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Chapter 12 - Managing the Employment Relationship
12-1
CHAPTER 12
MANAGING THE EMPLOYMENT RELATIONSHIP
Objectives.
After reading this chapter, you should be able to
1. Explain the concept of organizational justice and how it relates to all aspects of
relationship building with employees.
2. Understand how actions taken at organizational entry help to build the employment
relationship.
3. Know the major laws and legal doctrines governing the employment relationship.
4. Show familiarity with the complexities of employee handbooks, current issues, and
ways to avoid lawsuits.
5. Understand policies and procedures associated with discipline and grievances.
6. Explain the various ways that an employee can exit an organization and the
measures organizations can take to make this parting of ways a more positive
experience for all involved.
Chapter 12 - Managing the Employment Relationship
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CHAPTER 12 - SUMMARY
I. Overview
A. There are internal and external forces that form an employment relationship
B. Organizational entry and exit are the beginning and ending of the employment
relationship
C. Satisfaction, perceived engagement and trust in the firm, and organizational
commitment can lead to increased repeat business, customer satisfaction, and
financial performance
D. A well managed employment relationship can be a competitive advantage
E. Organizational Justice
1. Justice is perception of fairness in receiving things in balance with
contributions
2. Distributive justice is perception of equity in allocation of rewards and
punishments
3. Procedural justice is perception of fair rules, laws or policies that allocate the
rewards and punishments
4. Interpersonal justice is associated with the treatment an employee receives
from a supervisor or manager as decisions are being made
5. Informational justice is the adequacy of the explanations that were provided
by supervisors or managers
6. Increased fairness believed to “trickle-down” into lower turnover and
increased customer service orientation
a) Perception of fair treatment has significant effect on worker attitudes
(e.g. job satisfaction)
F. Ethics Programs
1. Formalized program designed to ensure honest, fair, and responsible actions
on the part of employees
a) Respect the customs/rituals of others
b) Think of yourself and organization as part of larger society
c) Evaluate situations objectively and evaluate the consequences
d) Consider the welfare of others
2. Benefits include reduced employee misconduct and protection against
lawsuits
3. Programs with the highest likelihood of reporting were those that included a
written statement, training, advice lines, and reporting systems
4. Managerial support is an important component
Chapter 12 - Managing the Employment Relationship
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II. Organizational Entry
A. Employment Status
1. Employee - Right of control over work belongs to supervisor
2. Contractor – Right of control over work belongs to self
3. Misclassification can result in large fines
B. Flexible Work Arrangements
1. Telecommuting
2. Flextime
3. Permanent part-time work
4. Job sharing
5. Compressed workweeks
C. Realistic Job Previews
1. Provide candidates with balanced information about a job prior to hire
2. Research shows RJP can reduce turnover
a) Lowers expectations to realistic expectations
3. Organization may have to recruit a large number of job candidates
D. Socialization and Orientation
1. Socialization is process of gaining appreciation of values, abilities, behaviors,
and knowledge of organization
2. Orientation is formalized process of employee socialization
a) Institutional orientation - each member receives
3. Larger organizations tend to have more formal orientation
4. Formalized orientation tends to be more successful
5. Informal socialization may be used to compliment what is learned in formal
training
6. Orientation can begin once an offer has been made
7. Be mindful not to overwhelm new employees with information and allow for
two-way communication
Chapter 12 - Managing the Employment Relationship
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III. The Ongoing Relationship
A. Employee relationship is with an entity, the company, not a person
B. External Forces: Law
1. Employment-at-Will: right to terminate with or without cause, absent a
contract
a) Major exceptions - labor and anti-discrimination statutes
2. Whistleblowing
a) Whistleblowing is reporting wrongdoing of the employer
i) Can be internal or external
ii) 19 states have protection for private employees
b) Statutes protect whistleblowers from retaliation
c) Every state except Alabama has a whistleblower policy
d) The Dodd-Frank Act has whistle-blower provisions
e) Organizations should take measures to promote internal reporting
f) Covenant of non-disclosure protects employer’s information
i) Not protected by whistleblowing
ii) Employees have a duty to protect confidential information
3. Protection of Employer’s Confidential Business Information
a) Non-compete agreements restrict acceptance of employment with a
4. Privacy
a) Personal information covered
i) Performance appraisals
ii) Disciplinary actions
iii) Formal complaints.
