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Chapter 02 - Strategic Human Resource Management
I. Introduction
The interaction in this scenario lends itself to a rich discussion of the role of Human
Resources and their interaction with line management. Issues related to email privacy and
appropriate disciplinary actions given certain situations are brought to the forefront. For those
seeking careers in HR, this scenario provides an example of what not to do to be a strategic
business partner.
II. Learning Objectives
1. To assess students’ understanding of issues with company property use and the
appropriate disciplinary process when company policies are violated.
2. To analyze the role of HR in enforcing company policies.
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Chapter 02 - Strategic Human Resource Management
III. Scenario Description:
Overview: An employee, Willy Kushing, has been put on administrative leave by the HR
department for misuse of company property [internet service and telephone]. His Manager is
just returning from vacation and had no prior notice that Willy would be put on leave. The
Manager goes to meet with HR to find out what has happened.
Profile:
Lynn Couchara is the Director of Distribution for Bank Street Films, a film
distribution house. Lynn manages a team of 30 people and is responsible for
the film distribution in 40 states, distributing over 75 films per year.
Janet Pierce is the Director of Human Resources and has been working with
Bank Street Films for eight years and was promoted to Director five years ago.
Since becoming Director, Janet has restructured her department and revamped
many policies at the company. Janet has known Lynn since she hired her six
years ago. Janet was not involved in the hiring of William Kushing.
References: The references included in the DVD are:
EPolicy Do’s and Don’ts (PPT 4-3 to 4-6)
The Electronic Communications Privacy Act of 1986 (PPT 4-8)
2003 E-Mail Rules, Policies and Practices Survey (PPT 4-10)
Back History: Willy Kushing has been working at Bank Street for just over two years
[recruited from Bank Street’s #2 competitor]. He has proven to be a vital employee for
Couchara, handling the largest accounts in the distribution department as well as being the
‘go-to man’ for many others in the office when they are in need of advice, support or help.
While Couchara was on her annual two-week vacation, Kushing was called for an immediate
meeting with the head of HR, Janet Pierce. Pierce informed Kushing that he was being put on
administrative leave for misuse of computer property, effective immediately. HR had
reviewed all of his internet and phone usage, as is their right to do, and found numerous and
regular abuses. There were “constant’ calls being made to Iowa, to a number having no
business relation to Bank Street Films. In addition semi-regular calls have been made to
Gloucester Massachusetts and Schenectady, New York. The internet abuses consisted of
many hours logged on various news and auction sites, that also fall outside the realm of Bank
Street business.
Kushing had explained to HR that he’d been making more personal calls from work to his
mother in Iowa and siblings in Gloucester and Schenectady because his father has been
seriously ill for months, in and out of emergency rooms and hospitals. He assured them these
calls had not interfered with his ability to do his job and that his performance had been
consistent and solid. This information was deemed to be irrelevant by Pierce, and Kushing
was sent to tie up loose ends and prepare for his leave.
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Chapter 02 - Strategic Human Resource Management
Scene Set-up: Couchara has made an appointment with Pierce to discuss the Kushing
situation.
Scene Location: Pierce’s office, HR department, Bank Street Films, Inc, Monday 11am
The Meeting - Summary: Lynn Couchara meets with Janet Pierce to discuss the surprising
punitive actions taken against one of her employees, Willy Kushing. Lynn is very concerned
that this action was taken while she was on vacation and without notifying or discussing the
situation with her. She also values Willy’s contributions very much and notes that he has had
no performance issues. Janet defends her actions based on the company’s policies and says
that it was merely coincidence that this happened when Lynn was on vacation and that she
was very sorry for that. When Lynn tries to suggest that Willy be reinstated, Janet becomes
defensive and then goes on to suggest that Lynn has also misused company property.
Lynn wants to resolve this issue by having Willy, a key employee, return to work and suggests
going over Janet’s head to the VP of HR if she needs to. The situation remains unresolved at
the end of the scenario.
Afterthoughts – Summary: Lynn does not think the meeting went well because the HR
Director did not understand her point of view. She notes frustration with the way the HR
enforced the company’s policies absent of management involvement. Specifically, she is
upset that she was not consulted or informed about the pattern of misuse or the punitive
action. She also doesn’t agree that email or phone use should be entirely forbidden for
personal use if it doesn’t impact productivity or the budget. She plans to go to Janet’s boss
with the intent of explaining her feelings about the way this was handled and to figure out
how to get Willy reinstated.
Dossier: The specific artifacts included in the DVD are:
1. Excerpts from Kushings’ computer/telephone usage report
2. Excerpts from Coucharas’ computer/telephone usage report
3. Company Policy on use of company property
IV. Discussion Questions:
The References and related Discussion Questions may be found in PowerPoint slides 4-1 to
4-10 on the Instructor’s side of the text’s Website.
