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Human Resource
Management in Health Care

Principles and Practice

L. Fleming Fallon, Jr., MD, DrPH, MBA
Professor of Public Health

Bowling Green State University
Bowling Green, Ohio

Charles R. McConnell, MBA, CM
Health Care Management and
Human Resources Consultant

Ontario, New York

35310_FMxx_Final.qxd 1/30/07 4:13 PM Page i

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Library of Congress Cataloging-in-Publication Data
Fallon, L. Fleming.
Human resource management in health care : principles and practice / L. Fleming Fallon Jr. and

Charles R. McConnell.
p. ; cm.

Includes index.
ISBN-13: 978-0-7637-3531-9
ISBN-10: 0-7637-3531-0
1. Health facilities—Personnel management. 2. Personnel management. 3. Personnel depart-
ments. I. McConnell, Charles R. II. Title.
[DNLM: 1. Health Manpower—organization & administration. 2. Personnel Management—

methods. W 76 F196h 2007]
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To Marie and Cynthia, two wonderful human resources.


To Kate, for the years of support and encouragement.



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35310_FMxx_Final.qxd 1/30/07 4:13 PM Page iv

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . xv
Authors and Contributors . . . . . . . . . . . . . . . . . xvii

Chapter 1 An Overview of Human Resources . . . . . . . . . . . . . 1

An Evolving Department . . . . . . . . . . . . . . . . . . . . 3

What’s In a (New) Name? . . . . . . . . . . . . . . . . . . . 7

The Focus Broadens . . . . . . . . . . . . . . . . . . . . . . 10

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chapter 2 How Human Resources Fits into an Organization . . 15

Human Resources in the Organization:
The Macro View . . . . . . . . . . . . . . . . . . . . . . . 17

Line and Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

The Appearance of Human Resources . . . . . . . . . 20

The Human Resources Internal Organization . . . 24

Human Resources and Senior Management . . . . . 24

The Relationship Between Human Resources
and Other Departments . . . . . . . . . . . . . . . . . . 26

Health Care Human Resources and the
Changing Scene . . . . . . . . . . . . . . . . . . . . . . . . 28

Human Resources Reengineered . . . . . . . . . . . . . 30

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Chapter 3 The Legal Framework of Contemporary
Human Resources . . . . . . . . . . . . . . . . . . . . . . 39

A Regulated Environment . . . . . . . . . . . . . . . . . . 40

The Growing Regulatory Environment:
An Annotated Chronology of Legislation . . . . . 42

Greater Responsibilities and Increased Costs
for Organizations . . . . . . . . . . . . . . . . . . . . . . 57

A Cumulative Effect . . . . . . . . . . . . . . . . . . . . . . 58

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60



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Chapter 4 Human Resource Activities and Managers . . . . . . 65
The Activities of Human Resources . . . . . . . . . . . 67

Human Resources from a Different Perspective . . 77

Where Department Managers and
Human Resources Personnel Meet . . . . . . . . . . 79

Human Resources and the Organization . . . . . . . 84

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Chapter 5 The Manager-Employee Relationship . . . . . . . . . . 93
Every Supervisor a Manager of

Human Resources . . . . . . . . . . . . . . . . . . . . . . 96

The Heterogeneous Work Group . . . . . . . . . . . . . 96

Employee Participation and Input . . . . . . . . . . . . 97

The People-Focused Manager . . . . . . . . . . . . . . . 99

Visibility and Availability . . . . . . . . . . . . . . . . . . 99

The Essential Downward Orientation . . . . . . . . 103

Essential Individual Relationships . . . . . . . . . . . 104

The Cost of Ignored Employees . . . . . . . . . . . . . 107

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Chapter 6 Position Descriptions . . . . . . . . . . . . . . . . . . . . . 113
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Position Analysis . . . . . . . . . . . . . . . . . . . . . . . . 115

Role of a Position Incumbent . . . . . . . . . . . . . . . 116

Elements of a Position Description . . . . . . . . . . . 117

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Appendix A: Sample Position Description . . . . . 122

Chapter 7 Department Managers and the
Recruiting Process . . . . . . . . . . . . . . . . . . . . . 125

Legal Concerns in Recruiting . . . . . . . . . . . . . . . 127

Partnerships with Human Resources . . . . . . . . . 127

Reference Checking and the
Department Manager . . . . . . . . . . . . . . . . . . . 131

The Manager’s Role in Finding Candidates . . . . 134

Promotion from Within . . . . . . . . . . . . . . . . . . . 137

Salary Bumping . . . . . . . . . . . . . . . . . . . . . . . . . 139

Recruiting during Periods of Shortage . . . . . . . . 140


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Every Employee a Recruiter . . . . . . . . . . . . . . . . 142

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

Chapter 8 Civil Service Systems . . . . . . . . . . . . . . . . . . . . . 147

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

History of the Federal Civil Service System . . . . . 148

History of State and Local Civil Service Systems . . 149

Using a Civil Service System . . . . . . . . . . . . . . . . 150

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Chapter 9 Conducting a Successful and Legal
Selection Interview . . . . . . . . . . . . . . . . . . . . . 159

Legal and Other Prerequisites . . . . . . . . . . . . . . . 161

Before the Candidate Arrives . . . . . . . . . . . . . . . 161

Conducting an Interview . . . . . . . . . . . . . . . . . . 164

Interview Questioning: To Ask or Not to Ask? . . 166

Probing for Intangibles . . . . . . . . . . . . . . . . . . . . 175

Very Few Exceptions . . . . . . . . . . . . . . . . . . . . . 176

When Forbidden Information is Volunteered . . . 176

After the Interview . . . . . . . . . . . . . . . . . . . . . . . 177

Behavioral Interviewing . . . . . . . . . . . . . . . . . . . 178

The Interviewer’s Behavior . . . . . . . . . . . . . . . . . 179

Résumé Fraud: Lies and Embellishments . . . . . . 181

An Acquired Skill . . . . . . . . . . . . . . . . . . . . . . . . 183

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

Chapter 10 Employee Training . . . . . . . . . . . . . . . . . . . . . . . 187

Introduction: The Role of Training
and Development . . . . . . . . . . . . . . . . . . . . . . 188

The Manager’s Role in Employee Training . . . . . 189

New-Employee Orientation . . . . . . . . . . . . . . . . 190

Training to Correct Performance Problems . . . . . 191

Determining Departmental Learning Needs . . . . 191

Employee Training Within a Department . . . . . . 192

Cross-Training for Efficiency . . . . . . . . . . . . . . . 193

On-the-Job Training . . . . . . . . . . . . . . . . . . . . . . 193

Effective Mentoring . . . . . . . . . . . . . . . . . . . . . . 194

Contents vii

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Developing Potential Managers . . . . . . . . . . . . . 195

How Human Resources Can Help . . . . . . . . . . . 196

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

Chapter 11 Compensation and Benefits . . . . . . . . . . . . . . . . 201

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202

Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 202

Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207

Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

External Agency Investigations . . . . . . . . . . . . . . 214

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

Chapter 12 Performance Appraisals . . . . . . . . . . . . . . . . . . . 219

Performance Appraisal Defined . . . . . . . . . . . . . 221

The Need for Performance Appraisal . . . . . . . . . 221

Conducting a Performance Appraisal . . . . . . . . . 222

Managers and Rating . . . . . . . . . . . . . . . . . . . . . 223

Obstacles to Performance Appraisal . . . . . . . . . . 223

Personality-Based Evaluations . . . . . . . . . . . . . . 224

Performance Appraisals . . . . . . . . . . . . . . . . . . . 227

The Appraisal Interview . . . . . . . . . . . . . . . . . . . 234

Self-Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . 238

Team Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . 239

The Appraisal Form . . . . . . . . . . . . . . . . . . . . . . 240

Legal Implications of Performance Appraisals . . 240

The Role of Human Resources . . . . . . . . . . . . . . 244

An Essential Process . . . . . . . . . . . . . . . . . . . . . . 245

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246

Chapter 13 Managers and Employee Problems . . . . . . . . . . . 249

People Problems are Inevitable . . . . . . . . . . . . . . 251

Primary Purpose: Correction . . . . . . . . . . . . . . . 253

Separate Issues of Performance and Behavior . . . 254

Addressing Performance Problems . . . . . . . . . . . 255

Addressing Behavior Problems . . . . . . . . . . . . . . 256

Employee Absenteeism . . . . . . . . . . . . . . . . . . . . 267


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Employee Assistance Programs . . . . . . . . . . . . . . 269

When Termination is Necessary . . . . . . . . . . . . . 270

Partnership with Human Resources . . . . . . . . . . 271

Prevention when Possible . . . . . . . . . . . . . . . . . . 271

Elements of Effective Corrective Action . . . . . . . 272

Document, Document . . . . . . . . . . . . . . . . . . . . 273

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274

Chapter 14 Addressing Problems before Taking
Critical Action . . . . . . . . . . . . . . . . . . . . . . . . 279

Prevention when Possible . . . . . . . . . . . . . . . . . . 281
Employee Privacy and Confidentiality . . . . . . . . 282
Personal Relationships . . . . . . . . . . . . . . . . . . . . 286
Sexual Harassment . . . . . . . . . . . . . . . . . . . . . . . 287
Violence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Employee Participation and Involvement . . . . . . 290
Counseling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293

Chapter 15 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . 297
Paper Remains Important . . . . . . . . . . . . . . . . . . 299
Legal Implications of

Employment Documentation . . . . . . . . . . . . . 299
Human Resources and Personnel Files . . . . . . . . 302
The Department Manager’s Responsibilities . . . . 303
Department Manager’s Employee Files . . . . . . . . 306
Do the Paperwork . . . . . . . . . . . . . . . . . . . . . . . 307
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307

Chapter 16 Terminating Employees . . . . . . . . . . . . . . . . . . . 311
Involuntary Termination . . . . . . . . . . . . . . . . . . 313
Individual Terminations . . . . . . . . . . . . . . . . . . . 313
Reductions in Force . . . . . . . . . . . . . . . . . . . . . . 315
Layoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Related Dimensions of Termination . . . . . . . . . . 324
The Survivors of Reduction . . . . . . . . . . . . . . . . 326
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328

Contents ix

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Chapter 17 Case Study: Balancing Needs . . . . . . . . . . . . . . . 331

Defining the Problem . . . . . . . . . . . . . . . . . . . . . 332

Moral and Ethical Issues . . . . . . . . . . . . . . . . . . 334

Acceptable Moral and Ethical Principles . . . . . . 335

Analysis: Ethical Decision Making . . . . . . . . . . . 337

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339

Chapter 18 Succession Planning . . . . . . . . . . . . . . . . . . . . . . 343

Introduction to Succession Planning . . . . . . . . . . 344

Why Organizations Should Create
Succession Plans . . . . . . . . . . . . . . . . . . . . . . . 345

Motivating Factors Behind the Creation of
Succession Plans . . . . . . . . . . . . . . . . . . . . . . . 345

Five Principles of CEO Succession Planning . . . . 347

Grooming a Successor . . . . . . . . . . . . . . . . . . . . 348

Why Organizations Have Not Created
Succession Plans . . . . . . . . . . . . . . . . . . . . . . . 349

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

Chapter 19 Relations with Labor Unions . . . . . . . . . . . . . . . 355

Why Workers Join Unions . . . . . . . . . . . . . . . . . 356

Why Organizations Try to Avoid Unions . . . . . . 358

The Legal Framework of Unions . . . . . . . . . . . . 358

The Department Manager’s Role . . . . . . . . . . . . 360

Decertification . . . . . . . . . . . . . . . . . . . . . . . . . . 366

Unions in Health Care . . . . . . . . . . . . . . . . . . . . 367

The Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368

Chapter 20 Directions in Employee Relations . . . . . . . . . . . . 371

The Evolution of Employee Relations . . . . . . . . . 373

The Emergence of Scientific Management . . . . . 375

Parallel Management Systems Develop . . . . . . . . 376

Opposing Views of Employees . . . . . . . . . . . . . . 378

Long-Term Trends in Organizational
Management . . . . . . . . . . . . . . . . . . . . . . . . . 380

Government Inspires a Major Shift . . . . . . . . . . . 381


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Where We Are, Where We Are Heading . . . . . . . 382

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382

Chapter 21 Human Resources Arbitration . . . . . . . . . . . . . . 387
Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388

Advantages of Arbitration . . . . . . . . . . . . . . . . . 390

Human Resources Arbitration . . . . . . . . . . . . . . 392

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392

Chapter 22 Using Human Resource Consultants . . . . . . . . . 395
Using Consultants . . . . . . . . . . . . . . . . . . . . . . . 396

Types of Consultants . . . . . . . . . . . . . . . . . . . . . 398

Engaging a Consultant . . . . . . . . . . . . . . . . . . . . 399

Summary: Why a Consultant? . . . . . . . . . . . . . . 402

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402

Appendix A: Sample Contract Agreement for
Consulting Services . . . . . . . . . . . . . . . . . . . . . 405

Chapter 23 Maintaining an Effective Human Resources
Department . . . . . . . . . . . . . . . . . . . . . . . . . . 409

An Effective Human Resources Department . . . . 410

HR and Optimal Organizational Efficiency . . . . 415

Future Directions for Human Resources . . . . . . . 416

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421

Contents xi

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Under its earlier, more narrowly descriptive names, human resources be-
gan to develop an independent identity in business organizations in the
1930s. Its importance has steadily increased over the intervening decades,
and as the new millennium gathers momentum, human resources con-
tinues to grow in relevance and usefulness.

Non-health businesses, manufacturing foremost among them, were the
first to recognize the utility of human resources. Out of necessity, health
care provider organizations began to rely increasingly on human resource
professionals as legal protections relating to workers proliferated. Owing
to characteristics of size and structure, however, some elements of health-
related activity have not received the full benefit of modern human re-
sources capabilities. For example, public health as a discipline has been
slow to embrace human resources partly as a consequence of relatively
small individual work forces and budgets that limit the ability of public
health organizations to afford full-time human resources employees.
Similarly, various other health-related organizations such as independent
laboratories and free-standing clinics and group practices have insuffi-
cient staffing to justify full-time human resources professionals.

This book introduces human resources to those who are preparing to
work in any area of health care or health service. It is written for practi-
tioners and students in all disciplines related to health, from practicing
providers to major medical centers to administrators who engage in health
in a broad range of settings. It is written for students, practitioners, and
members of boards of health, the citizen supervisors of many public health
agencies. To accommodate such a diverse audience, we have endeavored
to provide a balanced approach to the subject.

Each chapter is intended to stand alone; chapters are not sequential
and can be addressed in any order. Each chapter opens with a case study
that introduces the reader to key topics and questions to ponder while
reading the material that follows. The case study is concluded at the end
of the chapter with expert commentary and suggestions that can be uti-
lized should the reader someday become interested or involved in a sim-
ilar situation. Each chapter includes learning objectives, discussion points,
and listings of resources (books, periodicals, organizations, and Internet
sites) that provide supplementary materials.

Our goal was to produce a practical book. Discussions of theory are
included to aid understanding of application guidelines, but pure theory
runs a far second to practicality in the pages that follow. Many examples


35310_FMxx_Final.qxd 1/30/07 4:13 PM Page xiii

and a number of sample forms and documents are included, drawn from
our professional experiences and supplemented with input from other ex-

Thank you for sharing some of your time with us through using this
book. We trust that the time is well spent. We freely share credit with oth-
ers for successes, but we reserve for ourselves responsibility for errors that
may have crept into the book.

L. Fleming Fallon, Jr.
Bowling Green, Ohio

Charles R. McConnell
Ontario, New York


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We owe thanks to several people. Mike Brown believed in this project and
had patience when it was most appreciated. Kylah McNeill’s gentle but
sure hand guided the project. The folks at Jones and Bartlett are gracious
at all times; we could not work for a better or more professional team.

We express thanks to the contributors who enriched this book. Their
expertise and experiences are greatly appreciated. Lee Forst was willing
to take a chance many years ago. Thanks for exemplifying Theory Y.

Finally, thanks to our wives. They gave up the time that allowed this
project to be completed.

