CASE 10 The effects of HR decisions

CASE 10: Wells Fargo

Wells Fargo is an American international banking and financial services holding company that was accused by Federal regulations of illegal activity where the employees at the bank secretly created millions of on authorized bank and credit card accounts between 2011 and 2015 allowing the bank to make more money in fees and me the internal sales targets this scandal lead to 5300 low level employees being discharged. The bank paying 185 million dollors in fines and the southern retirement of longtime CEO and chairman John Stumpf.

Several former Wells Fargo employees described that the bank’s culture was built on selling as many products to customers as possible, and that management was putting relentless pressure on their employees and setting wildly unrealistic sales targets. It even led to managers asking their employees to cross ethical and legal lines in order to meet sales quotas. Some workers tried to stop these illegal tactics and contacted the HR department to report the unethical sales activities that were instructed upon them. Wells Fargo then retaliated against the whistleblowers by discharging them based on different reasons. Some of the employees were terminated because of tardiness, while others endured harsh workplace bullying and were either being pinned for something they didn’t do, or forced to sign false confessions of illegal behavior. This shows a major breach of trust from Wells Fargo, not providing protection for employees who were willing to speak up about illegal activities happening in the workplace.

Wells fargo had a cutthroat work environment where managers forced their employees to engage in illegal activities and used threats of employee terminations if they didn’t comply. These types of work environments result in employees working in fear of getting discharged, leaving no room for real employee engagement or ways for employees to develop and grow in their workplace. It’s clear to see that the management at Wells Fargo was too focused on getting their monetary awards that they turned a blind eye to the unethical and illegal behaviors that were happening. This case was a clear example of a company using an incentive system where the pressure to produce and meet targets resulted in undesirable behaviors of deceiving, stealing and engaging in identity theft of customers.

After the illegal acts became public, Wells Fargo’s leadership shifted the blame onto lower-level employees, an outrageous act committed in an attempt to salvage their damaged reputation. After the scandal broke, former CEO and chairman John Stumpf declared that they were going to drop sales goals that fueled bad behavior, as well as to abandon their old business model of boosting pay based on the number of products sold. However, many of the employees still remaining in the company continue to suffer from anxiety and depression due to the high-stress work environment. In the aftermath of the scandal, the workforce still didn’t feel understood or heard by the management. They were angry that the company put the blame on the employees, when it was the management that set too unrealistic targets and forced their employees into making the fake accounts. This is a case of lost employee engagement when the workforce sees how the management cares more about receiving monetary awards than the well being and fair treatment of their employees.

Sources:
BBC News 2016. Wells Fargo boss John Stumpf steps down. URL: http://www.bbc.com/news/business-37639648. Accessed: 2 May 2017.
BBC News 2016. Wells Fargo boss urged to resign over accounts scandal. URL: http://www.bbc.com/news/business-37419968. Accessed: 2 May 2017.
Egan, M. 2016. I called the Wells Fargo ethics line and was fired. URL: http://money.cnn.com/2016/09/21/investing/wells-fargo-fired-workers-retaliation-fake-accounts/index.html. Accessed: 2 May 2017.
Egan, M. 2016. Inside Wells Fargo, workers say the mood is grim. URL: http://money.cnn.com/2016/11/03/investing/wells-fargo-morale-problem/index.html. Accessed: 3 May 2017.
Egan, M. 2016. “Wells Fargo isn’t the only one”: Other bank workers describe intense sales tactics. URL: http://money.cnn.com/2016/09/22/investing/wells-fargo-fake-accounts-banks/index.html. Accessed: 3 May 2017.
Egan, M. 2016. Wells Fargo made me work overtime — without extra pay. URL: http://money.cnn.com/2016/09/30/investing/wells-fargo-workers-wage-theft-overtime/index.html. Accessed: 3 May 2017.
Egan, M. 2016. Workers Tell Wells Fargo Horror Stories. URL: http://money.cnn.com/2016/09/09/investing/wells-fargo-phony-accounts-culture/index.html. Accessed: 3 May 2017.
Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London.

CASE 9

CASE: Child refugees in Turkey making clothes for UK shops

There are three main challenges that managers have to face in today’s organizations, and it’s important to deal with them effectively in order for the company to stay competitive. These challenges can be classified as environmental challenges, organizational challenges and individual challenges.

• Environmental challenges: External forces influencing organizational performance, beyond management’s control. These forces include the constant rapid change of the business environment, the internet revolution transforming how firms manage their human resources dealing with information overflow and online learning, workforce diversity where there’s an increasing number of women and minorities, globalization that results in competition against foreign firms, legislation, evolving work and family roles where companies are introducing “family-friendly” programs especially concerning dual-career families, skill shortages and the rise of the service sector, and natural disasters and terrorism resulting in managers dealing with new and urgent HR issues.

