contract language to the contrary, the employment relationship is strictly an at- will one, meaning that either the employer or the employee may terminate the employment relationship at any time, for any reason, without prior exhibiT 2.1 Matching Process, employment Contract, and employment relationship 0077862414_ch02_p044_088.indd 51 11/19/13 12:53 AM 52 ParT Tw O Support Activities notification. Restrictions on the employment- at-will right are usually established as part of the employment contract (such as termination for “just cause” only); other restrictions come from federal, state, and local laws (such as nondiscrimination in termination). 2 independent Contractors As part of its staffing plan, the employer may hire independent contractors. 3 An independent contractor is not legally considered an employee, however. Therefore, the rights and responsibilities the employer has toward the independent contractor are different from those for its employees. Classifying and using a person as an independent contractor frees the employer of the tax withholding, tax payment, and benefits obligations it has for employees. It may also reduce employer expo- sure under laws and regulations governing the employment relationship, such as nondiscrimination (e.g., Civil Rights Act) and wage and hour laws. In exchange for these advantages of using independent contractors, the employer substantially loses the right to control the contractor. In particular, while the employer can still control expected results, the employer cannot dictate where, when, or how work is to be done. Thus, the employer loses control over the means (work processes, tools, equipment, work schedules, and so forth) by which the work is performed. Beyond this crucial distinction, the line of demarcation between what consti- tutes an employee and what constitutes an independent contractor is often fuzzy.

Numerous other factors come into play. For example, a person is more likely to be considered an independent contractor than an employee in the following situations:

• Working in a distinct occupation or business • Working without supervision or oversight from the employer • Paying one’s own business and travel expenses • Setting one’s own work hours • Possessing a high degree of skill • Using one’s own tools, materials, and office • Working on a project with a definite completion date • Working on relatively short projects • Being paid by the project or commission rather than by the time spent These examples are based on common- law interpretations and on a list of 11 criteria used by the Internal Revenue Service (IRS) to classify people as employ- ees or independent contractors. Misclassifying people as independent con\�tractors can result in substantial tax liabilities and fines for the employer. The IRS has stepped up its audit of employers to combat a trend of classifying people as inde- pendent contractors in order to gain staffing flexibility and save on labor costs.

4 0077862414_ch02_p044_088.indd 52 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 53 Temporary employees Temporary employees do not have special legal stature. They are considered employees of the temporary help agency (staffing firm) that obtained them through its own staffing process. Temporary employees are given job assignments with other employers (clients) by the staffing firm. During these assignments, the temporary employee remains on the payroll of the staffing firm, and the client employer simply reimburses the staffing firm for its wage and other costs. The client employer has a severely limited right to control temporary employees that it utilizes because they are not its employees but employees of the staffing firm.

Use of temporary employees often raises issues of coemployment, in which the client employer and the staffing firm share the traditional role of employer. 5 Because both function as employers to an extent, their obligations and liabilities under vari- ous laws need to be sorted out. The Equal Employment Opportunity Commission (EEOC) provides guidance on coverage and responsibility requirements for staffing firms and their client organizations. 6 When both the firm and the client exercise con- trol over the temporary employee and both have the requisite number of employees, they are considered employers and jointly liable under the Civil Rights Act, the Age Discrimination in Employment Act (ADEA), and the Equal Pay Act. The firm must make referrals and job assignments in a nondiscriminating manner, and the client may not set discriminatory job referral and job assignment criteria. The client must treat the temporary employees in a nondiscriminatory manner; if the firm knows this is not happening, it must take any corrective actions within its control. There are substantial penalties for noncompliance. There is special guidance for issues related to the Americans With Disabilities Act (ADA). The demarcation between an employee and a temporary employee becomes increasingly blurred when an employer uses a set of temporary employees from a staffing firm on a long- term basis, resulting in so- called permatemps. Nationally, 29% of such employees work for the same client employer for a year or more, so they appear more like employees of the client than of the staffing firm. Which are they? Court cases suggest that these individuals are in fact employees of the client employer rather than of the staffing firm, particularly because of the strong degree of control the client employer typically exercises over those people. Hence, to help ensure that permatemps will not be legally considered the client’s employees, the client must give up, or never exercise, direct control over these people and treat them as truly separate from regular employees. This may require, for example, not training or supervising them, not listing them in the phone directory, and not allow- ing them to use the organization’s stationery. In practice, this is difficult to do. 7 unpaid interns and Trainees The organization cannot simply say that a person is not an employee but rather an unpaid intern or trainee. In fact, a person must meet six requirements in order to 0077862414_ch02_p044_088.indd 53 11/19/13 12:53 AM 54 ParT Tw O Support Activities be classified as an unpaid intern or trainee; otherwise the person is an employee.

The requirements are that (1) the training must be similar to that given in school, (2) the training experience is to benefit the intern, (3) the trainee does not displace another person and works under close supervision of the employer’s staff, (4) the employer does not gain an immediate advantage from the trainee’s activities, and on occasion operations may be hampered, (5) the trainee is not entitle\�d to a job at the end of training, and (6) the employer and the trainee must understand that the trainee is not entitled to any pay for time spent. 8 LawS and reguL aTiO nS Establishing and maintaining the employment relationship involve exercising dis- cretion by both the employer and the employee. Employment laws affecting that relationship spring from a need to define the scope of permissible discretion and place limits on it. The need for laws and regulations and the sources of them are explored below. need for Laws and r egulations balance of Power Entering into and maintaining the employment relationship involve negotiating issues of power. The employer has something desirable to offer the employee (a job with certain requirements and rewards), and the employee has something to offer the employer (KSAOs and motivation). Usually, the employer has the upper hand in this power relationship since it controls the creation of jobs, the definition of jobs in terms of requirements and rewards, access to those jobs via staffing systems, movement of employees among jobs over time, and the retention or termination of employees.

While employees participate in these processes and decisions, it is seldom as an equal or a partner of the employer. Employment laws and regulations exist, in part, to reduce or limit such employer power in the employment relationship.

Protection of employees Laws and regulations seek to provide specific protections to employees that they are unlikely to get for themselves in an employment contract. These protections pertain to employment standards, individual workplace rights, and consistency of treatment. Employment standards represent the minimum acceptable terms and conditions of employment. Examples include minimum wage, nondiscrimination, overtime pay, and safety and health standards. Individual rights examples include organizing and collective bargaining, privacy protections, and constraints on uni- lateral termination. Finally, laws and regulations, in effect, guarantee consistency of treatment among employees. Hiring and promotion decisions, for example, can- not be made on the basis of protected employee characteristics (e.g., race, sex). 0077862414_ch02_p044_088.indd 54 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 55 Protection of employers Employers also gain protections from laws and regulations. First, they provide guidance to employers as to what are permissible practices and what are imper - missible practices. The Civil Rights Act, for example, not only forbids certain types of discrimination on the basis of race, color, religion, sex, and national origin but also specifically mentions employment practices that are permitted.

One of those practices is the use of professionally developed ability tests, a prac- tice that has major implications for external and internal selection. Second, ques- tions about the meaning of the law are clarified through many avenues—court decisions, policy statements from government agencies, informal guidance from enforcement officials, and networking with other employers. The result is increas- ing convergence on what is required to comply with the laws. This allows the employer to implement needed changes, which then become standard operating procedure in staffing systems. In this manner, for example, affirmative action pro- grams (AAPs) have been developed and incorporated into the staffing mainstream for many employers. Sources of Laws and r egulations Numerous sources of laws and regulations govern the employment relationship.

Exhibit 2.2 provides examples of these as they pertain to staffing. Each of these is commented on next.

Common Law Common law, which has its origins in England, is court- made law, as opposed to law from other sources, such as the state. It consists of the case- by-case decisions of the court, which determine over time permissible and impermissible practices, as well as their remedies. There is a heavy reliance on common law in the prece- dence established in previous court decisions. Each state develops and administers its own common law. Employment- at-will and workplace tort cases, for example, are treated at the state level. As noted, employment- at-will involves the rights of the employer and the employee to terminate the employment relationship at will.

A tort is a civil wrong that occurs when the employer violates a duty owed to its employees or customers that leads to harm or damages suffered by them. Staffing tort examples include negligent hiring of unsafe or dangerous employees, fraud and misrepresentation regarding employment terms and conditions, defamation of former employees, and invasion of privacy.

Constitutional Law Constitutional law is derived from the US Constitution and its amendments. It supersedes any other source of law or regulation. Its major application is in the area of the rights of public employees, particularly their due process rights. 0077862414_ch02_p044_088.indd 55 11/19/13 12:53 AM 56 ParT Tw O Support Activities Statutory Law Statutory law is derived from written statutes passed by legislative bodies. These bodies are federal (Congress), state (legislatures and assemblies), and local (munici- pal boards and councils). Legislative bodies may create, amend, and eliminate laws and regulations. They may also create agencies to administer and enforce the law.

agencies Agencies exist at the federal, state, and local levels. Their basic charge is to inter - pret, administer, and enforce the law. At the federal level, the two major agen- cies of concern to staffing are the Department of Labor (DOL) and the EEOC.

Housed within the DOL are several separate units for administration of employ- ment law, notably the Office of Federal Contract Compliance Programs (OFCCP).

The Department of Homeland Security handles issues regarding foreign workers and immigration in its agency, the US Citizenship and Immigration Services.

exhibiT 2.2 Sources of Laws and r egulations Source examples Common law Employment-at-will Workplace torts Constitutional law Fifth Amendment Fourteenth Amendment Statutory law Civil Rights Act Genetic Information Nondiscrimination Act Age Discrimination in Employment Act Americans With Disabilities Act Rehabilitation Act Immigration Reform and Control Act Fair Credit Reporting Act Employee Polygraph Protection Act Uniformed Services Employment and Reemployment Rights Act State and local laws Civil service laws Executive order Agencies 11246 (nondiscrimination under federal contracts) Equal Employment Opportunity Commission (EEOC) Department of Labor (DOL) Office of Federal Contract Compliance Programs (OFCCP) Department of Homeland Security State fair employment practice (FEP) agencies 0077862414_ch02_p044_088.indd 56 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 57 Agencies rely heavily on written documents in performing their functions.

These documents are variously referred to as rules, regulations, guidelines, and policy statements. Rules, regulations, and guidelines are published in the Federal Register, as well as incorporated into the Code of Federal Regulations (CFR), and they have the weight of law. Policy statements are somewhat more benign in that they do not have the force of law. They do, however, represent the agency’s official position on a point or question. eeO/aa LawS: generaL Pr OviSiO nS and enfOr CeMenT In this section, the major federal EEO/AA laws are summarized in terms of their general provisions. Mechanisms for enforcement of the laws are also discussed. 9 More details may be found online. general Provisions The major federal EEO/AA laws are the following:

1. Title VII of the Civil Rights Acts (1964, 1991) 2. Age Discrimination in Employment Act (1967) 3. Americans With Disabilities Act (1990, 2008) 4. Genetic Information Nondiscrimination Act (2008) 5. Rehabilitation Act (1973) 6. Executive Order 11246 (1965) Exhibit 2.3 contains a summary of the basic provisions of these laws pertaining to coverage, prohibited discrimination, and enforcement agency and to important rules, regulations, and guidelines. These laws are appropriately labeled “major” for several reasons. First, the laws are very broad in their coverage of employers.

Second, they specifically prohibit discrimination on the basis of several individual characteristics (race, color, religion, sex, national origin, age, genetic information, disability, and handicap). Certain other factors that may be closely related to these protected characteristics may also be covered. The EEOC’s opinion is that Title VII and the ADA may protect applicants and employees who are caregivers or who experience domestic or dating violence, sexual assault, or stalking. Third, sepa- rate agencies have been created for administration and enforcement of these laws.

Finally, these agencies have issued numerous rules, regulations, and guidelines to assist in interpreting, implementing, and enforcing the law. The specifics of these regulations will be discussed in subsequent chapters. Exhibit 2.3 shows that for some laws, the number of employees in the organi- zation determines whether the organization is covered. To count employees, the EEOC has issued guidance indicating that the organization should include any 0077862414_ch02_p044_088.indd 57 11/19/13 12:53 AM exhibiT 2.3 Major f ederal eeO/aa Laws: general Provisions Law or executive Order Coverage Prohibited discrimination enforcement agency important r ules, regulations, and guidelines Civil Rights Act (1964, 1991) Private employers with 15 or more employees Federal, state, and local governments Educational institutions Employment agencies Labor unions Race, color, religion, national origin, sex EEOC Uniform Guidelines on Employee Selection Procedures Sex Discrimination Guidelines Religious Discrimination Guidelines National Origin Discrimination Guidelines Age Discrimination in Employment Act (1967) Private employers with 20 or more employees Federal, state, and local governments Employment agencies Labor unions Age (40 and over) EEOCInterpretations of the Age Discrimination in Employment Act Americans With Disabilities Act (1990, 2008) Private employers with 15 or more employees Federal, state, and local governments Qualified individual with a disability EEOC ADA–Employment Regulations Pre-Employment Disability- Related Questions and Medical Examinations Genetic Information Nondiscrimination Act (2008) Private employers with 15 or more employees Federal, state, and local governments Educational institutions Employment agencies Labor unions Genetic information EEOCFinal Regulations Rehabilitation Act (1973) Federal contractors with contracts in excess of $2,500 Individual with a handicap DOL (OFCCP) Affirmative Action Regulations on Handicapped Workers Executive Order 11246 (1965) Federal contractors with contracts in excess of $10,000 Race, color, religion, national origin, sex DOL (OFCCP) Sex Discrimination Guidelines Affirmative Action Programs Regulations 0077862414_ch02_p044_088.indd 58 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 59 employee with whom the organization had an employment relationship in each of 20 or more calendar weeks during the current or preceding year. In essence, this means that full- time and part- time employees—and possibly temporary employees if there is true coemployment—should be included in the employee count. 10 Individuals who oppose unlawful practices, participate in proceedings, or request accommodations are protected from retaliation under the laws shown in Exhibit 2.3.

The term “retaliation” is broadly interpreted by the courts and th\�e EEOC to include refusal to hire, denial of promotion, termination, other actions affecting employ- ment (e.g., threats, unjustified negative evaluations), and actions that deter reason- able people from pursuing their rights (e.g., assault, unfounded civil or criminal charges). The EEOC has issued specific guidance on what constitutes evidence of retaliation, as well as special remedies for retaliatory actions by the \�employer. 11 Three other general features of the EEO laws, as interpreted by the EEOC and the courts, should be noted. 12 First, state (but not local) government employers are immune from lawsuits by employees who allege violation of the ADA or the ADEA. State employees must thus pursue age and disability discrimination claims under applicable state laws. Second, organization officials and individual manag- ers cannot be held personally liable for discrimination under the Civil Rights Act, the ADA, or the ADEA. They might be liable, however, under state law. Third, the ADA, the Civil Rights Act, and the ADEA extend to US citizens employed over - seas by American employers. Also, a foreign company that is owned or controlled by an American employer and is doing business overseas generally must also com- ply with the Civil Rights Act, the ADA, and the ADEA. An overview of the broad, sweeping nature of the specific employment practices affected by the federal EEO/AA laws is shown in Exhibit 2.4. enforcement: eeOC As shown in Exhibit 2.3, the EEOC is responsible for enforcing the Civil Rights Act, the ADEA, and the ADA. Though each law requires separate enforcement mecha- nisms, some generalizations about their collective enforcement are possible. 13 disparate Treatment and disparate impact Claims of discrimination in staffing ultimately require evidence and proof, particu- larly as these charges pertain to the staffing system itself and its specific character - istics as it has operated in practice. Toward this end, there are two avenues or paths to follow—disparate treatment and disparate impact. 14 Both paths may be followed for Title VII of the Civil Rights Act, ADA, and ADEA claims.

Disparate Treatment. Claims of disparate treatment involve allegations of intentional discrimination in which the employer knowingly and deliberately dis- criminated against people on the basis of specific characteristics such as race or sex. Evidence for such claims may be of several sorts. 0077862414_ch02_p044_088.indd 59 11/19/13 12:53 AM 60 ParT Tw O Support Activities First, the evidence may be direct. It might, for example, refer to an explicit writ- ten policy of the organization, such as one stating that “women are not to be hired for the following jobs.” The situation may not involve such blatant action but may consist of what is referred to as a mixed motive. Here, both a prohibited characteristic (e.g., sex) and a legitimate reason (e.g., job qualifications) are mixed together to contribute to a negative decision about a person, such as a failure to hire or promote. If an unlawful motive such as sex plays any part in the decision, it is illegal, despite the presence of a lawful motive as well. Under the laws enforced by the EEOC, it is illegal to discriminate against someone (applicant or employee) because of that person’s race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability, or genetic information. It is also illegal to retaliate against a person because he or she complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.

The law forbids discrimination in every aspect of employment.

The laws enforced by the EEOC prohibit an employer or other covered entity from using neutral employment policies and practices that have a disproportionately negative effect on applicants or employees of a particular race, color, religion, sex (including pregnancy), or national origin, or on an individual with a disability or class of individuals with disabilities, if the policies or practices at issue are not job related and necessary to the operation of the business. The laws enforced by the EEOC also prohibit an employer from using neutral employment policies and practices that have a disproportionately negative impact on applicants or employees age 40 or older, if the policies or practices at issue are not based on a reasonable factor other than age.

Covered practices:

  •  Job advertisements, recruitment, and job referrals   •  Application and hiring   •  Job assignments and promotion   •  Employment references   •  Pre-employment inquiries   •  Discipline and discharge   •  Pay and benefits   •  Reasonable accommodation and disability, religion   •  Training and apprenticeship programs   •  Harassment   •  Terms and conditions of employment, dress code   •  Constructive discharge/forced to resign exhibiT 2.4 Prohibited employment Policies/Practices under f ederal Law Source : Equal Employment Opportunity Commission, 2010. 0077862414_ch02_p044_088.indd 60 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 61 Finally, the discrimination may be such that evidence of a failure to hire or pro- mote because of a protected characteristic must be inferred from several situational factors. Here, the evidence involves four factors:

1. The person belongs to a protected class.

2. The person applied for, and was qualified for, a job the employer was trying to fill.

3. The person was rejected despite being qualified.

4. The position remained open and the employer continued to seek applicants as qualified as the person rejected.

Most disparate treatment cases involve and require the use of these four factors to initially prove a charge of discrimination.

Disparate Impact. Disparate impact, also known as adverse impact, focuses on the effect of employment practices, rather than on the motive or intent underlying them. Accordingly, the emphasis here is on the need for direct evidence that, as a result of a protected characteristic, people are being adversely affected by a prac- tice. Statistical evidence must be presented to support a claim of adverse impact. 15 Three types of statistical evidence may be used, and these are shown in Exhibit 2.5.

Refer to “Legal Issues” in Chapters 3 and 7 for elaboration. Shown first in the exhibit are applicant flow statistics, which look at differences in selection rates (proportion of applicants hired) among different groups for a particu- lar job. If the differences are large enough, this suggests that the effect of the selec- tion system is discriminatory. In the example, the selection rate for men is .50 (or 50%) and for women it is .11 (or 11%), suggesting the possibility of discrimination.\� A second type of statistical evidence involves the use of stock statistics. Here, the percentage of women or minorities actually employed in a job category is com- pared with their availability in the relevant population. Relevant is defined in terms of such things as “qualified,” “interested,” or “geographic.” In the example shown, there is a disparity in the percentage of minorities employed (10%) compared with their availability (30%), which suggests their underutilization. The third type of evidence involves the use of concentration statistics. Here, the percentages of women or minorities in various job categories are compared to see if they are concentrated in certain workforce categories. In the example shown, women are concentrated in clerical jobs (97%), men are concentrated in produ\�ction (85%) and managerial (95%) jobs, and men and women are roughly equally concentrated in sales jobs (45% and 55%, respectively).

initial Charge and Conciliation Enforcement proceedings begin when an employee or job applicant files a charge (the EEOC itself may also file a charge). In states where there is an EEOC- approved fair enforcement practice (FEP) law, the charge is initially deferred to the state. 0077862414_ch02_p044_088.indd 61 11/19/13 12:53 AM 62 ParT Tw O Support Activities The charge is investigated to determine whether there is reasonable cause to assume discrimination has occurred. If reasonable cause is not found, th\�e charge is dropped. If reasonable cause is found, the EEOC attempts conciliation of the charge. Conciliation is a voluntary settlement process that seeks agreement by the employer to stop the practice(s) in question and abide by proposed remedies\�. This is the EEOC’s preferred method of settlement. Whenever the EEOC decides not to pursue a claim further, it will issue a “right to sue” letter to the complaining party, allowing a private suit to be started against the employer.

Complementing conciliation is the use of mediation. With mediation, a neutral third party mediates the dispute between the employer and the EEOC and obtains an agreement between them that resolves the dispute. Participation in mediation is voluntary, and either party may opt out of it for any reason. Mediation proceedings are confidential. Any agreement reached between the parties is legally enforce- able. More than 70% of complaints that go to mediation are resolved, and 96% of exhibiT 2.5 Types of disparate impact Statistics A. FLOW STATISTICS De nition:

Signi cant differences in selection ratesbetween groups E\famp\be Job Category: CustomerServiceRepresentative No.ofApp\bicants Men \f0 Women 4\f No.

Hired Men 2\f Women \f Se\bection Rate(%) Men \f0 Women \b\b B. STOCK STATISTICS De nition:

Underutilization ofwomen or minorities relativetotheir availability inthe relevant population E\famp\be Job Category: Management Trainee CurrentTrainees (%) Nonminority 90 Minority \b0 Avai\babi\bity (%) Nonminority 70Minority 30 C. CONCENTRATION STATISTICS De nition:

Concentration ofwomen or minorities incertain job categories E\famp\be Job Category %Men % Women C\berica\b 3 97 Production 8\f \b\f Sa\bes 4\f \f\fManagers 9\f \f 0077862414_ch02_p044_088.indd 62 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 63 employers that use the EEOC mediation program say they would do so again. 16 In short, the EEOC prefers settlement to litigation.

