Essay Questions

1. Understand how to enhance employee/management relations – approaches to disciplinary

action and alternative dispute resolution mechanisms
CHAPTER 13
Enhancing Employee/Management Relations
 involve team members
o ensure they feel important and valued at the organization
o assign them responsibilities according to their interests/abilities
 encourage effective communication among team members
o feel comfortable enough to discuss and collaborate with one another
o encourage equal contribution amongst employees
 managers should understand their team and be accessible to them
o communicate clearly with employees so that nothing is confused or misunderstood
o treat each employee fairly and without partialities
o provide an ‘open door’ environment and allow employees to freely speak
 cooperation, communication and inspiration
o implement activities such as workshops, seminars, training programs or luncheons to bring
employees together to seek opportunities to work together
o align goals with rewards, such as casual days, fitness perks, bonuses, free lunches, etc.
o accept and take advantage of feedback to ensure you’re performing better every day

Disciplinary Action
 supervisors/managers are responsible for addressing unacceptable behaviour in a consistent and
objective manner and to ensure that before disciplinary action is taken, the matter has been properly
investigated and the employee has been given an opportunity to present his/her side
o HR department is responsible for developing a disciplinary policy, obtaining management
approval and ensuring that the disciplinary actions taken by management representatives are
consistent with the policy, with collective agreements and current law
 results of inaction regarding employee discipline can be viewed as an implied approval of the
unacceptable behaviour, which makes it more difficult to address down the road
o condemnation is considered a mitigating factor when deciding on disciplinary penalty, as its
existence makes it more to withstand an appeal or to successfully defend a wrongful dismissal suit
 organizational rules are necessary for an effective disciplinary system, as they tell employees what
behaviour is expected of them
o rules provide an established standard against which behaviour can be judged
o important that rules are thoroughly communicated to employees
o failure to appropriate communicate rules can be a mitigating factor that may affect the severity of
the disciplinary action or weaken management’s position in a wrongful dismissal suit
 goal of discipline is to obtain a change in behaviour, not to punish employees
o how you treat employees in a disciplinary situation is almost as important as what you decide to do
to address the behaviour
o management conduct can sometimes make the difference between winning and losing wrongful
dismissal suits as well as being able to successfully defend a charge of harassment from the
employee being disciplined

Approaches to Disciplinary Action

Progressive Discipline
 discipline is imposed in a progressive manner – there are 4 steps:
o oral warning or reprimand
o written warning
o suspension without pay
o dismissal
 last step is a last resort when other, light disciplinary measures have failed to result in behavioural
change
o goal is to obtain a positive change in behaviour
o when this approach is used, employees know where they stand with regard to their
unacceptable behaviour, they know that improvement is expected and what will happen
next if the behaviour doesn’t change
 Negative aspects of progressive discipline:

Positive Discipline
 aka. “non-punitive” discipline
 new approach focussing on the early correction of misconduct where the employee assumes full
responsibility for their conduct and job performance
 here, the employee and supervisor work in a cooperative way and engage in joint discussions and
problem-solving to resolve problems at an early stage
 note that this approach is based on giving reminders to employees rather than reprimands
 TEXT