L. Fleming Fallon, Jr.
Charles R. McConnell


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35310_FMxx_Final.qxd 1/30/07 4:13 PM Page xvi


L. Fleming Fallon, Jr., MD, DrPH, MBA
Fleming Fallon is Professor of Public Health at Bowling Green State
University, Bowling Green, Ohio. He is also the Director of the Northwest
Ohio Consortium for Public Health, an accredited MPH degree program
that is offered jointly by Bowling Green State University and the University
of Toledo. He has many years of experience as a management consult-
ant and has authored 6 books and more than 350 papers and book chap-
ters on a variety of topics in addition to making presentations throughout
the world. Dr. Fallon has written a weekly newspaper column entitled
Health Thoughts continuously since 1995. He was a consultant special-
izing in human resources with A. T. Kearney. He has served as both a
member and president of a local board of health.

Dr. Fallon is a physician with residency training in occupational and
environmental medicine. He received a DrPH degree in environmental
health science from Columbia University, New York, his MD degree from
St. Georges University School of Medicine, St. Georges, Grenada, and an
MBA from the University of New Haven, New Haven, Connecticut.

Charles R. McConnell, MBA, CM
Charles McConnell is an independent health care management and hu-
man resources consultant and freelance writer specializing in business,
management, and human resource topics. For 11 years he was active as
a management engineering consultant with the Management and Planning
Services (MAPS) division of the Hospital Association of New York State
(HANYS) and later spent 18 years as a hospital human resources man-
ager. As author, coauthor, and anthology editor, he has published 24
books and has contributed more than 350 articles to various publica-
tions. He is in his 26th year as editor of the quarterly professional jour-
nal, The Health Care Manager.

Mr. McConnell received an MBA and BS in Engineering from the State
University of New York at Buffalo, Buffalo, New York.

The following people made significant contributions to this book.

Marie M. Fallon, MHSA (Chapter 17)
Marie Fallon is the Executive Director of the National Association of
Local Boards of Health that has its headquarters in Bowling Green,
Ohio. She previously served as a Project Director for the same organi-
zation. Earlier in her professional career, she served as a controller for


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two community hospitals. She has completed Public Health Leadership
programs at the state and national levels.

Ms. Fallon is completing an EdD in Leadership from Bowling Green State
University, Bowling Green, Ohio, has earned an MHSA degree from St.
Joseph’s College, Standish, Maine, and has a BA degree in Accounting
from the State University of New York at Buffalo, Buffalo, New York.

Anthony J. Santarsiero, MBA (Chapter 8)
Tony Santarsiero is the Acting Chief of the Public Health and Education
Systems Branch, Division of Partnerships and Strategic Alliances, National
Center for Health Marketing at the Centers for Disease Control and
Prevention, Atlanta, Georgia. Prior to joining the CDC, he was a hospital
administrator in the U.S. Air Force.

Mr. Santarsiero received his MBA degree from Florida Technological
University, and has a BBA from the University of Georgia, Athens, Georgia.
He is a fellow in the American College of Healthcare Executives and has
completed the national Public Health Leadership program.

Hans Schmalzried, PhD (Chapters 8 and 18)
Dr. Hans Schmalzried is an Associate Professor of Public Health at Bowling
Green State University, Bowling Green, Ohio. He has served as the Health
Commissioner of the Fulton County Health District, Wauseon, Ohio and
the Commissioner of the Henry County/Napoleon City Health District,
Napoleon, Ohio. He has been active in public health administration ac-
tivities at the local and national levels through publications, presentations,
and work on task forces.

Dr. Schmalzreid earned his doctorate at the University of Toledo, Toledo,

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An Overview of
Human Resources

Chapter Overview

After reading this chapter, readers will:

• Understand the history of human resources in health care
organizations, originating from a few scattered tasks to a
centralized activity, assuming additional necessary responsibilities
as they arose.

• Appreciate the rationale for having a human resources department.
• Describe or formulate the mission of a human resources

department or area in a healthcare organization.

The human resources department provides vital services to any organi-
zation. Health care providers are no exception to this rule. The origin of
most contemporary human resources departments was an overworked
administrator who struggled to hire a sufficient number of employees to
maintain normal operations. Organizational growth and expansion of
services provided far exceeded the original administrator’s ability to hire
employees. Delegating this task created a personnel office. Compensation
issues were soon delegated to personnel. As other legal requirements were
imposed, the size and complexity of the personnel office increased. The
name of the department became Human Resources. Formal college-level
training programs for people wanting to spend their careers working in
human resources have been developed in recent decades. Contemporary
human resource professionals continue to struggle for equal status within
the ranks of an organization. The process of change has been ongoing
and is expected to continue in the future.

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Case Study: Mrs. Jackson’s Dilemma

It is approximately 1930, give or take a year or two. A hospital located in
a prosperous town was growing along with its community. Mrs. Clara
Jackson was effectively the administrator of the hospital, although it is
doubtful that the title Administrator was applied. Hospital administration
had yet to emerge as a specialized field of study and a profession in its own
right. This hospital had started as many others had begun, as a private clinic
owned by physicians who eventually turned their operation over to a com-
munity board that would operate it as a not-for-profit institution.

In 1930, few professions were represented in a typical hospital. There
were physicians, most of whom were in private practice and admitted
some of their patients to the hospital. A pharmacist might have been in
attendance at least part of the time as well as a few others working in oc-
cupations that later developed into the health professions that are known
today. However, by far the dominant occupation in the hospital of that
time was nursing. Nurses originally did nearly everything that was re-
quired by patients. Because nurses comprised the majority of the staff
and the persons who were in the hospital all the time, it was natural for
a senior nurse, in this case Mrs. Clara Jackson, to oversee the operation
of the facility.

Growth was accompanied by the emergence of specialized tasks and
activities such as housekeeping and food service. Despite their presence,
Mrs. Jackson remained the principal manager in the hospital. Her ad-
ministrative responsibilities, however, cut into the time she could spend
where she felt she belonged, which was involved in the nursing issues of
patient care. The task that especially consumed much of her time was hir-
ing employees. Even though she was able to delegate the hiring of non-
nursing personnel to other group supervisors, Mrs. Jackson was often
swamped with activities related to hiring nurses. She felt that she was
trapped. If she concentrated on nursing, where she believed she belonged,
jobs went unfilled and conditions worsened. However, if she gave her full
attention to hiring nurses, she had inadequate time available for her pro-
fessional nursing responsibilities. Her dilemma intensified when the hos-
pital’s sole bookkeeper and paymaster began to complain of having too
much work to perform for a single person in keeping up with staff addi-
tions and departures. What options were open to Mrs. Jackson in 1930?
What options would be available to her today? What other issues or re-
quirements did Mrs. Jackson have to think about in 1930? With what
other issues, requirements or regulations would a contemporary hospi-
tal have to cope?


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Common Origins
Many people refer to activities when discussing the duties and responsi-
bilities of a human resources department within a larger organization.
Persons with specialized training in human resources often refer to the
same activities but use the name function (plural is functions) when re-
ferring to the duties and responsibilities. The word function is sometimes
applied to an entire human resources group or organization. Using that
nomenclature, a human resources department becomes synonymous with
a human resources function. In this book, we have tried to avoid using the
term function. We raise the issue so that readers will not be surprised when
encountering a reference to a human resource function. Throughout this
book, we will use the interchangeable terms human resources and HR.

The human resources department, or office, as it is known today, orig-
inated and developed in the same manner as other areas of a health care
or any other kind of organization. That is, beginning from what now are
considered to be a set of fairly narrowly defined responsibilities, human
resources originated and grew in the same manner as finance, purchasing,
and other organizational areas. Bits and pieces of necessary work that have
some characteristics in common tend to be bundled or gathered together.
This occurs partly because they are related to each other and partly because
their common tasks suggest the need for specialized skills and expertise.
For example, activities that involve money, such as paying salaries, pay-
ing bills, receiving payments, maintaining bank accounts, and handling
investments, have been collected and centralized. Thus, the finance area
evolved, and organizations acquired a division or department known as
Finance. Activities that might once have been known as accounting, keep-
ing track of money and reporting on its movements, and payroll, dispensing
compensation to workers, were bundled under the broader heading of fi-
nance, the name ultimately given to the overall managing of money.

Before the title of human resources emerged, the bundled organiza-
tional activities related to people were called “personnel.” In what is likely
a minority of organizations, this activity remains known as personnel. In
some organizations, as the activities related to people have evolved and ex-
panded, the change from personnel to human resources has indicated real
changes in overall scope and direction. However, in many organizations,
the change from personnel to human resources occurred in name only,
with the activities continuing unchanged in depth or breadth. The more
preferred title is being used but the scope of activities has not changed.

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Development of the Employment Office
Before personnel existed, there was an employment office. Before the emer-
gence of a formal employment office, managers like Mrs. Jackson of the
opening case study did their own hiring. In many instances, organizations
were extremely small by contemporary standards and the proprietor or most
senior worker was often the sole manager. However, as businesses grew
and the manager or managers became busier, they acquired help. The first
assistance was clerical in nature: a person to assist with hiring.

The employment office came into being in such organizations because
of the growth and accumulation of tasks related to hiring. When a suffi-
cient number of these tasks emerged, it made sense to concentrate them
into a single department. One of the reasons for bringing these tasks to-
gether in one place was to relieve proprietors and managers of the grow-
ing burden of work that did not generate revenue. Personnel work is
essential but actually does little to produce an organization’s products or
services. The two primary benefits of establishing an employment office
included freeing managers from the necessity of personally having to find
workers and being able to establish consistency in hiring practices.

Initially, two significant activities pertained to employees and their
needs. Workers had to be hired, and they had to be paid. Before these
employee-related activities became centralized, they were ordinarily ac-
complished by proprietors or their designees. In some instances, the task
of compensating employees became centralized before hiring. Many pro-
prietors established the position of Paymaster. In many organizations, the
activities of the paymaster were merged into the newly established em-
ployment office. In this way, the new area became known as the employ-
ment office. The two primary activities became known generally as
“employment” and “payroll.”

The responsibilities of employment and payroll both grew in scope and
complexity as organizations were affected by legislation at all levels of
their operations. With the introduction of wage and hour laws by state
and federal governments and the advent of income tax and Social Security
with their requirements for employers to withhold monies from employ-
ees, those who hired and paid employees acquired more and more tasks
to perform within a business. These new tasks were in addition to com-
plying with the requirements of other government agencies.

In a minority of organizations payroll remains part of human resources
to this day. In most organizations of appreciable size, payroll has long been
a subfunction of finance. The qualification “of appreciable size” ac-
knowledges the practice by many smaller organizations of having the pay-
roll activities provided by an outside vendor. This is an example of
outsourcing. In such cases, the human resources office often retains the re-
sponsibility for transmitting necessary information to the payroll service.


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Tasks were added to the employment office as needs arose. These ad-
ditions had one significant dimension in common: all were related to work-
ers and the process of finding qualified people, hiring them, and maintaining
them as employees. The employment office finally reached a point at which
it encompassed much more than simply employment (and often payroll).
Its name became less and less of an accurate descriptor of the department’s
activities and responsibilities.

Over time, the employment office began to be known as the personnel
department. The title “Personnel Department” was considered to be far
more descriptive of what the department’s activities had become. All in
all, the label of personnel was appropriate. The word personnel essentially
referred to people. All of the responsibilities of a personnel department
revolved around an organization’s people.

The Expanding Personnel Department
Other forces emerged and additional external requirements were imposed.
Employers began to offer forms of compensation other than wages. Some
began to offer these on their own while others were spurred by unions.
However, most instituted them as a result of competitive forces. These added
forms of compensation came to be called fringe benefits. They imposed ad-
ditional responsibilities on an organization. People to support the new tasks
had to be placed somewhere in the organization. Because they related to
employees and their family members, that is, to people, the personnel de-
partment was a natural location for them.

In the economic boom that followed World War II, health insurance
programs became part of many organizations’ benefits offerings.
Government mandates such as Workers’ Compensation entered the pic-
ture as statutory benefits. (Workers’ Compensation was originally called
Workmen’s Compensation, but its name was changed in the 1960s.)
Statutory benefits are those that an employer is required by law to provide.
These include the employer’s share of Social Security taxes, participation
in Workers’ Compensation and often state-mandated, short-term disabil-
ity insurance programs. Retirement programs also proliferated, provid-
ing more work for personnel.

A major piece of government legislation that caused a great deal of work
for some organizations was the National Labor Relations Act of 1935,
more commonly known as the Wagner Act. This act provided legal protection
to labor unions and made the task of organizing workers considerably eas-
ier for unions than it had been. It created a great deal of people-related
work for organizations that became subject to union organizing efforts.
Once one or more unions were established, their interactions with the em-
ployer had to be organized so that business could continue. Some union-
related activities, such as running an anti-organizing campaign, conducting

An Evolving Department 5

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negotiations or administering a contract, were occasionally taken on by
line managers. In many organizations, these new activities fell to those who
were already in the people business. In contemporary organizations that have
unionized employees, an organizational entity known as Labor Relations
may exist on its own or as a subsidiary operation within human resources.

Prior to the early 1960s, a typical personnel department was responsi-
ble for most activities related to employment, record keeping related to em-
ployees, some degree of compensation and benefits administration, and
possibly labor relations. Over the years leading up to the early 1960s, per-
sonnel departments developed an image of a staff or service group that
ran an employment office, kept records, and generally pushed paper. In the
early 1960s, however, the importance of the personnel department began
to expand. In 1964, personnel departments were required to adopt a sig-
nificantly expanded and increasingly more important role. The pivotal
event in dramatically changing the activities of the personnel department
was passage of the Civil Rights Act of 1964. (A more complete chronol-
ogy of this act and other relevant human rights legislation is contained in
Chapter 3.)

Beginning in 1964, the work of the personnel department became in-
creasingly more complex and the level of responsibility involved signifi-
cantly increased. Much more specific knowledge was required of
practitioners working in the personnel office. Specialized education began
to develop, and personnel began to grow as a specific professional field.
The title of human resources came into being but did not immediately en-
joy widespread usage.

Even as personnel work grew more complex, more requirements were
imposed on the operation. More and different kinds of problems emerged
and additional but different varieties of work had to be performed. The for-
mer image of the personnel department, a group of people who found em-
ployees, kept files, and pushed paper, continued to prevail. In many instances
this older image was reinforced by personnel practitioners who, after two
or more decades in the field, were overwhelmed by the tide of change. Their
knowledge fell well behind the times and quickly became obsolete.

In academia, personnel administration became a specialized educational
field, joining labor relations that had already become a formal field of
study. Several new sub-disciplines such as compensation analysis, benefits
administration, employee testing and selection began to emerge. In the
mid-1970s, the personnel department became responsible for interacting
with a variety of external agencies and special interest groups involved in
activities such as Affirmative Action, Equal Employment Opportunity,
safety, and social responsibility. Many new professionals came from the
field of industrial psychology. Others came from programs in manage-
ment or administration.


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Problems with Personnel: Real and Perceived
Most of the personnel practitioners of the mid-twentieth century, from ap-
proximately 1945 to 1965, were not educationally prepared specifically
to enter that field. When the great majority of these practitioners received
their education, most formal training in personnel administration con-
sisted of one or two courses included in other programs of study.

Health care organizations, especially hospitals, were once seen as fun-
damentally low-pressure environments that offered an escape for individ-
uals who have at times been described as industry dropouts. Many
administrators, directors of finance, personnel managers, and others came
to work in hospitals from businesses and industries in mid-career. Some
personnel managers, for example, left manufacturing and industrial posi-
tions for hospital jobs as an escape from union involvement. Their previ-
ous experiences in health care working environments were extremely limited.
A strong attraction for making such a career change was to escape from unions
that, at the time, were not common in health care organizations.

Many of the problems experienced with the image of personnel de-
partments were surely due to the performance and behavior of personnel
practitioners of the time. The lack of educational training contributed to
the antipersonnel bias occasionally encountered. Many of these persons
found themselves in situations that far exceeded their training or experi-
ence as the field became more complex and the pressures of the 1960s and
1970s continued to mount.