Litigation and r emedies Should conciliation fail, suit is filed in federal court. The ensuing litigation process under Title VII is shown in Exhibit 2.6. As can be seen, the charge of the plain- tiff (charging party) will follow either a disparate treatment or a disparate impact route. 17 In either event, the plaintiff has the initial burden of proof. Such a burden requires the plaintiff to establish a prima facie case that demonstrates reasonable cause to assume discrimination has occurred. Assuming this case is successfully presented, the defendant must rebut the charge and accompanying evidence. In disparate treatment cases, the defendant must provide nondiscriminatory rea- sons during rebuttal for the practice(s) in question. In disparate impact cases, the \� employer must demonstrate that the practices in question are job related and \�con- sistent with business necessity. exhibiT 2.6 basic Litigation Process under Title vii: eeOC Source : Equal Employment Opportunity Commission, May 26, 2004 (www.eeoc.gov). 0077862414_ch02_p044_088.indd 63 11/19/13 12:53 AM 64 ParT Tw O Support Activities Following rebuttal, the plaintiff may respond to the defense provided by the defendant. In disparate treatment cases, that response hinges on a demon\�stration that the defendant’s reasons for a practice are a pretext, or smoke screen, for the practice. In disparate impact cases, the plaintiff ’s response will focus on show- ing that the defendant has not shown its practices to be job related and/or that the employer refuses to adopt a practice that causes less adverse impact. Disparate impact litigation involving age discrimination charges is somewhat different. After the disparate impact claim (supported by disparate impact statis- tics) is made, the defendant rebuttal will involve an attempt to prove that the chal- lenged practice is supported by a reasonable factor other than age, and the plaintiff response will attempt to prove that the factor cited is unreasonable and not the true reason for the practice. Who bears the final, or ultimate, burden of proof? In disparate treatment cases, the plaintiff must ultimately prove that the defendant’s practices are discrimina- tory. For disparate impact cases, on the other hand, the burden is on the defendant.

That is, it is the defendant who must prove that its practices are not discriminatory. The plaintiff and the defendant have an opportunity to end their dispute through a consent decree. This is a voluntary, court- approved agreement between the two parties. The consent decree may contain an agreement to not only halt certain pra\�c- tices but also implement certain remedies, such as various forms of monetary relief and AAPs. An example of a consent decree is shown in Exhibit 2.7. In the absence of a consent decree, the court will fashion its own remedies from those permitted under the law, of which several are available. First, the court may enjoin certain practices, which means requiring the defendant to halt the practices.

Second, the court may order the hiring or reinstatement of individuals. Third, the court may fashion various forms of monetary relief, such as back pay, front pay, attorney’s fees, and compensatory and punitive damages. Compensatory and puni- tive damages, which are capped at $300,000, may be applied only in cases in\�volv- ing disparate treatment; front pay and back pay are excluded from the cap. Finally, under the Civil Rights Act and the ADA, the court may order “such affirmative action as may be appropriate,” as well as “any other equitable relief” that the court deems appropriate. Through these provisions, the court has considerable latitude in the remedies it imposes, including the imposition of AAPs. enforcement: OfCCP Enforcement mechanisms used by the OFCCP are very different from those used by the EEOC. Most covered employers are required to develop and implement written AAPs for women and minorities. Specific AAP requirements for employers 0077862414_ch02_p044_088.indd 64 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 65 CLEVELAND—Presrite Corporation, a manufacturing company headquartered in Cleveland that makes gears and other industrial parts, will pay $700,000, offer jobs to no fewer than 40  women, and commit to other injunctive relief to settle a systemic class action lawsuit brought by the US Equal Employment Opportunity Commission (EEOC), the agency announced today.

The EEOC’s lawsuit charged widespread discrimination against women who applied to work at one or more of Presrite’s three plants in Cleveland and Ashtabula County. According to the EEOC, Presrite—a federal contractor—passed over female applicants in favor of less qualified males for entry-level positions at all three plants. The EEOC also cited evidence that women who were hired for such positions were harassed. The EEOC charged the company with failing to keep applications and other employee data in violation of federal law. The EEOC alleged that Presrite failed to produce more than a thousand employment applications for persons the company hired and failed to maintain accurate or complete data about applicants. As a result, the EEOC said, it was unable to verify by name all of the female applicants who were unlawfully denied hire. On  April  24, Judge  Patricia  A. Gaughan  signed a publicly  filed consent  decree resolving   the case. Under the terms of the decree, Presrite will pay $700,000 in compensatory damages to establish a class fund for women who sought certain positions at Presrite and were denied hire. Over the course of the next three years, Presrite will also offer jobs to no fewer than 40 women identified by the EEOC during the claims process. The decree compels Presrite to give those females priority consideration and to offer them jobs before any current applicants. The decree also requires Presrite to implement a number of measures desig\�ned to prevent future discrimination such as periodic reports to the EEOC disclosing the number of females and males who applied as compared to those who were hired; mandatory training; and compulsory retention of employment and applicant records, including creating and producing electronic data. The decree includes an injunction prohibiting Presrite from discriminatin\�g against women in the recruiting and hiring process, and compelling the company to make all good-faith, reasonably necessary efforts to find female candidates to fi\�ll vacancies in laborer and operative positions. “We are pleased that we were able to reach an agreement with this defendant,” said EEOC General Counsel David Lopez. “Moving forward, qualified female applicants will be judged by their talents and skill and not simply passed over because of their gender and women who were wrongfully denied positions will be compensated.” exhibiT 2.7 example of a Consent d ecree Source : Adapted from EEOC press release, April 30, 2013, (www.eeoc.gov/eeoc/newsroom/ release/4-30-13.cfm), accessed 5/22/13. 0077862414_ch02_p044_088.indd 65 11/19/13 12:53 AM 66 ParT Tw O Support Activities under Executive Order 11246 are spelled out in Affirmative Action Programs Reg- ulations, discussed in “Legal Issues” in Chapter 3.

To enforce these requirements, the OFCCP conducts off- site desk audits and reviews of employers’ records and AAPs, and on- site visits and compliance reviews of employers’ AAPs. It also investigates complaints charging noncompliance.

Employers found to be in noncompliance are urged to change their practices through a conciliation process. Should conciliation be unsuccessful, emp\�loyers are subject to various penalties that affect their status as a federal contractor.

These include cancellation of contracts and debarment from bidding on fu\�ture contracts. eeO/aa LawS: SPeCifiC S Taffing Pr OviSiO nS Each of the major laws covered in the previous section contains specific provi- sions pertaining to staffing practices by organizations. This section summarizes those specific provisions, including agencies’ and courts’ interpretations of them. \� Phrases in quotation marks are from the laws themselves. Applications of these provisions to staffing policies, practices, and actions occur throughout the remain- der of the book. Civil rights a cts (1964, 1991) The provisions of the Civil Rights Acts of 1964 and 1991 are combined for discus- sion purposes here. The 1991 law is basically a series of amendments to the 1964 law, though it does contain some provisions unique to it.

unlawful employment Practices This section of the law contains a comprehensive statement regarding unlawful employment practices. Specifically, it is unlawful for an employer 1. “to fail or refuse to hire or to discharge any individual, or otherwise discrimi- nate against any individual with respect to his compensation, terms, condi- tions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin”; or 2. “to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employ- ment opportunities or otherwise adversely affect his status as an employee because of such individual’s race, color, religion, sex, or national origin.” These two statements are the foundation of civil rights law. They are very broad and inclusive, applying to virtually all staffing practices of an organization. There are also separate statements for employment agencies and labor unions. 0077862414_ch02_p044_088.indd 66 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 67 establishment of disparate impact As discussed previously, a claim of discrimination may be pursued via a disparate impact or disparate treatment approach. The law makes several points regarding the former approach.

First, staffing practices that may seem unfair, outrageous, or of dubious value to the employer but do not cause adverse impact are not illegal (assuming, of course, that no intention to discriminate underlies them). Thus, they are a matter of legal concern only if their usage causes disparate impact. Second, staffing practices that the plaintiff initially alleges to have caused adverse impact are unlawful unless the employer can successfully rebut the charges. To do this, the employer must show that the practices are “job related for the position in question and consistent with business necessity.” Practices that fail to meet this standard are unlawful. Third, the plaintiff must show adverse impact for each specific staffing practice or component. For example, if an employer has a simple selection system in which applicants first take a written test and those who pass it are interviewed, the plain- tiff must show adverse impact separately for the test and the interview, rather than for the two components combined.

disparate Treatment Intentional discrimination with staffing practices is prohibited, and the employer may not use a claim of business necessity to justify intentional use of a discrimina- tory practice.

Mixed Motives An employer may not defend an action by claiming that while a prohibited fac- tor, such as sex, entered into a staffing decision, other factors, such as job quali- fications, did also. Such “mixed motive” defenses are not permitted. A plaintiff may pursue a mixed motive claim with either circumstantial or direct evidence of discrimination.

bona fide Occupational Qualification An employer may attempt to justify use of a protected characteristic, such as national origin, as being a bona fide occupational qualification (BFOQ). The law permits such claims, but only for sex, religion, and national origin—not race or color. The employer must be able to demonstrate that such discrimination is “a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise.” Thus, a maximum security prison with mostly male inmates might hire only male prison guards on the grounds th\�at by doing so it ensures the safety, security, and privacy of inmates. However, it must be able to show that doing so is a business necessity. 0077862414_ch02_p044_088.indd 67 11/19/13 12:53 AM 68 ParT Tw O Support Activities Testing The law explicitly permits the use of tests in staffing. The employer may “give and act upon the results of any professionally developed ability test, provided that such test, its administration, or action upon the basis of results is no\�t designed, intended, or used to discriminate because of race, color, religion, sex, or national origin.” Interpretation of this provision has been difficult. What exactly is a “profes- sionally developed ability test”? How does an employer use a test to discriminate?

Not discriminate? The need for answers to such questions gave rise to the Uniform Guidelines on Employee Selection Procedures (UGESP).

Test Score a djustments Test scores are not to be altered or changed to make them more fair; test scores should speak for themselves. Specifically, it is an unlawful employment practice “to adjust the scores of, use different cutoff scores for, or otherwise alter the results of employment- related tests on the basis of race, color, religion, sex, or national origin.” This provision bans so- called race norming, in which people’s scores are compared only with those of members of their own racial group and separate cutoff or passing scores are set for each group.

Seniority or Merit Systems The law explicitly permits the use of seniority and merit systems as a basis for \� applying different terms and conditions to employees. However, the seniority or merit system must be “bona fide,” and it may not be the result of an intention to discriminate. This provision is particularly relevant to internal staffing systems. It in essence allows the employer to take into account seniority (experience) and merit (e.g., KSAOs, promotion potential assessments) when making internal staffing decisions.

employment a dvertising Discrimination in employment advertising is prohibited. Specifically, the employer may not indicate “any preference, limitation, specification, or discrimination based on race, color, religion, sex, or national origin.” An exception to this is if sex, reli- gion, or national origin is a BFOQ.

Pregnancy The Pregnancy Discrimination Act (PDA) is an amendment to Title VII. Under the PDA, an employer cannot refuse to hire a pregnant woman because of her preg- nancy, because of a pregnancy- related condition, or because of the prejudices of coworkers, clients, or customers. There are also many provisions regarding preg- nancy and maternity leave. 0077862414_ch02_p044_088.indd 68 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 69 Preferential Treatment and Quotas The law does not require preferential treatment or quotas. Thus, the employer is not required to have a balanced workforce, meaning one whose demographic com- position matches or mirrors the demographic makeup of the surrounding popula- tion from which the employer draws its employees.

Note that the law does not prohibit preferential treatment, AA, and quotas. It merely says they are not required. Thus, they may be used in certain instances, such as a voluntary AAP or a court- imposed remedy. age discrimination in employment a ct (1967) Prohibited age discrimination The law explicitly and inclusively prohibits discrimination against those aged 40 and older. It is unlawful for an employer 1. “to fail or refuse to hire or to discharge any individual or otherwise discrimi- nate against any individual with respect to his compensation, terms, condi- tions or privileges of employment, because of such individual’s age”; and 2. “to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.” These provisions are interpreted to mean that it is not unlawful to favor an older worker over a younger worker, even if both workers are aged 40 or older.

bona fide Occupational Qualification Like the Civil Rights Act, the ADEA contains a BFOQ provision. Thus, it is not unlawful for an employer to differentiate among applicants or employees on the basis of their age “where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business.” r easonable f actors Other Than age The employer may use reasonable factors other than age (RFOA) in making employ- ment decisions. Specific interpretation of this provision is given by the EEOC. In the case of disparate impact (but not disparate treatment) claims, the employer can seek to justify the adverse impact occurrence as being based on an RFOA (as opposed to business necessity). An employment practice is based on an RFOA if it is reason- ably designed and administered to achieve a legitimate business purpose in light of circumstances. Reasonableness depends on the extent to which (1) a measured fac- tor (e.g., job skill) is related to the employer’s business purpose, (2) the factor has been accurately and fairly identified and applied, (3) managers and supervisors were given guidance or training about how to use the factor and avoid discrimination, 0077862414_ch02_p044_088.indd 69 11/19/13 12:53 AM 70 ParT Tw O Support Activities (4) limits were placed on supervisors’ discretion to assess employees subjectively, (5) adverse impact against older workers was assessed, including the degree of harm to older workers, and (6) steps were taken to reduce the harm.

Seniority Systems The law permits the use of seniority systems (merit systems are not mentioned).

Thus, the employer is permitted “to observe the terms of a bona fide seniority sys- tem that is not intended to evade the purposes” of the act.

employment a dvertising Employment advertising may not contain terms that limit or deter the employment of older individuals. It is permissible, however, to use terms or phrases that express a preference for older workers, such as “over age 60,” “retirees,” or “supplement your pension.” americans with disabilities a ct (1990, 2008) The ADA’s basic purpose is to prohibit discrimination against individuals with dis- abilities who are qualified for the job, and to require the employer to make reason- able accommodation for such individuals unless that would cause undue hardship for the employer.

Prohibited discrimination The law contains a broad prohibition against disability discrimination. It specifi- cally says that an employer may not “discriminate against an individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.” Also prohibited is discrimination based on an applicant’s or employee’s association with a person with a disability.

The law does not apply to all people with disabilities, only those with disabili- ties who are qualified for the job. To determine whether a person is covered under the ADA, it must be determined whether the person has a disability and is qual\�ified for the job.

d efinition of a disability The EEOC provides considerable regulation and guidance on the complex issue of what is a disability. The definition is interpreted in favor of broad coverage of individuals. There are three prongs to the definition:

1. A physical or mental impairment that substantially limits one or more major \� life activities (an “actual disability”) 2. A record of physical or mental impairment that substantially limited a major life activity (a “record of”) 0077862414_ch02_p044_088.indd 70 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 71 3. When an employer takes an action prohibited by the ADA because of an actual or perceived impairment that is not both transitory and minor (“regarded as”) Each of these three prongs is explained next.

Actual Disability. An impairment is a physical or mental disorder, illness, or condition. A physical impairment is any physiological disorder or condition, cos- metic disfigurement, or anatomical loss affecting one or more body systems such as neurological, musculoskeletal, special sense organs, respiratory (including speech organs), cardiovascular, reproductive, digestive, genitourinary, immune, circula- tory, hemic, lymphatic, skin, and endocrine. Also included (with special guidance) are cancer, diabetes, epilepsy, and intellectual disabilities. A mental or psychologi- cal disorder includes intellectual disability, organic brain syndrome, emotional or mental illness, and specific learning disabilities. An impairment that is episodic or in remission is a disability if it sub\�stantially limits a major life activity when active (e.g., major depression, epilepsy). The use of mitigating measures (with the exception of eyeglasses and contact lenses) that eliminate or reduce the symptoms or impact of a disability must be \�ignored when determining whether there is an impairment that substantially limit\�s a major life activity. The long list of mitigating measures includes medications, assistive devices, and various types of therapy. In terms of addiction as an impairment, cur - rent users of illegal drugs are not covered by the law; recovering drug users and both current and recovering alcoholics are covered. Major life activities include caring for oneself, performing manual tasks, see- ing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communi\�cating, interacting with others, and working. Also included are major bodily functions (e.g., digestive, neurological), including the operation of an individual organ within a body system. To determine whether an impairment substantially limits a major life activity, the person must be (or have been) substantially limited in performing a major life activity compared to most people in the general population. Temporary, nonchronic impairments of short duration with little or no residual effects usually are not considered disabilities (e.g., common cold, sprained joint, bro\�ken bone, and seasonal allergies). An impairment need not prevent or severely or signifi- cantly limit a major life activity to be considered substantially limiting. Finally, in assessing whether a person has a disability, two guidelines should be followed. First, there should be an individualized assessment of the impairment.

Second, the determination of a disability should not require extensive analysis.

Record of a Disability. A person who does not currently have a substantially limiting impairment but had one in the past has a record of disability. Additionally, a person who was misclassified as having a substantially limiting impairment has a record of disability. 0077862414_ch02_p044_088.indd 71 11/19/13 12:53 AM 72 ParT Tw O Support Activities Regarded as Disabled. A person is regarded as having a disability if the employer takes a prohibited action under the ADA (e.g., failure to hire or promote) based on an impairment the employer thinks the person has, unless the impairment is temporary (e.g., less than six months) and minor.

Qualified individual A person is qualified for the job if he or she can meet the job’s general require- ments (e.g., skills, education, experience, licenses, and certification) and perform the job’s essential functions (duties) with or without reasonable accommodatio\�n. Among qualified individuals, the employer can hire the most qualified person for the job.

essential j ob functions The law provides little guidance as to what are essential job functions. It would seem that they are the major, nontrivial tasks required of an employee. The employer has great discretion in such a determination. Specifically, “consideration shall be given to the employer’s judgment as to what functions of a job are essential, and if an employer has prepared a written description before advertising or interviewing applicants for the job, this description shall be considered evidence of the essential functions of the job.” Subsequent regulations amplify what are essential job func- tions; these are explored in Chapter 4.

r easonable a ccommodation and undue hardship Unless it would pose an “undue hardship” on the employer, the employer must make “reasonable accommodation” for the “known physical or mental impair - ments of an otherwise qualified, disabled job applicant or employee.” To qualify for reasonable accommodation, the person must be covered under the first (actual dis- ability) or second (record of disability) prong of the disability def\�inition. The law provides actual examples of reasonable accommodation. They include changes in facilities (e.g., installing wheelchair ramps), job restructuring, telework, changes in work schedules, employee reassignment to a vacant position, purchase of adap- tive devices, provision of qualified readers and interpreters, and adjustments in testing and training material. For mental impairment and psychiatric disabilities, EEOC guidance indicates several types of reasonable accommodations: leaves of absence and other work schedule changes, physical changes in the workplace, modifications to company policy, adjustment of supervisory methods, medication monitoring, and reassignment to a vacant position. In general, only accommoda- tions that would be difficult to make or that would require significant expense are considered to create an undue hardship. A suggested four- step problem- solving approach for handling a reasonable accommodation request from an applicant or employee is as follows. 18 First, conduct a job analysis to determine the job’s essential functions. Second, iden- tify performance barriers that would hinder the person from doing the job. Third, work with the person to identify potential accommodations. Fourth, assess each 0077862414_ch02_p044_088.indd 72 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 73 accommodation and choose the most reasonable one that would not be an undue hardship.

Selection of employees The law deals directly with discrimination in the selection of employees. Prohib- ited discrimination includes 1. “using qualification standards, employment tests or other selection criteria that screen out or tend to screen out an individual with a disability or a class of individuals with disabilities unless the standard, test, or other selection \�cri- teria, as used by the covered entity, is shown to be job related for the position in question and is consistent with business necessity”; and 2. “failing to select and administer tests concerning employment in the most effec- tive manner to ensure that, when such a test is administered to a job appli\�cant or employee who has a disability that impairs sensory, manual, or speaking skills, such results accurately reflect the skills, aptitude or whatever other factor of such applicant or employee that such test purports to measure, rather than reflecting the impaired sensory, manual, or speaking skills of such employee or applicant (except where such skills are the factors that the test purports to measure).” These provisions seem to make two basic requirements of staffing systems.

First, if selection procedures cause disparate impact against people with disabili- ties, the employer must show that the procedures are job related and consistent with business necessity. The requirement is similar to that for selection procedures under the Civil Rights Act. Second, the employer must ensure that employment tests are accurate indicators of the KSAOs they attempt to measure.

Medical exams for j ob applicants and employees Prior to making a job offer, the employer may not conduct medical exams of job appli- cants, inquire whether or how severely a person is disabled, or inquire whether the applicant has received treatment for a mental or emotional condition. Specific inqui- ries about a person’s ability to perform essential job functions, however, are permitted. After a job offer has been made, the employer may require the applicant to take a medical exam, including a psychiatric exam. The job offer may be contingent on the applicant successfully passing the exam. Care should be taken to ensure that all applicants are required to take and pass the same exam. Medical records should be confidential and maintained in a separate file. For employees, medical exams must be job related and consistent with business necessity. Exam results are confidential.

direct Threat The employer may refuse to hire an individual who poses a direct threat to himself or herself or to the health and safety of others. 0077862414_ch02_p044_088.indd 73 11/19/13 12:53 AM 74 ParT Tw O Support Activities affirmative a ction There are no affirmative action requirements for employers.

v eterans A veteran with a service- connected disability is covered by the ADA if the person meets the ADA definition of a disability and is qualified for the job. Vets with dis- abilities may also be covered under other laws and regulations that go beyond ADA requirements, such as asking an applicant to self- identify as a disabled veteran, and undertaking affirmative action on behalf of disabled veterans. genetic information n ondiscrimination act (2008) The Genetic Information Nondiscrimination Act (GINA) prohibits the use of genetic information in employment, as well as its acquisition; confidentiality of genetic information is required.

genetic information Genetic information includes an individual’s genetic tests, genetic tests of family members, and the manifestation of a disease or disorder in family members (i.e., the family’s medical history). Age and sex are not included as genetic information.

Prohibited Practices It is an unlawful employment practice for the employer to fail or refuse to hire; discharge; discriminate regarding terms and conditions of employment; and limit, segregate, or classify employees because of genetic information. There are no exceptions to this ban on usage.

It is also an unlawful employment practice to acquire (require, request, or pur - chase) genetic information about the employee or the employee’s family members.

There are several specific exceptions to this.

