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CHAPTER 12
INTERNAL EMPLOYEE RELATIONS
CHAPTER OBJECTIVES
12.1 Explain the concept of employment at will
12.2 Describe the concept of discipline and summarize disciplinary action
12.3 Explain employment termination of various occupational groups
12.4 Explain the use of ombudspersons and alternative dispute resolution
12.5 Describe transfers, promotions, resignations, and retirements as factors involved
in internal employee relations
KEY TERMS
Disciplinary action: Invoking a penalty against an employee who fails to meet
organizational standards.
Hot stove rule: An approach to disciplinary action that has four consequences which are
analogous to touching a hot stove.
Progressive disciplinary action: Approach to disciplinary action designed to ensure that
the minimum penalty appropriate to the offense is imposed.
http://hrdailyadvisor.blr.com/?5=discipline: Numerous articles related to disciplinary
action and progressive disciplinary action.
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Outplacement: A procedure whereby laid-off employees are given assistance in finding
employment elsewhere.
Transfer: Lateral movement of a worker within an organization.
Promotion: Movement of a person to a higher-level position in an organization.
Exit interview: Means of revealing the real reasons employees leave their jobs; it is
conducted before an employee departs the company and provides information on how to
correct the causes of discontent, and it reduces turnover.
Post-exit questionnaire: Questionnaire sent to former employees several weeks after
they leave the organization to determine the real reason they left.
LECTURE OUTLINE
INTERNAL EMPLOYEE RELATIONS
Those human resource management activities associated with the movement of
employees within the organization. Some topics related to internal employee relations
include terminations, demotions, downsizing, transfers, promotions, and resignations.
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states recognize something referred to as an implied covenant of good faith and fair
dealing in the employment relationship.
DISCIPLINE AND DISCIPLINARY ACTION
Discipline is a state of employee self-control and orderly conduct that indicates the extent
of genuine teamwork within an organization. Disciplinary action involves invoking a
penalty against an employee who fails to meet organizational standards.
APPROACHES TO DISCIPLINARY ACTION
Several concepts regarding the administration of disciplinary action have been developed
to facilitate the disciplinary process.
● HOT STOVE RULE—According to this approach, disciplinary action should
have the following consequences: burns immediately, provides warning, gives
consistent punishment, and burns impersonally.
PROBLEMS IN THE ADMINISTRATION OF DISCIPLINARY ACTION
The reasons managers want to avoid disciplinary action include lack of training, fear, loss
of friendship, time loss, loss of temper, and rationalization.
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EMPLOYMENT TERMINATION
The most severe penalty that an organization can impose on an employee, and therefore it
should be the most carefully considered disciplinary action.
TERMINATION OF EMPLOYEES AT VARIOUS LEVELS
Regardless of the similarities in the termination of employees at various levels, distinct
differences exist with regard to non-managerial/non-professional employees, executives,
and middle- and lower-level managers and professionals.
● EXECUTIVES—Unlike workers at lower-level positions, CEOs do not have to
worry about their positions being eliminated. Their main concern is pleasing the
board of directors because hiring and firing the CEO is a board’s main
responsibility.
DEMOTION AS AN ALTERNATIVE TO TERMINATION
Process of moving a worker to a lower level of duties and responsibilities which typically
involves a reduction in pay.
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people employed. Typically, both the organizational structure and the number of people
in the organization shrink for the purpose of improving organizational performance.
● NEGATIVE ASPECTS OF DOWNSIZING—When downsizing is chosen,
companies typically describe the positive results, such as improving the bottom
line. There may also be a negative side to downsizing.
OMBUDSPERSON AND ALTERNATIVE DISPUTE RESOLUTION
Ombudsperson is a complaint officer who has access to top management and who hears
employee complaints, investigates, and recommends appropriate action. Ombudspersons
are impartial, neutral counselors who can give employees confidential advice about
problems ranging from abusive managers to allegations of illegal corporate activity.
TRANSFERS
Lateral movement of a worker within an organization.
PROMOTIONS
Movement of a person to a higher level position in the company.
RESIGNATIONS
Even when an organization is totally committed to making its environment a good place
to work, workers will still resign.