Many people who spend their entire working lives in one particular job
or working environment do not readily adapt to change. Some of the prac-
titioners of the old-school who entered health care personnel work be-
tween 1945 and 1965 fell by the wayside as the field became more complex,
tougher, and considerably more demanding. Some were unable to cope
with unions and the demands of labor relations. Others became frustrated
by Affirmative Action and newly introduced civil rights concerns and leg-
islation. In the 1980s, some gave up when they perceived increasing gov-
ernment regulation of benefits as creating a technical and legal nightmare.

Some undeniable image problems related to the personnel department
still exist. A minority of senior managers continues to view personnel as
a relatively unimportant staff activity that does little more than hire peo-
ple and file papers. A considerable number of employees view the opera-
tions of personnel as a necessary bureaucratic activity that exists primarily
for the benefit of a corporation and not for them.

Although today human resources, or HR, is the prevailing name for the de-
partment that handles personnel matters, the HR label is far from universally

What’s in a (New) Name? 7

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used. Many departments fulfilling the same overall responsibilities are still
called personnel departments. Other names are occasionally encountered,
among them employee affairs, employee services, personnel informatics,
benefits processing, and others. Most of the uncommon titles reflect a lim-
ited portion of the activities that are performed by a contemporary, full spec-
trum human resources department.

Is human resources more descriptive than personnel? Some experts con-
tend that an organization’s ultimate resource is financial, and an organization
uses financial resources to acquire both things (material resources) and peo-
ple (human resources). Therefore, in an organizational context, human re-
sources means people, as does the older, alternate title of personnel.

Why the Change?
Most scholars of the field agree that personnel became human resources
in many organizations for one or more of the following reasons: the new
name more appropriately reflects the workload of the department; the
change in name improves the image and elevates the status of the work be-
ing performed; the new name enhances the professionalism of those who
are accomplishing the work.

Did the personnel department become human resources to escape the
existing and often negative image of personnel? For some practitioners
and organizations, the change was made to overcome the outmoded and
limited view of personnel and to gain both professional acknowledgement
and a measure of respectability.

A parallel transformation of organizational image occurred in finance.
Once there was only bookkeeping, which eventually became accounting
as reporting and analytical tasks were added to the simple business of
keeping track of money in and money out. As organizations grew there de-
veloped the necessity to raise money, invest money, and generally manage
money well beyond the needs of day-to-day operations, so the finance
function developed. In most instances those narrower money-related ac-
tivities such as payroll and accounting were brought under the umbrella
of finance. This particular transformation is incomplete and far from be-
ing universally accepted; many contemporary accounting and finance prac-
titioners are dismissed as number-crunchers or bean-counters. Marketing
professionals incur a similar lack of professional respect or identity. Despite
extensive efforts to modify their image, many marketing departments are
stereotypically referred to simply as sales, a term that has existed for decades
and frequently carries derogatory connotations.

Practitioners in every field are required to learn and grow. The alternative
is to fall behind and eventually fail. Change occurs at various rates in dif-
ferent occupational fields. In the field of personnel or human resources,


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several bursts of change occurred within a sufficiently brief period to im-
pact the career spans of many practitioners.

Bias, whether real or perceived, cannot be overcome by a simple change
of name. Neither can respectability be acquired by a change of name.
Respect, however, can be earned over time as a new image emerges, one
that has nothing to do with the department’s title other than shedding the
negativity that some associate with the name personnel. Human resources
is taking its place among those activities now viewed as being essential to
the success and survival of a modern organization. It required decades to
form and solidify the image of personnel as being neither especially diffi-
cult nor demanding. The transformation of that image has been under-
way for years, yet it is far from complete.

Not everyone associated with the field has been enthusiastic about the
name change to human resources. One personnel director described the
trend to change the name of the company personnel office to the depart-
ment of Human Resources as “An excellent example of corporate pom-
posity.”1 The article argued that employees are human and special, not
just another resource similar to real estate or spare parts. As an interest-
ing side note, not long after the article appeared in the professional jour-
nal Personnel, the publication changed its name to HR Magazine. Regardless
of whether or not one approves of the name change, no title alone will
confer respect. That is a commodity that must be earned through per-
formance. When performance is forthcoming, respect will follow.

Here to Stay
For a number of years, human resources has been the growing name of choice
for this service activity of an organization. The HR name has been adopted
by professional organizations, academic programs and publications for-
merly designated as serving personnel. This is a fairly good sign that the
title of HR will probably dominate for the next few decades.

The changeover of name was most evident during the decade of the
1980s. Surveys indicated that in 1986, some 40% of such departments
used the HR designation. Just 42 months later, the proportion using the
HR designation was at 60% and still climbing. Also, the HR title was more
prevalent in larger organizations, in use in 80% or more of organizations
having 2,500 or more employees.2

The title of Human Resources is more prevalent in larger organizations.
Professional organizations have also changed their names. The American
Society for Personnel Administration has become the Society for Human
Resource Management.

A number of additional surveys conducted by professional HR organ-
izations during the 1980s and 1990s seemed to focus primarily on the de-
gree to which the name change from personnel to human resources had
affected the status of the department within its organization. Historically,

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the position of the head of HR has carried the title of director or manager
among supposed peers who enjoy the title of vice president. The head of
HR frequently reports to a vice president rather than directly to the pres-
ident or executive vice president.

The component duties and responsibilities of HR are not uniform across
organizations. Changes are being made, but the relative status of HR within
most organizations is improving only slowly. Many HR departments re-
main in stages of transition, and some have made little progress. However,
they are changing and continuing to evolve to be better able to address
new and more complex responsibilities.

Experts disagree as to the present status of an HR department within
the health care industry. However, most do agree on several broad points.
First and foremost, HR must continue to evolve so that it can remain cur-
rent with the changing needs of health care organizations. Next, HR must
strive to transcend its traditional reactionary role and adopt a more proac-
tive outlook and approach. Human resources should be available to min-
imize undesirable occurrences to an organization through the systematic
identification of potential problems. The next step is working to avoid
them or similar ones in the future.

In addition to performing all of the expected duties in support of an or-
ganization’s employees, an effective contemporary HR department serves
as a full-fledged partner on an administrative team, participates in orga-
nizational strategic planning as a full-fledged member, guides succession
planning for an organization, and works as an agent for necessary and
healthy change.

Throughout the remainder of this book, the title human resources will
be used as the prevailing name for the department or functional area. This
use is not to be construed as claiming that any group that is called personnel
or another name is any less legitimate than a human resources department.
True differences do not reside in labels.

For all practical purposes, in the first half of the twentieth century human
resources in the health care industry essentially meant human resources in
hospitals. Until the 1960s, acute-care hospitals were perceived as being
the center of the American health care system. Virtually all services pro-
vided to people were delivered in a hospital. Those that were not provided
in hospitals were rendered in physicians’ personal offices. One has only to
look briefly at the different health care provider organizations in existence
today to appreciate that human resources in health care is now practiced
in a variety of settings and organizations that are both large and small.


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Identifying only a small sample of organizations that deliver health care
services will help to make an important point. Contemporary components
of the health care system include free-standing surgical centers; urgent care
providers; community health centers; public health agencies; long-term
care providers; groups specializing in imaging, physical therapy, labora-
tory testing, and other activities; and several forms of medical and surgi-
cal group practices of varying sizes. All of these organizations, from the
smallest partnership or group practice to the largest acute-care hospital,
require the presence of human resources knowledge and expertise. In larger
organizations, this expertise is provided by a human resources depart-
ment. In a small organization, HR expertise may be provided by an in-
house individual whose time and duties wholly or partly focus on
personnel-related activities. Human resources needs may be outsourced or
met by an external consultant who provides them on an hourly basis or
whose services are shared among several small health provider offices.
Regardless of size, however, human resources needs are essential to orga-
nizational operating in today’s health care environment.

The typical human resources department has grown from a single-person op-
eration into a multifaceted, complex organization. In some organizations,
a single person continues to perform all of the needed tasks although this
has become an exception rather than the rule. The volume of government
regulations has greatly increased in recent decades. The scope of duties per-
formed has also increased. Changing the departmental name from person-
nel to human resources reflects these developments. People are now receiving
specialized training in colleges and universities for subsegments of human
resource activities. However, they continue to struggle for professional recog-
nition and equal status with their organizational counterparts.

Returning to the dilemma posed in the initial case study, the first step
that Mrs. Jackson took in lightening her load of non-nursing responsibil-
ities was to hire a helper. The selected person was a combination secretary
and general assistant who coordinated most of the hiring activities for the
hospital. In effect, this helper was the hospital’s first personnel worker. It
is likely that the first personnel records section was a drawer in this indi-
vidual’s desk or file cabinet. At the time, employee hiring was the only
element of a personnel worker’s position description or list of job duties.
No government regulations had yet been introduced in 1930. The Social
Security Act and automatic withholding of employees’ contributions was
not created until 1935. Affirmative Action and Equal Opportunity legis-
lation was not enacted until the mid-1960s. The Americans with Disabilities
Act added additional duties in 1990.

Conclusion 11

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Mrs. Jackson’s helper was a staff of one that became the hospital’s em-
ployment office. Within a few years this office evolved into a personnel de-
partment. Mrs. Jackson was extremely relieved to be able to delegate the
growing burdens of securing employees and looking after many of their
needs. She continued to be involved in employee acquisition to the extent
of interviewing potential employees for her own area, but she no longer
assumed the responsibility to find and screen all job applicants. Furthermore,
she did not have to process them into and out of the organization.

1. Hoey, J. T. (1987). ‘Human Resources’ versus ‘Personnel.’ Personnel, 64(5), 72-75.
2. Dave Stier, “More Use of Human Resource Title,” Resource, Society for Human

Resource Management (SHRM), October 1989. p. 2. (SHRM was formerly
ASPA, the American Society for Personnel Administration.)

3. Townsend, R. (1970). Up the Organization. New York: Alfred A. Knopf.

Discussion Points

1. Describe how you believe the business of locating, hiring, and main-
taining employees was accomplished before the establishment of an
employment office. List the activities that were probably performed
and who was most likely to have performed them.

2. With specific reference to activities found within health care organi-
zations, describe how three departments or functional areas other than
human resources might have evolved in a manner similar to the evo-
lution of HR. In each instance, describe the activities that might have
initially existed and then accrued to form the basis of each activity as
it is known today.

3. In your opinion, what did senior managers in the past believe were the
primary benefits of gathering a variety of employee-related tasks to-
gether to form an employment office?

4. In your opinion, what were the two or three earliest changes that in-
fluenced the development of a centralized operation to address mat-
ters related to employees? Why?

5. Why might some people consider the term fringe benefits to be misleading
at best or completely erroneous at worst? Why is the value of these
benefits most appropriately included as part of total compensation?

6. Comment concerning the industry dropout phenomenon as it con-
cerned earlier full-time human resources managers in health care. Is
the somewhat derogatory label of “industry dropout” reasonably or
unreasonably applied? Why?

7. Do you personally agree with changing the name from personnel to
human resources? Why or why not?


35310_CH01_Final.qxd 1/30/07 4:13 PM Page 12

8. Do you support or oppose the abolition of a central personnel de-
partment in favor of having individual managers assume the respon-
sibility for all such activities for their own departments? Why?

9. Do you believe that changing the name of personnel to human re-
sources substantially improved the image of the department or ser-
vice area? Why?

10. Comment on the following quotation from Up the Organization
(Townsend, 1970): “Fire the whole personnel department. Unless your
company is too large (in which case break it up into autonomous
parts), have a one-girl people department (not personnel department).”3

Keep in mind that this passage was written in the late 1960s.


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How Human
Resources Fits into
an Organization

Chapter Overview

After reading this chapter, readers will:

• Understand the placement of human resources within an
organizational hierarchy

• Be able to distinguish between line and staff activities and
establish human resources as an essential staff operation

• Describe several models for organizing a human resources

• Describe how the human resources operation is commonly
organized to best serve an organization

• Appreciate the relationship between human resources and
executive management and other organizational departments

• Understand the role of human resources when implementing
changes within an organization

• Have reviewed the effects of re-engineering on services provided
by human resources

• Appreciate contemporary trends regarding outsourcing human
resource services

The person heading a human resources (HR) department should report
to an organization’s chief executive officer. A variety of organizational
structures are used in HR departments. These include models based on




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clerical tasks, counseling, industrial relations, control and consulting. Some
HR professionals have proposed similar approaches to HR organization.

Line and staff employees perform different tasks for an organization.
Line operations advance the work of an organization. Staff operations
support and enhance the work of an organization by making it possible
to continue producing products or delivering services as intended.

The degree of effectiveness of HR depends on a chief executive officer’s
attitude toward that activity. As a staff operation, HR does not issue com-
mands and is vulnerable to changes that result from reengineering.
Outsourcing human resource services is relatively common.

Case Study: What Shall It Be and Where Do We Put It?

“Things were much simpler when we were just a small-town hospital with
a four-person personnel department,” said personnel director Sharon Kelly
to her immediate superior, chief operating officer Don Thomas. “But now
that we’re a so-called health system, it’s almost impossible to tell who is
supposed to be doing what for whom on any given day.”

Sharon’s allusion to a system was in reference to the recent merger of
their facility, Community Hospital, with a somewhat smaller rural facil-
ity located 15 miles away. At the time of the merger, Community Hospital,
newly renamed the Affiliated Community Health and Education System
(ACHES), acquired an organization consisting of three health centers that
became satellite facilities for the system, and became affiliated with two
sizeable group practices, one medical and one surgical.

Sharon continued, “And now, as I understand it, we’re going to be called
human resources, not personnel. Is that right?”

Don nodded. “Yep, it’ll be HR from now on.” He grinned and added,
“We might as well call it HR. That’s what every other place is doing.”

“Don’t get me wrong,” Sharon said, “I’m not complaining. I’m really
pleased with being named personnel, that is, HR director for the system.
But look at what we’ve got to work with. There are four of us here at
Community. Two people are in the department at the other hospital and
one personnel person at the biggest of the satellites, with just a secretary
taking care of personnel stuff at the other two satellites. Office managers
at the group practices are overloaded trying to take care of personnel mat-
ters along with a dozen other concerns. And now we’ve got such a far-
flung setup that if I were to get in my car and make a circuit of all of our
facilities, I’d travel more than 60 miles. What can we do with all of this?”

Still smiling, Don said, “That’s what we want to know. We want to
know how to organize the new HR department to best serve the Affiliated
Community Health and Education System. Every essential base has to be
covered, but keep in mind that nothing is forever, given that we’ll proba-
bly continue to grow and change.”


35310_CH02_Final.qxd 1/30/07 4:22 PM Page 16

“But what does the CEO want from pers . . . ah, human resources?”
Don shrugged. “In some respects your guess is as good as mine. You

know how she’s been about your area since she’s been here. She expects
us to recruit good employees for the hospital system and keep good records.
Keep the system out of legal trouble, but don’t make waves.”

At that moment Sharon had very little idea of the direction she should

How would you respond to Don’s request? How should the new HR
department be organized? What issues should the HR department focus
on first? What aspects may change over time? Why?


In healthcare facilities, the individual in charge of HR usually reports to
one of the organization’s two top executives. The preferred reporting re-
lationship is with the president or chief executive officer (CEO). In some
health care organizations, this individual is referred to as administrator,
director, or some other title. The next best choice is the executive vice pres-
ident or chief operating officer (COO). This person may be known by an-
other title such as associate administrator or assistant administrator that
designates the number two executive in the organization. In many con-
temporary health care organizations, people heading HR departments re-
port to the top executive. In a small facility, there may be no second level
of executive management so the human resources head will be likely to re-
port directly to the CEO.

Having HR report to a level other than executive management is inap-
propriate. Doing so impairs the potential effectiveness of the department.
Even reporting to the second executive level, COO, or associate adminis-
trator can result in conflict with other organizational departments that re-
port to the CEO. The chief operating officer has responsibility for all of the
operating departments. This includes the majority of employees. Other staff
operations, for example finance, typically report directly to the president
or CEO. Instances can arise in which finance and HR are in disagreement.
It can seem like HR belongs to operations alone when HR reports to the
chief operating officer. In such an arrangement, HR might be incapable of
fair and equitable dealings with others in the larger organization.