Confidentiality of information Any genetic information is to be maintained in a separate file, but it is okay to use this same file for ADA purposes. There are strict limits on the disclosure of genetic information. r ehabilitation a ct (1973) The Rehabilitation Act applies to federal employees, contractors, and subcontrac- tors, and most of them are also covered by the ADA. The Rehabilitation Act has many similarities to the ADA, including that the 2008 ADA amendments apply to the Rehabilitation Act. Hence, the Rehabilitation Act provisions are only briefly mentioned. 0077862414_ch02_p044_088.indd 74 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 75 Prohibited discrimination It is illegal to discriminate against a qualified individual with a disability. The defi- nition of disability under the ADA applies here. Reasonable accommodation for a qualified individual with a disability must also be made.

affirmative action Employers are required to develop and implement written AAPs for employing and promoting qualified individuals with disabilities. The OFCCP monitors the plans and conducts employer compliance reviews. executive Order 11246 (1965) Prohibited discrimination The federal contractor is prohibited from discriminating on the basis of\� race, color, religion, sex, and national origin. (A similar prohibition against age discrimination by federal contractors is contained in Executive Order 11141.) affirmative a ction The order plainly requires affirmative action. It says specifically that “the contractor will take affirmative action to ensure that applicants are employed, and that employ- ees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such actions shall include, but not be limited to, the following:

employment, upgrading, demotion, or transfer; recruitment or recruitment advertis- ing; layoff or termination; rates of pay or other forms of compensation; and selec\�- tion for training, including apprenticeship.” (Executive Order 11141 does not require affirmative action.) Regulations for these affirmative action requirements are dis- cussed in Chapter 3. O Ther S Taffing LawS In addition to the EEO/AA laws, a variety of other laws and regulations affect staffing. At the federal level are the Immigration Reform and Control Act (IRCA), the Employee Polygraph Protection Act, and the Fair Credit Reporting Act. At the state and local levels are a wide array of laws pertaining to EEO, as well as a host of other areas. Finally, there are civil service laws and regulations that pertain to staffing practices for federal, state, and local government employers. federal Laws immigration r eform and Control a ct (1986) The purpose of the IRCA and its amendments is to prohibit the employment of unauthorized aliens and to provide civil and criminal penalties for violations of this law. The law covers all employers regardless of size. 0077862414_ch02_p044_088.indd 75 11/19/13 12:53 AM 76 ParT Tw O Support Activities Prohibited Practices. The law prohibits the initial or continuing employment of unauthorized aliens. Specifically, 1. “it is unlawful for a person or other entity to have, or to recruit or refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien with respect to such employment”; and 2. “it is unlawful for a person or other entity, after hiring an alien for employment . . . to continue to employ the alien in the United States know- ing the alien is (or has become) an unauthorized alien with respect to\� such employment.” (This does not apply to the continuing employment of aliens hired before November 6, 1986.) The law also prohibits employment discrimination on the basis of national ori- gin or citizenship status. The purpose of this provision is to discourage employers from attempting to comply with the prohibition against hiring unauthorized aliens by simply refusing to hire applicants who are foreign- looking in appearance or have foreign- sounding accents.

Employment Eligibility Verification System. The employer must verify that the individual is not an unauthorized alien and is legally eligible for employment by obtaining proof of identity and eligibility for work. The employer uses the I-9 form to gather documents from the new employee that establish proof of both identity and eligibility (authorization) for work. Documents that establish proof are shown on the back of the I-9 form. Documents should not be obtained until t\�he person is actually hired, and they must be acquired within three business days of the date of employment. To verify eligibility information, federal contractors and subcontractors must use E-Verify, which conducts electronic verification checks against federal databases. Other employers may voluntarily participate in E-Verify.

There are detailed record- keeping requirements. More information on verification is in the “Legal Issues” section of Chapter 12.

Temporary Visas. The employer may apply for temporary visas for up to six years for foreign workers under two major visa categories (there are other, minor categories that are not covered here). The first category is H-1B visa. An H-1B nonimmigrant must have a bachelor’s degree (or equivalent) or higher in a spe- cific specialty. These workers are typically employed in occupations such as architect, engineer, computer programmer, accountant, doctor, or professor. The employer must pay the person the prevailing wage for employees working in a similar position for the employer and attest that the employee will not displace any other US employee. Congress sets an annual cap of 65,000 for the number of visas issued. H-1B nonimmigrants employed by universities and nonprofit (including government) organizations are exempt from the annual cap. There is 0077862414_ch02_p044_088.indd 76 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 77 also an exception (with a 20,000 annual cap) for workers with a master’s degree or higher from a US university. H-1B visa holders may change jobs as soon as their employer files an approval petition, and they are not restricted to their cur - rent geographic area. The H-2B visa category applies to nonagricultural temporary workers. It is for employers with peak load, seasonal, or intermittent needs to augment their re\�gu- lar workforce. Examples of such employers are construction, health care, resort/ hospitality services, lumber, and manufacturing. There is an annual cap of 65,000 workers.

Enforcement. The law is enforced by the US Citizenship and Immigration Ser - vices within the Department of Homeland Security. Noncompliance may result in fines of up to $10,000 for each unauthorized alien employed, as well as imprison- ment for up to six months for a pattern or practice of violations. Feder\�al contractors may be barred from federal contracts for one year.

employee Polygraph Protection a ct (1988) The purpose of the Employee Polygraph Protection Act is to prevent most private employers from using the polygraph or lie detector on job applicants or emplo\�yees.

The law does not apply to other types of “honesty tests,” such as paper- and-pencil ones.

Prohibited Practices. The law prohibits most private employers (public employers are exempted) from (1) requiring applicants or employees to take a polygraph test, (2) using the results of a polygraph test for employment deci- sions, and (3) discharging or disciplining individuals for refusing to take a poly- graph test. The polygraph may be used in three explicit instances. First, employers that man- ufacture, distribute, or dispense controlled substances, such as drugs, may use the polygraph. Second, private security firms that provide services to businesses affect- ing public safety or security, such as nuclear power plants or armored vehicles, may use the polygraph. Third, an employer that experiences economic loss due to theft, embezzlement, or sabotage may use the polygraph in an investigation of the loss.

Enforcement. The law is enforced by the DOL. Noncompliance may result in fines of up to $10,000 per individual violation. Also, individuals may sue the employer, seeking employment, reinstatement, promotion, and back pay.

f air Credit r eporting act (1970) The Fair Credit Reporting Act, as amended, regulates the organization’s acquisi- tion and use of consumer reports on job applicants. A consumer report is virtually 0077862414_ch02_p044_088.indd 77 11/19/13 12:53 AM 78 ParT Tw O Support Activities any information on an applicant that is compiled from a database by a cons\�umer reporting agency and provided to the organization. The information may include not only credit characteristics but also employment history, income, driving record, arrests and convictions, and lifestyle; medical information may not be sought or provided without prior approval of the applicant. Specific requirements for gather - ing and using the information are provided in Chapter 8. A second type of consumer report is investigative. It is prepared from personal interviews with other individuals, rather than a search through a database. There are separate compliance steps for this type of report.

Enforcement. The law is enforced by the Consumer Financial Protection Bureau.

Penalties for willful or negligent noncompliance go up to $1,000.

uniformed Services employment and r eemployment rights act (1994) The purpose of the Uniformed Services Employment and Reemployment Rights Act (USERRA) is to prohibit discrimination against members of the uniformed services and to extend reinstatement, benefit, and job security rights to returning service members.

Coverage. Both private and public employers, regardless of size, are covered.

All people who perform or have performed service in the uniformed services have USERRA rights, but only a person who was employed, is an applicant, or who is currently employed can invoke these rights.

Requirements. Employers may not take negative job actions (e.g., firing, demoting, transferring, or refusing to hire) against members (and applicants for membership) in the uniformed services. The employer must reinstate (within two weeks of application for reinstatement) employees who have taken up to five total years of leave from their position in order to serve. These employees are entitled to be returned to the position they would have held if they had been continuously employed (this is called an “escalator” position). If the employee is not qualified for the escalator position, the employer must make a reasonable effort to help the employee qualify. Those employees are also entitled to promotions, raises, and other seniority- based benefits they would have received. There are many excep- tions to both the five- year service limit and the reinstatement rights. Certain ben- efits must be made available to those who take leave for service, and benefits must be restored to those who return. An employee may not be fired, except for cause, for up to one year after returning from service.

Enforcement. The law is enforced by the Veterans Employment and Training Ser - vice (VETS) within the DOL. There are also regulations for employer compliance. 0077862414_ch02_p044_088.indd 78 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 79 State and Local Laws The emphasis in this book is on federal laws and regulations. It should be remem- bered, however, that an organization is subject to law at the state and local levels as well. This greatly increases the array of applicable laws to which the organization must attend.

eeO/aa Laws EEO/AA laws are often patterned after federal law. Their basic provisions, how- ever, vary substantially from state to state. Compliance with federal EEO/AA la\�w does not ensure compliance with state and local EEO/AA laws, and vice versa.

Thus, it is the responsibility of the organization to be explicitly knowledgeable of the laws and regulations that apply to it.

Of special note is that state and local EEO/AA laws and regulations often provide protections beyond those contained in the federal laws and regulations.

State laws, for example, may apply to employers with fewer than 15 employ- ees, which is the cutoff for coverage under the Civil Rights Act. State laws may also prohibit certain kinds of discrimination not prohibited under feder\�al law, for example, sexual orientation, gender identity or expression, breast feeding, and religious dress and grooming practices. For example, nearly half of all states, and many metropolitan areas where there is no state law, have prohibitions on employ- ment discrimination on the basis of sexual orientation. The law for the District of Columbia prohibits 13 kinds of discrimination, including sexual orientation, physical appearance, matriculation, and political affiliation. Finally, state law may deviate from federal law with regard to enforcement mechanisms and penalties for noncompliance.

Other State Laws Earlier, reference was made to employment- at-will and workplace torts as matters of common law, which, in turn, are governed at the state law level. Statutory state laws applicable to staffing, in addition to EEO/AA laws, are also plentiful. Examples of areas covered in addition to EEO/AA include criminal record inquiries by the employer, polygraph and “honesty testing,” drug testing, AIDS testing, and employee access to personnel records, unemployed applicants, and social media privacy. Civil Service Laws and r egulations Federal, state, and local government employers are governed by special statutory laws and regulations collectively referred to as civil service. Civil service is guided by so- called merit principles that serve as the guide to staffing practices. Follow- ing these merit principles results in notable differences between public and private employers in their staffing practices. 0077862414_ch02_p044_088.indd 79 11/19/13 12:53 AM 80 ParT Tw O Support Activities Merit Principles and Staffing Practices The essence of merit principles relevant to staffing is fourfold:

1. To recruit, select, and promote employees on the basis of their KSAOs 2. To provide for fair treatment of applicants and employees without regard to political affiliation, race, color, national origin, sex, religion, age, or handicap 3. To protect the privacy and constitutional rights of applicants and employees as citizens 4. To protect employees against coercion for partisan political purposes 19 Merit principles are codified in civil service laws and regulations.

Comparisons with Private Sector Merit principles and civil service laws and regulations combine to shape the nature of staffing practices in the public sector. This leads to some notable differences between the public and private sectors. Examples of public sector staffing practices are the following:

1. Open announcement of all vacancies, along with the content of the selection process that will be followed 2. Very large numbers of applicants due to applications being open to all persons 3. Legal mandate to test applicants only for KSAOs that are directly job related 4. Limits on discretion in the final hiring process, such as number of finalists, ordering of finalists, and affirmative action considerations 5. Rights of applicants to appeal the hiring decision, testing process, or \�actual test content and method 20 These examples are unlikely to be encountered in the private sector. Moreover, they are only illustrative of the many differences in staffing practices and context between the private and public sectors. LegaL iSSueS in reMainder Of bOOk The laws and regulations applicable to staffing practices by organizations are mul- tiple in number and complexity. This chapter emphasized an understanding of the need for law, the sources of law, and general provisions of the law and presented in detail the specific provisions that pertain to staffing activities. Little has been said about practical implications and applications.

In the remaining chapters of the book, the focus shifts to the practical, with guidance and suggestions on how to align staffing practices with legal require- ments. The “Legal Issues” sections in the remaining chapters discuss major issues from a compliance perspective. The issues so addressed, and the chapter in which they occur, are shown in Exhibit 2.8. Inspection of the exhibit should reinforce 0077862414_ch02_p044_088.indd 80 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 81 exhibiT 2.8 Legal issues Covered in Other Chapters Chapter TitleandNumber Topic Planning(3) Af rmativeaction\flans and diversit\b \fr\oograms Legalit\b ofaf rmative action\flansand diversit\b \frograms Job Anal\bsis and Rewards \o(4) Job relatedness and c\oourt cases Essentialjobfunctions External Recruitment (5) De nitionofa job a\f\flicant Affirmative action \f\orograms Electronic recruitment Job advertisements Fraud andmisre\fresentation Internal Recruitment (6) Af rmativeActionPrograms Regulations Bona deseniorit\b s\bstems The glass ceiling Measurement Determining adverse\o im\fact (7) Standardization External Selection I(8) Disclaimers Referencechecks Background checks Preem\flo\bment inquiries Bona deoccu\fational quali cations External Selection II(9) UniformGuidelines onEm\flo\bee Selection Procedures (UGESP) Selection undertheADA Drug testing Internal Selection (10) UGESP The glass ceiling Decision Making(11) UGESP Diversit\b and hiring\o decisions Final Match (12) Em\flo\bment eligibilit\o\b verification Negligenthiring Em\flo\bment-at-will Staf ng S\bstemManagement (13)Record kee\fing and \fri\ovac\b Legal audits EEO re\fort Training for manager\os and em\flo\bees Dis\fute resolution Retention Management (14) Se\farationlawsandregulations Performance a\f\fraisal 0077862414_ch02_p044_088.indd 81 11/19/13 12:53 AM 82 ParT Tw O Support Activities the importance accorded laws and regulations as an external influence on staffing activities.

It should be emphasized that there is a selective presentation of the issues in Exhibit 2.8. Only certain issues have been chosen for inclusion, and only a sum- mary of their compliance implications is presented. It should also be em\�phasized that the discussion of these issues does not constitute professional legal advice. Su MMary Staffing involves the formation of the employment relationship. That relationship involves the employer acquiring individuals to perform work for it as employees, independent contractors, temporary employees, and unpaid interns and trainees. The specific legal meanings and obligations associated with these various arrangements were provided.

Myriad laws and regulations have come forth from several sources to place con- straints on the contractual relationship between employer and employee. These constraints seek to ensure a balance of power in the relationship, as well as provide protections to both the employee and the employer. Statutory federal laws pertaining to EEO/AA prohibit discrimination on the basis of race, color, religion, sex, national origin, age, genetic information, and disabil- ity. This prohibition applies to staffing practices intentionally used to discriminate (disparate treatment), as well as to staffing practices that have a discriminatory effect (disparate or adverse impact). The EEO/AA laws also contain specific provisions pertaining to staffing, which specify both prohibited and permissible practices. In both instances, the emphasis is on use of staffing practices that are job related and focus on the person/job match. Other laws and regulations also affect staffing practices. At the federal level, there is a prohibition on the employment of unauthorized aliens and on the use of the polygraph (lie detector), constraints on the use of credit reports\� on job appli- cants, and specification of the employment rights of those in the uniformed ser - vices. State and local EEO/AA laws supplement those found at the federal level.

Civil service laws and regulations apply to government employees. Many other staffing practices are also addressed by state and local laws. Finally, civil service laws and regulations govern staffing practices in the public sector. Their provisions create marked differences in certain staffing practices between public and private employers. Legal issues will continue to be addressed throughout the remainder of this\� book. The emphasis will be on explanation and application of the laws’ provisions to staffing practices. The issues will be discussed at the end of each chapter, begin- ning with the next one. 0077862414_ch02_p044_088.indd 82 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 83 diSCuSSiOn QueSTiO nS 1. Do you agree that the employer usually has the upper hand when it comes to establishing the employment relationship? When might the employee have maximum power over the employer?

2. What are the limitations of disparate impact statistics as indicators of\� poten- tial staffing discrimination?

3. Why is each of the four situational factors necessary for establishing a claim of disparate treatment?

4. What factors would lead an organization to enter into a consent agreement rather than continue pursuing a suit in court?

5. What are the differences between staffing in the private sector and staffing in the public sector? Why would private employers probably resist adopting many of the characteristics of public staffing systems? eThiC aL iSSueS 1. Assume that you’re the staffing manager in an organization that informally, but strongly, discourages you and other managers from hiring people with disabilities. The organization’s rationale is that people with disabilities are unlikely to be high performers or long- term employees and are costly to train, insure, and integrate into the work unit. What is your ethical assess- ment of the organization’s stance? Do you have any ethical obligations to try to change the stance, and if so, how might you go about that?

2. Assume the organization you work for strictly adheres to the law in its rela- tionships with employees and job applicants. The organization calls it “staff- ing by the book.” But beyond that it seems anything goes in terms of tolerated staffing practices. What is your assessment of this approach? aPPLiC aTiO nS age discrimination in a Promotion? The Best Protection Insurance Company (BPIC) handles a massive volume of claims each year in the corporate claims function, as well as in its four regional  claims centers. Corporate claims is headed by the senior vice president of corp\�orate claims (SVPCC); reporting to the SVPCC are two managers of corporate claims (MCC-Life and MCC- Residential) and a highly skilled corporate claims specialist (CCS). Each regional office is headed by a regional center manager (RCM); the 0077862414_ch02_p044_088.indd 83 11/19/13 12:53 AM 84 ParT Tw O Support Activities RCM is responsible for both supervisors and claims specialists within th\�e regional office. The RCMs report to the vice president of regional claims (VPRC). Here is the structure of the organization: SVPCC VPRC MCC-L MCC-R CCS RCM RCM RCM RCM BPIC decided to reorganize its claims function by eliminating the four regional offices (and the RCM position) and establishing numerous small field offices throughout the country. The other part of the reorganization involved creating five new CCS positions. The CCS job itself was to be redesigned and upgraded in terms of knowledge and skill requirements. These new CCS positions would be staffed through internal promotions from within the claims function. The SVPCC asked Gus Tavus, a 52-year-old RCM, to apply for one of the new CCS positions since his job was being eliminated. The other RCMs, all of whom were over 40 years of age, were also asked to apply. Neither Gus nor the other RCMs were promoted to the CCS positions. Other candidates, some of whom \�were also over age 40, were also bypassed. The promotions went to five claims specialists and supervisors from within the former regional offices, all of whom were under age 40. Two of these newly promoted employees had worked for, and reported to, Gus as RCM. Upon learning of his failure to be promoted, Gus sought to find out why. What he learned led him to believe that he had been discriminated against because of his age. He then retained legal counsel, attorney Bruce Davis. Bruce met informally with the SVPCC to try to determine what had happened in the promotion pr\�ocess and why his client had not been promoted. He was told that there were numer - ous candidates who were better qualified than Gus and that Gus lacked adequate technical and communication skills for the new job of CCS. The SVPCC refused to reconsider Gus for the job and said that all decisions were etched in\� stone. Gus and Bruce then filed suit in federal district court, claiming a violation of the Age Discrimination in Employment Act. They also subpoenaed numerous BPIC docu- ments, including the personnel files of all applicants for the CCS positions. After reviewing the documents and discussing things with Gus, Bruce learned more about the promotion process actually used by BPIC. The SVPCC and the two MCCs conducted the entire process; they received no input from the VPRC 0077862414_ch02_p044_088.indd 84 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 85 or the HR department. There was no formal, written job description for the new CCS position, nor was there a formal internal job posting as required by company policy. The SVPCC and the MCCs developed a list of employees they thought might be interested in the job, including Gus, and then met to consider \�the list of candidates. At that meeting, the personnel files and previous performance apprais- als of the candidates were not consulted. After deciding on the five candidates who would be offered the promotion (all five accepted), the SVPCC and MCCs scanned the personnel files and appraisals of these five (only) to check for any disconfirm- ing information. None was found. Bruce’s inspection of the files revealed no writ- ten comments suggesting age bias in past performance appraisals for any of the candidates, including Gus. Also, there was no indication that Gus lacked technical and communication skills. All of Gus’s previous appraisal ratings were above aver - age, and there was no evidence of decline in the favorability of the ratings. Finally, an interview with the VPRC (Gus’s boss) revealed that he had not been consulted at all during the promotion process, that he was “shocked beyond belief” that Gus had not been promoted, and that there was “no question” but that Gus was qualified in all respects for the CCS job.

1. Prepare a written report that presents a convincing disparate treatment claim that Gus had been intentionally discriminated against on the basis of his age.

Do not address the claim as one of disparate impact.

2. Present a convincing rebuttal, from the viewpoint of BPIC, to this disparate treatment claim. disparate impact: what do the Statistics Mean? Claims of discrimination can be pursued under an allegation of disparate impact.

According to this approach, the effect or impact of staffing practices can be dis- criminatory and thus in violation of the Civil Rights Act. Such an impact could occur even though there may be no underlying intention to discriminate against members of a protected group or class (e.g., women or minorities). Pursuit of a disparate impact claim requires the use of various statistics to show that, in effect, women or minorities are being treated differently than men or nonminorities under the law.

Exhibit 2.5 shows three types of disparate impact statistics: flow statistics, stock statistics, and concentration statistics. Also shown is a statistical example of dis- parate impact for each type. For each of these three types of statistics, prepare a report in which you discuss the following:

1. How can an organization collect and report these statistics in the form shown in Exhibit 2.5?

2. What standards or guidelines would you recommend for deciding whether statistical differences between men and women, or nonminorities and 0077862414_ch02_p044_088.indd 85 11/19/13 12:53 AM 86 ParT Tw O Support Activities minorities, reflect discrimination occurring throughout an organization’s staffing system?

3. What types of staffing activities (recruitment, selection, and employment) might be causing the statistical differences? For example, in Exhibit 2.5 the selection rate is 50% for men and 11% for women. How would the organiza- tion collect the data necessary to compute these selection rates, how would you decide whether the difference in selection rates (50% vs. 11%) is big enough to indicate possible discrimination, and what sorts of practices \�might be causing the difference in selection rates? endn OTeS 1. M. W. Bennett, D. J. Polden, and H. J. Rubin, Employment Relationships: Law and Practice (Frederick, MD: Aspen, 2004), pp. 1-1 to 3-50; D. J. Walsh, Employment Law for Human Resource Practice, 4th ed. (Mason, OH: South- Western, 2013), pp. 31–60.

2. Walsh, Employment Law for Human Resource Practice, pp. 625–628.

3. S. Bates, “A Tough Target: Employee or Independent Contractor?” HR Magazine, July 2001, pp. 69–74; Bennett, Polden, and Rubin, Employment Relationships: Law and Practice, pp. 1-4 to 1-7; K. D. Meade, J. W. Pegano, I. M. Saxe, and J. A. Moskowitz, “Revisit Independent Contrac- tor Classifications,” Legal Report, Society for Human Resource Management, Oct./Nov. 2007, pp. 7–8.

4. A. R. Midence, “A Risky New Trend: Replacing Employees With Independent Contractors,” Workforce Management Online, Nov. 2009, accessed 5/18/2010; J. Smith, “Labor Crackdown Heats Up,” Wall Street Journal, Mar. 4, 2013, p. B6.

5. Walsh, Employment Law for Human Resource Practice, pp. 40–41.

6. Equal Employment Opportunity Commission, EEOC Policy Guidance on Temporary Work- ers (Washington, DC: author, 1997); Equal Employment Opportunity Commission, Enforce- ment Guidance: Application of the ADA to Contingent Workers Placed by Temporary Agencies and Other Staffing Firms (Washington, DC: author, 2000); N. Greenwald, “Use of Tempo- rary Workers Also Invites Exposure to Lawsuits,” Workforce Management Online, Mar. 2010 ( www.workforce.com), accessed 3/25/2010.