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● ATTITUDE SURVEYS: A MEANS OF RETAINING QUALITY
EMPLOYEES—Survey that seeks input from employees to determine their
feelings about topics such as the work they perform, their supervisor, their work
environment, flexibility in the workplace, opportunities for advancement, training
and development opportunities, and the firm’s compensation system.
● OFFBOARDING—Facilitates employee departure from the company by
assisting the completion of exit tasks, including exit interviews, forms
completion, the return of company property, and ensuring that employees receive
the appropriate extended benefits.
RETIREMENTS—Most long-term employees leave an organization through retirement.
Phased retirement is any arrangement that allows people to move from full-time work to
retirement in steps.
ANSWERS TO CHAPTER 12 QUESTIONS FOR REVIEW
12-1. Define internal employee relations.
Internal employee relations consist of the human resource management activities
12-2. What is meant by the term employment at will?
12-3. What is the difference between discipline and disciplinary action?
12-4. What are the steps to follow in the disciplinary action process?
12-5. Describe the following approaches to disciplinary action:
a. hot stove rule
b. progressive disciplinary action
12-6. What are the problems associated with the administration of disciplinary action?
12-7. How does termination often differ with regard to non-managerial/non-
professional employees, executives, and middle- and lower-level managers and
professionals?
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12-8. Define demotion. Why should it be used very cautiously?
12-9. Define downsizing. What are some problems associated with downsizing?
12-10. Define outplacement and severance pay.
12-11. Define ombudsman and alternate dispute resolution (ADR). Why might a firm
want to use an ombudsman or alternate dispute resolution?
12-12. Distinguish between transfers and promotions.
12-13. Briefly describe the techniques available to determine the real reasons that an
12-14. Define offboarding. Why is it important?
12-15. Define phased retirement. Why do so many employees desire to have a phased
retirement?
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part-time job experience fewer major diseases and are able to function better day-to-day
than people who stop working altogether. Retirement is treated as a phased process rather
than a sudden event marked by hearing a sentimental speech and receiving a gold watch.
About half of all American workers phase into retirement in some way.
DISCUSSION OF CHAPTER 12 INCIDENTS
HRM Incident 1: Employment at Will
Aaradhya Patel is the HR manager for Apothec Pharmaceuticals. She is working with
district sales managers who are completing annual performance reviews of
pharmaceutical representatives. The most important performance criterion is dollar sales
volume for the previous year’s calendar quarters. Each representative is expected to
achieve at least $750,000 in quarterly sales.
Aaradhya informed James that he could fire only Stephen. Although their performances
were similarly below standard, there were important differences in employment terms.
Until five years ago, newly hired Apothec sales representatives signed contracts. The
performance expectations section explicitly states that an employee whose performance
falls below standard shall be given one year to meet expectations; otherwise, face
possible employment termination. Since then, Apothec no longer issues contracts. Offer
letters clearly specify at-will employment. Richard was hired eight years ago, and
Stephen was hired four years ago.
QUESTIONS
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12-23. Do you agree with Apothec’s decision to eliminate employment contracts?
Discuss.
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12-24. Do you think James should act on his recommendation to fire Stephen? Explain.
12-25. What are some of the financial and nonfinancial costs associated with
employment contracts? At-will employment? Explain.
HRM Incident 2: To Heck with Them!
Isabelle Anderson is the North Carolina plant manager for Hall Manufacturing Company,
a company that produces a line of relatively inexpensive painted wood furniture. Six
months ago Isabelle became concerned about the turnover rate among workers in the
painting department. Manufacturing plant turnover rates in that part of the South
generally averaged about 30 percent, which was the case at Hall. The painting
department, however, had experienced a turnover of nearly 200 percent in each of the last
two years. Because of the limited number of skilled workers in the area, Hall had
introduced an extensive training program for new painters, and Isabelle knew that the
high turnover rate was very costly.
QUESTIONS
12-26. Interpret a turnover rate of 200 percent. What does it mean?
12-27. Do you believe that the exit interviews were accurate? Explain your answer.
12-28. What do you believe was the cause of the turnover problem?