Alternative Dispute Resolution Mechanisms

 union: employees may use the grievance process to challenge disciplinary action taken against
them
 non-union: other approaches may be taken under the umbrella of Alternative Dispute Resolution
(ADR)
 various approaches allow employees to express formal disagreement with the action taken by
management without fear of reprisal
 six procedures:
o Step Review System
 like the grievance system
 employee complaints are reviewed by successively higher levels of management
 must be a formal written complaint and each step of the process (usually 4) has its own
timelines related to appeals and replies
 fig. 13.8 (p. 474) illustrates the steps
o Peer-Review System
 “complaint committee”
 composed of an equal number of employee and management representatives
 functions much like a jury in that it hears both sides, weights evidence and members vote to
render a final decision
 employees tend to believe in the value of this system – can be used by itself or along with a
step review system
o Open-Door Policy
 used in an informal sense to denote the fact that a manager welcomes discussion and the
opportunity to resolve employee issues before they become formal complaints
 more formal sense denotes a way of settling employee complaints by identifying various levels
of management above the immediate supervisor to which the employee can go with their
complaint
 several weaknesses: employees are reluctant to approach management representatives; they
feel that managers aren’t willing to listen to complaints; decision-making may not be consistent
due to feeling caught between employees and their subordinates; unless the system is well-
handled, employees see it as lacking credibility
o Ombudsperson System
 designated individual (full-time employee) to whom employees may seek counsel for the
resolution of their complaints
 doesn’t function as judge and has no decision-making power
 functions as a mediator and tries to support both parties in reaching a settlement
 doesn’t have power to overturn a decision but should be able to move complaints to the
appropriate ‘higher-up’ person if they believe the decision wasn’t fair
o Mediation
 involves the use of an impartial and neutral third party who helps both sides reach an
agreement acceptable to both
 main focus is fact-finding and opening lines of communication between two parties
 has no power to make a decision but works through communication and persuasion to help
parties reach a settlement
o Arbitration
 can be used to resolve disputes by having an individual or panel make a decision that’s binding
on both parties
2. Know how compensation works in an organization and the types of incentive plans that are
offered
CHAPTER 9
Important Aspects
 Strategic compensation planning links employee motivation and concerns for compensation to
the objectives and goals of the organization
 organizations seek to attract and maintain quality employees consistent with maximizing its
compensation budget
 three important aspects to strategic compensation planning:
o linking compensation to organizational objectives
 purpose is to ensure employees feel rewarded so that they perform effectively and help the
organization meet its overall objectives
 organizations must be familiar with what it is their employees feel is valuable and be prepared
to meet their needs sufficiently
 main goal of rewarding employees’ past performance, remain competitive in the labour market,
maintain salary equity, link employees’ future performance with organizational goals, control
the compensation budget, attract new employees, and reduce unnecessary turnover
 pay level at which employees will be recruited, difference in pay from this level to the top, when
will raises be given and how, and how compensation fits into the overall financial picture
o pay-for-performance standard
 commonly referred to as merit pay – based on the employee having achieved the
organization’s objective
 can be paid out in conjunction with an employee’s annual performance review or be given out
at any desired time period
o motivating value of compensation
 Maslow’s Hierarchy of Needs: compensation is at the very bottom – meeting the basic needs
that people have because it allows them to buy food and clothing and accommodation
 compensation eventually takes on the form of status for an individual – the more money they
make, the more important they are in the organization; so staff at this level of status tend to
work harder to achieve that status and thus make more money
 pay equity theory: both internal and external facets; employees compare themselves
internally to determine if they are being paid equitably in relation to other jobs within the
organization, then they compare to others in the labour market performing similar work
 expectancy theory and pay: states that an employee’s level of work motivation depends on
how attractive the compensation is related to the work they do; if they believe the reward will
be higher for good work, they tend to perform at this level of achievement (perception is key)
 wage-mix: defined as internal and external factors coming together to determine how much a
job will be paid
 internal: company’s compensation strategy; worth of job; worth of the employee;
employer’s ability to pay
 external: labour market conditions (the greater supply of skill, the less need there is);
area wages rates (keeping wages in line with other jobs within a geographical location);
cost of living increases; collective bargaining (unionized employees can expect that wages
will be higher than others or at least be very competitive)

Evaluating Jobs
Organizations use job evaluation to determine the relative worth of jobs within their organizations
and places jobs in hierarchy, with the most valuable jobs being paid more
Job evaluation is important in that it establishes pay equity:
 Job-Ranking System
o all jobs are simply ranked, generally by a committee of managers, employees and HR practitioners
into a hierarchy of jobs
 Job Classification System
o used by the federal public service
o predetermined number of pay grades are established, with each grade requiring more skill, effort
and responsibility than the grade below it
o job is put into the right grade by comparing it to the description for that particular grade
 Point System
 o set of factors chosen that the organization will compensate jobs for (i.e. skill, effort, responsibility
and working conditions)
o each factor is divided into degrees and each degree has points allocated to it
o add the points together to get the level of the job
o most organizations who use this method develop their own manual on the process
 Hay Profile
o bases the evaluation on 3 factors:
 knowledge
 mental activity
 accountability
o often the most difficult to evaluate because of its complexity
o many companies use this method for management positions and to map out and align roles/jobs –
helps with the following objectives:
 clarity in result areas and accountabilities in the processes of the organization
 enabling salary and benefit grading or benchmarking due to standardization of job levels
 improved succession planning or mobility within the organization
 creation of more useful and focused job descriptions
o like the point system, it allocates points to each level of the factor
 Work Valuation
o relatively new – evaluates work based on its value to the organization and its ability to meet its
objectives
o standards related to business items such as finances or customer service are set and the more the
job relates to these goals, the more value the job has to the organization