7. R. J. Bohner, Jr., and E. R. Salasko, “Beware the Legal Risks of Hiring Temps,” Workforce, Oct. 2003, pp. 50–57; Walsh, Employment Law for Human Resource Practice, pp. 40–46; L. E.

O’Donnell, “Is Our Unpaid Intern Legit?” HR Magazine, Apr. 2013, pp. 77–79.

8. US Department of Labor, “Fact Sheet # 71: Internship Programs Under the Fair Labor Standards Act,” Apr. 2010 (www.dol.gov/whd/regs/compliance/whdfs71.htm).

9. L. Guerin and A. DelPo, The Essential Guide to Federal Employment Laws, 4th ed. (Berkeley, CA: Nolo, 2013); D. D. Bennett- Alexander and L. P. Hartman, Employment Law for Business, 6th ed. (New York: McGraw- Hill Irwin, 2009).

10. Equal Employment Opportunity Commission, EEOC Enforcement Guidance on How to Count Employees When Determining Coverage Under Title VII, the ADA, and the ADEA (Washington, DC:

author, 1997).

11. Equal Employment Opportunity Commission, EEOC Guidance on Investigating, Analyzing Retaliation Claims (www.eeoc.gov). 0077862414_ch02_p044_088.indd 86 11/19/13 12:53 AM ChaPTer TwO Legal Compliance 87 12. W. Bliss, “The Wheel of Misfortune,” HR Magazine, May 2000, pp. 207–218; W. A. Carmell, “Application of U.S. Antidiscrimination Laws to Multinational Employers,” Legal Report, Soci- ety for Human Resource Management, May/June 2001; S. Lash, “Supreme C\�ourt Disables State Employees,” HR News, Apr. 2001, p. 6.

13. Bennett, Polden, and Rubin, Employment Relationships: Law and Practice, pp. 4-75 to 4-82.

14. Walsh, Employment Law for Human Resource Practice, pp. 66–87.

15. R. K. Robinson, G. M. Franklin, and R. F. Wayland, Employment Regulation in the Workplace (Armonk, NY: M. E. Sharpe, 2010), pp. 84–103.

16. K. Tyler, “Mediating a Better Outcome,” HR Magazine, Nov. 2007, pp. 63–66.

17. Bennett, Polden, and Rubin, Employment Relationships: Law and Practice, pp. 4-75 to 4-82; Walsh, Employment Law for Human Resource Practice, pp. 66–87.

18. J. R. Mook, “Accommodation Paradigm Shifts,” HR Magazine, Jan. 2007, pp. 115–120.

19. J. P. Wiesen, N. Abrams, and S. A. McAttee, Employment Testing: A Public Sector Viewpoint (Alexandria, VA: International Personnel Management Association Assessment Council, 1990), pp. 2–3.

20. Wiesen, Abrams, and McAttee, Employment Testing: A Public Sector Viewpoint, pp. 3–7. 0077862414_ch02_p044_088.indd 87 11/19/13 12:53 AM Chapter three Planning Learning Objectives and IntroductionLearning Objectives Introduction Internal and External Influences Organizational Strategy Organizational Culture Labor Markets Technology Human Resource Planning Process and Example Initial Decisions Forecasting HR Requirements Forecasting HR Availabilities Reconciliation and Gaps Staffing Planning Staffing Planning Process Core Workforce Flexible Workforce Outsourcing Diversity Planning Demography of the American Workforce Business Case for Diversity Planning for Diversity Legal Issues Affirmative Action Plans Legality of AAPs and Diversity Programs AAPs for Veterans and Individuals With Disabilities EEO and Temporary Workers 0077862414_ch03_p089_150.indd 89 11/19/13 12:56 AM Summary Discussion Questions Ethical Issues Applications Endnotes 0077862414_ch03_p089_150.indd 90 11/19/13 12:56 AM Chapter three Planning 91 Learning ObjeCtives and intrOduCtiOn Learning Objectives • Recognize internal and external influences that will shape the planning process • Understand how strategic plans integrate with staffing plans • Become familiar with statistical and judgmental techniques for forecasting HR requirements and availabilities • Know the similarities and differences between replacement and succession planning • Understand the advantages and disadvantages of a core workforce, a flexible workforce, and outsourcing strategies for different groups of employees • Learn how to incorporate diversity into the planning process • Recognize the fundamental components of an affirmative action plan introduction Human resource (HR) planning is the process of forecasting the organization’s future employment needs and then developing action plans and programs for ful- filling these needs in ways that align with the staffing strategy. HR plans form the basis of all other activities conducted during staffing. An organization that thoroughly considers its staffing needs and how these needs fit with the external environment will find it much easier to recruit the right number and type of candi- dates, develop methods for selecting the right candidates, and evaluate whether its programs are successful.

Essentially, HR planning involves learning about the employment environment, determining how many employees an organization will need in the future, and assessing the availability of employees in both the internal and external markets.

The HR planning process involves several specific components that we cover in this chapter, including making initial planning decisions, forecasting HR require- ments and availabilities, determining employee shortages and surpluses, and devel- oping action plans. The chapter begins with an overview of internal and external influences on the HR planning process, like organizational strategy and culture, labor markets, and technology. Next, we provide an overview of the process of HR planning, includ- ing a review of methods for forecasting HR requirements and availability. The staffing planning process includes distinguishing between the core and flexible workforces, as well as understanding the environment for outsourcing. Diversity programs have become an increasingly important part of the staffing planning pro- cess, so they are also discussed. The major legal issue for HR staffing planning is that of affirmative action plans (AAPs). A different legal issue, that of equal 0077862414_ch03_p089_150.indd 91 11/19/13 12:56 AM 92 part t wO Support Activities employment opportunity (EEO) coverage for temporary employees and their agen- cies, is also discussed. internaL and externaL infL uenCes Planning does not occur in a vacuum. All aspects of the planning process must con- sider both internal and external influences. The two most important internal influ- ences on the planning process are the organization’s strategy and the organization’s culture. There are three major sources of external influence on HR and staffing plan- ning, namely, product market conditions, labor markets, and technology. Exhibit 3.1 provides specific examples of these influences, which are discussed next. Organizational strategy The first, and most important, influence on the planning process is the organi- zation’s overall strategy. Staffing managers must be intimately familiar with all aspects of the organization’s future plans and goals so they can respond by hiring OrganiZatiOnaL strategY •  Current financial and human resources in the organization  •  Demand for products and/or services •  Competitors and partners •  Financial and marketing goals OrganiZatiOnaL CuL ture •  The expressed vision of executives •  The degree of hierarchy and bureaucracy •  Style of communication LabOr MarKets •  Labor demand: employment patterns, KSAOs sought •  Labor supply: labor force, demographic trends, KSAOs available •  Labor shortages and surpluses •  Employment arrangements teChnOLOgY •  Elimination of jobs •  Creation of jobs •  Changes in skill requirements exhibit 3.1 examples of internal and external influences on staffing 0077862414_ch03_p089_150.indd 92 11/19/13 12:56 AM Chapter three Planning 93 the right number of people with the right KSAOs (knowledge, skill, ability, and other characteristics) in a timely manner. Some of the techniques we will review for staffing planning are based on a view of the organization’s historical staffing levels. This is a good place to start, because previous practice is an important guide to setting a baseline for future needs. However, all planning must be conducted with an eye to the future as well.The Society for Human Resource Management proposes that strategic planning involves a thorough knowledge of the organization’s current situation as well as a sense of the strategic vision of the organization. 1 Breaking down the organization’s strengths, weaknesses, opportunities, and threats (SWOT) is a common method for understanding strategy. The internal assessment phase of the SWOT analysis focuses on physical and financial resources, as well as structure and culture. The external assessment phase looks to learn about economic, demographic, and\� tech- nological trends that will influence the organization in the future. Effective staffing planning must begin with a dialogue between HR representa- tives and organizational leaders. 2 HR managers should be aware of core aspects of the organization’s operations, including financial and marketing considerations.

Additionally, it is important to see how the organization sees itself changing in the future so that staffing strategies to meet these needs can be developed. Partici- pating in activities like annual planning meetings and reviewing financial state- ments are essential. Strategic HR experts emphasize that this dialogue must be a two- way communication. In many cases, the current workforce and its capabilities will influence overall organizational plans. HR managers who are aware of inter - nal human capital resources will be much more effective in an advisory capability when discussing future plans with the other executives. Organizational Culture Organizational culture is a very complex topic, in part because culture is so dif- ficult to define. In essence, culture is the set of intangibles that influences attit\�udes and behavior in organizations. Some of the factors that can influence an organi- zation’s culture include the expressed vision of executives, the degree of hierar - chy and bureaucracy, the history of interactions among departments, and the style of communication throughout the organization. For example, an organization in which structure and predictability are emphasized will call for a very different set of staffing practices relative to an organization in which flexibility and innovation are core values. The relationship between the organization and labor unions or other employee organizations (such as professional organizations like the Ameri- can Medical Association or the state Bar Association) is also an extremely impor - tant part of culture. To understand culture, HR managers should spend time talking with senior executives, administer and evaluate employee survey data, and conduct focus groups. 0077862414_ch03_p089_150.indd 93 11/19/13 12:56 AM 94 part t wO Support Activities Just because culture is intangible does not mean it is not important. Michael Davis, the chief human resources officer at General Mills, encourages HR manag- ers to build “an integrated set of programs and policies that reinforce and bring value to life.” He further notes that when the company’s espoused values are incon- sistent with the practices that employees encounter on a day- to-day basis, problems with motivation, communication, and retention will follow. 3 Matching culture to planning occurs in numerous ways. Deciding the types of attitudes and values that employees should have in order to achieve a person/organization fit is entirely dependent on culture. An organization with a participative culture should ensure that planning involves representatives from many different perspectives. Decisions related to how succession planning should be managed are also influenced by the degree to which the organization’s members value opportunities for growth and development relative to stability and predictability. These are just a few of the ways in which culture can impact the planning process. In conjunction with the staffing planning process, the organization’s staffing philosophy should be reviewed. The results of this review help shape the direction and character of the specific staffing systems implemented. The review should focus on internal versus external staffing and diversity philosophy. External and internal staffing is a critical matter because it directly shapes the nature of the staffing system, as well as sends signals to applicants and employees alike about the organization as an employer. Exhibit 3.2 highlights the advantages and disadvantages of external and internal staffing. Clearly there are trade- offs to consider in deciding the optimal internal- external staffing mix. The point regard- ing time to reach full productivity warrants special comment. Any new hire, either internal or external, will require time to learn the new job and reach a full pro- ductivity level. In some ways, external hires may be able to reach job productiv- ity faster. This is because external hires are usually selected because they have experience in a job similar to the one they will be taking, whereas internal hires are promoted into jobs they have not previously held. On the other hand, internal new hires have an advantage in terms of person/organization fit because they are already familiar with the culture, policies, procedures, and relationships among organizational members. Internal hires may have also received special training and development to prepare them for the new job. In terms of diversity, the organization must be sure to consider or develop a sense of importance attached to being a diversity- conscious employer and the commitment it is willing to make in incorporating diversity elements into all phases of the staffing system. As we describe later in the chapter, an organiza- tion’s overall philosophy toward diversity will be shaped by the cultural value the organization attaches to diversity as well as the business- related consequences of diversity- related practices. Many choices throughout the staffing process will follow from the organization’s attitudes toward diversity, ranging from deciding where to recruit to what types of qualifications are most important for new hires. 0077862414_ch03_p089_150.indd 94 11/19/13 12:56 AM Chapter three Planning 95 Labor Markets In and through labor markets, organizations express specific labor preferences and requirements (labor demand), and persons express their own job preferences and requirements (labor supply). Ultimately, person/job matches occur from the inter- action of demand and supply forces. Both labor demand and supply contain quan- tity and quality components, as described below. Labor shortages, labor surpluses, and a variety of possible employment arrangements are also discussed. Internal External Advantages Disadvantages Positive employee\h reactions to promotion fr\hom within \fuick method to iden\htify \bob applicants Less expensive Less time require\hd to reach full product\hivity Brings in employe\hes with new KSAOs Larger number of \hminorities and women to dra\hw from Large labor market\h to draw from Experienced employ\hees may require less tr\haining time No new KSAOs into \hthe organization May perpetuate cu\hrrent underrepresentat\hion of minorities and w\homen Small labor market \hto recruit from Inexperienced emplo\hyees may require more train\hing time Negative reaction\h by internal applicants Time-consuming to\h identify applicants Expensive to sear\hch external labor market More time require\hd to reach full product\hivity exhibit 3.2 staffing philosophy: internal versus external staffing 0077862414_ch03_p089_150.indd 95 11/19/13 12:56 AM 96 part t wO Support Activities Labor d emand: employment p atterns Labor demand is a derived demand, meaning it is a result of consumer demands for the organization’s products and services. Knowing the organization’s strategy and projections for future KSAO needs will guide the search for labor demand information. In particular, the labor market for the occupations the organization needs to staff will be greatly affected by the product market. For example, in the field of software design, the increased use of tablet computers since 2010 increased demand for programmers who gained skills in designing applications for related operating systems. To learn about labor demand, national employment statistics are collected and analyzed. They provide data about employment patterns and projections for indus- tries, occupations, and organization size. Most organizations will need to examine not just aggregated statistics, like the overall unemployment rate, but also occu- pational and regional employment data. As an example, the Bureau of Labor Sta- tistics in 2013 estimated that the unemployment rate for structural iron and steel workers was 21.9% and the rate for telemarketers was 23.1%. At the other extreme, the unemployment rate for physician assistants was 1.2% and the rate for petro- leum engineers was 0.6%. 4 Projections to year 2018 indicate that most job growth will occur in the services sector, led by the education and health services industries, followed by business and professional services. Manufacturing and federal government employment will remain steady, and declines will occur in mining and agriculture. 5 Labor d emand: Ksa Os sought KSAO requirements or preferences of employers are not widely measured, except for education requirements. Data collected by the Bureau of Labor Statis\�tics suggest a continued increase in demand for individuals with college degrees or higher. The number of jobs requiring a bachelor’s degree is expected to increase 17%, the number requiring a master’s degree is expected to increase 19%, and the number requiring a doctoral degree is expected to increase 22%. In contrast, the number of jobs requiring only short- term on- the-job training is expected to increase by only 9%. 6 The increasing demand for education most likely reflects advances in technology that have made many jobs more complex and technically demanding. 7 A very thorough and systematic source of information about KSAOs needed for jobs is the Occupational Outlook Handbook. It does not indicate KSAO defi- ciencies; rather, it provides detailed information about the nature of work and the training and KSAOs required for the entire spectrum of occupations in the United States. Surveys of HR professionals and employees consistently reveal that critical thinking skills, creativity, diversity, ethics, and lifelong learning are seen as espe- cially relevant skills for today’s employees. 8 0077862414_ch03_p089_150.indd 96 11/19/13 12:56 AM Chapter three Planning 97 Labor supply: the Labor force and its trends Quantity of labor supplied is measured and reported periodically by the \�Bureau of Labor Statistics in the US Department of Labor. An example of basic results for July 2002–2012 is given in Exhibit 3.3. It shows that the labor force, including both full- and part- time employees, reached about 155 million individuals (employed and unemployed) and that unemployment ranged from 4.6% to 9.6%. The data for 2009–2010 clearly show the effects of a major economic slowdown. The subse- quent gradual economic recovery is reflected by the decreased unemployment rate in 2012. Data reveal several labor force trends that have particular relevance for staffing organizations. Labor force growth is slowing, going from an annual growth rate of around 2% in the early 1990s to a projected rate of 1% by the year 20\�18. There are increasingly fewer new entrants to the labor force. This trend, coupled with the severe KSAO deficiencies that many of the new entrants will have, creates major adaptation problems for organizations. Demographically, the labor force has become more diverse, and this trend will continue. Data starting in the 1980s and projected through 2018 show a slow trend toward nearly equal labor force participation for men and women, a slight decrease in the proportion of whites in the workforce, and large proportional growth in the representation of Hispanics and Asians. There will also be a dramatic shift toward fewer younger workers and more workers over the age of 55. Other, more subtle labor force trends are also under way. There has been a slight upward movement overall in the average number of hours that people work and a strong rise in the proportion of employees who work very long hours in certain exhibit 3.3 Labor f orce statistics Source : US Department of Labor, “The Employment Situation,” July 2002, July 2004, July 2006, July  2008, July 2010, July 2012. 2002 20042006200820102012 Civilian noninstitutional population  (in millions) 218 223229234238243   Civilian labor force (in millions) 145147152155154155     Employed (in millions) 136140145147139142     Unemployed (in millions) 8.48.17.08.914.8 12.5 Labor force participation rate (%) 676666636564 Unemployment rate (%) 5.85.54.65.89.68.1 0077862414_ch03_p089_150.indd 97 11/19/13 12:56 AM 98 part t wO Support Activities occupations, such as managers and professionals. Relatedly, there is an increase in holding multiple jobs, with 6.2% of employed people holding more than one job.

The number of immigrants in the population is growing; nearly 1 in 10 people is foreign born, the highest rate in more than 50 years. New federal and state poli- cies are increasingly pushing welfare recipients into the labor force, and they are mostly employed in low- wage jobs with low educational requirements. People his- torically out of the labor force mainstream—such as those with disabilities and the growing number of retirees—may assume a greater presence in the labor fo\�rce. 9 Labor supply: Ksa Os available A survey of 431 HR professionals found that 40% of employers indicated that high school graduates lack basic skills in reading comprehension, writing, an\�d math required for entry- level jobs, and that 70% of employers said high school gradu- ates are deficient in work habits such as professionalism, critical thinking, personal accountability, and time management. 10 Most respondents believed college gradu- ates were somewhat better prepared for work, but 44% of applicants with college degrees were still rated as having poor writing skills. There are also shortages of employees with the high skill levels required in contemporary manufacturing environments. 11 Economists and sociologists are quick to note that these skills shortages are being reported despite consistent gains in standardized test scores and educational attainment in the labor force since the 1960s. 12 Thus, it appears the problem is that demand for advanced skills is increasing, as we noted earlier, not that the supply of skilled workers is decreasing. This idea is reinforced by another survey of 726 HR professionals which found 98% of respondents reported that t\�he competition for talented workers has increased in recent years.

13 Data such as these reinforce the serious KSAO deficiencies reported by employers in at least some portions of the labor force.

Labor shortages and surpluses When labor demand exceeds labor supply for a given pay rate, the labor market is said to be “tight” and the organization experiences labor shortages. Shortages tend to be job or occupation specific. Low unemployment rates, surges in labor demand in certain occupations, and skill deficiencies fuel labor quantity and labor quality shortages for many organizations. The shortages cause numerous responses:

• Increased pay and benefit packages • Hiring bonuses and stock options • Alternative work arrangements to attract and retain older workers • Use of temporary employees • Recruitment of immigrants • Lower hiring standards 0077862414_ch03_p089_150.indd 98 11/19/13 12:56 AM Chapter three Planning 99 • Partnerships with high schools, technical schools, and colleges • Increased mandatory overtime work • Increased hours of operation These types of responses are lessened or reversed when the labor market is “loose,” meaning there are labor surpluses relative to labor demand.

employment arrangements Though labor market forces bring organizations and job seekers together, the spe- cific nature of the employment arrangement can assume many forms. One form is whether the person will be employed full time or part time. Data show that about 83% of people work full time and 17% work part time. 14 Although many people prefer part- time work, approximately 23% of part- time workers are seeking full- time employment. A second arrangement involves the issue of flexible scheduling and shift work.

The proportion of the workforce covered by flexible shifts has steadily grown from 12.4% in 1985 to 27.5% in 2004. Many of these workers are covered by formal flextime programs. Work hours are often put into shifts, and about 15% of full- time employed adults work evening, night, or rotating shifts. 15 Two other types of arrangements, often considered in combination, are (1)\� vari- ous alternative arrangements to the traditional employer–employee relationship, and (2) the use of contingent employees. Alternative arrangements include the organization filling its staffing needs through the use of independent contractors, on- call workers and day laborers, temporary help agency employees, and employ- ees provided by a contract firm that provides a specific service (e.g., accounting).

Contingent employees do not have an explicit or implicit contract for long- term employment; they expect their employment to be temporary rather than long term. National data on the use of alternative employment arrangements and contingent employees were gathered by the US Bureau of Labor Statistics in 2005. It found that 89.3% of surveyed individuals worked in a traditional employer–employee arrangement, and the vast majority of these individuals (97.1%) considered them- selves noncontingent. The most prevalent alternative was to work as an indepen- dent contractor (7.5%), followed by on- call employees and day laborers (1.7%), temporary help agency employees (.9%), and employees provided by a contract firm (.6%). The percentage of contingent employees in these alternative arrange- ments ranged from 3.4% (independent contractors) to 60.7% (temporary \�help employees). Unfortunately, there has not been a data collection effort on the use of alternative employment arrangements since 2005, but most indicators suggest that alternative employment arrangements have increased over time. Exhibit 3.4 shows several other workforce trends identified in a survey of 1,247 HR professionals. The cost of health care has long been an issue identified in this survey, which is conducted every two years. The aging workforce has also 0077862414_ch03_p089_150.indd 99 11/19/13 12:56 AM 100 part t wO Support Activities • Continuing high cost of health care in the United States •  Increased global competition for jobs, markets, and talent •  Growing complexity of legal compliance for employers •  Large numbers of baby boomers leaving the workforce at around the same time •  Economic growth of emerging markets •  Greater need for cross-cultural understanding in business settings exhibit 3.4 Major workforce t rends Source : J. Schramm, Workplace Forecast, 2011 (Alexandria,  VA: Society for Human Resource  Management, 2011). been an issue of note. More recent surveys focus on global issues such as interna- tional competition for talent as well as the economic growth of emerging markets. t echnology Changes in technology can influence the staffing planning process significantly.

In some cases, technology can serve as a substitute for labor by either eliminating or dramatically reducing the need for certain types of workers. The economy as a whole has shown decreased demand for positions like clerical workers, tele- phone operators, and manufacturing operators as technology has replaced labor as an input to production. Ironically, changes in software that have made com- puters easier for nonspecialists to use have eliminated many jobs in computer programming.

At the same time, technology can serve to create new jobs as new business opportunities emerge. In place of the jobs that are eliminated, demand for tech- nical occupations like robotics engineers, systems and database analysts, and software engineers has increased. The expansion of e-commerce and other Internet- based services has increased demand for those who design and manage websites. Increasing productivity as a result of technological change can also spur increased firm performance, which in turn will create more jobs. Often these new jobs will require a completely different set of KSAOs than previous jobs, mean- ing that increased staffing resources will have to be devoted to either retraining or replacing the current workforce. Research conducted in both the United States and Germany shows that computerization has led to an increase in the demand for highly educated specialists, leading to an overall increased market demand for skills in science and mathematics, which has led to dramatic increases i\�n wages for individuals with these skills. 16 Employers that adopt new technology for any aspect of their operations will also have to consider how to tap into labor markets that have these skills. 0077862414_ch03_p089_150.indd 100 11/19/13 12:56 AM Chapter three Planning 101 huMan resO urCe pL anning After a solid understanding of the internal and external environments has been acquired, a more detailed set of plans to address organizational needs in light of these environmental influences can be considered. Human resource planning (HRP) is a process and set of activities undertaken to forecast an organization’s labor demand (requirements) and internal labor supply (availabilities), to compare these projections to determine employment gaps, and to develop action plans for addressing these gaps. Action plans include planning to arrive at desired staffing levels and staffing quality.