Learning Objective #1: To assess students’ understanding of issues with company property
use and the appropriate disciplinary process when company policies are violated.
1. Lynn is shocked by the action taken by HR and does not feel the violation of company
policy warranted the punitive action that was taken. In the long-term, what actions
does the company need to take to prevent this situation from occurring in the future
(see PPT 4-3 to 4-6)?
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Chapter 02 - Strategic Human Resource Management
Training employee’s to ensure that they understand the company’s policies and the penalty for
1. Lynn’s key concern should be:
A. HR Protocol
B. Workflow
C. Willy’s wrongdoing
Lynn’s key concern seems to be workflow because she continually mentions how important
Willy is to her department. Therefore, her focus is to reinstate Willy so that the workflow is
2. The ePolicy Do’s and Don’ts suggest that some personal email and internet use may
be tolerated by U.S. companies. What are the pro’s and con’s of this approach?
Pro’s – don’t have to worry about invasion of privacy when monitoring electronic systems,
Con’s – employees who are expected to work long hours do not get the chance to
2. The concern over phone [and internet] use is:
A. Budgetary
B. Performance related
C. Misuse of property
Janet’s concern over the phone use seems to be that it is in violation of the policy on the
3. How do the stipulations provided in the Electronic Communications Privacy Act of
1986 (see PPT 4-8) affect your view of personal email and internet use at work?
If companies allow the use of the internet and email for personal reasons, then the company
4. Companies create disciplinary processes to meet their business needs. What is your
reaction to the disciplinary process that occurred in this scenario?
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Chapter 02 - Strategic Human Resource Management
Typically, organizations have a disciplinary process that is gradual and calls for progressively
increasing punitive action unless there is an extremely grievous act (e.g., possession of a
4. What justifies Janet’s decision?
A. Existence of policy
B. Fair warning given
C. Nothing
Technically, the existence of the policy justifies Janet’s decision. In reality, however, her
1. Evaluate the actions taken by the HR director in this scenario. What was done well,
poorly?
Janet apologized to Lynn for her actions, but beyond that the HR Director’s actions did not
take into consideration the big picture or the organization’s business needs. While violating
3. Why does Janet bring up Lynn’s records?
A. To warn Lynn
B. Enforce the policy
C. Intimidation
Bringing up Lynn’s records was inappropriate in this context. If there was a valid concern,
then Lynn should be counseled about this issue and given fair warning. Bringing this up to
5. Lynn’s next step should be:
A. Meet VP of HR
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Chapter 02 - Strategic Human Resource Management
B. Reinstate Willy herself
C. Meet Janet again
From the interaction in the scenario, it doesn’t appear that Janet is willing to work with Lynn
to reinstate Willy. Also, the disciplinary process that was taken and it’s impact on line
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Chapter 02 - Strategic Human Resource Management
Exercising Strategy
Strategy and HRM at Delta Airlines
Questions
1. How does the experience of Delta Air Lines illustrate the interdependence between
strategic decisions of “how to compete” and “with what to compete?” Consider this
with regard to both strategy formulation and strategy implementation.
Students’ answers may vary, but could include the following. Delta Air Lines show
the interdependence between “how to compete” and “with what to compete” by
2. If you were in charge of HRM for Delta Air Lines now, what would be your major
priorities?
Students’ answer may vary, but could include the following. As head of the HRM
department for Delta Air Lines, one’s priorities should be focused on the highly
committed workforce. Since these employees had the incentive to buy a plane to help
Managing People
Is Dell Too Big for Michael Dell?
Questions
1. How does the case describe Dell’s transformed strategy over the years in terms of
where to compete, how to compete, and with what to compete?
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Chapter 02 - Strategic Human Resource Management
Dell competes in the global market as the cost leader in the industry due to their
direct-sales model. Their core business has been their sales of PCs to businesses;
2. What are the major people issues that exist as Michael Dell retakes the reins at Dell?
Michael Dell needs to fill several key executive roles within the company to aid him in
3. How would HR help in addressing the issues that Dell faces?
HR would help Dell address their current need in attracting and developing the
HRM Failures
Top
1.1 Case 2: Risky Business: Hiring During a Layoff
Struggling companies are often forced to lay o workers to survive. But employers that
keep hiring even as they lay o workers are irting with the possibility of litigation.
For example, Microsoft recently announced plans to lay o 5,000 workers—a move
expected to save the company $1.5 billion. At the same time, the company said hiring
would continue—up to 3,000 new employees who are targeted for businesses that
continue to grow.
While it’s dicey, many employers say simultaneous layos and hiring let them get rid of
underperformers and higher-cost employees and bring in upgraded talent, often at a
lower cost. However, the practice can increase the chances of being served with a
discrimination claim.
