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INSTRUCTOR’S MANUAL

APPLICATIONS IN HUMAN RESOURCE MANAGEMENT 7E

PART 2

Meeting Human Resource Requirements:

Job Analysis/Design, Planning, Recruitment, and Selection

Analysis / Planning / Outsourcing / Mergers / Layotis

25. CASE: EMPLOYEE LAYOFFS AT ST. MARY’S HOSPITAL

I. OVERVIEW:

Sooner or later all ins tu ons and all industries face the necessity for retrenchment when

revenues are not suffcient to cover expenses. Employee layo-s are a common response. However,

other cost cu/ng measures such as job-sharing, cutbacks in capital expenditures, genera ng new

revenue, and cutbacks in non-labor areas (i.e., supplies) are other alterna ves available under

retrenchment condi ons.

This case involves the necessity for a hospital to achieve short run savings through employee

layo-s in order to balance its budget. In addi on, the hospital needs to develop new revenue sources to

prevent future layo-s. The case requires the student to develop the specific of a layo- plan based upon

some guidelines presented to the human resource manager by the administrator and the board of

directors.

Complica ng the situa on are the religious orienta on of the hospital, its lack of previous

experience with layo-s, and the administrator’s desire to be “fair” and “equitable” in light of the lack of

formal policies or guidelines concerning layo-s. The board’s recommenda on that layo-s be

concentrated in “nonessen al areas” is not very helpful since all areas of hospital opera ons are

“essen al” in one respect or another. Topics covered include employee layo-s, downsizing, and human

resource planning.

II. OBJECTIVES:

A major objec ve of this case is to give students an apprecia on of the complexi es of planning

and implemen ng employee layo-s in situa ons where labor contracts do not specify such procedures:

Another objec ve is to illustrate the difficulty of using “merit” in layo- policies in the absence of a

sophis cated performance appraisal system. As in the case of most organiza ons, this hospital would

have a difficult me legally defending its use of the present performance appraisal system except at the

extremes of employee performance. A final objec ve is to cause students to think crea vely about

innova ve methods of implemen ng layo-s or reducing labor expenses.

III. DISCUSSION:

The major problem here is the inability of the hospital to generate enough revenue to cover its

present costs. The reason is the declining volume of pa ents resul ng from declining hospital

admissions and increased compe on for pa ents. The lack of a strategic planning process as well as a

human resources planning process have exacerbated this problem.

Alterna ves include immediate employee layo-s, developing new revenue sources (new

programs and services), or innova ve methods of reducing labor costs (i.e., work sharing). In this

par cular case, the hospital did implement immediate layo-s but was able to recall all laid o- employees

back (although not all were available) as a result of gradually increasing revenues from new services.

IV. ANSWERS TO CASE QUESTIONS:

1. Iden fy the major problem or problems and the causes.

2. What are some alterna ves for dealing with these problems? For example, is it

possible to avoid layo-s through the use of aDri on?

Among possible alterna ves are development of new products and services, reducing work

hours for current employees, closing some units of the hospital, reduc on in sta- through aDri on,

3. Develop a plan for implemen ng employee layo-s over the next year which will

generate $3 million in savings. Give speci8c details concerning department affected,

the use of seniority vs. merit, the amount of no ce, and outplacement ac vi es.

What addi onal informa on (if any) would you need? Provide a ra onale for each

recommenda on together with reasons other alterna ves were not chosen.

One possible approach to genera ng $3 million in savings as a result of employee layo-s might

be to start by laying o- those employees whose performance is clearly unsa sfactory. The percentage of

Department Employees x Payroll = Savings

These data indicate layo-s of the poorest performers in each department would yield a savings

of approximately 50% of the $3 million savings that need to be generated (note physicians were not

included since they perform a crucial role of admi/ng and trea ng pa ents). Addi onal savings would

4. What might be the effect of a layo- plan on “survivors” in terms of morale, job

security organiza onal commitment, produc vity, and career planning? How could

you avoid or minimize any poten al problems in these areas?

Layo-s may cause survivors to experience guilt and fear of the future. In addi on, there may be

more poli cal in8gh ng as survivors try to posi on themselves to survive future layo-s. These effect

5. What long-term solu ons do you see for the hospital once it gets its cash Sow

problems under control and eliminates its de8cit? What can it do to increase

revenue so that future layo-s will not be necessary?

Long-term solu ons require the development and successful marke ng of new services. Among

possible new services are wellness programs, weight reduc on/control, substance abuse clinics,

6. What di*cul es exist in using “performance” as a criterion for layo-s? How could

such di*cul es be overcome?

