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Chapter 12 - Dealing with Employee–Management Issues and Relationships
31
OPTIONS (the ability to buy the company
stock at a set price at a later date) or RE-
STRICTED STOCK (issued directly to the
CEO).
i. Stock options account for 50% of CEO
compensation.
ii. Restricted stock adds 25%.
c. The problems arise when executives are
handsomely compensated, even when the
company doesn’t do well.
d. Poor executives can often leave the compa-
ny yet still receive huge monetary benefits.
4. The late management consultant Peter Drucker
suggested that CEOs should not earn much
more than 20 TIMES as much as the company’s
lowest-paid employee.
a. Not many companies followed his advice.
b. Today, the average chief executive of a ma-
jor corporation makes 350 TIMES THE PAY
OF AN AVERAGE HOURLY WORKER.
5. Global comparisons:
a. European CEOs typically earn less than U.S.
executives.
b. In Europe, workers are entitled to seats on
the board of directors according to a process
called CO-DETERMINATION.
c. The U.S. public is now pressing for full dis-
closure concerning executive compensation.
6. The recent financial crisis increased pressure on
Chapter 12 - Dealing with Employee–Management Issues and Relationships
32
ADAPTING TO
change
PPT 12-36
College Athletes: What are They
Worth?
COLLEGE ATHLETES:
WHAT are THEY WORTH?
12-36
• Regional economies in college
towns reap huge revenues on
sports weekends.
• The players, however, cannot
draw a salary.
• Northwestern University’s football
players won a ruling that gave
them the right to unionize.
• The university is appealing the
ruling.
PPT 12-37
Play Ball!
PLAY BALL!
Salaries in Professional Sports
Source: Bloomberg Businessweek, www.businessweek.com, accessed No vember 2014. 12-37
Player Payment for…League
David Ortiz $406,250 per home runMLB
Matt Bonner $28,571 per three-pointer NBA
Sebastian Janikowski $121,212 per field goal NFL
George Parros $32,407 per fight NHL
bonus case 12-2
PENSION PLANS UNDER ATTACK
Faced with losses in the billions of dollars, a few U.S. airlines
have declared bankruptcy. Some, such as United, have walked
away from pension obligations in an attempt to regain profita-
bility. (See the complete case, discussion questions, and sug-
gested answers beginning on page 12.80 of this manual.)
lecture enhancer 12-5
PUTTING PEOPLE FIRST AT PUBLIX
It’s not just the CEOs that make big bonuses when companies
succeed. At Publix, lower-level employees do too. (See the
complete lecture enhancer on page 12.70 of this manual.)
critical thinking
exercise 12-3
EXECUTIVE PAY WATCH
This exercise further explores the issue of executive compen-
sation by having students visit the AFL-CIO site and gather
current pay data. (See the complete exercise on page 12.77 of
this manual.)
lecture enhancer 12-6
REVAMPING EXECUTIVE PAY
Throughout this recent recession, few things have stirred as
much emotion as disproportionate bonuses given to execu-
tives. (See the complete lecture enhancer on page 12.70 of this
manual.)
Chapter 12 - Dealing with Employee–Management Issues and Relationships
33
boards of directors to rein in executive compen-
sation.
7. However, most U.S. executives are responsible
for multibillion-dollar corporations and work 70+
hours a week.
a. Many executives guide their companies to
prosperity.
b. Good CEOs are a scarce commodity.
B. PAY EQUITY
1. The EQUAL PAY ACT OF 1963 requires com-
panies to pay equal pay to women and men who
do the same job.
2. PAY EQUITY is the concept that people in jobs
that require similar levels of education, training,
or skills should receive equal pay.
a. This goes beyond equal pay for equal work.
b. The issue of pay equity centers on compar-
ing the VALUE OF JOBS, which shows that
“women’s” jobs tend to pay less.