Two important distinctions must be made when using the terms line and
staff. How do people in these different positions operate within an or-
ganization and how do they differ? Although the actual relationships may

Line and Staff 17

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be different, how does organizational authority, that is, the chain of com-
mand, apply to both?

Doing versus Supporting
Simply stated, the difference between line and staff in an organization is
as elementary as the difference between doing and supporting. Line de-
partments actually perform an organization’s work while staff depart-
ments facilitate the work, striving to enable overall efficiency and

Another way to describe a line operation is to say that it advances the
work of an organization. In the manufacture of a physical product, each
line activity that is performed changes the physical shape or state of a prod-
uct and brings it closer to completion. When a service is being provided,
each activity performed advances the state of completion of the service. If
a line operation is ignored or omitted, the final physical product remains
incomplete or unfinished; if a service is not delivered in a satisfactory man-
ner or if an activity that should have been performed along the way is
omitted, then the service is incomplete. In the food service area of a hos-
pital, for example, if one station on a tray assembly line is missing, then
the meals that are assembled on that line will be incomplete. In another
example, if a nurse neglects to administer a particular medication when
scheduled, then the services delivered to the affected patient will be in-

A staff operation does not advance the work of an organization or has-
ten its completion. Rather, it supports and enhances the work of an or-
ganization by making it possible to continue producing products or delivering
services as intended. Staff positions may be removed and the productive
work of an organization will usually continue, at least for a time. However,
the organization is likely to become inefficient and will eventually cease
working without the necessary staff support. Staff areas within a health
care organization include HR, finance, housekeeping (or environmental
services) and maintenance (or engineering). While none of these activities
directly advances the provision of services, if they are not performed, then
patient care will eventually experience both inefficiencies and losses in
quality. The primary role of staff or supporting areas is to maintain an or-
ganization’s service environment and capability, making it possible for line
operations to continue in an optimal manner.

In most instances, it is possible to determine whether an activity is line
or staff by imagining what would happen to the workflow if the activity
were to cease. If an activity or position is abandoned and the workflow is
immediately disrupted, then it is a line operation. If there is no apparent
short-term effect on workflow, then it is a staff operation.


35310_CH02_Final.qxd 1/30/07 4:22 PM Page 18

What happens when individuals engaged in line activities disagree about
how services should be provided or supported with those who perform
staff operations? If a conflict between line and staff cannot be resolved by
the managers of the respective departments, then it is ordinarily referred
to higher management.

The Chain of Command
The concept of line and staff can become somewhat confusing when con-
sidered in conjunction with the chain of command. In every department,
whether line or staff, there is a line of authority that runs downward from
the department manager. This line includes all subordinate supervisors
and eventually reaches all rank-and-file employees. The line of authority
is known as the chain of command. A manager of a staff activity is also a
line manager, but only within that operational area. For example, the di-
rector of finance has line authority over the employees in finance, but that
authority does not extend beyond the boundaries of the department. The
director of finance can exercise authority within but not outside of finance.
Every staff position has a limited chain of command embedded within it.
The line of authority does not extend outside of the department. In line
operations, the chain of command can extend through several organiza-
tional levels and include more than one department. For example, the CEO
has authority over the COO who, in turn, has authority over the director
of materials management who has authority over others and so on to the
final link in the chain of command. The line of authority extends through
all levels.

As described earlier, HR is a staff organization. The line and staff dis-
tinction is extremely important when considering where HR is located and
how it operates. The manager in charge of HR has line authority only
within HR. As a staff operation that provides services, HR has no au-
thority over any employees outside of its departmental boundaries. The
HR department may be an organization’s expert and official voice re-
garding personnel policies, compensation, and benefits and many of the
legalities of employment, but HR has no power of enforcement. A small
minority of HR professionals object to this contention. They operate with
a control model under which HR assumes some enforcement authority.

Occasionally, an operational area straddles the boundary between line
and staff. An obvious example is dietary services, which has the responsi-
bility to feed patients, administer therapeutic dietetics (both line activi-
ties), and prepare cafeteria and snack shop meals (both staff activities).

An Essential Staff Activity
Managers working in a health care organization must understand that al-
though HR may ultimately report at or near the top of an organizational

Line and Staff 19

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structure, it is a staff operation. Its role is largely service and rendering ad-
vice. As such, HR has no authority over any other operational areas or de-
partments in an organization. The HR department exists to provide advice,
guidance, assistance, and whatever other services may be deemed appro-
priate according to the mission of the organization and the needs of other


Perceived Human Resources Models
Human resources may be viewed in a variety of ways depending on its
placement in an organization’s hierarchy. Relevant aspects include how it
is perceived by other employees, the behavior of HR management and
staff and the expectations of senior HR managers. Other influences in-
clude the traditional role of HR within an organization, the demands
placed on HR by the larger organization, and the education, training, and
experience of HR staff and personnel. Previous perceptions of an HR de-
partment are often viewed as models for HR service delivery. One author
discussed five recognizable models of HR organization: clerical, counsel-
ing, industrial relations, control, and consulting.1

TThhee CClleerriiccaall MMooddeell
The clerical model represents the long-held and unflattering stereotypical
view of personnel. Under this model, an HR department exists to process
and file paper, maintain records, track statistics and key dates, and ad-
minister employee benefits plans. Under the clerical model, the top man-
ager of HR is likely to be experienced as a benefits administrator or have
a similar practitioner orientation. In organizations where this model still
exists, HR is rarely called upon to go beyond these expectations.

TThhee CCoouunnsseelliinngg MMooddeell
This model is relatively common in hospitals and other service organiza-
tions where the total cost of employees represents a relatively large pro-
portion of the budget, and where an organization places an emphasis on
maintaining employees as effective producers. Under this model, HR is
likely to act as an advocate for employees, provide a resource to managers
for people problems, resolve disputes and disciplinary issues, place a high
priority on preserving privacy and confidentiality, stress training and de-
velopment throughout the year at all levels of an organization, lag behind
the state-of-the-art in effective compensation and benefits administration,
and maintain a posture that is primarily reactive.


35310_CH02_Final.qxd 1/30/07 4:22 PM Page 20

TThhee IInndduussttrriiaall RReellaattiioonnss MMooddeell
The industrial relations model typically develops in organizations in which
the work force is unionized and there are periodic contract negotiations.
Another aspect of this model is considerable activity having to do with
grievances, arbitrations, and similar confrontations. Under this model, an
HR group is likely to have its activities and procedures specified by con-
tract and performed automatically with little innovation. Because they are
directed by a contract, employees have few opportunities to display flex-
ibility or judgment as they perform their job duties. Human resources em-
ployees are viewed as powerless within an organization’s structure. Such
a view is usually limited and not especially positive.

TThhee CCoonnttrrooll MMooddeell
Infrequently encountered in American organizations, under the control
model HR has substantial power. This usually stems from the charisma, per-
sonality, or individual strength of its top manager and key staff. A control-
model HR department usually exerts dominance over any aspect of
operations having HR implications. Consistent with this model, many
managerial decisions are made only following clearance by HR personnel.
Human resources staff members must be current and knowledgeable con-
cerning applicable legal requirements and must understand policies and pro-
cedures. Other work rules must be consistently applied. Under the control
model, an HR departmental executive is a key member of an organiza-
tion’s administrative team. With this model in place, managers of other de-
partments may feel stifled and see the larger organization as being inflexible,
bureaucratic, and rule-bound. Under the control model, employee in-
volvement activities receive minimal if any support.

TThhee CCoonnssuullttiinngg MMooddeell
This model is ordinarily found in larger organizations. Here, HR practitioners
are usually expert resources. Employees, department managers, and exec-
utive management rely upon them. The services provided by HR person-
nel are determined by demand. However, this is primarily a reactive model
that provides effective service wherever an apparent need is identified but
leaves some organizational needs either unmet or unidentified.

The foregoing models describe some dominant perceptions of HR. These
models are unlikely to exist in their pure forms. Rather, most organizations
feature a mix of the characteristics of two or three models. This commonly
prevails because of differing philosophies introduced by a succession of HR
heads. However, one particular model will usually prevail in the percep-
tions of employees and their department managers. Most HR profession-
als agree that an effective HR department is best utilized as a consultant
or advisor. Ineffective HR departments are relegated to providing clerical

The Appearance of Human Resources 21

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The greatest single problem with all of the foregoing models is that they
are primarily reactive. All of the HR services provided by the models are
needed. They should be delivered without any single model dominating or
overwhelming an organization. However, managers at all organizational
levels must constantly work to make HR a true strategic partner in the
achievement of an organization’s mission.

Alternative Human Resources Models
In the late 1980s, another approach to providing human relations ser-
vices emerged. Driver, Coffey, and Bowen created alternate models based
on the operational areas of an organization.2 Organizations would, in
theory, adopt the model that best reflected the most dominant aspect of
their mission or core business. The next models to be described are sim-
ilar to those already discussed. However, they reflect different points of
view. The HR activities and services of an organization can be accurately
described by using a combination of the foregoing classic models and the
next revised models. The next models include approaches based on al-
ternative clerical approaches, the law, finance, management, humanism,
and behavioral science.

TThhee AAlltteerrnnaattiivvee CClleerriiccaall MMooddeell
This is similar to the clerical model described earlier. According to this
model, the primary role of HR is to acquire data, maintain records, and
file required reports. Human resources personnel perform routine tasks,
process paperwork, comply with regulations, provide a steady pool of
prospective employees, and meet the needs of existing and retired work-
ers. This model presents HR as passive and relatively weak.

TThhee LLeeggaall MMooddeell
Under the legal model, an HR department derives its primary strength and
reputation from its knowledge and expertise concerning legislation that af-
fects employment. Compliance with all applicable laws is the overriding
concern of all who work in such a department. Others in an organization
may view HR as a bureaucracy. Occasionally, others may judge it to be in-
trusive, obstructive, or both. The legal model is frequently present when
part of a workforce is unionized. An advantage of the legal model is its ex-
pertise and ability to negotiate contracts, monitor contract compliance,
and address grievances.

TThhee FFiinnaanncciiaall MMooddeell
An HR department operating under the financial model displays maxi-
mum attention to human resource costs. Particular attention is paid to in-
direct compensation costs such as health and dental insurance, life insurance,
retirement plans, paid time off, and other benefits offered to employees.
Successful human resource practitioners working under this model are fre-


35310_CH02_Final.qxd 1/30/07 4:22 PM Page 22

quently well versed in matters of finance. A potential hazard of this model
is placing financial matters above all other employee relations issues.

TThhee MMaannaaggeerriiaall MMooddeell
Under a managerial model, HR personnel often work within the same
bottom-line productivity oriented framework as do most line managers.
They share the same goals and values as line managers and make decisions
in accordance with organizational managerial objectives. This model lends
itself to decentralization of HR activities and services, under which line man-
agers perform many of the tasks typically reserved for HR personnel. This
model sometimes results in inconsistency in the application of HR prac-
tices because of having organizational guidelines interpreted by so many
different persons. A potential drawback of the managerial model is that
an organization may end up having no particular strategic outlook or in-
volvement in long-range planning.

TThhee HHuummaanniissttiicc MMooddeell
The central tenet of the humanistic model of HR is that it exists primarily
to foster human values and potential within an organization. Individual
employees are the primary focus of HR practitioners. Individual develop-
ment and career planning are emphasized. The model assumes that en-
hancing the working life of each individual enhances the overall effectiveness
of an organization. Experts claim that the rising level of education and the
general sophistication of employees and their expectations of a high-
quality work experience provide support for this model.

TThhee BBeehhaavviioorraall SScciieennccee MMooddeell
The behavioral science model assumes that disciplines such as psychol-
ogy, social psychology, sociology, and organizational behavior provide the
foundation for most HR activities. This model is frequently used when de-
signing performance appraisal systems, job evaluation classifications, re-
ward and incentive programs, employee development plans, and employee
interest and attitude surveys. Increasing sophistication of both managers
and employees provides some support for this approach.

As with the first set of models introduced, the alternative HR models
are unlikely to be found as pure types. For example, many managers con-
tinue to assume that HR provides clerical services. Despite how modern
and sophisticated HR becomes, organizations will continue to maintain a
significant number of records. Unless there is a marked change or rever-
sal in the amount of legislation impacting employment, the legal model will
appear to prevail. Nevertheless, for many HR departments, one or two
particular models will predominate, or at least seem to according to the
perceptions of line managers and rank-and-file employees.

The Appearance of Human Resources 23

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An HR department will customarily be organized according to an orga-
nization’s expectations, reflecting the prevailing goals and structure of the
organization that it serves. Smaller organizations typically employ HR
generalists. This is typically made necessary by staffing limitations. The re-
quirements of a small organization can usually be satisfied by a single per-
son sometimes working less than full time. Larger organizations employ
a mix of specialists and generalists. Their requirements cannot be met by
a single person and they have the resources to employ several individuals.
In larger health care organizations, specialists are most often used. They
are listed in descending order of the frequency with which they are most
likely to be encountered.

1. Employment
2. Compensation and benefits
3. Employee relations
4. Training and development
5. Labor relations
6. Equal Employment Opportunity (EEO)
7. Security
8. Safety

The individuals or customers served by an HR department vary. Internal
customers include all existing or former employees at all organizational
levels. External customers include potential employees or applicants for

The attitude of an organization’s CEO toward HR usually sets the tone
for the rest of the organization. Tone includes attributes such as the rela-
tive standing of an HR department within the larger organization and the
respect that is accorded to HR by others throughout an organization.
Translated, tone determines how much power or influence an HR de-
partment will be able to exercise. Human resources departments that have
power or influence are respected and vice versa. Respect leads to involve-
ment and interdependence throughout an organization. The respect is fun-
damentally based on the expectations of the CEO.

What CEOs Expect from Human Resources
Chief executive officers have some common expectations of HR depart-
ments. Most want their HR department to supervise recruitment, admin-


35310_CH02_Final.qxd 1/30/07 4:22 PM Page 24

ister compensation and benefits programs, and maintain personnel records.
These are the activities that HR experts include as the minimum or basics
of the profession. While many other activities can be assumed or provided
by an HR department, some senior managers demand only the basics.

A considerable number of CEOs expect their HR departments to pro-
vide advice and counsel on employee matters. Many expect the head of HR
to serve as a personal advisor for personnel issues. In unionized working
environments, CEOs may expect someone in HR to monitor activities re-
lated to labor relations.

Occasionally, a CEO wants to have an HR department that provides
the basic services but does so in an unobtrusive manner. In other words,
such an HR department should not make waves. It should be seen but not
heard. In reality, this is a difficult assignment. Human resources is expected
to meet basic personnel expectations in a competent and professional man-
ner but must not become advocates for innovation or positive changes.
The CEOs making such demands on an HR department often have large
or oversized egos.

Many CEOs say that they want a truly professional and innovative HR
department. However, those that mouth the words are more numerous
than individuals who truly desire, appreciate, and utilize competent and
professional HR services and advice.

The personal and organizational priorities of CEOs influence their ex-
pectations of an HR department. If senior managers are content with sim-
ply maintaining the status quo, then few changes are likely to emerge from
HR. Such executives are not oriented to the future or instituting changes.
They usually overlook HR’s potential value in business and strategic plan-
ning, personnel and career path development, and the development of dif-
ferent or innovative HR strategies.

Some management experts have observed that HR-related tasks have
dramatically expanded over the last four decades. Most of these additional
requirements have been mandated by legislation that began with the Equal
Employment Opportunity Act of 1972. Human resources departments
have become much larger as they attempted to keep pace with legal demands,
to create and update necessary systems, and to add and expand services.
Because of this reactive posture, the discipline of HR has missed an op-
portunity to become more of a full partner in organizational management.
Many critical observers have wondered whether HR is a full planner and
decision-maker or simply a firefighting activity.

This distinction is related to the attitudes of senior management. Human
resources becomes a more integral and important member of a manage-
ment team to the extent that senior managers regard an HR department
as a professional specialty. Furthermore, they ensure that HR is staffed
and led by competent people who have been appropriately educated and

Human Resources and Senior Management 25

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trained. They provide support for an HR department in an open and con-
tinuous manner.