A general model depicting the process of HRP is presented first, followed by an operational example of HRP. Detailed discussions of the major components of HRP are then given. 17 p rocess and example The basic elements of virtually any organization’s HRP are shown in Exhibit 3.5.

As can be seen, the HRP process involves four sequential steps:

1. Determine future HR requirements 2. Determine future HR availabilities 3. Reconcile requirements and availabilities—that is, determine gaps (shortages and surpluses) between the two 4. Develop action plans to close the projected gaps An example of HRP, including results from forecasting requirements and avail- abilities, is shown in Exhibit 3.6. The exhibit shows a partial HRP conducted by an organization for a specific unit (sales and customer service). It involves only two job categories (sales [A] and customer service [B]) and two hierarchical levels (1) Forecast Labor Requirements (3) Determine Gaps(4) Develop Action Plans (2) Forecast Labor Availabilities Compare exhibit 3.5 the basic elements of human r esource planning 0077862414_ch03_p089_150.indd 101 11/19/13 12:56 AM 102 part t wO Support Activities exhibit 3.6 Operational f ormat and example of h uman resource planning Organizational Unit:SalesandCustomer Ser\fice JobCategor\b and Le\fel Current Workforce Forecast forWorkforce— One Year Requirements A\failabilities Reconciliation and Gaps ActionPlanning A1(Sales) 100110 7139(shortage) Recruitment A2 (Sales manager) 2015227(surplus) Selection Employment B1 (Customer service representative) 200 250140110(shortage) Retention Compensation B2 (Customer service manager) 15 25 22 3 (shortage)Training and development 335 400255145(shortage) 0077862414_ch03_p089_150.indd 102 11/19/13 12:56 AM Chapter three Planning 103 for each category (entry level [1] and managerial level [2]). All of the HRP steps are confined to this particular organizational unit and its job categories/levels, as shown.The current workforce size (number of employees) is given for each job category/ level. Requirements and availabilities are predicted for one year, and the results are shown in the relevant columns. After the reconciliation process, final gap figures are agreed on and entered into the gap column. These gap data serve as the basic input to action planning. Because the gaps show both shortages and a surplus, and because the gaps vary in severity relative to the current workforce, a specific action plan will probably have to be devel- oped and implemented for each job category/level. The resulting four staffing (and other) plans should bring staffing into an orderly balance of requirements and availabilities over the course of the planning period. The above process and example identify and illustrate the rudiments of HRP.

Within them are several distinct components that require elaboration. We turn now to these components, emphasizing that each one represents a factor that must be considered in HRP and that specific choices must be made regarding the opera- tional details for each component. initial d ecisions Before HRP per se can be undertaken, several critical decisions must be made.

These decisions will shape the nature of the resultant HRP process, and \�they will influence the output of the process, namely, the gap estimates. The quality and potential effectiveness of the action plans developed from the gap estimates are thus at stake when these initial decisions are confronted and made.

strategic planning We have already discussed the need to integrate organizational strategy into the HRP process. In addition, the development of a strategy for HR should also be the first element of HRP. Several key decisions should be made before more concrete plans are considered. 18 First, a vision based on the overall organizational strategy should be developed. This often means deciding what values and core competen- cies all members of the organization should possess, and considering principles that will support these. Second, potential strategies for achieving planning process goals should be discussed. It is best at this point to think of whole sy\�stems of goals (e.g., integrate all KSAO information for the workforce and future planning needs) rather than specific concrete goals (e.g., conduct recruiting at a local college cam- pus). Too much focus on implementation details early in the strategic planning process can lead to a patchwork approach that involves elements that do not fit together well. Third, contingency plans should be developed and considered. For example, what happens if certain key employees leave the organization? What hap- pens if there is a change in the economy that reduces the supply of need\�ed KSAOs 0077862414_ch03_p089_150.indd 103 11/19/13 12:56 AM 104 part t wO Support Activities in the labor market? Use of simulation software that shows potential future out- comes for a variety of actions and responses is one way to evaluate the likelihood of potential worst- case scenarios and plan for how to respond should they arise.

Fourth, methods for obtaining feedback relative to goals and objectives should be in place. This is a crucial stage, as it involves specifying the types of data that will be used to determine whether the planning process is successful or \�whether changes need to be made. HRP can be performed on a plan- basis, project- basis, or population- basis. When HRP takes place as an integral part of an organization’s strategic planning process, it is referred to as plan- based HRP. This is a wise approach because it helps inte- grate the organization’s strategic planning process with HR implications. However, not all important business developments are captured in formal business plans, par - ticularly if they occur rapidly or unexpectedly. Organizational responses to these changes that occur in the form of special projects, rather than in chang\�es to the total business plan, are referred to as project- based HRP. In addition, many organi- zations do HRP outside the formal planning cycle for critical groups of employees on a regular basis. This often occurs for jobs in which there are perennial shortages of employees. Planning focused on a specific employee group is referred to as population- based HRP.

planning time frame Since planning involves looking into the future, the logical question for an orga- nization to ask is, How far into the future should our planning extend? Typically, plans are divided into long term (three years and more), intermediate (one to thr\�ee years), or short term (one year or less). Organizations vary in their planning time frame, often depending on which of the three types of HRP is being under\�taken. For plan- based HRP, the time frame will be the same as that of the business plan. In most organizations, this is between three and five years for so- called stra- tegic planning and something less than three years for operational plannin\�g. Plan- ning horizons for project- based HRP vary depending on the nature of the projects involved. Solving a temporary shortage of, say, salespeople for the introduction of a new product might involve planning for only a few months, whereas planning for the start- up of a new facility could involve a lead time of two or more years.

Population- based HRP will have varying time frames, depending on the time nec- essary for labor supply (internal as well as external) to become available. As an example, for top- level executives in an organization, the planning time frame will be lengthy.

j ob Categories and Levels The unit of HRP and analysis is composed of job categories and hierarchical levels among jobs. These job category/level combinations, and the types and paths of employee movement among them, form the structure of an internal labor market. 0077862414_ch03_p089_150.indd 104 11/19/13 12:56 AM Chapter three Planning 105 Management must choose which job categories and hierarchical levels to use for HRP. In Exhibit 3.6, for example, the choice involves two jobs (sales and customer service) and two levels (entry and managerial) for a particular organizational unit.Job categories are created and used on the basis of the unit of analysis for whi\�ch projected shortages and surpluses are being investigated. Hierarchical levels should be chosen so that they are consistent with or identical to the formal organizational hierarchy. The reason for this is that these formal levels define employee promo- tions (up levels), transfers (across levels), and demotions (down levels). Having gap information by level facilitates planning of internal movement programs within the internal labor market. For example, it is difficult to have a systematic promotion- from-within program without knowing probable numbers of vacancies and gaps at various organizational levels.

head Count (Current w orkforce) The basic unit of analysis for workforce planning is not the number of employ- ees needed. Rather, to account for the amount of scheduled time worked by each employee, staffing needs are stated in terms of full- time equivalents (FTEs). To determine FTEs, simply define what constitutes full- time work in terms of hours per week (or other time unit) and count each employee in terms of scheduled hours worked relative to a full workweek. If full time is defined as 40 hours per week, a person who normally works 20 hours per week is counted as a .50 FTE, a person normally working 30 hours per week is a .75 FTE, and so on. It is also often advis\�- able to take current authorized vacancies into account when assessing head count.

r oles and r esponsibilities Both line managers and staff specialists (usually from the HR department) become involved in HRP, so the roles and responsibilities of each must be determined as part of HRP. Most organizations take the position that line managers are ultimately responsible for the completion and quality of HRP, but the usual practice is to have HR staff assist with the process. As noted previously, in an ideal situation there will be a constant flow of information among those involved in HRP, with line managers indicating how needs are expected to change, and HR staff describing the KSAO resources within and outside the organization that can be used to meet these needs in the future. The process begins with line staff evaluating their current capabilities and future needs based on strategic plans for the organization. The HR staff then takes the lead in proposing which types of HRP will be undertaken and when, and in mak- ing suggestions with regard to comprehensiveness, planning time frame, and job categories and levels. Final decisions on these matters are usually the prerogative of line management. Once an approach has been decided on, task forces of\� both line managers and HR staff are assembled to design an appropriate forecasting and action planning process and to do any other preliminary work. 0077862414_ch03_p089_150.indd 105 11/19/13 12:56 AM 106 part t wO Support Activities Once these processes are in place, the HR staff typically assumes responsibility for collecting, manipulating, and presenting the necessary data to line \�manage- ment and for laying out alternative action plans (including staffing plans). Action planning usually becomes a joint venture between line managers and HR staff, particularly as they gain experience with, and trust for, one another. f orecasting hr r equirements Forecasting HR requirements is a direct derivative of business and organizational planning. As such, it becomes a reflection of projections about a variety of fac- tors, such as sales, production, technological change, productivity improvement, and the regulatory environment. Many specific techniques may be used to forecast HR requirements; these are either statistical or judgmental in nature, and \�they are usually tailor- made by the organization. In forecasting future needs, it is essential to con- sider not just the status of the workforce but also the expected changes in needs due to strategic considerations. Forward- thinking HR experts note that data can inform HRP when it comes to prior needs and trends, but effective planning also entails con- sidering how changes in the internal and external environments will alter forecasts. 19 statistical t echniques A wide array of statistical techniques are available for use in HR forecasting.

Prominent among these are regression analysis, ratio analysis, trend analysis, time series analysis, and stochastic analysis. Brief descriptions of three of\� these tech- niques are given in Exhibit 3.7. The use of integrated workforce planning software, which can be combined with data from other organizational databases, has made it easier to use these sta- tistical techniques than it was in the past. As we noted earlier, HR practitioners are also increasingly expected to support their proposals and plans with hard data. The three techniques shown in Exhibit 3.7 have different strengths and weaknesses, as we will see. We present these approaches in order from those requiring the least data collection to those requiring the most. Trend analysis is the simplest approach, because it uses data only on previous staffing levels over time to predict future needs. Trend analysis is useful when organizations have data mostly on historical staffing levels with less detailed infor - mation on specific predictors. The decomposition of data into specific time periods of demand is often used in health care and retail settings, where staffing levels vary greatly over the course of a year or even at different times of the day. The trend analysis approach implicitly assumes that the pattern of staffing needs in the past will be predictive of the future but does not take any external factors, like the overall state of the economy or product market demand, into account. Ratio analysis is a more sophisticated approach that uses data from prior sales figures or other operational data to predict expected head count. In the example in Exhibit 3.7, estimates of sales growth are used to predict how many employees will 0077862414_ch03_p089_150.indd 106 11/19/13 12:56 AM Chapter three Planning 107 (B)Ratio Analysis 1. Examine historical ratiosinvolving wor\fforce size.

$ sales \bo.ofnew customers ?

?

:

e l p m a x E 1.0FTE 1.0FTE 2. Assume ratiowillbetrue infuture.

3. Use ratio topredict futureHRrequirements.

Example: (a)$40,000 sales 1.0FTE (b) Sales forecastis$4,000,000 (c) HR requirements 100FTEs (C) Regression Analysis 1. Statistically identifyhistorical predictors ofwor\fforce size.

2. Only useequations withpredictors foundtobe statistically significant.

3. Predict futureHRrequirements, usingequation.

Example: (a)FTEs 7.0004 sales .02new customers (b) Projected sales$1,000,000 Projected newcustomers 300 (c) HR requirements 7400 6413 Example: FTEsabsales bnew customers 1 2 (A)Trend Analysis 1. Gather data on sta\wffing levels over \wtime and arrange i\wn a spreadsheet with one colum\wn for employment l\wevels and another \wcolumn for time .

2. Predict trend in e\wmployee demand by \wfitting a line to \wtrends in historic\wal staffing leve\wls over time (this\w can be done by us\wing regression or \wgraphical methods in mo\wst spreadsheet pro\wgrams). 3. Calculate period d\wemand index by div\widing each period’\ws demand by the average a\wnnual demand. Example: January demand ind\wex = Avg. January \wFTE/Avg. annual FT\wE Example: A retail store fin\wds that the averag\we number of employ\wees over the past five\w years has been 14\w2, 146, 150, 155, a\wnd 160. This represents a consi\wstent 3% increase \wper year; to predi\wct the next year’s\w average demand, mu\wltiply 160 by 1.03\w to show a 3% expec\wted increase. Over thi\ws same time period\w, it averaged 150 \wFTEs per month, with an average of \w200 FTEs in Decembe\wr. This means the \wDecember demand index is 200\w/150 = 1.33, so it\ws estimate for nex\wt year’s December FTE deman\wd will be (160 × 1.\w03) × 1.3 = 219 FTE\ws. 4. Multiply the previ\wous year’s FTEs by\w the trend figure,\w then multiply thi\ws figure by the\w period’s demand i\wndex. is past ratio exhibit 3.7 examples of statistical techniques to f orecast hr requirements 0077862414_ch03_p089_150.indd 107 11/19/13 12:56 AM 108 part t wO Support Activities be needed. This technique is useful for incorporating data from other functional areas to predict the future. However, this model cannot directly account for any changes in technology or skill sets that might change these ratios.

The regression analysis technique can be used with historical predictors and c\�an make more statistically precise estimates of future expectations by taking several factors into account simultaneously. In the example, sales data and new customer data from organizational records are used to predict staffing needs in the past. Then the estimates from these predictions are combined with projections for t\�he future to generate future FTE requirements. This procedure is more thorough than the ratio analysis approach, which incorporates only a single predictor of workforce size.

However, collecting enough data to make good estimates can be time- consuming and requires judgment calls.

judgmental t echniques Judgmental techniques represent human decision- making models that are used for forecasting HR requirements. Unlike statistical techniques, judgmental techniques use a decision maker who collects and weighs the information subjectively and then turns it into forecasts of HR requirements. The decision maker’s forecasts may or may not agree very closely with those derived from statistical techniques. This is not necessarily a weakness of either approach. Ideally, the precision of statistical techniques should be coupled with on- the-ground knowledge represented by judg- mental techniques to provide estimates that have both rigor and relevance. Implementation of judgmental forecasting can proceed from either a top- down or bottom- up approach. In the former, top managers of the organization, organi- zational units, or functions rely on their knowledge of business and organizational plans to predict what future head counts should be. At times, these projections may, in fact, be dictates rather than estimates, necessitated by strict adherence\� to the business plan. Such dictates are common in organizations undergoing signifi- cant change, such as restructuring, mergers, and cost- cutting actions.

In the bottom- up approach, lower- level managers make initial estimates for their unit (e.g., department, office, or plant) on the basis of what they have been told or presume are the business and organizational plans. These estimates are then con- solidated and aggregated upward through successively higher levels of management.

Then, top management establishes the HR requirements in terms of numbers\�.

scenario planning Scenario planning is a technique that has been explored in a variety of fields to predict future outcomes in an uncertain environment. 20 The previous methods we have described are all designed to give a specific estimate for the number of people who will be needed in the organization in the future. Scenario planning provides a range of estimates based on various possible changes in the external and internal environments. For example, ratio analysis uses forecasts of future product demand 0077862414_ch03_p089_150.indd 108 11/19/13 12:56 AM Chapter three Planning 109 to predict how many FTEs will be required; in our example in Exhibit 3.7, 100 FTEs will be required based on sales forecasts. Scenario planning provides a range of possible FTE requirements based on a variety of potential product demand levels; thus, three distinct estimates of FTE requirements will be developed for worst- case, expected, and best- case demand levels.

The advantage of scenario planning is that it allows HRP to incorporate uncer - tainty and prepare for the unexpected. Because it explicitly acknowledges ways that the future might be different from the past, it also incorporates judgmental tech- niques. Considering all the complex factors that go into various scenarios is often challenging, so simulation software is often part of the process. These programs allow managers to change various features of a situation to see how an outcome (in this case, projected FTEs) will change. Evidence suggests that the proc\�ess of doing scenario planning can change the ways decision makers think by promoting more holistic views of a problem that incorporate a wide range of factors. 21 f orecasting hr a vailabilities In Exhibit 3.6, head- count data are given for the current workforce and their avail- ability as forecast in each job category/level. These forecasted figures take into account movement into and out of each job category/level and exit from the orga- nizational unit or the organization. Described below are three approaches for fore- casting availabilities: manager judgment, Markov Analysis, and replacement and succession planning.

Manager judgment Individual managers may use their judgment to make availability forecasts for their work units. This is especially appropriate in smaller organizations or in ones that lack centralized workforce internal mobility data and statistical forecasting capabili- ties. Continuing the example from Exhibit 3.6, assume the manager is asked to make an availability forecast for the entry sales job category A1. The template to follow for making the forecast and the results of the forecast are shown in Exhibit 3.8. To the current staffing level in A1 (100) is added likely inflows to A1 (10), and then likely outflows from A1 (37) are subtracted to yield the forecasted staffing availability (73). Determining the inflow and outflow numbers requires judgmental estimates as to the numbers of promotions, transfers, demotions, and exits. As shown at the bottom of Exhibit 3.8, promotions involve an upward change of job level within or between job categories, transfers are lateral moves at the same job level across job categories, and demotions are downward changes of job level within or between job categories. Separate forecasts may be done for the other job category/levels (A2, B1, and B2). To provide reliable estimates, the manager must be very knowledgeable about both organizational business plans and individual employee plans or preferences for 0077862414_ch03_p089_150.indd 109 11/19/13 12:56 AM 110 part t wO Support Activities staying in their current job versus moving to another job. Knowledge of business plans will be helpful in judging the likely internal mobility opportunities for employ- ees. Business expansion, for example, will likely mean expanding internal mobility opportunities. Knowledge of employee plans or preferences will help pinpoint which employees are likely to change jobs or leave the work unit or organization.

The estimated staffing availability (n = 73) in Exhibit 3.8 coincides closely with the availability estimate (n = 71) derived from forecasting based on Markov Analy- sis results, discussed below. This is intentional. Markov Analysis uses historical mobility data and probabilities to forecast future availabilities, while managers’ judgment uses current knowledge of business and employees’ plans to forecast employee movements person by person. Results from these two approaches to availability forecasts will not necessarily coincide, but they can be quite close if the manager is knowledgeable about past mobility patterns, employee mobility inten- tions, and mobility opportunities. A major problem with using manager judgment to forecast availabilities is that the manager may lack the necessary business plan and employee intention infor - mation to provide solid estimates, as opposed to casual guesstimates. In addition, if there are large numbers of employees and job category/levels in the work unit, the sheer complexity of the forecasting task may overwhelm the manager. Markov Analysis presents a way out of this dilemma, since it substitutes historical data about internal mobility and exit rates for the manager’s judgment as a basis for making availability forecasts, and it simultaneously considers all types of possi\�ble employee movement in the forecasts.

Markov analysis Markov Analysis is used to predict availabilities on the basis of historical pat- terns of job stability and movement among employees. Consider again the four job category/levels (A1, A2, B1, and B2) in the sales and customer service unit in T ime 1 Current Staffing Level 100 Time 2 Forecasted Staffing A vail. 73 Inflows Promotion 0 T ransfer 9 Demotion 1 Outflows Promotion 10 T ransfer 15 Demotion 0 Exit 12 Job Category/Level: Sales (A1) exhibit 3.8 Manager f orecast of f uture hr availabilities Note : Promotion is  A1 to A2, A1 to B2, B1 to B2, or B1 to  A2; transfer is A1 to B1, A2 to B2, B1 to  A1,  or B2 to  A2; demotion is  A2 to A1, A2 to B1, B2 to B1, or B2 to  A1. 0077862414_ch03_p089_150.indd 110 11/19/13 12:56 AM Chapter three Planning 111 Exhibit 3.6. Note that between any two time periods, the following possibilities exist for each employee in the internal labor market:1. Job stability (remain in A1, A2, B1, or B2) 2. Promotion (move to a higher level: A1 to A2, A1 to B2, B1 to B2, or B1 to A2) 3. Transfer (move at the same level: A1 to B1, B1 to A1, A2 to B2, or B2 to A2) 4. Demotion (move to a lower level: A2 to A1, A2 to B1, B2 to B1, or B2 to A1) 5. Exit (move to another organizational unit or leave the organization) These possibilities may be thought of in terms of flows and rates of flow or move- ment rates. Past flows and rates may be measured and then used to forecast the future availability of current employees, based on assumptions about the extent to which past rates will continue unchanged in the future. For example, if it is known that the historical promotion rate from A1 to A2 is .10 (10% of A1 employees are promoted to A2), we might predict that A1 will experience a 10% loss of employees due to promotion to A2 over the relevant time period. To conduct Markov Analysis we must know all of the job stability, promotion, transfer, demotion, and exit rates for an inter - nal labor market before we can forecast future availabilities. The elements of Markov Analysis are shown in Exhibit 3.9 for the organiza- tional unit originally presented in Exhibit 3.6. Refer first to part A of Exhibit 3.9, where movement rates between two time periods (T and T+1) are calculated for four job category/level combinations. This is accomplished as follows. For each job category/level, take the number of employees at time period T, and use this number as the denominator for calculating job stability and move- ment rates. Next, for each of these employees, determine which job category/ level they were employed in at T+1. Then, sum up the number of employees in each job category/level at T+1, and use these as the numerators for calculat- ing stability and movement rates. Finally, divide each numerator separately by the denominator. The result is the stability and movement rates expressed as proportions, also known as transition probabilities. The rates for any row (job category/level) must add up to 1.0. For example, consider job category/level A1. Assume that at time T in the past, A1 had 400 people. Further assume that at T+1, 240 of these employees were still in A1, 40 had been promoted to A2, 80 had been transferred to B1, 0 had been promoted to B2, and 40 had exited the organizational unit or the organization. The resulting transition probabilities, shown in the row for A1, are .60, .10, .20, .00, and .10. Note that these rates sum to 1.00. By referring to these figures, and the remainder of the transition probabilities in the matrix, an organization can begin to understand the workings of the unit’s inter - nal labor market. For example, it becomes clear that 60%–80% of employees experi- enced job stability and that exit rates varied considerably, ranging from 10% to 35%.