3. A 1980s concept called COMPARABLE
WORTH has recently been reintroduced.
a. COMPARABLE WORTH required that peo-
ple in jobs that require similar levels of edu-
cation, training, or skills should receive equal
pay.
b. It is difficult to determine whether compara-
ble worth creates greater equality or simply
chaos.
4. Women earn approximately 77% of what men
Chapter 12 - Dealing with Employee–Management Issues and Relationships
34
PPT 12-38
Compensating Executives in the
Future
COMPENSATING EXECUTIVES
in the FUTURE
• The passage of the Dodd-
Frank Act was intended to
give shareholders more say
in compensation decisions.
12-38
LO 12-5
• Boards of directors are being challenged
concerning executive contracts.
• Government and shareholders are putting
pressure to overhaul executive compensation.
lecture enhancer 12-7
FRENCH LAW FORCES BOSSES TO
RESPECT FREE TIME
In the U.S., we concentrate on being able to work as much as
possible and what the workplace can provide for us. Over in
France, 35-hour work weeks are enforced. (See the complete
lecture enhancer on page 12.71 of this manual.)
PPT 12-39
The Question of Pay Equity
The QUESTION of PAY EQUITY
12-39
LO 12-5
• Women earn 77% of what
men earn.
• This disparity varies by
profession, experience and
level of education.
• Young women actually earn
8% percent more than male
counterparts due to their
higher graduation rates.
PPT 12-40
Equal Pay for Equal Work
EQUAL PAY for EQUAL WORK
Equal Pay Act Factors that Justify Pay Differences
12-40
LO 12-5
• Skill
• Effort
• Responsibility
• Working Conditions
PPT 12-41
The Salary Gender Gap
THE SALARY GENDER GAP
Source: U.S. Census Bureau, www.census.gov, accessed November 2014. 12-41
Age Average Salary
15 to 24 Women - $23,357
Men - $26,100
25 to 44 Women - $41,558
Men - $55,286
45 to 64 Women - $44,808
Men - $67,040
LO 12-5
Chapter 12 - Dealing with Employee–Management Issues and Relationships
35
earn.
a. Once this difference could be explained be-
cause women only worked 50 to 60% of
their available years.
b. Today, such extended leaves by women are
rarer.
c. One reason for the disparity is that many
women devote more time to their families
and accept lower paying jobs with flexible
hours.
5. There is evidence that EDUCATION and
knowledge-based skills are reducing women’s
inequality.
a. In many fields women now earn as much as
men.
b. Young women in urban areas earn 8% more
than male counterparts due to high college
graduation rates.
c. Today women earn almost 60% of all bach-
elors and masters awarded.
d. However, inequities still exist for women with
children.
C. SEXUAL HARASSMENT
1. SEXUAL HARASSMENT refers to unwelcome
sexual advances, requests for sexual favors,
and other conduct of a sexual nature (verbal or
physical) that create a hostile work environment.
2. SEXUAL HARASSMENT becomes ILLEGAL
when:
Chapter 12 - Dealing with Employee–Management Issues and Relationships
36
lecture enhancer 12-8
THE MALE EMPLOYMENT
DROUGHT
Though women seem to still be earning less than their male
counterparts, not all is rosy in the world of male employment.
(See the complete lecture enhancer on page 12.71 of this man-
ual.)
PPT 12-42
What’s Sexual Harassment?
WHAT’S SEXUAL HARASSMENT?
• Sexual Harassment -- Unwelcomed sexual
advances, requests for sexual favors or other verbal
or physical conduct that creates a hostile work
environment.
12-42
LO 12-5
• Sexual harassment laws
cover men, women and
foreign companies doing
business in the U.S.
• Violations can be extremely
expensive for businesses.
Chapter 12 - Dealing with Employee–Management Issues and Relationships
37
a. An employee’s submission to such conduct
is made either explicitly or implicitly a term or
CONDITION OF EMPLOYMENT or an em-
ployee’s submission to or rejection of such
conduct is used as the basis for employment
decisions affecting the worker’s status.
b. The conduct unreasonably interferes with a
worker’s job performance or creates an IN-
TIMIDATING, HOSTILE, OR OFFENSIVE
WORKING ENVIRONMENT.