How does a department whose responsibilities are continually chang-
ing and evolving remain current? Further complicating this question is the
widely held perception that HR is an entity to be tolerated rather than em-
braced because it does not generate a profit. Many managers are surprised
at the level of expertise displayed by HR personnel. Expressed differently,
how does an HR department become a strategic organizational partner with
its leader a full-fledged member of senior management? The field of HR
has been wrestling with this question for three decades without reaching
any satisfactory conclusions. It has gained status in some health care or-
ganizations, but in many, it has yet to become a reality.


From the perspective of departmental personnel, HR has traditionally been
viewed as more administrative than advisory, more as an enforcer of poli-
cies than policy makers. Many individuals throughout almost every or-
ganization regard HR as a group of paper pushers. It acquired this sobriquet
by virtue of its employment-related activities. Recent governmental re-
porting requirements have reinforced this perception. In short, in the minds
of many people, HR merely hires people and files papers.

The proliferation of laws and regulations governing almost all aspects
of employment relationships has been a major factor in the changing role
and relative organizational position of an HR department. However, or-
ganizational managers outside of the HR department often cannot see or
appreciate the legal and regulatory obstacles that must be avoided. Rather,
they see only the portion of HR that applies to their own departments.
Furthermore, they often lack the perspective to appreciate why HR makes
the demands that it imposes on other organizational units. For many, HR
appears to be a rule-bound, bureaucratic group that, in their opinions, is
trying to prevent them from undertaking tasks that they feel are necessary.
Even persons who have a partial appreciation of the regulatory environ-
ment in which HR must operate often come to view HR as little more than
a necessary evil.

Many of the prevailing views or, more accurately, stereotypes, of an HR
department prevent managers from seeking appropriate counsel or assis-
tance until their needs or problems have become critical. The time to call
upon experts from HR for assistance is when the earliest signs of a prob-
lem appear. When personnel-related issues involve discipline or legal ac-
tion, many opportunities for intervention have already been lost. Full-blown


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problems can be resolved, but the cost is usually far greater than it could
have been if advice had been sought at an earlier juncture.

If an HR department exists to serve an organization, then why is it still
often viewed as an obstacle? Resistance sometimes emerges as a result of
a particular department’s approach or the attitude of its practitioners.
When individuals in an organization perceive a group as a miniature bu-
reaucracy, the reasons for the perception can usually be found in the be-
havior of the HR staff. In addition, the reasons why persons in an HR
department may offer recommendations that are contrary to the expecta-
tions of department managers are not clearly communicated. Consider the
following example.

A department manager has had a key position open for several weeks
and the lack of a person to fill the position is impacting the department’s
output. It is affecting other staff members who have been obliged to cover
the vacancy through mandatory overtime. An ideal candidate appears, is
referred to the manager by HR, is interviewed, and is immediately offered
the position. This ideal candidate accepts and indicates an ability to begin
work at any time. The manager responds to HR by saying, “I want this
person to start work tomorrow.”

However, protocols used by HR call for a delay. The recruiter in HR
responds to the departmental manager by saying, “We must have time to
check references and properly clear this candidate. Even on a fast track,
the earliest starting date we can give you is in a week.” Although the man-
ager understands that proper clearance means concluding reference checks
and completing a pre-employment physical examination, the manager in-
sists on a next-day start and says, “The reference checks and the physical
can be concluded next week. In the meantime, we can get a start on attacking
the backlog of work that has accumulated.”

Because HR refuses to authorize the immediate start, the department
manager proceeds to complain about HR’s inflexibility and unwillingness
to cooperate to other peer and senior-level managers. The involved HR rep-
resentative stands firm, without appreciating the fact that the complain-
ing department manager may not be aware that regulations (at least in
some states) legally prohibit a new employee from starting work in a health
care position before being medically cleared, or that the organization, re-
inforced by personnel policy, has an obligation to make a good-faith ef-
fort to check references before accepting an individual as an employee.

In this example the HR representative is bound by state regulation and
corporate personnel policy. If this is not fully understood by the other de-
partment manager, then HR’s opposition will appear as arbitrary resist-
ance. It does little good for personnel from the HR department to simply
cite organizational policies and regulations to a manager. Such an ap-
proach, coming from HR, usually sounds like more HR rules and gener-
ates division. Education of line managers concerning existing legal and

The Relationship Between Human Resources and Other Departments 27

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regulatory restrictions that affect aspects of an employment relationship
and have an impact on their activities is required.

When interacting with HR, it is helpful to remember that HR does not
command. Rather, it merely advises or makes recommendations. However,
as in the previous example, the department has the responsibility not only
to make a recommendation in favor or against a specific action but also
to advise others of the possible consequences of the proposed action.

Human resources does not issue commands. An HR department man-
ager should never expect to issue mandates and should avoid allowing HR
to command by default. “This was really personnel’s decision,” or, “HR
made me do it,” are two laments commonly heard by executives or sen-
ior level managers when lower level supervisors are unhappy with a rec-
ommendation made by HR. These defenses can transform an HR
recommendation into an HR command. Human resources managers must
explain the reasons for their recommendations and be sure that they are
clearly understood. Human resources is purely a staff activity that oper-
ates by advising, counseling, suggesting, recommending, and occasionally
by negotiating, persuading, or convincing. It should never issue commands.


As with any other organizational activity, HR must adapt to a frequently
changing environment. Changes external to the health care industry and
changes within the industry itself affect the ways that health care is being
delivered. In turn, these affect how the services of HR are provided. Three
kinds of changes are faced by a modern health care organization: techno-
logical, financial, and social. Not only are the three interrelated, but also
these major areas of change have resulted in many specific changes in the
ways in which health care is organized and delivered.

Technological change encompasses advances being made in methods
of diagnosis and treatment, including all new or improved equipment, new
procedures, and new or improved drugs. In short, this encompasses most
advances made in any dimension of restoring health and preserving life.
But technological changes collide with considerations of finance because
the cost of having the benefits of the latest and best equipment and the in-
formation that it can produce conflict with the pressures experienced to
stem the rapid increase of health care costs. Social change becomes a strong
influence as the population ages and society experiences the changing at-
titudes of contemporary generations.

The three major categories of change mutually affect each other. The
results of this interplay can be seen in a number of changing forces within
the health care industry. Financial pressure increases as revenues are con-


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strained from growing in a manner that is consistent with actual cost in-
creases. In some instances, available funding is being reduced. Competition
is increasing as elements of a shrinking hospital system struggle to acquire
or retain a share of the available business in a particular area.

There is a growing emphasis on outpatient care. Technological advances
and financial pressures are continually conspiring to transfer more modes
of treatment to outpatient settings. Free-standing specialty centers that
perform some of the same services provided by hospital departments are
proliferating. Corporate restructuring is occurring as provider organiza-
tions consummate mergers or other affiliations and form ever-larger health

Turnover rates among health care executives are increasing. Some or-
ganizations are folding under mounting pressures while others are dis-
covering that mergers result in fewer executive positions. Medical
entrepreneurship is increasing as individual providers establish specialties
or attempt to tap specific market segments. Emphasis on productivity is
growing, and getting more output from the same or less input becomes nec-
essary as financial constraints and other shortages occur.

Chronic shortages of critical care-giving staff are occurring as occupa-
tional and professional groups react to the combination of financial pres-
sures that restrict earning potential and the stresses of working under
increasing demands while short of critical staff. An increasingly better ed-
ucated and more sophisticated workforce of employees is finding that they
are less likely than members of earlier generations to accept what they are
offered without expressing what they want.

Change within a health care organization or in any enterprise occurs in
one of two ways. Change is either intentional, being planned and executed
for some specific purpose, or it is forced, coming about in response to cir-
cumstances beyond the control of an organization. Healthcare organiza-
tions, especially hospitals, experience far more reactionary changes than
planned changes.

Several reasons contribute to these developments. Change is difficult to
promote unless it is driven by a crisis. Few organizations engage in plan-
ning that creates change. Because of workload and other continuing prob-
lems, top managers have little time to focus on change. Resistance to change
is often prevalent throughout many organizations. Middle managers and
department managers do not view themselves as agents of change. Finally,
few managers are skilled or effective at creating and managing change.

Experts often suggest that managers at all levels should be agents of
change. In HR departments, fostering a climate that is conducive to con-
structive change is especially important. This belief should be communi-
cated in all of HR’s interactions with organizational managers and employees.
Contemporary health care organizations benefit from a culture of change
that encourages innovation, rewards risk taking, and values employee

Health Care Human Resources and the Changing Scene 29

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participation and input. Human resources can best communicate its be-
lief in a change process by implementing up-to-date policies and proce-
dures that convey respect for the capabilities of every employee.

Job descriptions should be flexible and should allow room for innova-
tion and employee participation and input. A modern performance ap-
praisal process that permits employees to set objectives for themselves and
participate in their own growth and development fosters change.
Opportunities for promotion and transfer from within reinforce employ-
ees’ personal growth and development. A compensation structure that in-
cludes the opportunity to influence earnings through performance and a
flexible benefits structure that recognizes the divergence of individual needs
also supports change.

Given its unique relationship with all line and staff operations and its
mission to provide service for all employees, an HR department is ideally
positioned to be a health care organization’s primary driver of internal
change. Whether it is used as such is up to executive management and
HR’s leadership.


A Process by Any Other Name
Reengineering is intended to make work processes easier and more pro-
ductive. Reengineering, a term used to describe many improvement-
oriented activities, is far more complex than many people realize. The term
literally means engineered again. It involves addressing something that is
presently being done and redesigning a process so that a different objec-
tive related to the same result is achieved, for example, savings in time or
labor or direct savings in money. Practically, this may be a reduction in ma-
terials or supplies consumed or an improvement in quality without an in-
crease in cost. As applied to an entire organization or significant subunit,
reengineering is the systematic redesign of a business’s core processes, start-
ing with desired outcomes and then establishing the most efficient possi-
ble processes to achieve those outcomes.

At the heart of traditional methods-improvement or problem-solving
processes is the way that something is presently being done. These processes
begin with the present method and look for ways to eliminate steps or
make improvements. By contrast, reengineering ignores how something is
presently done and focuses only on desired outcomes. Abandoning a fa-
miliar routine is difficult. Overcoming the comfort of familiarity is the
challenge of reengineering.

Reengineering is a business term that has replaced a number of other
buzz words. These include reorganizing, downsizing, repositioning, right-


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sizing, revitalizing, and modernizing. The term reengineering has evolved
as the intent has gradually clarified. It is now the preferred term because
it connotes more of a focus on process and thus less of a focus on people.
Despite this meaning, an announcement of impending reengineering has
come to be synonymous with the likely loss of jobs.

Human Resources Meets Reengineering
As organizations change, the need to improve services and reduce costs is
the driving force behind most reengineering efforts. Reengineering con-
sistently results in reductions of staff. Many instances of reengineering
have been undertaken specifically to reduce the cost of services by reduc-
ing staff. Human resources is so labor intensive that, with the exception
of reducing employee benefits, there is no way to achieve significant cost
savings other than reducing staff. As a consequence, HR is often unaf-
fected by staff reductions driven by reengineering programs.

Effects on Human Resources Staffing
Human resources staffing ratios in different areas of organizational ac-
tivity vary. Health care organizations have approximately half of the num-
ber of staff persons per 1000 employees compared to HR departments in
industries such as manufacturing or finance. Human resources depart-
ments in contemporary health care organizations have approximately one
staff member for every 100 to 150 total employees.

The Flatter Organization
Organizational flattening, the elimination of layers of management such
that the institution’s organization chart becomes flatter, often accompa-
nies reengineering. As many managers have discovered, when an organi-
zation is flattened, middle managers are often eliminated. The responsibilities
of remaining managers, usually first-line supervisors, are increased.

A typical HR department, even in a mid- to large-size health care or-
ganization, has only three layers. The middle layer, usually comprised of
specialist-managers for activities such as employment or compensation
and benefits, may vanish, leaving only HR staff and a departmental su-
pervisor. When this occurs, an organization’s department managers must
then relate directly with several staff-level individuals rather than with
two or three specialist-managers.

Centralization versus Decentralization
Reengineering can lead to changes in an organization’s degree of cen-
tralization as it seeks more cost-effective ways of getting its work done.
Decentralization is a more common outcome of reengineering than is

Human Resources Reengineered 31

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centralization. Whichever outcome occurs affects not only HR person-
nel and how they do their jobs, but also department managers.

When its activities are decentralized, individual managers must be more
aware of HR concerns because decisions must be made closer to an orga-
nization’s lowest levels. For example, if some aspects of employment are
decentralized, then a department manager may then have to screen in-
coming applications and decide which applicants have the qualifications
for a particular open position, which is something HR would have done
before decentralization.

Some forms of technology, for example computerized telephone sys-
tems, have led to the centralization of question-and-answer protocols and
other systems for geographically scattered organizations. When using
newer communication systems, employees at multiple locations have been
able to transact business about their benefits without having to travel to
an HR office. In turn, this can enable an organization to maintain a smaller
HR presence at satellite locations while handling all business centrally.
For widely dispersed organizations, toll-free numbers for employees who
have benefits questions provide an effective and financially viable partial
replacement of HR staff with technology.

Outsourcing is defined as having an external vendor provide, on a continuing
basis, a service that would normally be provided within an organization.4

Although outsourcing is frequently linked to staff reduction in HR de-
partments, budget cuts and staff reductions are not always the leading rea-
sons for outsourcing. Exhibit 2-1 lists common reasons for outsourcing in
approximate order of their frequency of occurrence.


Exhibit 2-1 Order of Importance of Commonly Cited Reasons for

Outsourcing Selected Human Resource Services (From most to least

frequently cited)

• Use the expertise of specialists (for example payroll, pension plan
administration and Workers’ Compensation administration)

• Conserve staff time when addressing required tasks
• Reduce administrative costs
• Allow staff to focus on needs more relevant to an organization’s

• Compensate for overload caused by increasing responsibilities
• Reduce human resources staff
• Make organizational and departmental budget cuts

35310_CH02_Final.qxd 1/30/07 4:22 PM Page 32

Cutbacks related to economic pressures and reengineering have created
opportunities for companies that specialize in HR services. Exhibit 2-2
lists a number of activities that are commonly outsourced and the reasons
for so doing.

Payroll is the most commonly outsourced activity, although it is now
normally based in the finance department. Payroll processing requires con-
siderable detailed knowledge of the details of the Fair Labor Standards Act
and related regulations that affect payroll deductions and other aspects of

Human Resources Reengineered 33

Exhibit 2-2 Human Resources Activities Frequently Subject to


• Payroll. Payroll is often a responsibility of the finance department.
Payroll input often flows through HR. Where payroll is processed
has an effect on HR staff.

• Outplacement services. This is outsourced because it is
intermittently or infrequently needed.

• Employee assistance program administration. This is outsourced
to maintain confidentiality for employees.

• Employee training and development. Many organizations contract
with training specialists or consultants for services because they
are intermittently needed.

• Relocation services. This is outsourced because the need for it is
intermittent or infrequent.

• Benefits administration. Many benefit programs are internally
administered. Pension plans and self-funded insurance programs
such as dental and short-term disability are often administered by
external trustees.

• Compensation planning and administration. This is occasionally
outsourced, especially when executive incentive compensation
plans are involved.

• Recruitment and staffing. Some elements are outsourced.
Organizations experiencing rapid expansion or adding a significant
service may outsource application and resume screening and initial

• Candidate background checks. Very few health care organizations
attempt to perform their own background checks. This activity is
nearly always outsourced.

• Safety and security. Few organizations entirely outsource these
activities. Most organizations contract with specialists to supply such

35310_CH02_Final.qxd 1/30/07 4:22 PM Page 33

payment. Firms that specialize in payroll have created automated systems
that fully account for all of the detailed requirements of wage payment.
Users submit input information. The payroll service creates paychecks or
direct deposits and generates all necessary records. This particular form of
outsourcing has eliminated a great deal of frustration for businesses. It is
usually less expensive than an internal payroll operation. Because many
smaller health care organizations have small payrolls, purchasing an auto-
mated payroll system is cost efficient.