Promotions occurred only within job categories (A1 to A2, B1 to B2), not between 0077862414_ch03_p089_150.indd 111 11/19/13 12:56 AM 112 part t wO Support Activities job categories (A1 to B2, B1 to A2). Transfers were confined to the lower of the two levels (A1 to B1, B1 to A1). Only occasionally did demotions occur, and only within a job category (A2 to A1). Presumably, these stability and movement rates reflect specific staffing policies and procedures that were in place between T and T+1.

With these historical transitional probabilities, it becomes possible to \�forecast the future availability of the current workforce over the same time interval, T and T+1, assuming that the historical rates will be repeated over the time interval and that staffing policies and procedures will not change. Refer now to part B of Exhibit 3.9.

To forecast availabilities, simply take the current workforce column and multiply it by the transition probability matrix shown in part A. The resulting availability figures (note these are the same as those shown in Exhibit 3.6) appear at the bottom of the columns: A1 = 71, A2 = 22, B1 = 140, and B2 = 22. The remainder of the current workforce (80) is forecast to exit and will not be available at T+1.

Limitations of Markov Analysis. Markov Analysis is an extremely useful way to capture the underlying workings of an internal labor market and then use the results to forecast future HR availabilities. It is, however, subject to some limita- tions that must be kept in mind. 22 The first and most fundamental limitation is that of sample size, or the number of current workforce employees in each job category/level. As a rule, it is desirable to have 20 or more employees in each job category/level. Since this number serves as the denominator in the calculation of transition probabilities, with small sample sizes there can be substantial differences in the values of transition probabilities, A. Transition Probability Matrix Job Category andLevel A1A2T 1 B1 B2Exit 0 1 .

0 0 .

0 2 .

0 1 .

0 6 .

1 A 5 3 .

0 0 .

0 0 .

0 6 .

5 0 .

2 A T 0 3 .

5 0 .

0 6 .

0 0 .

5 0 .

1 B 0 2 .

0 8 .

0 0 .

0 0 .

0 0 .

2 B B. Forecast ofAvailabilities Current Workforce A1 1006010 20 0 A2 20112 00 B1 200100120 10 B2 150 0 0 12 7122140 22 exhibit 3.9 use of Markov analysis to f orecast availabilities 0077862414_ch03_p089_150.indd 112 11/19/13 12:56 AM Chapter three Planning 113 even though the numerators used in their calculation are not that different (e.g., 2/10 = .20 and 4/10 = .40). Thus, transition probabilities based on small samples yield unstable estimates of future availabilities.A second limitation of Markov Analysis is that it does not detect multiple moves by employees between T and T+1; it only classifies employees and counts their movement according to their beginning (T) and ending (T+1) job category/level, ignoring any intermittent moves. To minimize the number of undetected multiple moves, therefore, it is necessary to keep the time interval relatively short, prefer - ably no more than two years. A third limitation pertains to the job category/level combinations created to serve as the unit of analysis. These must be meaningful to the organization for the HRP purposes of both forecasting and action planning. Thus, extremely broad categories (e.g., managers or researchers) and categories without any level desig- nations should be avoided. Note that this recommendation may conflict somewhat with organizations with a non- bureaucratic or team- based structure.

Finally, the transition probabilities reflect only gross, average employee move- ment and not the underlying causes of the movement. Stated differently, all employ- ees in a job category/level are assumed to have an equal probability of movement.

This is unrealistic because organizations take many factors into account (e.g., seniority, performance appraisal results, and KSAOs) when making movement decisions about employees. Because of these factors, the probabilities of move- ment may vary among specific employees.

individual internal f orecasts Both the managerial judgment and Markov Analysis approaches are designed to esti- mate future internal HR availabilities for large numbers of employees. Replacement and succession planning focus on identifying individual employees who will be con- sidered for promotion, along with a thorough assessment of their current\� capabilities and deficiencies, coupled with training and development plans to erase any defi- ciencies. Through replacement and succession planning, the organization constructs internal talent pipelines that ensure steady and known flows of qualified employees to higher levels of responsibility and impact. Replacement planning precedes suc- cession planning, and the organization may choose to stop at just replacement plan- ning rather than proceeding into the more complex succession planning process. 23 Replacement and succession planning can occur at any and all levels of the organization. They are most widely used at the management level, starting with the chief executive officer and extending downward to the other officers or top managers. They can also be used throughout the entire management team, includ- ing the identification and preparation of individuals for promotion into entry- level management. They may also be used for linchpin positions—ones that are critical to organization effectiveness (such as senior scientists in the research and devel- opment function of a technology- driven organization) but not necessarily housed within the management structure. 0077862414_ch03_p089_150.indd 113 11/19/13 12:56 AM 114 part t wO Support Activities Replacement Planning. Replacement planning focuses on identifying indi- vidual employees who will be considered for promotion and thoroughly assess- ing their current capabilities and deficiencies. Training and development plans to improve the fit between capabilities and requirements are also developed. The focus is thus on both the quantity and the quality of availability. The results of replacement planning are shown on a replacement chart, an example of which is shown in Exhibit 3.10. The chart is based on the previous sales–customer service unit in Exhibit 3.6. The focus is on replacement planning for the sales manager (A2) from the ranks of sales associates (A1) as part of the organization’s “grow your own,” promotion- from-within HR strategy. The top part of the chart indicates the organizational unit and jobs covered by replacement planning, as well as the minimum criteria for promotion eligibility. The next part shows the actual replace- ment chart information for the incumbent department manager (Woo) and the two eligible sales associates (Williams and Stemke) in the menswear department at the Cloverdale store. The key data are length of service, overall performance rating, and promotability rating. When the incumbent sales manager (Woo) is promoted to group sales manager, both sales associates will be in the promotion pool. Williams will likely get the position because of her “ready now” promotability rating. Given his relatively short length of service and readiness for promotion in less than one\� year, Stemke is probably considered a “star” or a “fast tracker” whom the organiza- tion will want to promote rapidly. Similar replacement charts could be developed for all departments in the store and for all hierarchical levels up to and including store manager. Replacement chart data could then be aggregated across stores to provide a corporate composite of talent availability. The process of replacement planning has been greatly accelerated by huma\�n resources information systems (HRISs). Many HRISs make it possible to keep data on KSAOs for each employee based on job history, training, and outside education. Software also allows organizations to create lists of employees who are ready to move into specific positions, and to assess potential risks that manag- ers or leaders will leave the organization. The ability to keep track of employees across the organization by standardized inventories of skill sets means that staffing managers will be able to compare a variety of individuals for new job assignments quickly and consistently. A large database of candidates also makes it possible to seek out passive internal job candidates who are not actively looking for job changes but might be willing to take new positions if offered. Many organizations that use integrated database systems to track candidates across a variety of loca- tions report they are able to consider a larger pool of candidates than they would with a paper- based system. Some HRISs automatically alert HR when key posi- tions become open, and thus the process of finding a replacement can get under way quickly. The development of comprehensive replacement planning software is typically quite expensive, with costs reaching hundreds of thousands of dol- lars. The software is probably most useful for large organizations that are able to capitalize on the costs of a large system. However, smaller organizations may 0077862414_ch03_p089_150.indd 114 11/19/13 12:56 AM Chapter three Planning 115 OrganizationalUnit:Merchandising—\foft Goods Re\blacement for:De\bartment \falesManager (A2) Pi\belines forRe\blacement: De\bartment\fales(A1)—\breferred; ExternalHire—last resort Minimum EligibilityRequirements: Two years’ full-ti\—me sales ex\berience\—; overall \berforman\—ce rating of “exce\—eds ex\bectations”; \bromotabilityratingof“ready now”or“ready in<1yr.” De\bartment: Menswear \ftore: Cloverdale Incumbent Manager Years in Job Overall Performance Rating \fengWoo 7 Exceedsex\bectations Meetsex\bectations Below ex\bectations X Promote to PromotabilityRating Grou\b\falesManager Ready now Readyin<1yr.

Ready in1–2 yrs.

Not\bromotable X Replacement Years in Job Overall Performance Rating \fhantaraWilliams 8 Exceedsex\bectations Meetsex\bectations Below ex\bectations X Promote to PromotabilityRating \falesManager Ready now Readyin<1yr.

Ready in1–2 yrs.

Not\bromotable X Replacement Years in Job Overall Performance Rating Lars\ftemke 2 Exceedsex\bectations Meetsex\bectations Below ex\bectations X Promote to PromotabilityRating \falesManager Ready now Readyin<1yr.

Ready in1–2 yrs.

Not\bromotable X exhibit 3.10 replacement Chart example 0077862414_ch03_p089_150.indd 115 11/19/13 12:56 AM 116 part t wO Support Activities find it possible to create their own databases of skills as a means of facilitating the internal replacement process. 24 Succession Planning. Succession plans build on replacement plans and directly tie into leadership development. The intent is to ensure that candidates for promotion will have the specific KSAOs and general competencies required for success in the new job. The key to succession planning is assessing each promotable employee for KSAO or competency gaps, and where there are gaps, creating employee training and development plans that will close the gap. A survey conducted by the Society for Human Resource Management showed that over half of HR professionals indicated that their organization had implemented some form of succession planning. 25 Continuing the example from replacement planning, Exhibit 3.11 shows a suc- cession plan for the two promotable sales associates. The organization has devel- oped a set of general leadership competencies for all managers, and for \�each management position (such as department sales manager), it indicates w\�hich of those competencies are required for promotion, in addition to the minimu\�m eli- gibility requirements. It is the focus on these competencies, and the de\�velopment plans to instill them in candidates for promotion who lack them, that differentiates replacement and succession planning. It can be seen that Williams, who is “ready now,” has no leadership compe- tency gaps, with the possible exception of an in- house training course on bud- get preparation and monitoring, which she is currently completing. Stemk\�e, while having “star” potential, must undertake development work. When he successfully completes that work, he will be promoted to sales manager as soon as possible.

Alternatively, he might be placed in the organization’s acceleration pool. This pool contains high- potential individuals like Stemke from within the organization who are being groomed for management positions generally, and for rapid acceleration upward, rather than progressing through the normal promotion paths. It should be noted that replacement and succession planning require mana\�g- ers’ time and expertise to conduct, both of which the organization must be will- ing to provide to those managers. Moreover, there must be effective performance appraisal and training and development systems in place to support replacement and succession planning. For example, overall performance and promotability rat- ings, plus assessment of competency gaps and spelling out development plans, could occur annually as part of the performance appraisal process conducted by management. In addition to identifying the skills needed immediately, succession plans should also identify skills needed in the future. Finally, promotability and development assessments require managers to make tough and honest decisions. A study of successful succession management in several Fortune 500 organizations concluded, “Succession management is possible only in an organizational culture that encourages candor and risk taking at the executive level. It depends on a will- ingness to differentiate individual performance and a corporate culture in which the truth is valued more than politeness.” 26 0077862414_ch03_p089_150.indd 116 11/19/13 12:56 AM Chapter three Planning 117 reconciliation and gaps The reconciliation and gap determination process is best examined by means of an example. Exhibit 3.12 presents intact the example in Exhibit 3.6. Attention is now directed to the reconciliation and gaps column. It represents the results of bringing together requirements and availability forecasts with the results of external and internal environmental scanning. Gap figures must be decided on and entered into the column, and the likely reasons for the gaps need to be identified.

Let’s first consider job category/level A1. A relatively large shortage is pro- jected due to a mild expansion in requirements coupled with a substantial drop in availabilities. This drop is not due to an excessive exit rate but to losses through promotions and job transfers (refer back to the availability forecast in Exhibit 3.9). For A2, decreased requirements coupled with increased availabilities lead to a projected surplus. Clearly, changes in current staffing policies and procedures will have to be made to stem the availability tide, such as a slowdown in the promotion Organizational Uni\st: Merchandising\fSo\sft Goods \bepartment: Menswea\sr Position to Be Fill\sed: \bepartment Sale\ss Manager (A2) Leadership Competen\scies Required Plan work u\snit activities Budget prep\saration and monito\sring Performance \smanagement of sales \sassociates Eligible Replacement Promotability Rating Competency Gaps \bevelopment Plans S. Williams Ready now Budget prep Budget prep Now completing in-\shouse training course L. Stemke Ready in < 1 year Plan work Shadowing sales man\sager Starting in-house t\sraining course Perf. mgt. Serving as sales man\sager 10 hours per week Taking course on pe\srformance management at univ\sersity extension exhibit 3.11 succession plan example 0077862414_ch03_p089_150.indd 117 11/19/13 12:56 AM 118 part t wO Support Activities exhibit 3.12 Operational f ormat and example of human r esource planning OrganizationalUnit:SalesandCustomer Ser\fice JobCategor\b and Le\fel Current Workforce Forecast forWorkforce— One Year Requirements A\failabilities Reconciliation and Gaps ActionPlanning A1(Sales) 100110 7139(shortage) Recruitment A2 (Sales manager) 2015227(surplus) Selection Employment B1 (Customer service representative) 200 250140110(shortage) Retention Compensation B2 (Customer service manager) 15 25 22 3 (shortage)Training and development 335 400255145(shortage) 0077862414_ch03_p089_150.indd 118 11/19/13 12:56 AM Chapter three Planning 119 rate into A2 from A1, or to accelerate the exit rate, such as through an early retire- ment program.Turning to B1, note that a huge shortage is forecast. This is due to a major surge in requirements and a substantial reduction in availabilities. To meet the shortage, the organization could increase the transfer of employees from A1. While this would worsen the already- projected shortage in A1, it might be cost effective and would beef up the external staffing for A1 to cover the exacerbated shortage. Alternately, a mas- sive external staffing program could be developed and undertaken for B1 alone. Or, a combination of internal transfers and external staffing for both A1 and B1 could be attempted. To the extent that external staffing becomes a candidate for consideration, this will naturally spill over into other HR activities, such as establishing starting- pay levels for A1 and B1. Finally, a very different strategy would be to develop and implement a major retention program for employees in customer service. For B2 there is a small projected shortage. This gap is so small, however, that for all practical purposes it can be ignored. The HRP process is too imprecise to warrant concern over such small gap figures. In short, the reconciliation and gap phase of HRP involves coming to grips with projected gaps and the likely reasons for them. Quite naturally, thoughts about future implications begin to creep into the process. Even in the simple example shown, it can be seen that considerable action will have to be contemplated and undertaken to respond to the forecasting results for the organizational unit. That will involve mixtures of external and internal staffing, with compensation as another likely HR ingredient. Through action planning, these possibilities become real. s taffing pL anning After the HRP process is complete, it is time to move toward the development of specific plans for staffing. This is a vital phase of the planning process, in which staffing objectives are developed and alternative staffing activities are generated.

The objectives are the targets the organization establishes to determine how many employees will be needed and in which job categories. The activities are the spe- cific methods, including recruiting and selection strategies, that will be used to meet these objectives. We devote special attention in this section to one of the most critical decisions made during staffing planning: Should the organization use a core workforce or a flexible workforce, or should parts of the workforce be outsourced? staffing planning p rocess staffing Objectives Staffing objectives are derived from identified gaps between requirements and availabilities. Thus, these objectives respond to both shortages and surpluses. They may require the establishment of quantitative and qualitative targets. 0077862414_ch03_p089_150.indd 119 11/19/13 12:56 AM 120 part t wO Support Activities Quantitative targets should be expressed in head count or FTE form for each job category/level and will be very close in magnitude to the identified gaps. Indeed, to the extent that the organization believes in the gaps as forecast, the objectives will be identical to the gap figures. A forecast shortage of 39 employees in A1, for example, should be transformed into a staffing objective of 39 accessions (or something close to it) to be achieved by the end of the forecasting time interval.

Exhibit 3.13 illustrates these points. For each cell, enter a positive number for head- count additions and a negative number for head- count subtractions.

Qualitative staffing objectives refer to the qualities of people in KSAO- type terms. For external staffing objectives, these may be stated in terms of averages, such as average education level for new hires and average scores on ability tests.

Internal staffing objectives of a qualitative nature may also be established. These may reflect desired KSAOs in terms of seniority, performance appraisal record over a period of years, types of on- and off- the-job training, and so forth.

The results of replacement and succession planning, or something similar\� to that, will be very useful to have as well.

generating alternative staffing a ctivities With quantitative and, possibly, qualitative objectives established, it is necessary to begin identifying possible ways of achieving them. At the beginning stages of generating alternatives, it is not wise to close the door prematurely on any of them.

Exhibit 3.14 provides a full range of options for dealing with employee shortages and surpluses. As with previous planning processes, the focus is not on specific programs at this stage but rather on broad classes of potential activities. As shown in the exhibit, both short- and long- term options for shortages, involving a combination of staffing and workload management, are possible. Short- term options include utilizing current employees better (through more overtime, productivity Note :  The objective is to close each gap exactly.

Job Category and Level Gap Objectives New Hires Promotions TransfersDemotions ExitsTotal A1 A2 B1 B2 39 7 110 3 39 7 110 3 52 0 +140 +2 –6 +2 –5 +4 –3 –8 –3 –1 0 0 –2 0 –4 –1 –20 –2 + + + + – – – – exhibit 3.13 setting numerical staffing Objectives 0077862414_ch03_p089_150.indd 120 11/19/13 12:56 AM Chapter three Planning 121 exhibit 3.14 staffing alternatives to deal with employee shortages and surpluses Employee shortage Long-term options Short-term options Recalls Hires Permanent in-transfers Retrain Transfer work out Increase overtime or part time Increase subcontracts Increase productivity Buy back vacation or holidays Temporary assignments Temporary hires Transfer work out Employee surplus Long-term options Short-term options Freeze hires and use attrition Permanent out-transfers Layoffs Retirement incentives Retrain Transferwork in Freeze hires and use attrition Reduce overtime or part time Transferwork in Reduce workweek Temporary shutdownor layoffs Excused absences Temporary assignments Retrain or train Accumulate surplus 0077862414_ch03_p089_150.indd 121 11/19/13 12:56 AM 122 part t wO Support Activities increases, and buybacks of vacation and holidays), outsourcing work to other orga- nizations (subcontracts, transferring work out), and acquiring additional employees on a short- term basis (temporary hires and assignments). Long- term options include staffing additional employees (recalling former employees, transferring in employ- ees from other work units, adding new permanent hires), enhancing skills (retrain- ing), and pushing work to other organizations (transferring work out).

assessing and Choosing alternatives As should be apparent, a veritable smorgasbord of alternative staffing activities are available to address staffing gaps. Each of these alternatives needs to be assessed systematically to help decision makers choose from among them. The goal of assessment is to identify one or more preferred activities. A preferred activity offers the highest likelihood of attaining the staffing objective within the time limit established, at the least cost or at a tolerable cost, and wi\�th the fewest negative side effects. A wide variety of metrics are available to assess potential activities. First, a common set of assessment criteria (e.g., time for completion, cost, and probability of success) should be identified and agreed on. Second, each alternative should be assessed according to each of these criteria. In this way, all alternatives will receive equal treatment, and tendencies to jump at an initial alter - native will be minimized. All of these alternatives must be considered within the broader context of how the organization creates and structures its workforce. This involves the key stra- tegic issue of core versus flexible workforce usage. The choice should be consid- ered in light of the organization’s staffing philosophy, in particular, the difference between an internal or external emphasis. Many of the staffing activity alternatives are more applicable to one type of workforce than another. Core w orkforce A core workforce, defined as regular full- time and part- time employees of the orga- nization, forms the bulk of most organizations’ workforces. The key advantages of a core workforce are stability, continuity, and predictability. The organization can depend on its core workforce and build strategic plans based on it. Several other advantages accrue to the organization from using a core workforce. The regularity of the employment relationship fosters a sense of commitment and shared purpose toward the organization’s mission. In addition, the organization maintains the legal right to control employees working in its behalf, in terms of both work process and expected results, rather than having to divide or share that right with organizations providing a flexible workforce, such as temporary employment agencies. Finally, the organization can directly control how it acquires its workforce and the quali- fications of those it employs through the management of its own staffing systems.

By doing so, the organization may build not only a highly qualified workforce but also one more likely to be retained, thus lessening pressure to continually restaff. 0077862414_ch03_p089_150.indd 122 11/19/13 12:56 AM Chapter three Planning 123 Several disadvantages of a core workforce exist. The implied permanence of the employment relationship “locks in” the organization’s workforce, with a potential loss of staffing flexibility to rapidly increase, reduce, or redeploy its workforce in response to changing market conditions and project life cycles. Reducing the core workforce, in particular, can be very costly in terms of severance pay pack- ages, low morale, and damage to the organization’s reputation as a good employer.

Additionally, the labor costs of the core workforce may be greater than that of the flexible workforce due to (1) higher wages, salaries, and benefits for the core workforce, and (2) the fixed nature of these labor costs, relative to the more vari- able costs associated with a flexible workforce. By using a core workforce, the organization incurs numerous legal obligations—particularly taxation and employ- ment law compliance—that could be fully or partially avoided through the use of flexible workforce providers, which would be the actual employer. Finally, use of a core workforce may deprive the organization of new technical and administrative knowledge that could be infused into it by use of flexible workers such as program- mers and consultants. Consideration of these numerous advantages and disadvantages needs to occur separately for various jobs and organizational units covered by the HR plan. In this way, usage of a core workforce proceeds along selective, strategic lines. Referring back to the original example in Exhibit 3.6, staffing planners should do a unique core workforce analysis for the sales and customer service unit, and within th\�at unit, for both sales and customer service jobs at the entry and manageri\�al levels.

The analysis may result in a decision to use only full- time core workers for the managerial jobs, both full- time and part- time core workers for sales jobs, and a combination of full- time core customer service representatives augmented by both full- time and part- time temporary customer service representatives during peak sales periods. Once the job and work unit locations of the core workers have been determined, specific staffing planning for effective acquisition must occur. This involves planning of recruitment, selection, and employment activities; these top- ics will be covered in subsequent chapters. flexible w orkforce The two major components of the flexible workforce are temporary employees provided by a staffing firm and independent contractors. Planning for usage of the flexible workforce must occur in tandem with core workforce planning; hence, it should begin with a review of the advantages and disadvantages of a flexible work- force. 27 The key advantage is staffing flexibility. The flexible workforce may be used for adjusting staffing levels quickly in response to changing technological or consumer demand conditions and to ebbs and flows of orders for products and ser - vices. Other flexibility advantages are the ability to quickly staff new areas or proj- ects and the ability to fill in for core workers absent due to illness, vacations, and holidays. Relative to the core workforce, the flexible workforce may also present 0077862414_ch03_p089_150.indd 123 11/19/13 12:56 AM 124 part t wO Support Activities labor cost advantages in the form of lower pay and benefits, more variable labor costs, and reduced training costs. It should be noted, however, that the temporary workforce provider shoulders many of these costs and simply passes them on to the organization through the fees it charges for its services. Another advantage for the organization is possibly being relieved of many tax and employment law obligations, since flexible workers are often not considered employees of the orga- nization. For temporary employees, however, the organization may be considered a co- employer subject to some legal obligations, especially pertaining to EEO. An emerging advantage is that the flexible workforce, especially in the professional and technical ranks, may be an important source of new knowledge about organi- zational best practices and new skills not present in the core workforce, especially “hot skills” in high market demand. In a related vein, organizations use temporary or interim top executives to fill in until a permanent hire is found and on board, to spur change, and to launch special projects requiring their expertise. 28 Finally, usage of a flexible workforce relieves the organization of the need to design and manage its own staffing systems, since this is done by the flexible workforce pro- vider. An added advantage here is that the organization might use flexible workers on a tryout basis, much like a probationary period, and then hire into its core work- force those who turn out to be a solid person/job match. Many temporary workers are “temp-to-perm,” meaning that the organization will hire them permanently if they perform successfully in the temporary role. Such an arrangement is usu\�ally negotiated up front with the staffing services company. These numerous advantages must be weighed against several potential disad- vantages. Most important is the legal loss of control over flexible workers because they are not employees of the organization. Thus, although the organization has great flexibility in initial job assignments for flexible workers, it is very limited in the amount of supervision and performance management it can conduct for \�them.