The problem is that “performance” criteria and measurement are not always objec ve or valid.

criteria and the actual instrument against which their performance will be measured. Finally, the

26. CASE: STRATEGIC HUMAN RESOURCE MANAGEMENT

I. OVERVIEW:

This case provides an excellent example of the linkage between organiza on strategy and human

resources processes. When an organiza on’s strategy shiTs, successful implementa on requires that

new employee behaviors be rewarded and some old behaviors be either ignored or sanc oned. In

addi on, it may require the development of a whole new organiza on culture. The implica ons for

employees who have adapted to and been successful in the previous culture are ominous. Resistance to

proposed strategic ini a ves is common under these circumstances.

Most organiza ons fail to plan human resource changes when new strategic ini a ves are

developed. They oTen fail to understand the existence of such linkages, much less to iden fy and

implement the appropriate human resources strategies. In the present case, Dean Blake has explicitly

recognized and proposed human resource changes which are needed to implement his strategy for the

College. Clearly, the faculty changes required by this strategy make both the strategy and the necessary

human resources changes quite controversial.

II. OBJECTIVES:

The first objec ve of this case is to make students aware of the linkages between organiza on

strategy and human resources strategy. Failure to consider this linkage and make appropriate human

resource modi8ca ons could result in failure of the organiza on strategy.

A second objec ve is to provide a concrete example of a speci8c strategy and its associated

human resource implica ons so that students are able to develop their own linkages. A final objec ve is

to sensi ze students to the di*cul es in implemen ng both organiza onal and human resource

strategies. The poli cal aspects of implemen ng organiza on and human resource strategies need to be

emphasized.

III. DISCUSSION:

The major problems here involve the mismatch of the present faculty with the new strategic

direc ons of the College and the new Dean’s aDempt to implement the strategic and human resources

changes before support has been developed.

Alterna ve solu ons include revising the strategic plan or increasing faculty support for the

exis ng strategic plan. The best solu on might involve some combina on of both alterna ves. The

College needs to move ahead and develop new markets. However, a slower implementa on phase

coupled with a preserva on of tradi onal academic values (i.e., research and publica on) might help the

College avoid conSict and a crisis atmosphere.

IV. ANSWERS TO CASE QUESTIONS:

1. How and why do strategic decisions affect human resources management policies?

Can human resources policies or constraints ever affect strategy? Why or why not?

Strategic decisions affect human resources management policies because successful

implementa on of strategy requires human resource policy which reinforces and supports the strategy.

For example, if the successful delivery of new services is important to the future viability of an

2. Iden fy the problem and causes of the problem in this case.

The problem is a lag between the new organiza onal mission, vision, values, strategic goals and

objec ves and the new culture needed to implement the new strategic orienta on. The problem causes

3. Evaluate Dean Blake’s strategy and human resource policies. Did the strategy make

sense in terms of the internal and external environment of the college? Do the

human resource strategies support and reinforce the organiza onal strategy? Why

or why not?

Dean Blake’s strategy and human resource policies were appropriate. They were matched with

the College’s overall external environment and with each other. However, they were not well matched

4. Evaluate the process by which Dean Blake implemented the strategic and human

resources changes. Can you suggest any improvements?

The process by which Dean Blake implemented strategic and human resource changes was

faulty. Too many changes of a signiticant nature were being aDempted in too short a period of me.

Breaking the strategic plan into subparts, se/ng priori es, and then aDemp ng to “sell” the most

5. How can resistance to his plans and strategies be overcome?

Dean Blake should set up a Strategic Implementa on CommiDee consis ng of himself, other

administrators in the College, and faculty representa ves. This CommiDee should follow a procedure

27. CASE: THE ALTERNATIVE WORK SCHEDULE

I. OVERVIEW:

When students are asked to describe an alterna ve work schedule, they undoubtedly men on

Sex- me. However, there are a large number of other work schedules that firm use. For example, some

employees work four ten-hour days and are o- three, while in the mari me industry, employees may

work two straight weeks while on a boat and are then o- two weeks. This case shows an unusual work

schedule that is actually in use at several firm.

II. OBJECTIVES:

1. To familiarize students with an unusual alterna ve work schedule and its advantages

and disadvantages.

2. To make students aware that firm use a variety of work schedules, that there is no

one best schedule, and that each firm must tailor make a schedule to 8t its

par cular needs.

III. ANSWERS TO CASE QUESTIONS:

1. What do you see as the strengths and weaknesses of the HR Director’s proposed

work schedule from (a) the employees’ perspec ve, and (b) the firm’s perspec ve?