Some of the downsizing of HR operations has resulted in outsourcing
to save money. In 1999, 58% of all companies were outsourcing at least
one HR activity. In 2002, this number had increased to 74%.5

Many small facilities lacking the resources to employ adequate full-time
HR staff rely heavily on outsourcing, particularly on firms known as pro-
fessional employer organizations (PEO). A PEO takes over and provides
all HR services. When an organization or business contracts with a PEO,
its employees become co-employees of the PEO. A PEO charges a per-
centage of payroll, typically 2–4%, for its services. These ordinarily in-
clude benefits administration as well as payroll. In one instance, by
contracting with a PEO, a small health care provider organization reduced
its costs of personnel administration from 9% of payroll to 3%.6

Reengineering aside, HR departments have outsourced activities be-
cause doing so often makes economic sense. Activities such as administering
a self-funded health insurance or disability program or coordinating an em-
ployee assistance program are frequently provided by non-organization em-
ployees for reasons of confidentiality. This prevents the company from
having to reveal employees’ personal and medical information to the per-
sons administering the programs.

Additional outsourcing of HR activities is often one of the results of
reengineering. As HR staff members are eliminated, adjustments are made
in the HR workload. However, essential tasks that remain may occur so
infrequently that it is inefficient to retain and pay staff to perform them.
Almost any HR operation can be a candidate for outsourcing. Commonly
outsourced HR activities include payroll, insurance claim processing, EAP
administration, retirement and savings plan administration, employee ed-
ucation, and employment candidate background checks.

Effects on Corporate Culture
Corporate culture is comprised of the shared basic assumptions and be-
liefs developed by an organization over time. It requires time for an orga-
nization’s culture to develop to the extent that those entering can tell the
kind of organization they have entered in a relatively short time.

It also takes time for an organization’s culture to mature and to adapt
to change. Time is required for an organization’s culture to adapt to change.


35310_CH02_Final.qxd 1/30/07 4:22 PM Page 34

Reengineering is inevitably accompanied by change. In order for an orga-
nization’s culture to successfully absorb and accommodate, change should
occur in increments that can be absorbed without trauma. The pace of
change should allow full assimilation of one significant modification before
another is introduced. In many health care organizations, the pace of change
has been so rapid that the corporate culture has had no opportunity to
reach a new equilibrium before once again being thrown off balance.

Reengineering inevitably introduces turmoil into an organizational cul-
ture. Mergers; acquisition and other forms of re-affiliation; downsizing,
rightsizing, and other forms of reorganization; increasing external regu-
lation; and all forms of cost-cutting involve organizational turmoil.

To ensure maximum effectiveness in all organizational relationships, the
individual in charge of HR should report to the CEO. Line and staff tasks
are different. Line and staff employees perform different tasks for an or-
ganization. Line operations advance the work of an organization. Staff op-
erations support and enhance the work of an organization by making it
possible to continue producing products or delivering services as intended.

A variety of organizational paradigms are used in HR departments.
These include organizational models based on clerical tasks, counseling,
industrial relations, control, and consulting. Alternative models are rec-
ognized by some HR professionals.

The degree of effectiveness for HR depends on the attitude of a CEO
towards HR. Human resources does not issue commands. It is vulnerable
to changes because of reengineering. Outsourcing HR services is relatively

Returning to the opening case study, Sharon, the HR director for the
newly designated health system, reports to the COO. This is the second
best of the two acceptable reporting relationships for HR. Her organiza-
tional standing is compromised from the outset.

Sharon was wise enough to realize that she could not immediately es-
tablish the kind of HR department that she would like to have. Despite a
change in name, the CEO still thinks of HR as personnel. Uniting all of
the scattered elements of personnel into an HR department to serve the new
health system’s needs was a significant challenge. Her present HR struc-
ture, a combination of the clerical and counseling models, would have to
prevail until she could get HR properly organized and transform it into a
full-fledged business partner. She realized that this might not occur until
the current CEO left.

Sharon’s initial recommendations included opting for partial decen-
tralization of some HR activities, with the senior person at the smaller

Conclusion 35

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hospital, a single HR person at the largest satellite, and the office managers
at the other satellites and the group practices handling local matters. These
included making changes to the employee information and benefits data
bases and addressing employee matters as they arose. In addition, they
would serve as channels for policy interpretation.

Sharon decided to keep recruiting centralized, primarily to maintain con-
sistency in such matters as formulating salary offers, explaining benefits,
checking references, and initiating background checks. She was concerned
about organizational consistency in pre-employment activities. She opted
to maintain all personnel files centrally, but created a procedure to ensure
quick access by managers at any location when necessary. Finally, she es-
tablished a help-line for employees to call at any time. Through this service,
employees could learn where and how they might access HR or benefit in-
formation or secure assistance in addressing problems related to benefits.

Sharon realized that she would have to provide direct support to her
HR staff by visiting the satellite facilities in person. She planned to ensure
that all of her HR managers were trained. She would send them to local
colleges or universities for instruction by HR experts. Supervisors having
the least HR experience would be the first to receive training. Sharon es-
tablished a personal goal to make HR activities as easy as she could for
the managers who had only a part-time involvement in HR matters.

1. Andrews, J. R. (1986). Is there a crisis in the personnel department’s identity?

Personnel Journal, 65(6), 86-93.
2. Driver, M. J., Coffey, R. E., & Bowen, D. E. (1988). Where is HR management

going? Personnel, 33(1), 28-31.
3. Greene, R. J. (1995). Culturally compatible HR strategies. HR Magazine, 40(6),

4. Harkins, P. J., Brown, S. M., & Sullivan, R. (1995). Shining new light on a

growing trend. HR Magazine, 40(12), 75-81.
5. Knight Ridder News Service. (2002). Outsourcing human-resource tasks.

Democrat & Chronicle, Rochester, NY, February 17.
6. Perl, L. (1996). Outsourcing, Health-Care Style. Detroiter: For Business in

Greater Detroit, November, 26-27.

Discussion Points

1. Describe a specific outsourcing practice about which you are knowl-
edgeable, and explain what you believe are the primary benefits achieved
by having the services provided by outside persons rather than keep-
ing them within an organization.


35310_CH02_Final.qxd 1/30/07 4:22 PM Page 36

2. Why do experts contend that a primary characteristic of line person-
nel is present within a clearly defined staff activity such as HR or

3. What is the fundamental difference between a line activity and a staff
activity? Provide two examples of each in a health care setting.

4. What problems develop when the head of HR reports to any execu-
tive other than the chief executive officer?

5. Under what organizational circumstances could the following mod-
els of HR be successful in a health care organization: Clerical Model,
Control Model, Industrial Relations Model, Legal Model, Consulting
Model, and Financial Model?

6. Which of the HR models appears most appropriate for managing per-
sonnel in a health care organization? Why?

7. Describe how an HR department in a health care organization might
evolve through different organizational models as a department grows
and matures.

8. How do the expectations of an organization’s CEO shape the model
or manner in which HR services are delivered?

9. What are the primary areas of conflict between HR and department
managers? How might these conflicts be reconciled?

10. What are the advantages of a decentralized organization for deliver-
ing HR services? What are the risks?

11. What is organizational flattening? Why is it practiced?
12. What are the primary shortcomings of reengineering as it is practiced

in contemporary health care organizations? How does reengineering
differ from minor modification of existing practices?


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Cambridge, MA: Harvard University Press.
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to Retain Today’s Workforce and Find Tomorrow’s. Chicago: Health Forum

Society for Human Resource Management. (2005). SHRM Health Care Survey
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VA: Society for Human Resource Management.

Conclusion 37

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Thomas, M., & Keagy, B. (2004). Essentials of Physician Practice Management.
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Walburg, J., & Bevan, H. (2005). Performance Management in Healthcare. London:
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Anonymous. (2005). Excess, shortage, or sufficient physician workforce: How

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The Legal
Framework of

Human Resources
Chapter Overview

After reading this chapter, readers will:

• Understand the evolution of the regulated environment within
which human resources must work in serving a health care

• Trace the chronology of legislation affecting employment,
beginning in 1932, with a brief explanation of each pertinent law

• Agree that 1964 was a pivotal year in legislation affecting human

• Understand highlights of legislation enacted in 1964 and beyond
• Acknowledge 1964 as the beginning of an effort by the federal

government to shift considerable social responsibility to employers
• Describe the cumulative effects of employment legislation to date

This chapter is intended to provide readers with sufficient background and
knowledge of employment legislation to enable them to develop an un-
derstanding of the effects of employment law on the activities of a depart-
ment manager. It provides a review of the laws affecting aspects of the
employment relationship. These pieces of legislation are described using non-
legal terminology. In each instance, how the pertinent piece of legislation




35310_CH03_Final.qxd 1/30/07 4:15 PM Page 39

approaches its subject is discussed. The importance of each law is reviewed
along with the success each has had in addressing a societal need through
the legislation’s stated intent. Effects of the more significant laws are re-
viewed along with descriptions of some apparently unintended outcomes.

Case Study: Does Weight Constitute a Disability?

Susan J. applied for a position as a licensed practical nurse at County
Memorial Hospital. She had generated an impressive record during her
training, possessed good references from prior employment in two differ-
ent private duty situations, and interviewed well. Susan was clearly very
heavy. Helen Harding, the Director of Nursing at County Memorial, es-
timated her weight to exceed 300 pounds. An ideal weight for her five foot
five inch body was 125 to 130 pounds. A reasonable weight range for
someone of that height was 120 to 140 pounds. After the interview, Helen
extended a tentative offer of employment to Susan. The offer was contin-
gent on passing the hospital’s pre-employment physical examination.

The County Hospital employee health physician examined Susan but
declined to approve her for employment unless she could first achieve a
safer weight, in her case less than 275 pounds. Susan failed to get the job
because of her overweight condition. She then filed a complaint with the
State Division of Human Rights charging discrimination based on dis-
ability, citing Title VII of the Civil Rights Act of 1964 and the Americans
with Disabilities Act of 1990. She claimed that her only responsibility was
to demonstrate that she was capable of doing the job, and that in spite of
her physical handicap she could still adequately perform all required du-
ties of the job. Her obesity, she claimed, was due to a medical condition
over which she had no control.

County Hospital moved for dismissal of the complaint on three grounds.
First, it argued that obesity was not a true physical impairment under the
law. Second, it claimed that Susan’s condition resulted from her own vol-
untary actions. Finally, the hospital claimed that she could reduce and con-
trol her weight if she so chose.

How might the foregoing situation be resolved? Is obesity truly a disability,
or will a different argument prevail? Do you believe that the hospital will
be successful in getting the complaint dismissed, or will Susan successfully
persuade the Division of Human Rights to act on her complaint? Why?

An important disclaimer is in order before proceeding with the contents
of this chapter. Nothing in this chapter constitutes legal advice, and no
such advice should be inferred from its contents. Individuals with questions


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about the applicability of any particular point of law should take those ques-
tions to the appropriate people in their organization. These may be per-
sons in Human Resources (HR), Administration, or Risk Management
who can provide or secure appropriate responses.

The pivotal year when HR began to change for all time was 1964.
Internal operations that referred to people were still called personnel in most
organizations. Sweeping civil rights legislation came into being with the
passage of the Civil Rights Act of 1964. The specific turning point was
the appearance of Title VII. This legislation marked the beginning of sig-
nificant changes in relations between government and business. It marked
a change in philosophy that resulted in a completely new direction for gov-
ernment in concern for the citizens of the United States.

Pre-1964: Regulation Minimal and Tolerable
Before 1964, businesses were free to treat employees essentially as they
chose, with only two exceptions: wage-and-hour laws and labor-relations
laws. Prior to 1964, the only laws that had noticeable impact on the em-
ployment relationship were the Fair Labor Standards Act and related state
laws, and the National Labor Relations Act.

The Fair Labor Standards Act governs the payment of wages and other
related conditions of employment. This and similar laws existing in some
of the states are commonly referred to as wage-and-hour laws.

The National Labor Relations Act governed relationships between work
organizations and labor unions. Similar laws existed in some but not all
states. They were relevant only to organizations where employees were
unionized or where active union organization efforts were underway.

Prior to 1964, managers did not have to be knowledgeable about many
regulatory requirements. Few legal restrictions impinged on HR opera-
tions or on managers in general. The majority of business organizations
complied with the wage-and-hour laws as a matter of operating routine.
Leaders of organizations where there was a union presence, either being
organized or already under contract, generally expected to comply with
all applicable labor laws.

Other applicable legislation was in place before 1964, but the Fair Labor
Standards Act and the National Labor Relations Act were the only ones
having a visible influence on HR operations and department management.
These two are discussed more fully in the chronology of legislation that

The turning point of 1964 heralded a change in philosophy concerning
government’s relationship with business. For years, the governing philos-
ophy had largely been one of hands-off to the maximum practical extent.
Employers were only expected to concern themselves with wage-and-hour
requirements and restrictions imposed by labor relations legislation. Since
1964, the government has been addressing many of the perceived needs

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of individuals by involving employers in meeting those requirements.
President Johnson’s signature on the Civil Rights Act in 1964 initiated a
significant change in the actions that government would be taking on be-
half of its citizens. This trend continues to the present day.


Some of the laws and legislation included in the following chronology will
receive little more than a brief, passing description because they are ad-
dressed more thoroughly in subsequent chapters. These will be so identi-
fied. For others, implications for HR and department managers are briefly

Norris-LaGuardia Act (1932)
The first significant piece of legislation to address the growing organized
labor movement in the United States was the Norris-LaGuardia Act of
1932. This law reflected an important shift in public policy concerning la-
bor unions, from a posture of legal repression of unions and their activi-
ties to one of actual encouragement of union activity. Although the
Norris-LaGuardia Act legalized union organizing activities and affirmed
workers’ rights to organize for collective bargaining purposes, it did little
or nothing to directly restrain employers in their conduct toward labor
organizations. During the first three decades of the twentieth century, many
workers who attempted to organize for collective bargaining lost their
jobs because of their involvement with the organizing process. Often, their
organizational efforts were countered with violence. Presently the impact
of the Norris-LaGuardia Act has waned. It is mentioned here because of
its role as a forerunner to subsequent labor legislation.

National Labor Relations Act (1935)
Also known as the Wagner Act, the National Labor Relations Act (NLRA)
established a number of rules for the conduct of both unions and employ-
ers in labor organizing and collective bargaining situations. Although it
seemed largely to favor unions and encourage their presence, the NLRA es-
tablished some boundaries on what unions could do in their organizing ac-
tivities. In addition to affirming the right of employees to organize, the
NLRA made it illegal for an employer to refuse to negotiate with a union.
This requirement assumed that the union had conducted a legal organiz-
ing campaign and had won a proper representation (certification) election.

The NLRA created the National Labor Relations Board. This body was
charged with administering the Wagner Act by conducting representation
elections to determine whether employees in particular groupings (called


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bargaining units) wished to have union representation. The NLRA speci-
fied that a union chosen by a majority of the employees in an appropriate
unit would be the exclusive representative for all employees in the unit. The
NLRA delineated a list of unfair labor practices that were punishable by
fines. Many unfair labor practices pertain to management reactions to
union organization activities. The NLRA has been modified by the Taft-
Hartley Act and the Landrum-Griffen Act.

Social Security Act (1935)
The Social Security Act established a basic system of contributory social
insurance and a supplemental program for low-income elderly persons.
In 1939 it was expanded to provide benefits to survivors of covered work-
ers and dependents of retirees. The Social Security Act has been further ex-
panded to cover workers who had become permanently disabled. Coverage
under the Social Security Act was again expanded in 1965 to provide
Medicare health insurance coverage for the elderly.

Fair Labor Standards Act (1938)
In part, the Fair Labor Standards Act (FLSA) was intended to reduce the
high unemployment rate that typified the years of the Great Depression.
Congress intended to reduce the length of a work week to a uniform stan-
dard, thus spreading available work over a greater number of workers. In
addition to defining a normal work week, the FLSA set minimum pay
rates, established rules and standards for the payment of overtime, and
regulated the employment of minors. Over the years, FLSA has been
amended many times by raising the minimum wage due to changing cir-
cumstances imposed by inflation and other economic and social concerns.
The FLSA remains as the country’s basic wage-and-hour law.