Exacerbating the situation, frictions between core and flexible workers may also arise. Core workers, for example, may feel that flexible workers lack knowledge and experience, are just “putting in time,” receive the easy job assignments, and do not act like committed team players. Also, flexible workers may lack familiarity with equipment, policies, procedures, and important customers; such deficiencies may be compounded by a lack of training in specific job requirements. Finally, it should be remembered that the quality of the flexible workforce depends heav- ily on the quality of the staffing and training systems used by the provider of the flexible workers. The organization may end up with flexible but poorly qualified workers. If the review of advantages and disadvantages of flexible workers confirms the strategic choice to use them in staffing, plans must be developed for the organiza- tion units and jobs in which they will be used, and for how they will be acquired.

Acquisition plans normally involve the use of staffing firms and independent con- tractors, both of which perform the traditional staffing activities for the organiza- tion. Hence, in contrast to the substantial and sustained staffing planning that must 0077862414_ch03_p089_150.indd 124 11/19/13 12:56 AM Chapter three Planning 125 occur for the core workforce, planning for the flexible workforce is primarily a matter of becoming knowledgeable about potential sources and lining them up in advance of when they will be needed.

staffing firms Recall that staffing firms (also called temporary help agencies) are the legal employers of the workers being supplied, though matters of co- employment may arise. Hence, the staffing firm conducts recruitment, selection, training, compensa- tion, performance appraisal, and retention activities for the flexible workers. The firm is also responsible for on- site supervision and management, as well as all payrolling and the payment of legally required insurance premiums. For such ser - vices, the firm charges the organization a general fee for its labor costs (wages and benefits) plus a markup percentage of labor costs (usually 40%–50%) to \�cover these services’ costs plus provide a profit. There may be additional charges for specially provided services, such as extra testing or background checks, or skill training. Temp- to-perm workers may be hired away from the firm (with its permis- sion and for a special fee) by the organization to become regular employees in the core workforce. For larger clients the firm may provide an on- site manager to help the organization plan its specific staffing needs, supervise and appraise the perfor - mance of the temporary workers, handle discipline and complaints, and facilitate firm–organization relations. With such additional staffing services, the firm func- tions increasingly like a staffing partner rather than just a staffing supplier. Use of a staffing firm requires advanced planning, rather than a panicky phone call to a firm at the moment of staffing need. In addition to becoming aware of firms that might be accessed, it is wise to become familiar with their characteristics and services. Shown in Exhibit 3.15 are the various factors and issues to become knowledgeable about for any firm. When the organization chooses a firm, both parties should enter into a formal written agreement. The agreement should cover such matters as specific services to be provided, costs, steps to ensure that the flexible workers are employees of the firm (such as having an on- site manager for them), and the process for terminat- ing the firm–organization relationship. It is best to have legal counsel prepare and review the agreement. The organization may decide to establish its own in- house staffing firm. When this is done, the employees of the firm may even be employees of the organiza- tion. Managers thus have readily available flexible workers to whom they can turn, without having to go through all the planning steps mentioned above.

independent Contractors An independent contractor (IC) provides specific task and project assistance to the organization, such as maintenance, bookkeeping, advertising, programming, and consulting. The IC can be a single individual (self-employed, freelancer) or an 0077862414_ch03_p089_150.indd 125 11/19/13 12:56 AM 126 part t wO Support Activities employer with its own employees. Neither the IC nor its employees are intended to be employees of the organization utilizing the IC’s services, and care should be taken to ensure that the IC is not treated as an employee (see Chapter 2). 29 As with staffing firms, the organization must take the initiative to identify and check out ICs for possible use in advance of when they are actually needed. It is desirable to solicit and examine references from past or current clients of the IC. In f actor issues Agency and Its Reputation    How long in business; location; references from clients  available.

Types of  Workers Provided  What occupation and KSAO levels; how many available.

Planning and Lead  Time   Does agency help client plan staffing levels and needs; how  quickly can workers be provided.

Services Provided   Recruitment    What methods are used; how targeted and truthful is  recruitment process.

  Selection  What selection techniques are used to assess KSAOs.

  Training    What types of training, if any, are provided before workers  are placed with client.

  Wages and Benefits  How are wages determined; what benefits are provided.

  Orientation    How does the agency prepare workers for assignment with  client; does agency have an employee handbook for its  workers.

  Supervision    How does agency supervise its workers on site of client;  does agency provide  on- site manager.

  Temp-to-Perm    Does agency allow client to hire its temporary workers as  permanent employees.

  Client Satisfaction    How does agency attempt to gauge client satisfaction with  services, workers, costs.

Worker Effectiveness   Punctuality and  Attendance   Does the agency monitor these; what is its record with  previous clients.

  Job Performance  Is it evaluated; how are the results used.

  Retention    How long do workers remain on an assignment voluntarily;  how are workers discharged by the agency.

Cost   Markup    What is the percentage over base wage charged to client  (often it is 50% to cover benefits, overhead, profit margin).

  For  Special  Services     What services cost extra beyond the markup (e.g., temp-   to-  perm); what are those costs. exhibit 3.15 f actors to Consider when Choosing a staffing firm 0077862414_ch03_p089_150.indd 126 11/19/13 12:56 AM Chapter three Planning 127 addition, as much as possible the organization should seek to determine how the IC staffs, trains, and compensates its employees. This could occur during a prelimi- nary meeting with the IC. In these ways, the organization will have cultivated and screened ICs prior to when they are actually needed. Outsourcing Outsourcing of work functions can be defined as the transfer of a business process to an external organization. This is a more drastic step than simply using ICs or tem- porary employees. The primary difference is that when processes are outsourced, the organization expects to receive a completely finished product from the external source. This means the organization does not direct or control the way in which work is performed; rather, it only receives the end result of the work. Within the HR department, it has become the norm for organizations to completely outsource payroll tasks, meaning that data from the organization are sent to a third- party ven- dor that assesses taxes and withholdings and takes care of either directly depositing or sending out paychecks for employees. 30 Organizations outsource for a variety of reasons. An obvious reason for out- sourcing of manufacturing and routine information- processing tasks is the avail- ability of less expensive labor in the global market. Often, specialized vendors can achieve economies of scale for routine tasks that are performed across a variety of organizations. Organizations also outsource functions that have highly cyclical demand so that they do not have to make major capital outlays and go through the cost of hiring and training permanent workers to perform tasks that may not be needed in the future. Sometimes organizations outsource functions that require specific expertise that cannot be economically generated in- house. Smaller orga- nizations that require legal services, for example, often choose to hire an external law firm rather than establish their own pool of legal specialists. As we have noted, many organizations also outsource routine business functions, such as having third- party vendors take care of payroll or benefits administration tasks.

One variant of outsourcing is termed “offshoring,” which means that products or services are provided by an external source outside of the country where the organization’s core operations take place. 31 The outsourcing of manufacturing to lower- wage countries has a long history, and this practice is likely to continue unabated. For example, in the computer industry it is common for large companies to have many subcomponent electronic parts manufactured by third- party vendors overseas, with final assembly of products performed domestically. Many compa- nies have outsourced routine computer programming and telephone help services to third- party providers in India because of the availability of a highly skilled labor force that typically draws only a fraction of the wages paid in North America.

Offshoring is no longer limited to blue- and pink- collar jobs. There has been a dramatic increase in offshoring white- collar technical and professional work in the twenty- first century, fueled by improvements in global education, an increasingly 0077862414_ch03_p089_150.indd 127 11/19/13 12:56 AM 128 part t wO Support Activities positive climate for business in China and India, and increased demand for prod- ucts and services in multinational organizations.

The decision to outsource is likely to be controversial. 32 Outsourcing is usu- ally done for activities that have low added value for the organization. Normal transactional or procedural work that is easily replicated is likely to be outsourced.

High- value-added operations that are core to the organization’s business strategy almost certainly should not be outsourced. Although most managers are aware that it is unwise to outsource work that is fundamental to a business’s core opera- tions, there are still many cases where organizations discover, too late, that they outsourced work that should have been done internally. Additionally, offshoring has been the focus of media and political scrutiny. Extremely low wages and dan- gerous working conditions provided by external partners in foreign countries have created a backlash against certain companies that have offshored manufacturing jobs. Negative press about poor working conditions in overseas “sweatshops” has been especially prominent in the clothing industry. When outsourcing, an organi- zation needs to make certain that it is not losing too much control over its major work processes. Just because a business process has been outsourced does not mean that the organization has lost the responsibility (and this sometimes includes legal liability) for the actions of external partners. diversit Y pLanning Diversity programs arise out of a recognition that the labor force is becom\�ing more demographically and culturally diverse. Diversity planning in staffing requires devel- oping a strategy to recruit and select a diverse group of employees. Another major focus of diversity programs is the assimilation and adaptation of a diverse workforce.

To foster workforce diversity and to help strengthen the diversity–organizational effectiveness link, organizations have designed and implemented a wide variety of diversity initiatives and programs. Many of these initiatives involve staffing, as a diverse workforce must be actively identified, acquired, deployed, and retained.

Most organizations supplement the staffing component of their diversity initiatives with many other programs, including diversity training for managers and employ- ees to heighten awareness and acceptance of diversity, mentoring relationships, work/life balance actions such as flexible work schedules, team building, and spe- cial career and credential- building job assignments. demography of the american w orkforce In part, organizations need to take diversity into account because the workforce has become more diverse. There has been a massive shift in the makeup of the American workforce over the past 30 years. 33 Once excluded from large portions of the workforce, women now make up half of the labor force, along with making 0077862414_ch03_p089_150.indd 128 11/19/13 12:56 AM Chapter three Planning 129 up a majority of university graduates. There has also been a dramatic increase in the ethnic and racial diversity of the workforce. Immigration into the United States has brought large numbers of Latinos and Asians, and the progress of civil rights legislation has removed previous barriers to employment faced by African Ameri- cans. Legislation and technology have combined to make accommodations that allow the entry of individuals with disabilities into the workforce more feasible.

The age diversity of the workforce has increased over time, as greater numbers of individuals continue working into their sixties and seventies. There has also been an increased presence of openly lesbian, gay, bisexual, and transgender (LGBT) employees in the workforce, which has been accompanied by numerous state and local statutes making sexual orientation and/or gender identity a protected class. 34 These shifts in the makeup of the workforce have permanently altered the require- ments for successful HR management. Surveys conducted by the Society for Human Resource Management suggest that managers are especially concerned about\� the loss of skills due to the retirement of baby boomers, increases in medic\�al expenses that arise as the workforce ages, and employee elder- care responsibilities. 35 A host of other issues have been identified as arising from demographic changes, including providing work- life benefits for dual- career couples and developing multilingual training materials for workers who primarily speak a language other than English. business Case for diversity There is a strong impetus for effectively managing a diverse workforce. In fact, many argue that above and beyond the ethical need to treat all employees fairly and with respect, there is a financial imperative to manage diversity effectively. 36 As we noted in the introductory chapter, there are two ways organizations can address issues related to diversity. In passive diversity planning, the organization reviews all policies and practices to ensure there is no discrimination on the basis of race, religion, national origin, gender, disability status, age, or other protected classes covered locally. In active diversity planning, the organization goes a step further by encouraging underrepresented groups to apply for positions, actively recruiting from a variety of sources that are likely to be seen by underrepresented groups, and providing additional training and mentoring to encourage the advancement of underrepresented groups. There are certain advantages to an active diversity management strategy.

Exhibit 3.16 illustrates ways in which an effective diversity management strat- egy can enhance organizational effectiveness in several domains. It should be noted that these are not speculative staffing outcomes—all are supported by prior research findings. In some areas, like legal compliance, the goal is to minimize negative consequences. However, the foundation of diversity management should be based on the potential advantages of effective diversity management. It is more productive for an organization to emphasize diversity management as an oppor - tunity for gain, rather than as a way of protecting against a threat. Emphasizing 0077862414_ch03_p089_150.indd 129 11/19/13 12:56 AM 130 part t wO Support Activities the positive impact that all workers will see when diversity is managed effec- tively will also enhance managerial motivation to implement diversity- oriented policies. 37 At the same time, there are costs associated with these active diversity efforts that must be considered, as additional recruiting, selection, and traini\�ng programs do not come for free. Empirical evidence suggests that despite the conceptual advantages of having more diverse points of view in work groups, demographi- cally diverse teams are not more effective than more homogenous teams. Active diversity efforts that are specifically directed to some groups of employees and not others may unintentionally send a message to members of the demographic \�major - ity that they are less welcome in the organization. Therefore, an organization needs to carefully consider how to engage in active diversity planning and select the right mix of passive and active strategies to maximize organizational effectiveness. planning for diversity Whether an organization adopts an active or passive diversity strategy, there are several ways that workforce diversity should be taken into account in the staff- exhibit 3.16 Making the business Case for diversity area of Concern effective diversity Management Legal and policy compliance • Avoids lawsuits •  Minimizes operational disturbances •  Prevents negative press due to government  investigations Staffing levels • Broadens base of candidates from which to select •  Increases diversity of employee KSAOs •  Improves potential to respond to environmental  change •  Improves retention of employees Employee attitudes and behavior • Enhances engagement •  Creates perceptions of justice •  Fosters cooperation and collaboration among  employees Product/service market • Increases insight into diverse customer groups’  preferences •  Heightens sensitivity in interacting with the public •  Improves relationships with communities and  regulatory agencies 0077862414_ch03_p089_150.indd 130 11/19/13 12:56 AM Chapter three Planning 131 ing planning process. First and foremost, top management must state that\� diver- sity goals are important and will be measured. 38 Clear communications regarding diversity strategies should be made, and updated frequently, to remind employees of the importance of nondiscrimination for the organization’s mission. Many recruiting activities can help enhance the diversity of the workforce.

One such activity is to advertise positions in media sources that target a variety of demographic groups. 39 Organizations that wish to increase the diversity of their workforce may also consider recruiting at colleges, universities, and other institu- tions that have large numbers of underrepresented minorities. These efforts can have a major impact on employee attitudes. Studies show that women and minori- ties prefer to work at companies that show a commitment to diversity in their recruiting efforts. Internally, organizational promotion efforts should target quali- fied members of underrepresented groups, possibly supplemented with mento\�ring programs to overcome gaps in skills. 40 There are also techniques that can incorporate diversity into the selection pro- cess. Requirements that might lead to lower representation of traditionally under - represented groups should be considered carefully, and eliminated when they are not absolutely necessary for job performance. Additionally, efforts to incorporate objective standards for judging candidate qualifications and policies that encour - age nondiscrimination have been shown to diminish the extent of discrimination in the hiring process. 41 Unfortunately, evidence suggests that many organizations do not take demo- graphic shifts in the workplace into account when developing staffing plans. Pro- grams to help dual- career couples manage work and child- care arrangements are implemented in a rather scattered fashion, with some organizations doing little to recognize the needs of such families. Other organizations have failed to adequately address the needs of employees with disabilities, even though disability rights advocates note that most accommodations are relatively inexpensive and do not affect core job tasks. Often, the needs of older workers are also overlooked. A sur - vey of over 700 organizations found that 77% of companies had not analyzed pro- jected retirement rates of their workforce or had done so to only a limited extent. 42 Similarly, data show that about a third of employers report that they do not have enough programs for the recruitment and training of older workers. 43 Research shows that diversity- oriented practices, including targeted recruitment, inclusion of women and African Americans on the top management team, work/ family accommodations, the creation of AAPs, and diversity councils, can increase the racial and gender diversity of the organization’s entire managerial workforce. 44 The effects of such practices on the composition of the nonmanagerial workforce are not well known, nor have the effects of these practices on organizational per - formance been documented. Similar programs with a strong behavioral component designed to improve the representation of individuals with disabilities and older workers should also be considered. It is interesting to note that while conc\�rete pro- grams like those mentioned above have been highlighted as improving workforce 0077862414_ch03_p089_150.indd 131 11/19/13 12:56 AM 132 part t wO Support Activities diversity, attitude- based diversity training interventions have not shown as much effectiveness.

the aging w orkforce A recent staffing challenge facing organizations (and individuals seeking employ- ment) is that of the aging workforce. It is estimated that the number of individuals who are 75 years old or older and still employed has increased by a whopping 76.7% over the past 20 years. Although many older individuals continued to work after the Great Recession out of financial necessity (many saw their retirement portfolios shrink to substandard levels), their continued push for employment, even as the economy has rebounded, is also due to other factors. Not only are people liv- ing longer, but many jobs are not as physically demanding as they were in previous generations, allowing individuals to work well past the traditional retirement age. Although the supply of older workers has sharply increased, demand has not, leading to higher unemployment. In 2007, 3.1% of US workers aged 65 or older were unemployed; in 2012, that number grew to 6.2%. From the perspective of the older worker, the statistics can be discouraging. From the perspective of the organization, the abundant supply means that it can have the “pick of the litter.” Older workers bring with them a multitude of experience and tacit, difficult to articulate knowledge from their previous professions. However, older workers are also frequently accompanied by myths and stereotypes that may influence \�employ- ers’ perceptions of their competence and potential for success. Such \�myths include perceptions that older workers are poorer performers, unmotivated, unhealthy, and resistant to change and skill acquisition. A recent meta- analysis of these stereo- types found that most are exaggerations. A general unwillingness to train on the part of older workers was the sole exception, as this stereotype was supported by the available data. Thus, the increasing number of older individuals seeking employment presents both opportunities and challenges for selection systems. 45 LegaL issues The major legal issues in HR and staffing planning are AAPs and diversity programs.

AAPs originate from many sources—voluntary employer efforts, court- imposed remedies for discriminatory practices, conciliation or consent agreement\�, and requirements as a federal contractor. Regardless of the source, all AAPs seek to rectify the effects of past employment discrimination by increasing the representa- tion of certain groups (minorities, women, and individuals with disabilities) in the organization’s workforce. This is achieved through establishing and actively pur - suing hiring and promotion goals for these groups. As described above, diversity programs are undertaken for competitive reasons, rather than as a legal response to discrimination. However, diversity programs may share components with AAPs. 0077862414_ch03_p089_150.indd 132 11/19/13 12:56 AM Chapter three Planning 133 This section describes the general content of AAPs, discusses the affirmative action requirements for federal contractors under AAP regulations, and provides some general indications as to the legality of AAPs and diversity programs. affirmative a ction plans AAPs are organization- specific plans that, as noted above, have a legal origin and basis. They precede diversity programs, which organizations typically undertake for strategic business reasons rather than legal ones. Often, however, the struc- ture and content of AAPs and diversity programs are very similar. While AAPs are organization specific, they all share a common architecture composed of three major components—availability analysis of women and minorities, placement (hir - ing and promotion) goals derived from comparing availability with incumbency (percentages of women and minority employees), and action- oriented programs for meeting the placement goals. These components, and accompanying details, are spelled out in the federal regulations put forth and enforced by the Office of Federal Contract Compliance Programs (OFCCP). The Federal Contractor Com- pliance Manual may also be consulted.

affirmative a ction programs r egulations All but very small federal contractors must develop and implement AAPs accord- ing to the OFCCP’s affirmative action regulations. Below are a summary of those regulations and a sample of an AAP for small employers from the OFCCP website.

The contractor must develop a separate AAP for each of its establishments with more than 50 employees. With advance approval from the OFCCP, the contractor may sidestep separate establishment plans by developing a functional plan that covers employees in discrete functional or business units, even though in differ - ent locations. All employees must be included in either AAP. The description that follows is for an establishment plan. It uses race, ethnicity, and job category des- ignations on the EEO-1 form (see Chapter 13). OFCCP race, ethnicity, and job category designations are somewhat different. Usage of either EEOC or OFCCP designations is acceptable.

Organization Display. An organization display depicts the staffing pattern within an establishment. It provides a profile of the workforce at the establish- ment, and it assists in identifying units in which women or minorities are under - represented. Key elements are a showing of organizational structure of lines of progression (promotion) among jobs or organization units, the total number of job incumbents, the total number of male and female incumbents, and the \�total number of male and female incumbents in each of the following groups: Hispanic and Latino, white, black or African American, Native Hawaiian or other Pacific Islander, Asian, American Indian or Alaskan Native, and two or more races. 0077862414_ch03_p089_150.indd 133 11/19/13 12:56 AM 134 part t wO Support Activities Job Group Analysis. Jobs with similar content, wage rates, and opportunities (e.g., promotion, training) must be combined into job groups, and each group must include a list of job titles. Small establishments (fewer than 150 employees) may use the categories on the EEO-1 form: executives/senior level officials and managers, first/mid-level officials and managers, professionals, technicians, sales workers, administrative support workers, craft workers, operatives, laborers and helpers, and service workers. The percentage of minorities and the percentage of women (determined in the previous step) employed in each job group must be indicated.

Availability Determination. The availability of women and minorities must be determined separately for each job group. At a minimum, the following two factors should be considered when determining availability:

1. The percentage of minorities or women with requisite skills in the reasonable recruitment area 2. The percentage of minorities or women among those promotable, transfer - able, and trainable within the organization Current census data, job service data, or other data should be consulted\� to deter - mine availability. When there are multiple job titles in a job group, with different availability rates, a composite availability figure for the group must be calculated.

This requires summing weighted availability estimates for the job titles. Exhibit 3.17 shows an example of availability determination for a single job group based on the EEO-1 form. Listed on the left are the two availability factors that must be considered. Shown next are the raw statistic availability estimates for females and minorities (summed across the four minority groups) for both of the availability factors (refer to the “Source of Statistics” column to see the sou\�rces of data for these estimates). Next, the value weights represent an estimate of the percentages of the total females and minorities available according to each avail- ability factor (50% for each group). The weighted statistics represent the raw sta- tistics multiplied by the value weight (e.g., 41.8% × .50 = 20.9%). A summing of the weighted statistics yields the total availability estimate percentages (47.6% for female, 18.1% for minority).