• Organizational challenges: A company’s internal concerns and problems, often affected by environmental forces. Here proactivity is key for managers to find the organizational issues and deal with them before they become critical. Different HR practices can help with that, including decentralization which transfers responsibility to more relevant locations, downsizing to improve the company’s bottom line, organizational restructuring, implementing more self-managed work teams, adjusting the organizational culture to keep up with the environmental changes, utilizing information technology, internal security and data security, saving costs by outsourcing, and monitoring the company’s product integrity.

• Individual challenges: HR issues dealing with the decisions that are most relevant and important to individual workers. Individual challenges and organizational challenges have an affect on each other, and can both be addressed by using effective HR practices to manage the company and its workforce. These challenges include matching people and organizations, implementing ethics and social responsibility as an important ground factor for the workforce, the difficulties of maximizing productivity, ability and motivation in the workforce, offering a high quality of work life, finding ways to empower employees, the liability of brain drain, and job insecurity as a result of layoffs.(Gómez-Mejía, Balkin & Cardy 2016, 31-48.)

Strategic human resource (HR) planning captures the process of designing HR strategies and installing programs or tactics to implement them.

• There are many benefits of strategic HR planning: Encouragement of proactive rather than reactive behavior, explicit communication of company goals when they develop strategic objectives that exploits on the firm’s special talents, stimulation of critical thinking and ongoing examination of assumptions during a flexible process, identification of gaps between current situation and future vision, encouragement of line manager’s participation, identification of HR constraints and opportunities when overall business strategy planning is done together with HR strategic planning, and creation of common bonds as a result of a strategic HR plan that reinforces, adjusts, or directs the organization’s present culture in order to foster customer focus, innovation, fast growth and cooperation.

• There are also many crucial challenges that a company faces when developing an effective HR strategy: Maintaining a competitive advantage by establishing programs to expand present employees’ potential through carefully developed career ladders, reinforcing overall business strategy, avoiding excessive concentration on day-to-day problems and focusing instead on the long term goals, developing HR strategies suited to unique organizational features in firms that operate with different culture, leadership style and technology, coping with the environment within companies that deal with different industry environments, securing management commitment at all levels to support the HR strategies, translating the strategic plan into action that will affect practice, combining intended and emergent strategies to recognize environmental opportunities and threats, and accommodating change with a flexible HR strategy.
  (Gómez-Mejía et al., 2016, 49-52.)

Strategic HR choices are the options available in a company when designing its human resources system. Some common strategic HR choices are:

• Work flows
• Staffing
• Employee separations
• Performance appraisal
• Training and career development
• Compensation
• Employee and labor relations
• Employee rights
• International management
  (Gómez-Mejía et al., 2016, 52-55.)

Case summary:

Syrian refugee children have been making clothes for British shoppers, an undercover BBC investigation has found.

Panorama investigated factories in Turkey and found children had been working on clothes for Marks and Spencer and the online retailer Asos.

Adult refugees were also found working illegally on Zara and Mango jeans.

All the brands say they carefully monitor their supply chains and do not tolerate the exploitation of refugees or children.

In this case presented the challenge an organization can face when it comes to ethics and social resposibility.

Sources: Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London.

CASE8

CASE 8: EXIT MANAGEMENT

What are employee seperations?

 An employee separation occurs when an employee ceases to be a member of an organization.7 The turnover rate is a measure of the rate at which employees leave the firm. Well-managed companies try to monitor their turnover rate and identify and manage causes for turnover. The goal is to minimize turnover and the costs of replacing employees.

Case A:Nokia closes plant in Germany and relocates in Romania

Without the slightest information or consultation, the Finnish management of the world-leading mobile phone producer Nokia announced the abolition of 4,000 jobs. The ETUC decided to revise the EU directive on European Works Councils (EWCs).

In particular, it must be guaranteed that companies cannot ride roughshod over European and national workers’ rights without sanctions. In any case it must be guaranteed that no layoffs or transfers can be carried out without prior thorough information and serious consultations with the workers’ representatives and their trade unions. 

 The EU Commission can thereby make a meaningful sign that it is not only concerned for a better business environment but that it also has the power to strengthen worker’s rights across Europe.

Case B: Nokia cuts 3500 jobs "to ensure profitability

Nokia informed employees of new, drastic job cuts on Thursday. A total of 3,500 jobs are to go. The plant in Cluj, Romania, which is just four years old, is to be closed by the end of this year. Meanwhile the fates of those in Hungary, Mexico and Salo, Finland hang in the balance.