iv) Medical information
b) Personal information not covered
i) Legitimate public concern
5. HIPAA, 2005
a) Legal restriction on the use of employee medical information
6. PATRIOT Act of 2001
a) Records relevant to terrorism investigation are not private
12-5
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
b) Allows government officials access to records
c) Allows for surveillance in the workplace
d) The law is being tested in the courts
7. Monitoring Employee Communication Devices
a) Unauthorized use of computers and internet
b) Balance of respect for employees and protection from culpability
c) Develop a “No Abuse of Privilege Clause”
d) Written policy notifying employees of monitoring removes the expectation
of privacy
8. Fair Credit Reporting Act (FCRA)
a) Offers applicant a level of protection of privacy
b) Applies to internal investigations
c) Company must provide information that leads to adverse employment
action
9. Off –duty behavior can be regulated
10. Uniformed Services Employment and Reemployment Rights Act (USERRA)
a) Applies to all employers regardless of size
b) Right to return to work after service,
c) Receive benefits while on duty similar to LOA
d) No pay requirement
11. Worker Adjustment and Retraining Notification Act (WARN)
C. Internal Forces
1. Employee Surveys
a) Means to gather information from employees
b) Reveals an organization’s strengths and weaknesses
2. Employee Handbooks
a) An organization’s published policies and procedures
3. Violations of Policy/Discipline
Chapter 12 - Managing the Employment Relationship
a) Punishment is provision of negative consequence of undesirable behavior
b) Discipline intention to direct toward positive behavior
c) Progressive discipline is suited to the severity of the offence
d) Includes potential of termination
e) Potential exceptions based on law e.g. ADA
4. Grievances
a) A formal written complaint about the way the employment relationship is
being carried out
b) Can include peer review
c) Can provide for formal mediation and/or arbitration
d) Document understanding of policy
IV. Organizational Exit
A. Termination
B. Resignation/Voluntary Turnover
1. High turnover can result in poor financial performance
2. Turnover results in costs to the organization
3. Organizations should understand the means to reduce involuntary turnover
4. Exit Interviews can help assessment of reasons for turnover
C. Downsizing and Layoffs
1. Downsizing is the overall organization strategy
2. Layoff is tactical elimination of redundant skills
3. The Causes and Effects of Downsizing and Layoffs
4. Organizational Measures
5. Alternatives to Downsizing
a) Attrition
b) Re-deployment
c) Hiring freeze
d) Early retirement packages
e) Cut travel and entertainment
D. Retirement
1. Influenced by personal characteristics and economic concerns
2. Organizational Actions
a) Flexible plans to phase into retirement
b) Part-time work
c) Longer vacations
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e) Altering content of job
f) Demotion
g) Second career assistance
h) Use as volunteers or ambassadors
3. Spouse participation is encouraged
V. Summary
A. All HR activities are crucial to maintaining the relationship
B. The relationship is established with new hires, maintained with employees and
must be managed as an employee exits the organization
C. Organizational concerns for productivity need to be balance with employee need
for justice
D. Keeping the relationship in balance leads to gains in productivity and efficiency
Chapter 12 - Managing the Employment Relationship
CHAPTER 12 - IMPORTANT TERMS
Arbitration – grievance process in non-union organizations where disputes are settled by
external arbitrators and the decisions are legally binding
publish an untrue statement about an employee to a third party
Discipline - points the way to more positive and productive behavior rather than to penalize the
person for his or her mistakes
Distributive justice - deals with perceptions of equity in the allocation of rewards or penalties
given by the organization
Ethics programs - designed primarily to ensure honest, fair, and responsible actions on the part
of the employee
Exit Interview – means to access the reasons why an employee voluntarily leaves an
organization
Flextime - means an employee can choose his or her work schedule within some limits
Chapter 12 - Managing the Employment Relationship
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Implied contract – can be created by an employer’s conduct and need not be specifically stated
or written
Independent contractor – self employed individuals who work for multiple customers and
Institutionalized socialization - formal; that is each member receives the san, sequential, fixed
information upon organization entry
Interpersonal justice – associated with the treatment an employee receives from a supervisor
or manager as decision are being made
Job sharing - refers to a situation where two people divide the responsibilities for a regular, full-
neutral third party
Non-compete agreements - contractual arrangements with employees that restrict their
acceptance of employment with an industry competitor upon voluntarily leaving the current
organization
Organizational Exit - the dissolution of the employment relationship.