Labor Management Relations Act (1947)
The Labor Management Relations Act amended the National Labor
Relations Act and is commonly referred to as the Taft-Hartley Act. As
passed in 1935, the NLRA clearly favored unions over employers. The
principal intent and subsequent effect of the Taft-Hartley Act was to level
the playing field to some extent by more appropriately balancing the re-
sponsibilities and advantages of both unions and employers. Taft-Hartley
listed additional unfair labor practices. Although many experts still view
it as a law favoring labor unions, the Taft-Hartley Act was clearly a change
in the direction of management’s rights.

Two points are of immediate interest concerning the Taft-Hartley Act.
Most mentions of the NRLA are actually in reference to the NLRA as
amended by Taft-Hartley. The Taft-Hartley Act was itself amended in 1975

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specifically to address not-for-profit hospitals by removing the exemption
that had been in place since its original passage in 1947.

Labor-Management Reporting and Disclosure Act (1959)
The Labor-Management Reporting and Disclosure Act is more commonly
known as the Landrum-Griffen Act. It further amended the National Labor
Relations Act. Because it amended the NLRA as amended by Taft-Hartley,
it is sometimes jokingly referred to as an amendment to an amendment.
Among its numerous provisions, the Landrum-Griffen Act required em-
ployers, including not-for-profit hospitals and other nonprofit health care
facilities, to report any financial arrangements or transactions that were
intended to improve or retard the process of unionization in detail to the
Secretary of Labor. Reporting and disclosure requirements were imposed
on unions.

Equal Pay Act (1963)
The Equal Pay Act was an amendment to the Fair Labor Standards Act.
It prohibited the payment of unequal wages for men and women who
worked for the same employer in the same establishment performing equal
work on jobs requiring equal skill, effort and responsibility, and performed
under similar working conditions. Simply put, people doing the same work
in the same place in the same way have to be paid equally regardless of gen-
der. Although the Equal Pay Act came into being before 1964, it had no
noticeable impact on the activities of HR and no effect on roles of de-
partment managers. As of 2006, equality of pay rates is not universal.
Many men continue to earn more than women for comparable jobs.

Civil Rights Act (Title VII) (1964)
This legislation has led to greater regulation of the employer-employee re-
lationship by the government. Title VII provided the legal basis for all peo-
ple to pursue the work of their choosing and to advance in their chosen
occupations subject only to the limitations imposed by their own individ-
ual qualifications, talents and energies. This legislation defined unlawful
employment discrimination as the failure or refusal to hire or to otherwise
discriminate against any individual with respect to compensation or other
terms, conditions, or privileges of employment because of that individ-
ual’s race, color, religion, sex, or national origin. The Act prohibits setting
limits, segregating or classifying employees or applicants for employment
in any way that deprives them of employment opportunities or otherwise
adversely affects their status as employees because of race, color, religion,
sex, or national origin.

The Civil Rights Act of 1964 established the Equal Employment
Opportunity Commission (EEOC) to enforce the anti-discrimination re-


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quirements of Title VII. The Act was amended in later years to compen-
sate for perceived erosion of its strength and effectiveness owing to a num-
ber of Supreme Court decisions.

Age Discrimination in Employment Act (1967)
The Age Discrimination in Employment Act (ADEA) legally established
the basic right of individuals to be treated in employment situations on the
basis of their ability to perform the job rather than on the basis of age-
related stereotypes or artificial age limitations. The ADEA prohibits dis-
crimination in employment on the basis of age in hiring, job retention,
compensation, and all other terms, conditions, and privileges of employ-
ment. Originally enforced by the Department of Labor, in 1978 enforce-
ment of the ADEA was transferred to the Equal Employment Opportunity
Commission. The threshold for defining age discrimination is 40. Therefore,
workers age 40 and older constitute a protected class for EEOC purposes.

The ADEA has had a direct effect on retirement. Before ADEA, em-
ployers were free to mandate retirement at a specific age. The most com-
monly mandated age for retirement was 65. When passed in 1967, the
ADEA raised the limit such that employers could no longer mandate re-
tirement at any age younger than 70. When the ADEA was again amended
in 1986, the age 70 limitation was removed. This means that retirement
can no longer be required by any specific age. The sole legal criterion for
continuing employment is an individual’s ability to fulfill the requirements
of the job. Some exceptions exist under which retirement by a stated age
can be mandated for a limited number of specific occupations. These in-
clude police officers, firefighters, airline pilots, surgeons, and some policy-
making executives. In many instances the ADEA has permitted people who
wished to keep working to do so. This has ensured the continuing em-
ployment of some workers who might otherwise have to depend on gov-
ernment assistance.

Occupational Safety and Health Act (1970)
Passed in 1970 and effective in 1971, the Occupational Safety and Health
Act (OSHA) is a highly influential piece of legislation concerning employee
safety in the workplace. The “A” in OSHA indicates either Act or
Administration, depending on the specific situation and reference. The in-
tent of Congress in establishing the Occupational Health and Safety Act
was to provide all persons with workplaces free from recognized hazards
that have the potential to cause serious physical harm or death to em-
ployees. The Occupational Safety and Health Administration is authorized
to promulgate legally enforceable workplace safety standards, respond to
employee complaints and, as necessary, conduct on-site inspections to fol-

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low up on employee safety complaints or on lost-workday injury rates
that are considered excessive.

On May 25, 1986, OSHA began enforcement of the second phase of
an elaborate set of rules known formally as Hazard Communications.
These rules provide workers with the right to know about any hazardous
substances to which they are exposed or handle in the course of perform-
ing their job duties. According to OSHA’s hazard communication rules,
health facilities are required to create and deliver programs for informing
and training employees about hazardous substances in their workplace, en-
sure that warning labels on all incoming containers are intact and clearly
readable, and inform and train employees in the nature and appropriate
handling of hazardous substances at the time of initial assignment. Suppliers
are required to create and distribute a Material Safety Data Sheet (MSDS)
for all products containing a hazardous substance that they produce. These
must be provided to all purchasers of their product. The OSHA hazard com-
munication rules mandate that employers maintain copies of MSDSs for
all hazardous substances in the workplace, supply copies of MSDSs to em-
ployees upon request and maintain current copies of MSDSs for all prod-
ucts so that they are accessible to any employee on all work shifts.

Under OSHA regulations, more than 1,000 substances are considered
to be hazardous. A number of the states have enacted right-to-know laws
with requirements that are similar to OSHA regulations. Federal and state
standards for the handling of hazardous substances require that employ-
ers distribute material safety data sheets, ensure that warning labels are al-
ways in evidence on workplace containers, and be able to produce a written
employee orientation program at any time. Department managers are typ-
ically assigned the responsibility for ensuring that these regulations are fol-
lowed and all requirements are fully satisfied within the department or
areas under their direct supervision. Personnel from HR usually supply
training materials and provide supportive services to department managers.

Health Maintenance Organization (HMO) Act (1973)
This legislation was passed as part of a Nixon administration cost con-
tainment initiative, preempting all state regulations that posed any barri-
ers to HMO formation. It set conditions for HMOs to become federally
qualified and mandated that most employers offer an HMO option if a fed-
erally qualified HMO in the area requested inclusion in their benefits of-
ferings (this condition was eliminated in 1995). In theory the act was
intended to reduce costs by eliminating regulatory barriers to HMO de-
velopment and encouraging the proliferation of what was seen as a more
cost-effective health care delivery system.


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Rehabilitation Act (1973)
Although disabled persons were mentioned in the Civil Rights Act of 1964,
they were addressed separately for the first time in the Rehabilitation Act
of 1973. Congress recognized that the handicapped were subject to cul-
tural myths and prejudices similar to those biases that existed against
women and ethnic minorities. However, this law applied only to employ-
ees of the federal government and to employers doing a specified amount
of business with the government.

One portion of the Rehabilitation Act prohibited discrimination in the
hiring, promotion, and other employment of the handicapped, essentially
paralleling Title VII of the Civil Rights Act of 1964. Another portion re-
quired employers doing more than $2,500 in business with the federal
government to apply affirmative action guidelines so as to employ and
promote qualified handicapped individuals. Employers having more than
50 employees and fulfilling government contracts worth $50,000 or more
were require to have written affirmative actions programs as required by
the Office of Federal Contract Compliance Programs. These employers
were required to make reasonable accommodations for the physical or
mental limitations of employees or applicants. The Rehabilitation Act is
significant because it was a precursor of the Americans with Disabilities
Act (1990).

Employee Retirement Income Security Act (1974)
The Employee Retirement Income Security Act (ERISA) established four
basic requirements governing employee retirement plans. The Employee
Retirement Income Security Act mandated that employees must become
eligible for retirement benefits after a reasonable length of service (also
known as vesting or being vested); adequate funds must be reserved to
provide the benefits promised under the plan; the persons who adminis-
ter the plan and manage its funds must meet established standards of con-
duct; and sufficient information must be made available on a regular basis
so plan participants, auditors or other interested parties may determine
whether ERISA requirements are being met. The provisions of this act
were later reinforced by legislation included in the Retirement Equity Act
of 1984 that greatly increased the complexity of ERISA and added multi-
ple layers of Internal Revenue Service regulations.

Taft-Hartley Amendments of 1975
The Taft-Hartley Act, which, as noted earlier, was an amendment to the
National Labor Relations Act, was itself amended in 1975. This “amend-
ment to an amendment” was created specifically to address not-for-profit
hospitals by removing the exemption that had been in place since Taft-
Hartley’s original passage in 1947. Beginning in 1975, no longer could

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not-for-profit hospitals be considered beyond the reach of labor unions.
The exemption was removed, but specific rules were created in recogni-
tion of the special circumstances of this vital service which deals in mat-
ters of human life. For example, written notice must be provided by a
union to the health care institution and the Federal Mediation and
Conciliation Service 10 days prior to engaging in any picketing, strike, or
other concerted refusal to work. No such notice is required prior to sim-
ilar actions in other industries.

The 1975 amendments preempt all state labor laws that previously ap-
plied to nongovernmental hospitals. Also, the 1975 amendments apply to
health care institutions previously covered by the act, such as proprietary
hospitals and nursing homes, as well as to all those institutions brought
under federal law by these amendments to the act.

A significant element of Congress’s intent in passing the amendments
was to provide time to transfer patients from a struck or threatened insti-
tution to another facility and to obtain limited assistance from another fa-
cility without risking secondary strikes or boycotts against the assisting

Pregnancy Discrimination Act (1978)
The Pregnancy Discrimination Act decrees that discrimination on the ba-
sis of pregnancy, childbirth, or related medical conditions was in fact un-
lawful sex discrimination under Title VII of the Civil Rights Act of 1964.
From this point forward, pregnancy has been considered to be a medical
disability and is treated accordingly as a disability of some 6 to 8 weeks
duration. The exact length varies and depends on whether federal or state
guidelines are applied.

Consolidated Omnibus Budget Reconciliation Act (1986)
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a com-
plex piece of legislation that addresses many concerns. However, most per-
tinent to employment is the provision that COBRA allowed for the extension
of group insurance coverage to employees and their dependents on a self-
pay basis for set periods of time for those who would otherwise lose group
health or dental benefits due to a loss of employment, change in employ-
ment status, or other defined events. The maximum period for COBRA
benefits is 36 months. The length of the period depends on the qualifying
event or the reason for accessing COBRA. By making it possible for these
employees and dependents to remain on the group contracts under which
they had been covered, COBRA shifted to employers a portion of the cost
of health coverage for many individuals who would otherwise be unin-
surable except under government programs. As far as health insurance is
concerned, COBRA simply provides temporary or stopgap coverage.


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Persons who continue coverage under COBRA must secure other insur-
ance after the eligibility period expires. Insurance coverage can be con-
tinued up to 18 months for laid-off employees, up to 29 months for disabled
individuals, and up to 36 months for dependents following separation, di-
vorce, or the death of the previously covered employee. However, should
the employer go out of business or for some other reason terminate its
health insurance plan, all rights under COBRA immediately cease.

Immigration Reform and Control Act (1986)
The Immigration Reform and Control Act (IRCA) requires employers to
review and, as necessary, modify their hiring practices. They must insti-
tute procedures to verify that all job applicants are United States citizens
or otherwise legally authorized to work in the United States. This law es-
tablished civil and criminal penalties for knowingly hiring, recruiting, re-
ferring, or retaining in employment persons designated as unauthorized
aliens. The act prohibits employers from discriminating against job ap-
plicants on the basis of citizenship status or national origin.

Much initial business reaction to IRCA was strong, vocal, and negative.
Because IRCA forces employers to take steps to screen out illegal immi-
grants (the majority of whom enter this country with employment as a
goal), many organizational heads have expressed the belief that businesses
are being made to perform a function that more correctly belongs within
the purview of the federal government. Skrentny provided the following
early assessment of the act, “This onerous piece of legislation for business
turns every employer in the country, whether he or she hires a housekeeper
or 10,000 auto workers, into an arm—an agent or a cop, if you will—of
the Immigration and Naturalization Service (INS).”1

Most employment legislation specifies the minimum size organization
to which it applies. For example, the Family and Medical Leave Act ap-
plies only to employers with 50 or more employees. The Immigration
Reform and Control Act pointedly applies to all employers of one or more
employees. The basis for this requirement is the premise that a significant
number of undocumented aliens find work as household help.

This legislation has created work in the form of a verification docu-
ment known as the I-9 Form which is ordinarily completed in HR as part
of the hiring process. Each new employee or employee-to-be must furnish
specified proofs of identity and, in the instance of legal aliens, proof of au-
thorization to work in the United States. After examining (and usually
copying) the appropriate proofs, a representative of the employer signs
the I-9 attesting to having seen the documents. An employer has three busi-
ness days from the date of hire to complete an I-9 Form. This requirement
changes to the first day of employment if the term of hire is to be less than
three days. Completed I-9 Forms are retained in employees’ personnel files,
where they are subject to audit by the Immigration and Naturalization

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Service. Financial penalties may be imposed for missing or incomplete
I-9 Forms. Significant legal repercussions can be imposed if illegal aliens
are discovered in the work force.

Some critics have claimed that the Immigration Reform and Control Act
has resulted in increased employment discrimination. Employment appli-
cants who look or sound foreign, especially Asians and Hispanics, are of-
ten faced with an increased likelihood of discrimination by employers who
may shy away from hiring them because they fear inadvertently hiring il-
legal aliens and thus exposing themselves to action by the INS. Laws af-
fecting employment have proliferated to such an extent that some of them
occasionally come into conflict with each other. Title VII of the Civil Rights
Act declares that discrimination on the basis of race or national origin is
illegal while the Immigration Reform and Control Act encourages closer
scrutiny of applicants on the basis of national origin.

Pension Protection Act (1987)
This act requires organizations with under-funded pension plans to make
additional payments to the Pension Benefit Guarantee Corporation (PBGC).
The PBGC is a government agency established to guarantee benefit pay-
ments to participants of legally qualified defined-benefit pension plans. In
addition to increasing employers’ payments to the PBGC, this legislation
reduces or eliminates the deduction of contributions by employers for
better-funded plans.

Drug-Free Workplace Act (1988)
The Drug-Free Workplace Act requires organizations having $25,000 or
more in federal contracts or grants to make good-faith efforts to maintain
a drug-free workplace and to establish drug education and awareness pro-
grams for their employees. As a precondition to receiving a contract or
grant, the law requires an organization to certify that it will provide and
maintain a drug-free workplace. The manager of any department involved
in the fulfillment of any portion of an appropriate federal contract or grant
will be involved at several points in the following process. An organiza-
tion must notify all employees in writing (via a published statement) that
the possession, use, manufacturing, or distribution of a controlled sub-
stance in the workplace is prohibited. The statement must include the
penalties that will be imposed for violations of company rules. Each or-
ganization must establish a drug-free awareness program to inform em-
ployees of the dangers of drug abuse in the workplace; comply with the
external requirement of a drug-free workplace as a condition of seeking
and accepting contracts and grants; note drug counseling, rehabilitation,
or employee assistance programs that may be available to them; and enu-


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merate the penalties to which the organization may be exposed for viola-
tions that occur in the workplace.