How must to Pay for Jobs

 Wage or Salary Survey
o once jobs have been evaluated and their worth established, a determination needs to be made
about how much to pay the job
o most companies perform salary surveys of employers with similar jobs
o info can be collected locally, regionally and nationally, depending on the job
 i.e. national survey for a scientist, but local survey for a clerk
 Wage Curve
o organizations can either conduct the survey themselves or use data collected by other
organizations or by different levels of government
o once data is collected through the wage/salary survey, organizations can construct a wage curve
 this shows the relationship between the relative worth of the job (determined by job
evaluation) and their wage rates
 developed by preparing a scattergram of the wages currently paid for jobs that are under
review
 from reviewing these dots, a freehand curve can be created which will show the relationship
between the value of the job and its wage rate at any given point on the line
o for pay purposes, similar jobs are normally groups together so that they are paid the same wage
rates (best for internal equity)
o most organizations have a range of pay for each grade that recognizes seniority and/or training
o issue: classifying jobs in groups doesn’t always compensate employees for special skills or
knowledge they may possess
 Competence-Based Pay
o results in increased productivity, more willingness to learn and flexible scheduling
o employers must be careful that they aren’t paying for unnecessary skills (as skill increases, so
does pay)
o some staff have more opportunities to learn
 those who may have other responsibilities such as a family may become resentful of their
inability to acquire the same level of pay
o broadbands are used to replace a number of salary grades with a few wide salary bands
 allows staff to use a wider degree of skills than would be dictated by a narrower pay grade
 same types of issues exist as for a regular competence based system
Types of Incentive Plans
 figs. 10.1 & 10.2 (pgs. 360-1): range of both group and individual incentive compensation plans;
advantages of incentive pay programs
 successful incentive plans:
o identify important organizational metrics that encourage employee behaviour
o involve employees – incentive programs should seem fair
o find the right incentive payout – formulas should be simple and understandable
o establish a clear link between performance and payout

Individual Incentive Plans

 non-management jobs – some factors influencing plan design include:
o type of work performed by employees
o technology of the organization
o economics of the organization
o management philosophy
 Piecework
o straight piecework: number of units produced x rate per unit
o differential rate plan: once you reach a predetermined level, everything beyond that point earns
additional money
o advantages
 potential for satisfying an employee’s desire to earn more money
o disadvantages
 difficult to set production standards
 sometimes difficult to set up a system to identify individual contributions
 staff may give up quality to achieve quantity
 not conducive to team work
 unions don’t support this practice
 Standard Hour Plan
o “standard time” to do a job is established (i.e. 5 hours)
o if the employee does the work in 4 hours, they still get paid for 5
o plans are good because they motivate an employee to produce more, but care must be taken to
ensure that the employee doesn’t sacrifice quality for speed
 Bonuses
o payment in addition to an employee’s wages
o paid for a number of pre-determined reasons such as increase in productivity or a reduction in
costs
o sometimes a “spot-bonus” is given – nothing was set up in advance, but the employee’s
accomplishments are recognized this way
 Merit Pay
o increase in base pay, based on performance (raise)
o very common for management employees
o to work, you need to have a well-developed performance appraisal system
o must be an objective criteria, measurement of staff has to be valid and reliable
o merit increase is not a cost of living increase which may be given to all staff, regardless of
performance
o advantages
 controls labour costs because you pay for what you get
 can be motivating to staff who are hard workers to produce even more
o disadvantages
 money available for merit increases may be inadequate to satisfactorily raise all employees’
base pay
 managers may have no guidance in how to define and measure performance; there may be
vagueness regarding merit award criteria
 employees may not believe that their compensation is tied to effort and performance; they may
be unable to differentiate between merit pay and other types of pay increases
 employees and their managers hold different views of the factors that contribute to job success
 merit pay plans may create feelings of pay inequity
 Lump-Sum Merit Pay
 o same as merit pay but, rather than paying it all out over the next year, the money is given in one
lump sum and not added to their base salary
o while companies feel that this has a bigger impact because staff see the money at once, it’s
actually short-lived being it’s forgotten quickly
 Sales Incentives
o developed to respond to the unique nature of sales jobs
o take into account high motivation, self-discipline and independence
o three basic types of incentive plans:
 straight salary
 straight commission
 combination of both

Executive Incentive Plans

 Base Salary
 Short Term Incentives (bonuses)
 Long Term Incentives (i.e. stock options)
 Benefits
 Perquisites (status payments, i.e. company condo, chauffeur, etc.)