From the perspec ve of an employee, this schedule has many advantages. They get 14 days o-

each month, including one period of 8 straight days. This permits them to take a vaca on each month.

They earn 8 hours of over me pay each month and get holiday pay which helps them financially. They

also have less commu ng since they don’t need to go back and forth to work as oTen. This schedule

also has disadvantages. It requires that employees switch back and forth between day and night work.

From the perspec ve of the firm, this schedule has the advantage of minimizing the number of

employees needed. This reduces me spent hiring and training new employees and reduces employee

fringe benefit costs. There are no part me employees, so none of the problems associated with them

occur. The firm also doesn’t need to schedule employee vaca ons or maintain large cafeterias or

employee lounges. On the other hand, the firm may have di*cul es in coordina ng, communica ng to,

2. Would you recommend the firm use the new work schedule? Why?

This firm has been using this schedule for several years and according to the HR manager, it is

working quite well. He stated that at first there was considerable turnover because some employees

3. What alterna ve work schedule could be used?

The present work schedule was adopted because the firm needs to sta- the plant 24 hours a day, 363

days a year, and wants to minimize labor costs. So, any alterna ve to this schedule must also accomplish

these objec ves. One alterna ve the firm might want to consider is to follow the same basic me

schedule as they are currently using but not rotate crews between day and night shiTs. So, some teams

28. EXERCISE: WHICH EMPLOYEE SHOULD BE TERMINATED?

I. OBJECTIVES:

1. To make students aware of the di*cul es involved in making termina on decisions.

2. To familiarize students with possible criteria a manager can use in making

termina on decisions.

3. To give students prac ce in conduc ng termina on interviews.

II. OUT-OF-CLASS PREPARATION TIME: 10 minutes to read exercise and decide which employee

should be terminated.

III. IN-CLASS TIME SUGGESTED: 40-50 Minutes

IV. PROCEDURES: See Text

V. DISCUSSION:

There are two aspects of this exercise which are par cularly worthy of discussion:

1. What criteria did par cipants use in determining whom to terminate?

2. How e-ec vely was the termina on interview conducted?

The exercise provides many poten al criteria. Six are listed in Harvey’s evalua on: current

salary, work quality, work quan ty, knowledge of job, dependability, and coopera veness. In addi on,

the profile of each employee suggest many other poten al criteria including: age, race, marital status,

seniority, educa on, congeniality, willingness to work over me, loyalty, involvement in community

a-airs, absenteeism, physical condi on, and accuracy. As in most termina on decisions in industry,

par cipants need to consider a wide range of variables in making their decisions. While no par cular set

of criteria can be labeled as “correct,” the organiza on’s long range e-ec veness is the ul mate goal.

Several aspects of the decision making process can be discussed. First, which of the poten al

criteria did the par cipants even consider? Why? How, if at all, did par cipants rank order those they

did consider? Why? Second, how did the par cipants combine the criteria they considered important?

What weights did they aDach to each, either implicitly or explicitly? How did they determine these

weights? Third, in making their decision, did par cipants use a compensatory model, a disjunc ve

model, or a conjunc ve model?

While discussing the alterna ves, par cipants some mes want to avoid selec ng anyone to be

terminated. They conclude that no one should be fired and that, instead, some other solu on is

appropriate (e.g. reducing everyone’s work hours, gran ng more vaca on me, crea ng new posi ons,

or wai ng for natural aDri on to occur). Faculty members can either inform the group that this answer

is unacceptable and that they must pick an employee to terminate or can let the group’s answer serve as

a basis for discussing alterna ves to termina on.

In discussing whom they will 8re, par cipants also frequently consider how easy or hard it will

be to conduct a discharge interview with a given employee. Par cipants should realize that this prac cal

issue cons tutes a very real criterion that some managers use in determining whom they will discharge.

Even though it is a criterion just as is work quan ty, work quality, etc., it is oTen not recognized as such.

One other aspect of this exercise that could be discussed is the legal issues that might surface if

par cular individuals are terminated. For example, if Mr. Pope is terminated, would the firm be found

guilty of viola ng the Age Discrimina on in Employment Act?

Students differ widely in terms of how they conduct the termina on interview. Some just

announce to the employee that he or she has been terminated and, aTer the employee responds, the

role play ends. Others will terminate the employee following steps used in industry. They will explain

the decision, discuss the e-ect of termina on on employee benefits, ask the employee to sign a

termina on form, ask for the employee’s I.D. card, etc. Faculty members can use the exercise to discuss

the steps in the termina on process if they desire. Alterna vely, they can de-emphasize this aspect of

the exercise.