3. Both men and women are covered under the CIV-
IL RIGHTS ACT of 1991 that governs sexual har-
assment.
a. In 1997 the Supreme Court ruled that
SAME-SEX HARASSMENT should be
treated the same.
b. The number of complaints filed with the
EEOC has fallen off.
4. In 1996, the U.S. Supreme Court broadened the
scope of what can be considered a hostile work
environment.
5. Recent cases have introduced the concept of a
HOSTILE WORKPLACE, which is any work-
place where a particular behavior that is unwel-
come, or that would offend a reasonable person,
occurs.
6. Managers and workers are now much more
sensitive to comments and behavior of a sexual
nature.
a. One of the major problems is that workers
Chapter 12 - Dealing with Employee–Management Issues and Relationships
38
PPT 12-43
Kinds of Sexual Harassment
KINDS of SEXUAL HARASSMENT
12-43
LO 12-5
• Quid pro quo sexual harassment involves threats
like “Go out with me or you’re fired.” An
employee’s job is based on submission.
• Hostile work environment sexual harassment is
conduct that interferes with a worker’s
performance or creates an intimidating or
offensive work environment.
PPT 12-44
You Make the Call . . .
YOU MAKE the CALL…
12-44
LO 12-5
1. Two colleagues walk by you as one delivers the
punch line to a very dirty joke. You feel the joke
is inappropriate. Is this sexual harassment under
the law?
2. An employee thinks she may have been
sexually harassed when her boss
complimented her blouse. She explains the
circumstances to you and asks, “Wouldn’t you
be upset?” What’s your response?
Chapter 12 - Dealing with Employee–Management Issues and Relationships
39
and managers often know a policy concern-
ing sexual harassment exists, but they
HAVE NO IDEA WHAT IT SAYS.
b. One expert suggests that companies RE-
QUIRE SEXUAL HARASSMENT WORK-
SHOPS for all employees.
c. Foreign companies doing business in the
U.S. are not immune from sexual harass-
ment charges.
d. Many companies have set up rapid effective
grievance procedures and promptly react to
an employee’s allegations of harassment.
D. CHILD CARE
1. Child care is an increasingly important work-
place issue.
2. The percentage of women in the workforce with
children under 18 has reached 75%. There are
now more women than men in the workforce.
3. These trends cause concerns:
a. Absences related to child care already cost
businesses billions of dollars annually.
b. There is also the question of who will pay for
these services.
4. Federal child care assistance has not risen sig-
nificantly since the passage of the WELFARE
REFORM ACT OF 1996.
5. Many companies are now PROVIDING CHILD
CARE for their employees.
Chapter 12 - Dealing with Employee–Management Issues and Relationships
40
PPT 12-45
Facing Childcare Issues
FACING CHILDCARE ISSUES
• The number of women in the workforce with
children under three-years-old has increased.
12-45
LO 12-5
• Childcare related absences
cost businesses billions of
dollars each year.
• Who should pay for the cost
of childcare – this is a
dividing issue among
employees and businesses.
PPT 12-46
Businesses’ Response to Child
Care
BUSINESSES RESPONSE to
CHILD CARE
12-46
LO 12-5
• Benefits can include:
- Discounts with childcare
providers.
- Vouchers that offer payment
for childcare.
- Referral services identify
high-quality childcare
facilities.
- On-site childcare centers
- Sick-child centers.
Chapter 12 - Dealing with Employee–Management Issues and Relationships
41
6. COMPANIES ARE OFTEN PROVIDING:
a. Discount arrangements with national child
care chains
b. Vouchers for payments of child care ex-
penses
c. Referral services
d. On-site childcare centers
e. Sick-child centers
E. ELDER CARE
1. Currently there are 40.3 million Americans
over 65.
a. Over the next 20 years, it’s expected that
number will grow to 70 million.
b. These workers will not be concerned with
childcare.
c. Instead, they face the responsibility of caring
for older parents and other relatives.