Group Incentive Plans

 Team Compensation
o receive a bonus when the team exceeds the pre-determined standard
o payment for quality, quantity or cost
 Gainsharing Incentive Plans
o can cover any group of staff
o employees receive additional money if they improve organizational efficiency
o payment is according to a pre-determined formula
o pg. 375: outlines steps in designing a plan

3. Know how unions organize, the steps in the collective bargaining process and understand
the impact of unionization
CHAPTER 14
Developing a Union
 Labour relations process is a logical sequence of 4 events:
o workers desire collective representation
o union begins its organizing campaign which may lead to certification and recognition
o collective negotiations lead to a contract
o contract is administered
see below:

How Unions Organize

 Workers desire collective representation
o may feel they are being undervalued in terms of direct compensation and/or benefits
o may object to working conditions
o may feel that management isn’t dealing fairly with them in a variety of ways (promotions, shift
assignments, transfers, etc.) and may want to find ways to exert pressure on management for
changes
o may seek social connection and fulfillment
 unions can’t apply pressure to other employees to join/remain a member of the union
 Organizing campaigns – either a union organizer or an employee may start this campaign
o most are begun by employees
 limits the rights of management, it’s important that HR and management always be aware of
circumstances that might indicate that a union may be being considered
o common practice for unions to present documentation to the appropriate Labour Relations Board
for certification
 board must certify a union before it can act as a bargaining unit for a group of employees
 to acquire certification, the union must demonstrate that it’s obtained the minimum level of
support required by the board (40% agreement)
  employers can’t interfere with the certification process and can’t threaten or punish employees
through dismissal or discipline
 Contract Negotiation
o once the bargaining unit has been certified by the Labour Relations Board, the employer and union
are legally obligated to bargain in good faith over the terms and conditions of the collective
agreement
 usually, the terms apply for a minimum of one year and a maximum of three, but there isn’t a
legally mandated maximum
 as the contract expiry date approaches, either party must notify the other of its intention to
bargain for a renewal collective agreement or contract negotiation

Impact of Unionization on Management

 employees can challenge management’s decision through the grievance process
o union’s goal is to gain greater involvement in decision making, so management rights may be
eroded over a period of time as successful contracts are negotiated and concessions obtained
 supervisors must work with the collective agreement on a daily basis and ensure the decisions they
make are aligned with it
o supervisors must be able to demonstrate just cause in disciplinary decisions or else they’ll be
overturned during the grievance process and will lose supervisory credibility
o collective agreements have clauses that restrict the decisions management can make in various
areas (scheduling, transfers, promotions, etc.)
o management may lost the right to hire who they wish (some agreements require that staff be hired
through seniority)
 before unionization and establishing a collective agreement, management has unfettered rights to
make decisions, so long as they are legal
o collective agreements only serve to curtail some of management’s rights
o unions start with nothing and obtain rights through a collective agreement
 to work effectively with unions, managers and HR practitioners need to understand the following:
o local union officials are elected and are subject to pressure from their members
o there will be times when the issues brought forward by the union are of importance to them but not
in the best interests of the organization
o most union officials are very strongly committed on a philosophical level to the ideas of unionism
and how it can help employees

Steps in the Collective Bargaining Process – process of negotiating that includes the use of
economic pressures by both parties
Preparing for Negotiations
 both labour and management negotiators collect data related to internal/external factors
o i.e. past grievances, disciplinary actions, labour agreements from competitors, current economic
conditions, past arbitration awards, data related to any other areas in which change is sought
 negotiators often develop a “bargaining book” that serves as a cross reference file to determine which
contract clauses would be affected by a demand
o also contains a general history of contract terms and their relative importance to management
 union will endeavour to negotiate a contract that provides workers with wages and benefits similar to
those enjoyed by workers doing similar/identical jobs elsewhere
 composition and size of each side’s bargaining team will be affected by industry practice and
bargaining history
o often 4-6 members on each side
o management’s chairperson will likely be a fairly senior manager or labour relations manager
o management’s team may include representatives from various functional areas/departments
o union bargaining team will likely be composed of local union vice presidents, the chief steward, and
the president of the local union or business agent