employees through a downsizing experience, minimizing legal risks for the employer, and
preserving morale of “survivors”
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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Procedural justice - a perception of fair rules, laws, or policies that allocate valued rewards and
punishments.
Progressive discipline – the organization’s response when an employee continues to violate
policy and discipline becomes more and more severe up to and including termination
Punishment - the provision of a negative consequence following undesirable behavior
Realistic Job Previews (RJP) - present relevant, balanced, and unbiased information about the
organization, the job, and the conditions under which the job candidate will work.
Resignation - when an employee voluntarily decides to leave the organization
Socialization - the process by which an individual comes to appreciate the values, abilities,
due to misconduct or violation of company policy and the resulting progressive discipline
Whistleblowing - reporting misconduct to persons who have the power to take action.
Wrongful discharge – when an employer unfairly discharges an employee legal doctrine allows
the employee to file charges against the employer
Chapter 12 - Managing the Employment Relationship
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CHAPTER 12 - LEGISLATION
Computer Fraud and Abuse Act (CFAA) – bars individuals from accessing a computer without
authorization or beyond their access authority
Fair Credit Reporting Act (FCRA) - amended in 2005, a federal law that regulates how such
agencies provide information about consumers
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (PATRIOT) Act of
2001 - allows government officials access to business records and transactions
Uniform Trade Secret Act – prohibits acquisition, reliance, or use of trade secrets
Uniformed Services Employment and Reemployment Rights Act (USERRA) - establishes the
rights of reservists and the National Guard to return to work at the end of their service
Worker Adjustment and Retraining Notification Act (WARN) - enacted in 1989, requires
organization of employers with more than 100 full time employees to give affected employees
60 days written notice when a plant will close or when mass layoffs are expected that will last
six months or more.
Chapter 12 - Managing the Employment Relationship
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CHAPTER 12 - DISCUSSION QUESTIONS
1. A CEO once told an HR consultant that organizational justice is a “touchy feely concept
not related to anything important.” If you were the HR consultant, what would you
say?
Research has shown that perceptions of justice impact organizational outcomes such as
2. Should realistic job previews be applied to overseas assignments? If so, how would
you go about constructing a realistic job preview for such an assignment? Pick one
country and do a draft of an RJP for an assignment there.
Since expatriates say that cultural shock and spousal satisfaction are their two main complaints
of overseas assignments and RJPs increase the level of job satisfaction, it is recommend that
3. The “covenant of good faith and fair dealing” as related to employment-at-will implies
that excellent performance over an extended period of time grants the performer a
right to only be terminated for “just cause.” Research your state’s position in this area.
Montana became the first state to enact a comprehensive statute protecting at- will employees
from unlawful discharge while limiting the damages they can recover. It is likely to be the model
1
hr-esource.com/index.asp?rightframe=hresources/sampleChapters/lghSampleChapter.html accessed August 5,
2002.