2. About 65 million U.S. workers provide care for
an older family member.
3. Employees with elder care responsibilities need
medical, legal, and insurance information, as
well as the full support of their companies.
a. Some firms offer elder care programs (ex-
amples: DuPont and JPMorgan Chase).
b. Unfortunately, few U.S. companies now pro-
vide any elder care benefits.
4. ELDER CARE PROVIDERS are generally older
and more experienced employees who are often
Chapter 12 - Dealing with Employee–Management Issues and Relationships
42
PPT 12-47
Increasing Elder Care Challenges
INCREASING ELDER CARE
CHALLENGES
12-47
LO 12-5
• 31% of U.S. households are
providing some care to an
elderly person.
• Care giving obligations cause
employees to miss about 15
million days of work per year.
• Costs could rise up to $35
billion annually.
PPT 12-48
Elder Care in the Modern House-
hold
ELDER CARE in the
MODERN HOUSEHOLD
12-48
Source: Money, www.money.com, accessed November 2014.
LO 12-5
• More and more boomers are taking care of their
parents while still working.
- 31% say that may delay their retirement.
- The average cost of taking care of an aging parent is
$5,534.
- 76% say they enjoy taking care of their parents.
- 54% say it made them closer.
Chapter 12 - Dealing with Employee–Management Issues and Relationships
43
more critical to the company than the younger
workers effected by childcare problems.
5. With an aging workforce, this issue will continue
to be important.
F. DRUG TESTING
1. Fortunately, the spread of AIDS has declined in
the U.S., although it remains a challenge.
2. Some companies feel that alcohol and drug
abuse are even more serious workplace issues
because SUBSTANCE ABUSE involves more
workers.
a. Alcohol is the most widely used drug in the
workplace, with 6.5% of full-time employees
believed to be heavy drinkers.
b. Approximately 40% of industrial injuries and
fatalities can be linked to use of alcohol.
c. About 8% of employed adults use illicit
drugs.
3. Individuals who use drugs are THREE AND A
HALF TIMES more likely to be involved in
WORKPLACE ACCIDENTS.
4. The National Institute of Health estimates that
each drug abuser can cost an employer $10,000
annually.
5. Over 80% of major companies now test workers
and job applicants for substance abuse.
G. VIOLENCE IN THE WORKPLACE
1. Employers are also struggling with a growing
trend of violence in the workplace.
Chapter 12 - Dealing with Employee–Management Issues and Relationships
44
PPT 12-49
Drug Use in the Workplace
DRUG USE in the WORKPLACE
12-49
LO 12-5
• Alcohol is the most widely used drug - 6.5% of full
time employees are considered heavy drinkers.
• Over 8% of workers aged 18-49 use illegal drugs
and are more likely to be in workplace accidents.
• Drug abuse costs the U.S. economy $414 billion
in lost work, healthcare costs and crime.
• Over 80% of major companies drug test workers.
PPT 12-50
Violence in the Workplace
VIOLENCE in the WORKPLACE
12-50
LO 12-5
• OSHA reports homicides account for 16% of
workplace deaths.
• Violence is the number one cause of death for
women in the workplace.
• Companies have taken action to deal with
potential problems by using focus groups and
other interactions.
PPT 12-51
Warning Signs of Possible Work-
place Violence
WARNING SIGNS of POSSIBLE
WORKPLACE VIOLENCE
12-51
LO 12-5
• Unprovoked outbursts of anger or rage
• Threats or verbal abuse
• Repeated suicidal comments
• Paranoid behavior
• Increased frequency of domestic problems
Chapter 12 - Dealing with Employee–Management Issues and Relationships
45
2. Homicides account for 16% of all workplace
deaths.
3. Although some believe the problem is overblown
by the media, workplace violence is all too real.
4. Other organizations recognize the threat and
hire managers with STRONG INTERPERSON-
AL SKILLS to deal with growing employee vio-
lence.
VI. SUMMARY