Developing Strategies
 each side attempts to anticipate demands from other side and how strongly they will push for the
demands
 each side can prepare written descriptions of demands, outlining limits of acceptability
 union usually asks for more than it hopes to gain and management offers less
 at a minimum, employers’ bargaining strategy must address the following:
 o potential union proposals and management’s responses to them
o listing of management demands, limits of concessions and anticipated union responses
o development of database to support management bargaining proposals and to counteract union
demands
o contingency operating plan should employees strike
 each bargaining situation is unique as there are several variables at work:
o economic conditions
o personalities of negotiators
o competitive pressures on organization
o current set of bargaining demands
 experience of negotiators plays a huge role in how smoothly (or not) the negotiations progress

Conducting the Negotiations

 both sides required by law to bargaining in “good faith”, meaning:
o meet at reasonable times/places
o negotiate with competent representatives
o submit realistic proposals
o offer counterproposals
o negotiate with open minds
 to successfully conclude negotiations, each side must bargain within a range acceptable to each:
o if demands from either side are too extreme and fall outside the range of acceptable limits, a
bargaining “deadlock” is likely to occur
 this would result in both sides resorting to bargaining power (economic, political and social
influence) to achieve their goals
 unions may strike, boycott or picket (often the threat is enough) – employers then have the
option to close operations, hire replacements, continue with management personnel, or transfer
work to another facility
 lockout is an option to employers but is seldom used due to negative publicity (and may not be
needed if the employer is firm when stating proposals and the union feels it has no option but
to strike)
o bargaining has been traditionally characterized as adversarial in nature, but there are methods to
resolving deadlocks
 mediation may be used or conciliation may be required prior to strike/deadlock
 mediation is voluntary and the mediator takes a more active role in negotiations
 conciliation is not voluntary and the conciliator is appointed by the Ministry of Labour and is not
actively involved with negotiations
 usually a “cooling off” period in conciliation after the conciliator’s report before a strike proceeds
 arbitration is different in that the interest arbitrator’s decision is binding on both parties (not
often used in private sector, sometimes in public)
 interest-based bargaining is sometimes used to promote a more collaborative approach and to
approach negotiators based on a win-win philosophy as opposed to win-lose

Formalizing the Collective Agreement

 when negotiations are concluded and the union membership votes to approve the contract, the
collective agreement becomes a formal binding document listing terms, conditions and rules under
which the employees and managers agree to operate
o has a specified duration, usually 2-3 years
 two key parts in any collective agreement and they relate to
o management rights – conditions of employment over which management is able to exercise
exclusive control
o union security – during the collective bargaining process, unions will attempt to negotiate union
security agreements in contracts by having clauses that:
 require employees to join the union
 require automatic payment dues (checkoff provision – i.e. an employer going down the list
and checking off their employees one by one as they deduct their union dues)
4. Be able to discuss the roles and responsibilities of employers and employees in health and
safety
CHAPTER 12
ROLES/RESPONSIBILITIES:
Employers:
 be familiar with legislation governing workplace health and safety
 inform employees about H&S requirements
 take every reasonable precaution to provide and guarantee a hazard-free workplace
 ensure that employees are using/wearing the appropriate safety equipment, devices or clothing
 be prepared to take disciplinary action when employees fail to comply with safety regulations
 ensure that supervisors are appropriately trained and familiar with potential hazards
 keep records and provide annual summaries of work-related illnesses/injuries
 supervisors must listen to employee concerns and if there is a continued refusal to work, contact the
appropriate ministry to initiate an investigation
 notify replacement workers of the previous employee’s refusal to work
 ensure that supervisors provide written instructions where appropriate
 report work-related injuries and illnesses to WSIB
 HR/Industrial Relations department: administering the workplace health and safety program (and
all relevant communications/training)
o promotes safety awareness
o enforces safety rules
o ensures accidents are investigated
o ensure required safety records are kept
 important that they recognize improper ergonomics or depression/stress in the workplace
o institute programs that help employees deal with these issues

Employees:
 comply with government legislation and employer/H&S safety rules and regulations
 report hazardous conditions/defective equipment, or suspicions of hazards to a supervisor
 wear appropriate protective equipment