The company's Executive Vice President of Markets, Niklas Savander, says the job cuts are intended to ensure the company remains profitable both now and in the future.

”It is impractical to manufacture products in Europe when one has fly all the components to Europe and then fly the readymade phones back to Asia,” he stated.

Savander confirmed the company planned to end the assembly of phones at the Salo plant and transfer operations to Asia.

Case C: Hundreds of Nokia's outsourced Symbian developers leaving Accenture

“Around 40 percent of those who were transferred have sought [the pay-offs],” said shop steward Sami Sallmén. “A majority of them have signed leaving agreements. That’s based on the survey we commissioned.”

 Sallmén says that there is now so little work that some Accenture employees are left twiddling their thumbs. The severance packages have been an agreeable offer for many outsourced developers.

Unions had criticised the outsourcing arrangement from the start. They had feared that Symbian developers—working on an operating system that was to be replaced by Windows Phone as the main smartphone platform for Nokia—would face a short career with their new employers.

Accenture management are keeping a low profile on the story. The company’s communications department explained by email that the lay-off programme is voluntary. It says that the packages have been offered to those former Nokia employees that have not yet found new responsibilities within Accenture. The company would not confirm how many former Symbian developers had left.


Source: Nokia C Nokia B Nokia A  Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248

CASE7

Employee Engagement

What is employee engagement

• Employee engagement is not employee satisfaction or happiness.
• Employee engagement is the emotional commitment the employee has to the organization and its goals.
• When employees care—when they are engaged—they use discretionary effort.

What happens when the employees are engaged?

• According to Towers Perrin research companies with engaged workers have 6% higher net profit margins, and according to Kenexa research engaged companies have five times higher shareholder returns over five years.
• Engaged Employees lead to…
     higher service, quality, and productivity, which leads to…
        higher customer satisfaction, which leads to…
           increased sales (repeat business and referrals), which leads to…
              higher levels of profit, which leads to…
                 higher shareholder returns (i.e., stock price)

"To win in the marketplace you must first win in the workplace."—former Campbell's Soup CEO, Doug Conant

What has to happen to make engagement work?

• The most important enabler: the employees believed that their senior management had a sincere interest in their well-being. 
• The second driver was the extent to which employees believed that they had improved their skills and capabilities over the previous year.
• Leadership

Example:

Top 3 engagement idea from google

(Source: Forbes: What is employ engagement , Enabler of engagement, Becoming irresistible: A new model for employee engagement)

CASE6

Case 6: Managing work safety and health

Workplace Safety and the Law

There are two sets of workplace safety laws: (1) workers’ compensation, an employer-funded insurance system that operates at the state level, and (2) the Occupational Safety and Health Act (OSHA), a federal law that mandates safety standards in the workplace.
Workers’ compensation—which consists of total disability, impairment, survivor, medical expense, and rehabilitation benefits—is intended to ensure prompt and reasonable medical care to employees injured on the job, as well as income for them and their dependents or survivors. It also encourages employers to invest in workplace safety by requiring higher insurance premiums from employers with numerous workplace accidents and injuries. 
OSHA compels employers to provide a safe and healthy work environment, to comply with specific occupational safety and health standards, and to keep records of occupational injuries and illnesses. Its safety standards are enforced through a system of inspections, citations, fines, and criminal penalties.

Managing Contemporary Safety, Health, and Behavioral Issues

The most significant safety, health, and behavioral issues for employers are AIDS, violence in the workplace, cumulative trauma disorders, fetal protection, hazardous chemicals, and genetic testing. In all of these areas, line managers must deal with a variety of practical, legal, and ethical questions that often demand a careful balancing of individual rights (especially privacy rights) with the needs of the organization.

Safety and Health Programs

Comprehensive safety programs are well-planned efforts in which management (1) involves employees and carefully considers their suggestions, (2) communicates safety rules to employ- ees and enforces them, (3) invests in training supervisors to demonstrate and communicate safety on the job, (4) uses incentives to encourage safe behaviors and discipline to penalize unsafe behaviors, and (5) engages in regular self-inspection and accident research to identify and cor- rect potentially dangerous situations.
Employee assistance programs (EAPs) are designed to help employees cope with physical, mental, or emotional problems (including stress) that are undermining their job performance.
Wellness programs are preventive efforts designed to help employees identify potential health risks and deal with them before they become problems. 