In 2008, for example, Dell was named in a $500 million class-action suit claiming that the
company’s layo of nearly 9,000 employees targeted female and older employees. The
suit accuses management of doctoring performance evaluations to justify terminating
certain employees (who were then told no other jobs were available when, in fact, open
positions existed).
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Chapter 02 - Strategic Human Resource Management
Hiring during a layo presents risks. The lowest risk would occur if an organization has
several business units, each aected dierently by economic conditions. There, the
employer could lay o workers in one division while continuing to hire in another. The risk
is also lower in companies that lay o workers and then change or consolidate jobs before
hiring new workers to 6ll them. However, the risk of exposure increases when an
employer lays o workers and hires others to 6ll the positions without 6rst modifying the
jobs or their duties.
Question
If you’re an employer who’s laying o workers but still hiring, what could you do to
minimize the risk of a discrimination lawsuit?
Possible answers
Be able to demonstrate that a layo was necessary to reduce costs. At the same
time, be prepared to justify why hiring was also necessary.
Source: Fay Hansen, “Mass Sta Cuts Don’t Slam the Brakes on New Hires,” Workforce
Management, February 2009, http://www.workforce.com .
Additional Activities
Teaching Suggestions
Students who have not yet had a course in business strategy will find this material challenging
and new. Therefore, any exercises that ask the student to identify various strategies and
discuss HRM implications should be helpful. Following are suggestions of activities that
provide this type of learning activity. The HBR case, People Express, can be used in a whole
class period, most effectively in small group discussion initially.
The Frost, Inc. case is simpler and could be given as homework assignment and thenused in
class discussion. An outside speaker is suggested, if the time and person is available.
A. Harvard Business School Case 9-490-012, People Express Airlines: Rise and
Decline by M. Beer, Teaching Note 5-491-080 by Beer.
(Two case supplements have also been developed: People Express Supplement,
9-487-054. by C. Heckscher, and People Express, Update— January 1989, 9-489-022,
by D. Q. Mills and G. B. Friesen.)
This case describes the innovative approach to organizing and managing employees by
People Express and describes the company's eventual demise. This material can be
used to inform about leading-edge human resource practices and to raise questions
about what went wrong with the organization. Two videotapes (9-890-507 and
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Chapter 02 - Strategic Human Resource Management
9-890-508) are available as well.
Suggested Questions for "People Express"
1. How did People Express business strategy relate to its HR strategy? Was the business
strategy always closely linked to the HR strategy?
1. Would the People Express HR system remained effective
if it had chosen to remain in the low-density routes dominated by local and regional
carriers? Why? What aspects of the People Express HR system needed to be modified
if it was going to successfully compete with the major carriers?
2. What factors do you believe were most responsible for the
success of People Express from 1981 to 1985? In comparison to other factors, how
important was the management of human resources for People Express's success
between 1981 and 1985?
4. The following case describes an organization's attempt to modify its strategy and
problems that result from the attempted change. Questions for students to discuss or
respond to in writing follow the case.
B. Frost, Inc.
(Raymond Noe, Michigan State University)
Frost. Inc. is a manufacturer of overhead conveyor trolleys, used primarily in the auto
industry. With sales of $20 million, Frost is located in Grand Rapids. Michigan. Concerned
about depending too heavily on one cyclical industry, Frost's president made several attempts
to diversify the business. The attempts to move into manufacturing lawn mower components
and material handling systems, such as floor conveyors and hoists, failed. The engineers did
not know how to design unfamiliar components, production people did not know how to make
them, and sales people did not know how to sell them.
The president diagnosed the problem as inflexibility ("We have single-purpose machines and
single-purpose people, including single-purpose managers."). He decided that automating
production was the key to flexibility. Twenty-six old-fashioned screw machines on the factory
floor were replaced with 11 computer-numerically controlled machines and 18 robots. He
decided to build an automated store and retrieval inventory-control system and to completely
automate the front office to reduce indirect labor costs. He did not plan to approve additional
hires as a result of the automation.
Questions
1. What directional strategy was Frost pursuing?
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Chapter 02 - Strategic Human Resource Management
2. What HR practices should be in place to support this strategy?
In order to successfully pursue a strategy of diversification, people with the needed
skills must be hired or developed. Therefore, as the company moved into a new area,
engineers with experience in lawn mower components, etc., would need to be hired, or
3. What types of information should the HR function provide to support the new
strategy?
One of the unstated problems in this case may be with employee attitudes toward the
change, given that it appears that they did nor participate in the strategic choice. A
survey of attitudes may be useful. Secondly, a survey of employee skills and
With the need for higher skills and potentially for team organization, the HRM
function would need to determine the aspects of the organization's practices that no
C. Outside Speaker: An outside speaker for this chapter could be used very effectively.
Identify an HRM or organizational development practitioner who has recently
Business literature is filled with examples of businesses that are reevaluating their
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