Joint Health and Safety Committee:

 required when there are 20 or more workers in a workplace (and sometimes less)
 must have at least 4 members on the committee when there are 50 or more workers, and at least 2
members when there are fewer than 50 workers
 Ontario: at least one management rep and one worker rep must be certified
 identify workplace safety hazards

RIGHTS:
Employees:
 right to refuse work if they believe conditions are unsafe or dangerous to their own health and safety
and that of another worker – without fear of reprisal
 right to know about any potential hazards in the workplace
o right to be trained and have information on machinery/equipment, conditions, processes and
hazardous substances
o included in the Occupational Health and Safety Act – WHMIS system to inform employees
 right to be part of the process of identifying and resolving workplace H&S concerns
o worker membership on JH&S committees or through serving as H&S representatives

Joint Health and Safety Committee:

 obtain information from the employer about actual or potential hazards, or testing for any hazards
 make recommendations to the employer to improve workplace health and safety
 investigate work refusals and serious injuries
 obtain information from the Workplace Safety and Insurance Board (WSIB)
5. Be able to discuss the different types of benefits and pension plans available to employees
CHAPTER 11
Benefits:
 Canadian employers are legally required to support 12% of each employees’ benefit plans
o includes contributions to CPP/QPP (Canada/Quebec pension plan), EI (employment insurance), WC
(workers’ compensation insurance) and provincial medicare
 CPP/QPP
o require employers to match employee contributions
o used for three types of benefits:
 retirement pensions
 disability benefits
 survivor’s benefits
 EI
o temporary financial assistance for unemployed individuals while they look for work or upgrade their
skills
o sick, pregnant or caring for newborns/adopted children or elders/ill family members
o eligible for EI after contributing enough for a qualifying period
 WC
o for of insurance that helps employees who are injured on the job return to work, if possible
o provincially administered as opposed to federally
o contributions made solely by employer as a percentage of payroll
o benefits paid out of an employer-financed fund and includes medical expenses stemming from:
 work-related injuries
 survivor benefits (burial and pensions)
 wage-loss payments for temporary, total or partial liability
 permanent disability benefits can be disbursed as a lump-sum payment or as a permanent
disability pension with rehabilitation services (amount depends on employee’s earnings and
provincial legislation)
 Provincial Hospital and Medical Services (i.e. OHIP)
o OHIP becomes effective three months after the date a person establishes residency in Ontario
o many employers offer coverage through a third party which entitles employees to:
 extended benefits like a semi-private or private hospital room
 drug plan
 dental plan
 vision care
 etc.
 Voluntary Benefit Programs – Organizations Coverage (payment for time not worked)
o benefits employees receive from their employer in which they are paid when not working – i.e.:
 statutory holiday pay
 vacation pay
 time off for bereavement
 jury duty
 military duty
 rest periods/coffee breaks
 maternity/parental leaves
 severance pay
 life insurance
 company pension plans
 pre-retirement programs
 Employee Services
o increases employee satisfaction, reduces sick time and assists with child/elder care:
 EAP – counseling, referral for matters related to addiction, emotional/financial/family problems,
etc.
 Support for child/elder care – financial assistance, flexible schedule, leave, etc.
 pre-paid legal programs
 financial planning
 housing/moving expenses
 transportation pooling
 credit unions
  sports programs and health club memberships
 major social functions organized for employees

Pension plans:
 Contributory
o where contributions are made by both employee and employer
o most private corporations, federal public servants, etc.
 Non-contributory
o where only the employee makes contributions
 Defined benefit plan
o retirement benefit where the amount is based on a set calculation taking into account the
employee’s years of service, age at time of retirement, average earnings over a set period of time
 Defined contribution plan
o profit sharing
o matching contributions from the employer
o employee and employer-sponsored RRSP plans
o size of pension is based on funds in the employee’s account at the time of retirement and the size
of the annuity that can be purchased with these funds
o plans aren’t predictable as defined benefit plan but are more popular because they are less
expensive
 Vesting
o guarantee of accrued benefits to participants at retirement age regardless of employment status at
the time
o employees with at least two years service are locked in and can’t be revoked by employer
 Pension funds
o trust plan – where the pension contributions are placed in a trust fund and administered by
trustees
o insured plan – where funds are used to purchase insurance annuities and funds are administered
by the insurance company from which the annuities have been purchased
 Flexible benefits plans
o allow employees to choose those benefits that are best suited to individual needs