Wellbeings at work: Physical, psychological and social wellbeings 

Case 6A: Exhausted' Merrill Lynch intern died from epileptic fit in shower after he 'pulled three all-nighters at bank where employees compete to work the longest hours

• Moritz had medical conditions the company didn't know about
• Long working hours caused fatigue
• The bank does not monitor employees' working hours
• Lack of wellness programs for interns

Case 6B: Do Corporate Wellness Programs Really Work?

• Too many wellness programs are only focused on physical wellbeing
• Focus on wellbeing beyond the physical—it can lead to happier, healthier employees
• Wellness programs are more effective when considering long-term ROI

Sources: Case A CASE B Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248

CASE5

Case 5: The puzzle of motivation

Key points and challenges

• There is a mismatch between what science knows and what business does. Businesses are not doing things according to science.
• Nowadays how we motivate people in HRM is built entirely around extrinsic motivators.
• Too many organizations are making their decisions, their policies about talent and people, based on assumptions that are outdated, unexamined, and rooted more in folklore than in science.
• Challenges in pay-for-performance plans

Good points taken

• Rewards work really well for those sorts of tasks, where there is a simple set of rules and a clear destination to go to.
• Rewards narrow our focus by nature, and concentrate our mind.
• Left-brained, routine kind of work can easily be outsourced, what really matters are the right-brained, creative, conceptual kind of abilities.
• In 21st century we need a new approach, the reward-and-punishment is simply outdated.

Problems in pay-for-performance plan

• The "do only what you get paid for" syndrome
• Incentives might induce employees to engage in undesirable behaviours
• Individual merit system assume that the employee is in control of the major factors affecting his or her work output
• Individual performance is difficult to measure, and tying pay to inaccurate performance measure is likely to create problems.
• The credibility gap
• Merit pay can place employees under a great deal of stress and lead to job dissatisfaction
• Decrease employees' intrinsic motivation (block talents and creativity)

Solution

• Promote the belief that performance makes a difference
• Build employee trust
• Use motivation and nonfinancial incentives
• Use multiple layers of rewards
• Increase employee involvement

Sources: Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248

TED talk the puzzle of motivation

CASE 4

Case: Super-sized gamification for training- McDonald's is loving it

Key points and challenges:

• The case is mainly about McDonald's new training method

CASE 2

Case: Receipt rage: Why food is being served with a side of hate?

Key points and challenges

• Waiters bullying customer with disrespectful words
• Lack of effective staff training
• Servers are not in tune of cultural sensitivity
• Lack of guidelines for dealing with servers who wrote offensive language on receipts
• Damaged brand image

Solutions:

• Training programs for the new waiters 
• Build disciplinary procedure in the restaurant

Five Steps for effective disciplinary sessions

1. Detriment whether discipline is called for. Consult with HR expert and get some feedback
2. Outline clear goals for the discussion in your opening remarks. The employee should gain a clear idea of your expectation for improvement
3. Ensure two-way communication. Discussion is much more helpful than a lecture.
4. Establish a follow-up plan. Especially the time frame
5. End on a positive note. Emphasise the employee's strength, so he/she will leave the meeting believing the company want the employee to succeed.

Progressive discipline

Four step progressive discipline

Positive discipline: a discipline procedure that encourages employees to monitor their own behaviours and assume responsibility for their actions.Positive discipline replaces the punishment used in progressive discipline with counselling sessions. These sessions focus on getting the employee to learn from their past mistakes and initiate a plan to make a positive change in behaviour.

Preventing the need for discipline with HRM

1. Recruitment and selection
2. Training and development
3. Human resource planning
4. Performance appraisal
5. Compensation

News related to the case:

1. Offensive cake:Bullying manager keeps job https://www.sunshinecoastdaily.com.au/news/offensive-cake-bullying-manager-keeps-job/2563029/
2. Many Australian med students being taught by "humiliation" https://www.sunshinecoastdaily.com.au/news/Many-Australian-med-students-being-taught-by-humil/2742064/

Source:

Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248

CASE1

Case: What is was really like working as an Abercrombie model?

Key points and challenges

• Problems with recruiting and selecting processes
• Risk damaging the company's image
• Recruiting: Ask random good-looking people in the mall
• Selecting: No interview

Solutions:

Recuiting process:

• Post job advertisement with clear job description on social media, news paper or magazines
• Use recruitment services/ companies (e.g. Monster)
• Applicant-centered approach: treat job applicants like customers

Selection process:

• Change the requirements (focus on the attitude and personality instead of appearance)
• Proper application forms with attachments (letters of recommendation, certificates)
• Personality, ability, honesty tests
• Interviews

News related to the case:

1. To land a job at Facebook, one employee had 17 rounds of interviews.

Source: LINK

2. Why one CEO insists on interviewing at 6:30 am?

Source: LINK