Comparison of Incumbency With Availability. For each job group, the per- centages of women and minority incumbents must be compared with their avail- ability. When the percentage employed is less than would reasonably be expected by the availability percentage, a placement goal must be established. Exhibit 3.18 compares incumbency with availability for eight job groups, includ- ing job group 1. The comparisons are shown separately for females and minorities.

Where incumbency is less than availability, it may be decided to establish a place- ment goal. In job group 1, it was concluded that the differences between availability 0077862414_ch03_p089_150.indd 134 11/19/13 12:56 AM Chapter three Planning 135 exhibit 3.17 determining a vailability of Minorities and w omen Source : Sample Affirmative  Action Program for Small Employers, 2004, www.dol.gov/ofccp. Job Group: 1 Raw StatisticsVa\fue Weig\btWeig\bted Statistics Reason for Weig\bting 1. Percentage of m\Vinorities or women wit\b requi\Vsite ski\f\fs in t\be reasona\Vb\fe recruitment area 2. Percentage of m\Vinorities or women among t\bos\Ve promotab\fe, transfe\Vrab\fe, and trainab\fe wit\bi\Vn t\be contractor’s organi\Vzation 2000 Census Data T\be reasonab\fe recruitment area for t\bis job group is t\be St. Louis, MO–IL metropo\fitan statistica\f area (MSA).

50% of p\facement into t\bis job group is made from externa\f \bires.

50% of p\facement into t\bis job group is made from interna\f promotions.

T\be group of promotab\fe emp\foyees in job group 2 41.8% 9.4% 50.0%20.9%4.7% 53.3% 26.7% 50.0%26.7%13.4% Fema\fe Minority Fema\fe Minority r o t c a F \f a n i F < % 0 0 1 :

s \f a t o T 47.6%18.1% Job Group: 1 Va\fue Weig\bt Statistics Source of 0077862414_ch03_p089_150.indd 135 11/19/13 12:56 AM 136 part t wO Support Activities Job Group Female Incumbency Female Availability Establish Goal? Yes/No If Yes, Goal for Females Minority Incumbency Minority Availability Establish Goal? Yes/No If Yes, Goal for Minorities 1 2 4 5 6 7 8 0.0% 45.5% 20.0% 83.3% 9.3% 10.0% 6.3% 47.6% 43.8% 34.5% 87.7% 5.5% 6.3% 19.1% 47.6% 34.5% 19.1% Yes No Yes No No No Yes 11.1% 18.2% 0.0% 43.3% 34.9% 30.0% 37.5% 18.1% 8.2% 12.4% 27.6% 23.2% 37.5% 26.3% 18.1% 12.4% Yes No Yes No No No No exhibit 3.18 d etermining affirmative a ction goals: Comparing incumbency with a vailability and annual placement goals Note : The 80% rule of thumb is followed in declaring underutilization and establishing goals when the actual employment of minorities  or females is less than 80% of their availability. If the female/minority incumbency percentage (%) is less than the female/minority  availability percentage (%) and the ratio of incumbency to availability is less than 80%, a placement goal should be included in the  appropriate “If  Yes” column.  Source : Sample Affirmative  Action Program for Small Employers, 2004, www.dol.gov/ofccp. 0077862414_ch03_p089_150.indd 136 11/19/13 12:56 AM Chapter three Planning 137 and incumbency percentages for both females and minorities were sufficient to warrant placement goals (47.6% for females and 18.1% for minorities). N\�ote that an incumbency percentage less than an availability percentage does not automati- cally trigger a placement goal (e.g., females in job group 5).How does the organization decide whether to set a placement goal for females or minorities in a job group? The OFCCP permits some latitude. One possibility is to set a placement goal whenever incumbency is less than availability, on the the- ory that any differences between availability and incumbency represent underuti- lization of females and minorities. A second possibility is based on the theory that some differences in percentages are due to chance, so some amount of tolerance o\�f differences is permissible. The suggested rule is 80% tolerance. This means that if the ratio of incumbency percentage to availability percentage is greater than 80%, no placement goal is needed. If the ratio is less than 80%, a placement \�goal must be set. The 80% rule was followed in Exhibit 3.18. Though the incumbency per - centage for females was less than the availability percentage in both job groups 1 and 5, the difference was less than 80% in only job group 1, triggering a placement goal just for that group.

Placement Goals. If an annual placement goal is set, it should at least equal the availability percentage for women or minorities in a job group. Placement goals may not be rigid or inflexible quotas; quotas are expressly forbidden. Placement goals do not require hiring a person who lacks the qualifications to perform the job successfully, or hiring a less qualified person in preference to a more qualified one.

Designation of Responsibility. An official of the organization must be desig- nated as responsible for the implementation of the AAP.

Identification of Problem Areas. The organization must evaluate the following:

1. Problems of minority or female utilization or distribution in each job group 2. Personnel activity (applicant flow, hires, terminations, and promotions) and other personnel actions for possible selection disparities 3. Compensation systems for possible gender-, race-, or ethnicity- based disparities 4. Selection, recruitment, referral, and other procedures to see whether th\�ey result in disparities in employment or advancement of minorities or women Action-Oriented Programs. The organization must develop and execute action- oriented programs to correct any identified problem areas and attain place- ment goals. Specific examples of these programs are shown in Exhibit 3.19.

Internal Audit and Reporting. An auditing system must be developed that peri- odically measures the effectiveness of the total AAP. 0077862414_ch03_p089_150.indd 137 11/19/13 12:56 AM 138 part t wO Support Activities exhibit 3.19 examples of a ction-Oriented p rograms for an aap 1. Conducting annual analyses of job descriptions to ensure they accurately reflect job  functions; 2.  Reviewing job descriptions by department and job title using performance criteria; 3.  Making job descriptions available to recruiting sources and to all members of  management involved in the recruiting, screening, selection, and promotion processes; 4.  Evaluating the total selection process to ensure freedom from bias through:

a. Reviewing job applications and other preemployment forms to ensure information  requested is job related; b.  Evaluating selection methods that may have a disparate impact to ensure that they  are job related and consistent with business necessity; and c.  Training in EEO for management and supervisory staff.

5.  Using techniques to improve recruitment and increase the flow of minority and female  applicants:

a. Include the phrase “Equal Opportunity/Affirmative  Action Employer” in all printed  employment advertisements; b.  Place help-wanted advertisements, when appropriate, in local minority news media  and women’s interest media; c.  Disseminate information on job opportunities to organizations representing  minorities, women, and employment development agencies when job opportunities  occur; d.  Encourage all employees to refer qualified applicants; e.  Actively recruit at secondary schools, junior colleges, and colleges and universities  with predominantly minority or female enrollment; and  f.  Request employment agencies to refer qualified minorities and women.

6.  Hiring a statistical consultant to perform a self-audit of compensation practices; and 7.  Ensuring that all employees are given equal opportunity for promotion:

a. Post promotional opportunities; b.  Offer counseling to assist employees in identifying promotional opportunities, and   offer training and educational programs to increase promotions and opportunities   for job rotation or transfer; and c.  Evaluate job requirements for promotion.

Source : Adapted from Sample  Affirmative Action Program for Small Employers, 2010, www.dol.gov/ofccp. 0077862414_ch03_p089_150.indd 138 11/19/13 12:56 AM Chapter three Planning 139 Legality of aaps and diversity p rograms AAPs have been controversial since their inception, and there have been many challenges to their legality. Questions of legality involve complex issues of consti- tutionality, statutory interpretations, differences in the structure of the AAPs being challenged in the courts, claims that affirmative action goals represent hiring quo- tas, and, very importantly, differences in the amount of weight placed on race or gender in the ultimate selection decisions made about job applicants.

Despite these problems, it is possible to provide several conclusions and recom- mendations regarding affirmative action. AAPs in general are legal in the eyes of the Supreme Court. However, to be acceptable, an AAP should be based on the following guidelines: 46 1. The plan should have as its purpose the remedying of specific and identifiable effects of past discrimination.

2. The plan should address the current underutilization of women and/or minor - ities in the organization.

3. Regarding nonminority and male employees, the plan should not unsettle their legitimate expectations, should not result in their discharge and replace- ment with minority or women employees, and should not create an absolute bar to their promotion.

4. The plan should be temporary and should be eliminated once affirmative action goals have been achieved. 47 5. All candidates for positions should be qualified for those positions.

6. The plan should include organizational enforcement mechanisms as well as a grievance procedure.

Court rulings on the constitutionality of federal and state government AAPs suggest that even more strict guidelines than these may be necessary. Insofar as these programs are concerned, racial preferences are subject to strict c\�onstitutional scrutiny. They may be used only when there is specific evidence of identified dis- crimination, when the remedy has been narrowly tailored to only the identified discrimination, when only those who have suffered discrimination may benefit from the remedy, and when other individuals will not carry an undue burden, such as job displacement, from the remedy. Lesser scrutiny standards may apply for gender preferences. 48 Some states have even banned the use of AAPs by govern- ment employers, contractors, and educational institutions. 49 Turning to diversity programs, the EEOC states the following about how they differ from AAPs, as well as their permissibility: Diversity and affirmative action are related concepts, but the terms have different origins and legal connotations. Workforce diversity is a business 0077862414_ch03_p089_150.indd 139 11/19/13 12:56 AM 140 part t wO Support Activities management concept under which employers voluntarily promote an inclu- sive workplace. Employers that value diversity create a culture of respect for individual differences in order to “draw talent and ideas from all segments of the population” and thereby potentially gain a “competitive advantage in the increasingly global economy.” Many employers have concluded that a diverse workforce makes a company stronger, more profitable, and a better place to work, and they implement diversity initiatives for competitive rea- sons rather than in response to discrimination, although such initiatives may also help to avoid discrimination. Title VII permits diversity efforts designed to open up opportunities to everyone. For example, if an employer notices that African Americans are not applying for jobs in the numbers that would be expected given their avail- ability in the labor force, the employer could adopt strategies to expand the applicant pool of qualified African Americans such as recruiting at schools with high African American enrollment. Similarly, an employer that is chang- ing its hiring practices can take steps to ensure that the practice it selects mini- mizes the disparate impact on any racial group. For example, an employer that previously required new hires to have a college degree could change this requirement to allow applicants to have a college degree or two years of rel- evant experience in the field. A need for diversity efforts may be prompted by a change in the population’s racial demographics, which could reveal an underrepresentation of certain racial groups in the work force in comparison to the current labor pool. 50 aap s for veterans and individuals with disabilities There are specific AAP regulations for federal contractors under the Vietnam Era Veterans’ Readjustment Assistance Act and the Rehabilitation Act. The regulations were recently updated to strengthen them and improve the hiring of veterans and individuals with disabilities (IWDs).

For veterans, updates to the regulations include:

1. Requiring contractors to annually adopt a benchmark based on either the national percentage of veterans in the workforce (currently 8%) or the best available data 2. Collecting annual data on the number of veterans who apply and are hired in order to increase accountability for staffing practices and decisions 3. Making contractor job listings in formats that can be easily used by sta\�te employment service agencies 4. Creating flexibility in “linage agreements” with organizations that provide recruiting or training services to veterans 5. Repealing regulations in Part 60-250 of the Code of Federal Regulations 0077862414_ch03_p089_150.indd 140 11/19/13 12:56 AM Chapter three Planning 141 For IWDs, the new regulations include:

1. Establishing a 7% utilization goal at the job group level 2. Inviting applicants to self- identify as IWDs at both the pre- offer and post- offer phases of the staffing process; inviting employees to self- identify on a regular basis 3. Collecting annual data on the number of IWDs who apply and are hired in \� order to increase accountability for staffing practices and decisions 4. Revising the definition of “disability” to be consistent with the new amend- ments to the Americans With Disabilities Act (ADA) eeO and temporary w orkers The EEOC has provided guidance on coverage and responsibility requirements for temporary employment agencies (and other types of staffing firms) and their client organizations. 51 When both the agency and the client exercise control over the temporary employee and both have the requisite number of employees, they are considered employers and jointly liable under the Civil Rights Act, the Age Discrimination in Employment Act (ADEA), the ADA, and the Equal Pay Act.

It should be noted that these laws also apply to individuals placed with organiza- tions through welfare- to-work programs. The agency is obligated to make referrals and job assignments in a nondiscriminatory manner, and the client may not set discriminatory job referral and job assignment criteria. The client must treat the temporary employees in a nondiscriminatory manner; if the agency knows this is not happening, the agency must take any corrective actions within its control. The agency, the client, or both parties could face substantial penalties for noncompli- ance (e.g., back pay, front pay, and compensatory damages). There is special guid- ance for ADA- related issues. suMMar Y Internal and external forces shape the conduct and outcomes of HRP. The key forces and trends that emerge are organizational strategy, organizational culture, labor markets, and technology.

HRP is a process and set of activities undertaken to forecast future HR require- ments and availabilities, resulting in the identification of likely employment gaps (shortages and surpluses). Action plans are then developed for addressing the gaps.

Before HRP begins, initial decisions must be made about its comprehensiveness, planning time frame, job categories and levels to be included, how to “count heads,” and the roles and responsibilities of line and staff (including HR) managers. 0077862414_ch03_p089_150.indd 141 11/19/13 12:56 AM 142 part t wO Support Activities A variety of statistical and judgmental techniques may be used in forecasting.

Those used in forecasting requirements are typically used in conjunction\� with business and organization planning. For forecasting availabilities, techniques must be used that take into account the movements of people into, within, and out of the organization, on a job- by-job basis. Here, manager judgment, Markov Analysis, and replacement and succession planning are suggested as parti\�cularly useful techniques. Staffing planning is a form of action planning. It is shown to generally require setting staffing objectives, generating alternative staffing activities, and assessing and choosing from among those alternatives. A fundamental alternative involves the use of core or flexible workforces, as identified in staffing strategy. Plans must be developed for acquiring both types of workforces, and the advantages and dis- advantages of each type should be reviewed to reaffirm strategic choices about the use of each. After this step, planning can begin. For the core workforce, this involves matters of staffing philosophy that will guide the planning of recruitment, selection, and employment activities. For the flexible workforce, the organization should establish early contact with the providers of the flexible workers (i.e., staff- ing firms and independent contractors). Organizational leaders should also con- sider the advantages and disadvantages of outsourcing some jobs at this point. Changes in the demographic makeup of the workforce suggest that organizations need to take employee diversity into account in the planning process. Activities to address a diverse workforce include recruiting, selection, training, development, and retention. AAPs are an extension and application of general HR and staffing planning.

AAPs have several components. The Affirmative Action Programs Regulations, which apply to federal contractors, specify requirements for these compo\�nents.

The legality of AAPs has been clearly established, but the courts have fashioned limits to their content and scope. To clarify how EEO laws apply to temporary employees and agencies, the EEOC has issued specific guidance. disCussiO n QuestiO ns 1. What are ways that the organization can ensure that KSAO deficiencies do not occur in its workforce?

2. What types of experiences, especially staffing- related ones, will an organiza- tion be likely to have if it does not engage in HR and staffing planning?

3. Why are decisions about job categories and levels so critical to the conduct and results of HRP?

4. What are the advantages and disadvantages of doing succession planning for all levels of management instead of just top management?

5. What is meant by reconciliation, and how can it be useful as an input to staff- ing planning? 0077862414_ch03_p089_150.indd 142 11/19/13 12:56 AM Chapter three Planning 143 6. What criteria would you suggest using for assessing the staffing alternatives shown in Exhibit 3.14?

7. What problems might an organization encounter in creating an AAP that it might not encounter in regular staffing planning? ethiC aL issues 1. Does an organization have an ethical responsibility to share with all of its employees the results of its forecasting of HR requirements and availabili- ties? Does it have an ethical responsibility not to do this?

2. Identify examples of ethical dilemmas an organization might confront when developing an AAP. appLiC atiOns Markov analysis and f orecasting The Doortodoor Sports Equipment Company sells sports clothing and equipment for amateur, light sport (running, tennis, walking, swimming, badminton, and golf) enthusiasts. It is the only company in the nation that does this door- to-door, seek- ing to bypass the retail sporting goods store and sell directly to the c\�ustomer. Its salespeople have sales kits that include both sample products and a full- line cata- log they can use to show the products and discuss them with customers. The sales function is composed of full- time and part- time salespeople (level 1), assistant sales managers (level 2), and regional sales managers (level 3). The company has decided to study the internal movement patterns of people in the sales function, as well as forecast their likely availabilities in future time periods. The results will be used to help identify staffing gaps (surpluses and short- ages) and to develop staffing strategy and plans for future growth. To do this, the HR department first collected data for 2013 and 2014 to con- struct a transition probability matrix, as well as the number of employees for 2015 in each job category. It then wanted to use the matrix to forecast availabilities for 2016. The following data were gathered:

  Transition Probabilities   (2013–14) Current (2015) Job Category  Level SF SP ASM  RSM  Exit No. Employees Sales, Full-time (SF)  1 .50  .10 .05  .00  .35  500 Sales, Part-time (SP)  1 .05  .60 .10  .00  .25  150 Ass’t. Sales Mgr. (ASM)  2 .05  .00 .80  .10  .05  50 Region. Sales Mgr. (RSM)  3 .00  .00 .00  .70  .30  30 0077862414_ch03_p089_150.indd 143 11/19/13 12:56 AM 144 part t wO Support Activities Use these data to answer the following questions:

1. Describe the internal labor market of the company in terms of job stability (staying in same job), promotion paths and rates, transfer paths and r\�ates, demotion paths and rates, and turnover (exit) rates.

2. Forecast the numbers available in each job category in 2016.

3. Indicate potential limitations to your forecasts. deciding whether to use flexible staffing The Kaiser Manufacturing Company (KMC) has been in existence for over 50 years.

Its main products are specialty implements for use in both the crop and \�the dairy herd sides of the agricultural business. Products include special attachments for tractors, combines, and discers and add- on devices for milking and feeding equip- ment that enhance the performance and safety of the equipment. KMC has a small corporate office and four manufacturing plants (two in the Midwest and two in the South). It has a core workforce of 725 production workers, 30 clerical workers, 32 engineers and professional workers, and 41 managers. All employees are full time, and KMC has never used either part- time or temporary workers. Those in charge of staffing feel very strongly that the strategy of using only a core workforce has paid big dividends over the years in attracting and retain- ing a committed and highly productive workforce. Sales have been virtually flat at $175 million annually since 2008. At the same time, KMC has begun to experience more erratic placement of orders for its prod- ucts, making sales less predictable. This appears to be a reflection of more turbu- lent weather patterns, large swings in interest rates, new entrants into the specialty markets, and general uncertainty about the future direction and growth of the agricultural industry. Increased unpredictability in sales has been accompanied by steadily rising labor costs. This is due to KMC’s increasingly older workforce, as well as shortages of all types of workers (particularly production workers) in the immediate labor markets surrounding the plants. Assume you are the HR manager responsible for staffing and training at KMC.

You have just been contacted by a representative of the Flexible Staffing Services (FSS) Company, Mr. Tom Jacoby. Mr. Jacoby has proposed meeting with you and the president of KMC, Mr. Herman Kaiser, to talk about FSS and how it might be of service to KMC. You and Mr. Kaiser agree to meet with Mr. Jacoby. At that meeting, Mr. Jacoby makes a formal presentation to you in which he describes the services, operation, and fees of FSS and highlights the advantages of using a more flexible workforce. During that meeting, you learn the following from Mr. Jacoby. FSS is a recent entrant into what is called the staffing industry. Its general pur - pose is to furnish qualified employees to companies (customers) on an as- needed basis, thus helping the customer implement a flexible staffing strategy. It furnishes 0077862414_ch03_p089_150.indd 144 11/19/13 12:56 AM Chapter three Planning 145 employees in four major groups: production, clerical, technical, and professi\�onal/ managerial. Both full- time and part- time employees are available in each of these groups. Employees may be furnished to the customer on a strictly temporary basis (“temps”) or on a “temp-to-perm” basis, in which the emplo\�yees convert from being temporary employees of FSS to being permanent employees of the customer after a 90-day probationary period. For both the temp and the temp- to-perm arrangements, FSS offers the following services. In each of the four employee groups it will recruit, select, and hire people to work for FSS, which will in turn lease them to the customer. FSS performs all recruitment, selection, and employment activities. It uses a standard selection sys- tem for all applicants, composed of an application blank, reference chec\�ks, drug testing, and a medical exam (given after making a job offer). It also offers custom- ized selection plans in which the customer chooses from among a set of s\�pecial skill tests, a personality test, an honesty test, and background investigations. Based on the standard and/or custom assessments, FSS refers to the customer wh\�at it views as the top candidates. FSS tries to furnish two people for every vacancy, and the customer chooses from between the two. New hires at FSS receive a base wage that is similar to the market wage, as well as close to the wage of the customer’s employees with whom they will be directly working. In addition, new hires receive a paid vacation (one week for every six months of employment, up to four weeks), health insurance (with a 25% employee co- pay), and optional participation in a 401(k) plan. FSS performs and p\�ays for all payroll functions and deductions. It also pays the premiums for workers’ compen- sation and unemployment compensation. FSS charges the customer as follows. There is a standard fee per employee fur - nished of 1.55 × base wage × hours worked per week. The 1.55 is labeled “markup”; it covers all of FSS’s costs (staffing, insurance, benefits, and administration) plus a profit margin. On top of the standard fee is an additional fee for customized selection services. This fee ranges from .50 to .90 × base wage × hours worked per week. Finally, there is a special one- time fee for temp- to-perm employees (a finder’s fee of one month’s pay), payable after the employee successfully com- pletes the 90-day probationary period and becomes an employee of the customer. Mr. Jacoby concludes his presentation by stressing three advantages of flex- ible staffing as provided by FSS. First, use of FSS employees on an as- needed basis will give KMC greater flexibility in its staffing to match fluctuating product demand, as well as movement from completely fixed labor costs to more variable labor costs. Second, FSS provides considerable administrative convenience, reliev- ing KMC of most of the burden of recruitment, selection, and payrolling. Finally, KMC will experience considerable freedom from litigation (workers’ comp, EEO, torts) since FSS and not KMC will be the employer. After Mr. Jacoby’s presentation, Mr. Kaiser tells you he is favorably impressed, but that the organization clearly needs to do some more thinking before it embarks 0077862414_ch03_p089_150.indd 145 11/19/13 12:56 AM 146 part t wO Support Activities on the path of flexible staffing and the use of FSS as its provider. He asks you to prepare a brief preliminary report including the following:

1. A summary of the possible advantages and disadvantages of flexible staffing 2. A summary of the advantages and disadvantages of using FSS as a service provider 3. A summary of the type of additional information you recommend gathering and using as part of the decision- making process endnOtes 1. W. Bliss, “Engaging in Strategic Planning,” SHRM Templates and Toolkits, Mar. 21, 2013 (www.

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