6. Understand international human resources and assignments

CHAPTER 15
International Human Resources – types of International Companies
 International Corporation
o domestic firm that builds on existing capabilities to penetrate overseas markets
o existing products are adapted for overseas markets without changing much else about their normal
operations
 Multinational Corporation (MNC)
o usually has fully autonomous units operating in multiple countries
o companies that have given their foreign subsidiaries a great deal of latitude to address local issues
(i.e. consumer preferences)
 Global Corporation
o multinational firm that maintains control of operations back in the home offices (i.e. headquarters)
 Transnational Corporation
o uses a network structure that coordinates specialized facilities positioned around the world
o provides autonomy to independent country operations but brings these separate activities together
into an integrated whole

Staffing Internationally
 employees from the home country who are on an international assignment
o expatriates, or home-country nationals
o i.e. Canadian working at a Canadian company assigned to work in Australia
 employees who are natives of the host country
o host-country nationals
o i.e. Australian working at the Australian branch of a Canadian company
 employees who are natives of a country other than the home or host country
o third-country nationals
 o i.e. American working at an Australian branch of a Canadian company
 host-country nationals are more likely to be used due to there not being a cost of relocation, there is
pressure to create local jobs, knowledge of local culture that facilitates business relations, and an
increase in longer term retention – clients tend to favour a company perceived to be “local”

Recruiting Nationally
 recruitment subject to more government regulation abroad than in Canada
 regulations range from those that cover:
o procedures for recruiting employees
o govern the employment of foreign labour
o require the employment of physically disabled, war veterans or displaced people
 virtually all countries have work permit/visa restrictions
 transnational teams
o composed of members of multiple nationalities working on projects that span multiple countries
 differences between countries, i.e.:
o Canada – employers tend to hire on the basis of talent and merit
o other countries – family ties, social status, language and common origin
 increasing number of organizations have begun considering an individual’s ability to adapt to different
environments
o i.e. many expatriates don’t succeed due to culture shock and the family’s inability to adapt

Training & Development

 for managers to be effective in international assignments, they need to be trained in global
management skills
 Levi Strauss: 6 attributes which make global managers excel
o ability to seize strategic opportunities
o ability to manage highly decentralized organizations
o awareness of global issues
o sensitivity to issues of diversity
o competence in interpersonal relations
o skill in building community
 5 main areas of preparation training required for expatriates that are essential for a successful
assignment (also attracts host country nationals)
o language training
o cultural training
o assessing and tracking career development
o managing personal and family life
o repatriation
 what one culture expects from a leader might be different from another – managerial/employee
attitudes/behaviours are the product of the society they received their education and training
o management style in Japan is participatory as opposed to the autocratic style in Europe
 repatriation is just as important as expatriation

Compensation
 different countries have different norms for employee compensation
o financial/non-financial forms of compensation/incentives have to be carefully thought out to ensure
that they are motivators in the particular culture in which they are going to be used
 host-country employees are usually paid on the basis of productivity, time spent on job, or a
combination of both
o benefits frequently higher than in NA, but some industries in other countries require compensation
such as profit sharing
 firms are trying to narrow the salary gap between the host-country manager and expatriate
o compensation plans must be competitive, cost-effective, motivating, fair, easy to understand,
consistent with international financial management, easy to administer and simple to communicate
 expatriate compensation used by more NA companies is based on a “balance-sheet” approach (ensures
that the expatriate doesn’t lose financially in his/her international assignment) and is composed of four
elements:
o base pay
o cost of living adjustment
 o incentive premiums
o assistance programs

Performance Appraisal
 one of the biggest problems with managing individuals abroad relates to evaluating performance
o esp. when the successfully management style in the host country is radically different from the
home country, and the evaluator’s experience is confusing to the home country
 distance complicates the situation where the evaluator is back in the home country – leads to criterion
deficiency (factors outside the individual’s control, like the evaluator not seeing their performance)
o challenges in that the manager/evaluator may have difficulty seeing how the individual is
contributing to the organization as a whole, as opposed to the local office
o to properly capture the full achievement of the expatriate employee during an assignment, the
performance criteria not only needs to include “hard” factors (i.e. market share and sales), but also
“soft” factors (i.e. representing the organization and building partnerships)
o best to base individuals’ appraisals on information from both home- and host-country evaluations