Chapter 12 - Managing the Employment Relationship
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4. Should companies have the right to monitor all Internet “surfing” at work? How
would you react if a company stipulated that no personal surfing is allowed and, if
discovered, could result in termination?
LETTER TO EDITOR OF ST. LOUIS POST-DISPATCH REGARDING WORKPLACE INTERNET USE, IN
RESPONSE TO MISQUOTE
Ms. Christine Bertelson, Editor
St. Louis Post-Dispatch
900 North Tucker
St. Louis, Missouri 63101
Dear Ms. Bertelson:
In Kyung M. Song's article, "Personal Use of Workplace E-mail is a Gray Area at Many
Companies," in yesterday's issue of your newspaper, I was misquoted as saying that "it's
unrealistic for employers to prohibit personal use of company computers." What I actually told
Ms. Song was that employers have very good reasons for restricting, or even prohibiting,
that employers restrict personal uses of company computers is concern regarding employee
productivity. Studies have shown that employees with access to the Internet at work spend an
average of five to ten hours per week sending personal e-mail or searching for information
unrelated to their jobs. One study reported that in one month alone, employees at IBM, Apple
Computer, and AT&T together visited Penthouse Magazine's Web site 12,823 times. As
reported in the Wall Street Journal (Nov. 25, 1996), "Based on an average visit of 13 minutes,
that comes to more than 347 eight-hour days." Employers are also concerned that employees
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will say or do things on the Internet or via e-mail that embarrass or harm the reputation of the
employer. Additionally, employers may be concerned that employees' downloading of Internet
pages with extensive graphics will tax the workplace system resources.
On the other hand, many employees feel that restrictions on workplace computer use may
violate their rights to privacy and to freedom of speech and expression, and some argue that
sending e-mail and surfing the Internet at work is the equivalent of a lunch break. Further,
However, the decision of an employer as to whether or not to restrict employee personal use of
computers, the Internet, and e-mail, will depend on the needs and culture of the organization. I
do strongly recommend that employers adopt carefully-drafted Internet, e-mail, and computer
use policies, and that these policies be clearly communicated to employees, in order to reduce
Susan E. Gindin, Attorney at Law
26 West Dry Creek Circle, Suite 600
Chapter 12 - Managing the Employment Relationship
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5. How does a binding arbitration agreement work? Should companies be allowed to
adopt a binding arbitration requirement for their current employees in which
employees surrender their right to litigate employment disputes through the court
system? Explain your answer. What is the current state of the law regarding
arbitration?
The American Arbitration Association (AAA) identifies the following as the stages in the
arbitration process.
6. Should companies purchase software that shuts down all access terminated
employees have to company equipment, credit cards, website access, and premises as
soon as the termination takes effect? Why would a company need to purchase such
software?
Employers will have greater control over the organization’s assets. This is especially important
if the termination was due to illegal or inappropriate use of those assets. Software would be
7. To what extent would you be attracted to an organization that offered a variety of
work arrangements such as flextime, telecommuting, four-day workweeks and job
sharing?
2
AAA. (2000). A Guide to Mediation and Arbitration for Business People.
www.adr.org/index2.1.jsp?JSPssid=13923&JSPsrc=upload\LIVESITE\Rules_Procedures\ADR_Guides\aaa035-
0900.htm accessed August 5, 2002.
Chapter 12 - Managing the Employment Relationship
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Most of the Fortune Best Companies to Work For offer some sort of flexible work
arrangements. Given the choice of a company that had flexible arrangements and a company
8. What firms do you know have a strong code of ethics, and how important is this to
you as a potential employee of that firm?
9. You have probably seen many colleagues, family, or friends experience either
downsizing or alternatives to downsizing (e.g., furloughs, cuts in benefits or perks,
redeployment). Interview them and find out how thy feel about what has happened
to them. Did their firm take the view that “downsizing is the 1st option for cost
savings” or the “last option,” and what impact did that have on their views of the
company?