An organization must require that each individual employee who is to
be involved in the fulfillment of an appropriate contract or grant possess
a copy of the organization’s published statement concerning controlled
substances. Furthermore, the organization must notify all employees re-
ceiving the controlled substances statement that they are expected to abide
by all terms of the statement and notify their employer of any criminal
drug statute conviction for a violation in the workplace no later than five
days after conviction. Within ten days of receiving such a notice of crim-
inal drug statute conviction, the granting or contracting agency must be
notified of the conviction. Within 30 days of receiving notice of an employee’s
criminal drug statute conviction, an employer must take appropriate dis-
ciplinary action against the employee, or require the employee to com-
plete an approved drug-abuse assistance or rehabilitation program in a
satisfactory manner. Finally, each employer must make a good-faith effort
to maintain a drug-free workplace through implementation of the foregoing
procedures and requirements.

All health care institutions have an interest in keeping their work envi-
ronments free from dangers to patients, visitors, and employees created by
the use of illegal drugs or controlled substances. For a number of years,
drug abuse in the workplace has made it necessary for employers to de-
velop and implement different means of addressing this growing problem.
Although the requirements of the Drug-Free Workplace Act apply only to
employees receiving federal contracts and grants, conscientious manage-
ment practices suggest that a comprehensive policy and drug-free aware-
ness program be implemented for all employees. Conscientious departmental
managers should have a strongly vested interest in displaying a high level
of concern for maintaining a drug-free work environment whether or not
there are external requirements for doing so.

Employee Polygraph Protection Act (1988)
The Employee Polygraph Protection Act (EPPA) prevents most private-
sector employers from requiring job applicants or current employees to take
polygraph (lie detector) tests. Under EPPA, the routine use of polygraph
tests is permitted only in organizations that produce and distribute con-
trolled substances and in those concerned with nuclear power, trans-
portation, currency, commodities, or proprietary information.

In most organizations, an employee may be asked to submit to a poly-
graph when other evidence gives management reason to suspect an indi-
vidual of wrongdoing. This is sometimes referred to as reasonable suspicion
or, somewhat inaccurately, as reasonable cause. However, an employee
may not be disciplined or discharged solely on the results of a polygraph
test. Under EPPA, an employer may not ask an employee or job applicant

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to submit to a polygraph test other than in the situations already delineated.
Furthermore, an employer may not take any adverse action against an em-
ployee or applicant for refusing to take a polygraph test. Finally, the re-
sults of a polygraph test to which a person has submitted for one specific
reason cannot be used for a different purpose.

Worker Adjustment and Retraining Notification Act (1988)
The Worker Adjustment and Retraining Notification Act (WARN) re-
quires employers with 100 or more employees at any individual site to
provide advance notification of major reductions in force. An employer
must provide 60 days notice of an impending layoff of 50 or more em-
ployees, and must notify local government and the appropriate state agency,
bureau or unit responsible for dislocated workers that provides employ-
ment and training services.

Americans with Disabilities Act (1990)
The Americans with Disabilities Act (ADA) provides individuals with dis-
abilities with the same protections afforded to minorities and other pro-
tected groups under the Civil Rights Act of 1964. The ADA calls for access
equal to that available to others in regard to employment, transportation,
telecommunications, and ensuring that all services and facilities are avail-
able to the public, whether under private or public auspices.

Disabilities are broadly defined under the Americans with Disabilities
Act, including, in addition to physical limitations ordinarily thought of as
disabilities, hearing and visual impairments, paraplegia and epilepsy, HIV
or AIDS, and literally dozens of other conditions. The list of recognized
disabilities is long, and it continues to expand as legal challenges continue
over what constitutes a disability.

The ADA prohibits potential employers from asking about a job ap-
plicant’s medical conditions, if any, and imposing major limitations on pre-
employment physical examinations. Under the law, a physical examination
cannot be conducted until after a job offer has been extended. If a phys-
ical examination reveals a medical condition that does not affect the per-
son’s ability to perform the major functions of the job being sought, an
employer may be expected to make a reasonable accommodation to the
needs of the applicant. The key to applicability of the ADA lies in an in-
dividual’s ability to perform satisfactorily the major functions of a job.
Thus, an individual cannot be denied a job because an impairment pre-
vents performance of a minor or non-essential activity. Each employer
may find it necessary to make a reasonable accommodation for the con-
dition providing such accommodation does not cause unreasonable ex-
pense or hardship.


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From time to time each department manager may have reason to be fa-
miliar with some aspects of the law concerning disabilities. Involvement
surely will be required should a need arise to make a reasonable accom-
modation for one or more employees in the department. However, it is
not always possible to identify an individual who is disabled. Unlike race
or gender, disabilities may not be visually apparent.

Managers should not be concerned unless they know factually that a
disability exists. To obtain protection available under anti-discrimination
laws, employees must identify themselves as being disabled. If a disability
is neither apparent nor declared, then the employee in question should be
treated the same as any other worker. Managers who suspect the presence
of a disability that has not been declared are advised not to inquire about
the situation with the employee in question. Furthermore, they should not
offer unsolicited advice to an employee about a possible but undeclared
problem. Such a course of action has been ruled as treating an employee
in a different manner and is against the law.

The Americans with Disabilities Act has frequently been in the news.
A decade after its passage, lawyers argued before the Supreme Court that
the ADA went too far in allowing disabled public employees to sue state
and local governments in federal court.2 States and localities generally
have immunity against such lawsuits unless Congress has documented suf-
ficient discrimination in the states to deny them that immunity. The fed-
eral government must invoke its power under the 14th Amendment to
ensure that people have equal protection under the law. States have con-
tended that Congress has been lax in demonstrating that individual states
were not enforcing their disability laws.

In a 2002 decision, the Supreme Court unanimously narrowed the num-
ber of people covered by the ADA. The opinion held that “Merely having
an impairment does not make one disabled for purposes of the ADA,”
that a person’s ailment must extend beyond the workplace and affect every-
day life, and that the ability to perform tasks that are of central importance
to most people’s daily lives must be “substantially limited” before an in-
dividual can qualify for coverage under the original legislation that was
intended to protect the disabled from discrimination because of physical
impairments.3 In other words, the Court ruled that individuals who could
function normally in daily living could not claim disability status because
of physical problems that limited their ability to perform some manual
tasks on the job.

In another opinion that was viewed by some as a defeat for disabled work-
ers, the Supreme Court ruled that disabled workers are not always enti-
tled to premium assignments intended for more senior workers.4 The
practical implication of this ruling is that, in the majority of instances,
seniority can take precedence over disability. In continuing its series of
clarifications and rulings limiting rights under the ADA, the Court ruled

The Growing Regulatory Environment 53

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that disabled workers cannot demand jobs that would threaten their lives
or health.5 This ruling arose from a case in which a worker with a partic-
ular medical condition wanted to return to his original position although
it was considered medically risky for him to do so. The ADA’s require-
ment for reasonable accommodation has always made exceptions for those
who may be a threat to the health or safety of others on the job. This de-
cision interpreted the exception as applying to workers who may present
a risk only to themselves. Legal scholars consider it likely that the Americans
with Disabilities Act will continue to be refined through Supreme Court
future decisions.

Older Workers Benefit Protection Act (1990)
The Older Workers Benefit Protection Act (OWBPA) amended the Age
Discrimination in Employment Act (ADEA) by clarifying the authority of
the ADEA relative to employee benefits. Although still requiring equal
benefits for all workers, as a result of several legal decisions, the ADEA
allowed reductions in benefits for older workers in situations where added
costs were incurred to provide the benefits. The OWBPA removed em-
ployers’ option to justify lower benefits for older workers. It requires that
any waivers or releases of age discrimination must be voluntary and part
of an understandable, written agreement between employer and employee.
In other words, this law prohibited an employer from unilaterally pro-
viding a reduced benefit to an employee on the basis of age.

Civil Rights Act (1991 Amendments)
Adding to the original Civil Rights Act of 1964, the 1991 amendments al-
lowed employees to receive compensatory and punitive damages from em-
ployers who committed violations with malice or reckless disregard for
an individual’s protected rights. They allowed women and disabled work-
ers to sue for compensatory and punitive damages, a right they previously
did not have. This legislation provided for jury trials in such discrimina-
tion cases. Previously, these had been handled with non-jury processes.
For employers, the overall impact of these amendments was to increase the
likelihood of longer and costlier legal processes and to increase potential

Family and Medical Leave Act (1993)
The Family and Medical Leave Act (FMLA) applies to eligible persons in
organizations having 50 or more employees. The FMLA defines eligible
employees as those having been employed for at least one year and hav-
ing worked at least 1,250 hours during the previous 12 months. These
persons are permitted to take up to 12 weeks of unpaid leave during any
12-month period when unable to work because of a serious health condi-


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tion, or to care for a child upon birth, adoption, or foster care, or care for
a spouse, parent, or child with a serious health condition. Under specified
circumstances, leave may be taken intermittently or on some reduced time
schedule. This has the potential to extend any given leave over a period
longer than 12 calendar weeks. Employees who are entitled to a set amount
of paid time off are ordinarily required to use that time as part of their 12
weeks. Most employees on leave ordinarily use up their available paid time
off rather than experiencing their entire leave without pay. The Family
and Medical Leave Act does not take precedence over any state or local
laws that happen to provide greater leave rights.

While on approved leave, employees must continue to receive health care
benefits but are not entitled to accrue vacation, sick time, or seniority. The
employer must guarantee that, upon returning from leave, an employee will
be reinstated to the previous position held or placed in a fully equivalent
position with no loss of benefits or seniority.

In many situations, the Family and Medical Leave Act has made life
considerably more difficult for department managers. When an employee
in an essential position takes leave, that position and its responsibilities must
be covered. Some positions cannot be left vacant for a few days, let alone
for a 12-week period. Filling the position and later returning the employee
to an equivalent position is not readily accomplished. Courts and other ex-
ternal agencies have repeatedly interpreted equivalent as essentially the
same in all aspects: pay, benefits, tasks, and responsibilities. Some courts
have ruled that equivalent extends to reinstating similar hours and shifts.
Because equivalent has been so strictly interpreted, the safest course of ac-
tion for managers is to preserve the original position of the person on leave.
Managers are often advised to juggle coverage until the employee returns
from leave. This often requires the use of temporary employees, overtime,
reassignments, and other means. The practical result of the FMLA is that
staffing and scheduling has become more difficult and time-consuming for
some managers.

Retirement Protection Act (1994)
The Retirement Protection Act strengthens and accelerates funding of
under-funded pension plans and increases Pension Benefit Guarantee
Corporation (PBGC) premiums for plans that pose the greatest risk. It im-
proves the flow of pension related information for workers and increases
the PBGC’s authority to enforce compliance with pension obligations.

Small Business Job Protection Act (1996)
Despite the title of this legislation, its provisions are not restricted to small
businesses. This legislation included the 1996 increase in the minimum
wage. It increased pension protection and made it easier for workers to roll

The Growing Regulatory Environment 55

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over (change to another fund or plan) their retirement savings upon chang-
ing employment. It simplified pension administration to an extent and re-
duced the vesting period for selected multi-employer plans from 10 years
to 5 years. The act allows specified smaller employers to establish simpli-
fied 401(k) plans for their employees.

Health Insurance Portability and Accountability Act (1996)
The full impact of the Health Insurance Portability and Accountability
Act (HIPAA) was not felt until several years after its passage. Ironically,
the portions of HIPAA causing the most frustration and necessitating the
most effort by organizations and HR personnel had little or nothing to do
with the title of the act.

HIPAA consists of five sections or titles. Titles I, III, IV, and V address
the issue of continuity and the ability to renew health insurance coverage
for employees who change employers or otherwise lose their jobs, pro-
mote the use of medical savings accounts, and establish standards for long-
term care coverage.6 HIPAA eliminated the possibility of individuals being
denied coverage because of pre-existing medical conditions. It further re-
quires insurance companies to provide coverage for small employer groups
or to individual employees who lose their group coverage.

The effects of Titles I, III, IV, and V of HIPAA on most HR departments
and personnel were barely noticeable. In the majority of instances, re-
quired legal notifications were taken care of by the administrative services
of organizations’ different health plans. However, the true impact of HIPAA
became felt in April of 2003.

In terms of effort required by health care organizations and HR per-
sonnel, the significant section of HIPAA has been Title II, “Preventing
Health Care Fraud and Abuse, Administrative Simplification, and Medical
Liability Reform.” This is often referred to as “Administrative
Simplification.” The irony in this nomenclature is that for many organi-
zations, the impact has been anything but simple. Receiving the most at-
tention of the contentious components of Title II has been the portions
having to do with patient privacy.

The majority of health care organizations were required to be in com-
pliance with HIPAA’s Privacy Rule by April, 2003. The same deadline ap-
plied to other organizations that provided HR services related to health
care and benefits. Two other pertinent deadlines for compliance included
the Transactions and Code Sets Rule (October, 2003) and the Security
Rule (phased in on two dates). Healthcare providers with large health
plans, large employer-sponsored group health plans, and health care clear-
inghouses were required to be in compliance by April, 2005. Providers of
small health plans had to be in compliance by April, 2006.


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Compliance with the Security Rule usually begins by appointing a se-
curity officer, often the same person who serves as a privacy officer. The
next step is to assess risks related to information systems. The third step
is to develop policies and procedures and training programs that are ap-
propriate for a particular organization. According to legal experts, com-
pliance is an ongoing process that involves periodic audits, re-evaluation
and implementing procedural changes as needed.7

The Privacy Rule has affected nearly all health care plans and all health
care providers. Physicians’ offices, hospitals, laboratories, pharmacies,
dentists, medical equipment dealers, billing services and others providing
administrative services have all been required to implement systems designed
to protect patient information in all forms, protect all patient information
from malfeasance, implement specific data formats and code sets, provide
mechanisms to stop fraud and conduct periodic audits to prevent abuse.
All subcontractors and suppliers coming into contact with patient infor-
mation must comply with the Privacy Rule. All contracts and other arrange-
ments must define the acceptable uses of patient data.

HIPAA has impacted not only HR but also very nearly all departments
and divisions of any health care organization. Although there may be fu-
ture modifications in some of its rules and mandated procedures, the height-
ened emphasis on personal privacy and the confidentiality of patient
information is here to stay.


The foregoing chronology is incomplete. There are state laws that often
vary from state to state. Other federal statutes have employment implica-
tions. These are introduced in other chapters.

An obvious conclusion from the foregoing chronology is that the final
two decades of the twentieth century were accompanied by the federal
government spreading its influence over an increasing number of aspects
of the employment relationship. In addition to creating added work for HR
personnel by designating what cannot be done or imposing new require-
ments, many of these laws have created new or tighter boundaries within
which managers must operate.

The pattern of employment legislation during the late twentieth and
early twenty-first centuries has been to compel employers to be more so-
cially responsible for their employees. This is especially evident in signif-
icant pieces of legislation such as the Americans with Disabilities Act and
the Family and Medical Leave Act. Legislation affecting social responsi-
bility and rules of conduct for interactions between employers and their
employees imposed added work responsibilities and supporting systems

Greater Responsibilities and Increased Costs for Organizations 57

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to organizations. These requirements have increased the cost of doing busi-
ness and thus increased costs to the ultimate consumers of all goods and

It is true that some new laws have required only minor changes in pro-
cedures or modest alterations in recordkeeping practices. However, most
have clearly increased the cost of doing business because provider organ-
izations and their customers are the only entities available to pay the in-
creased costs. Legislators know very well that costs are associated with
implementing any new law. Legislators and senior managers are often far
from agreement concerning the costs of implementing new legislation.
When elected officials create new programs, they are undoubtedly aware
that only three options exist to cover the costs associated with implemen-
tation. Legislators can discontinue an existing program to free up funds.
This rarely occurs because it is politically unpopular. Legislators can raise
taxes. This is even more unpopular. In the current political climate, it is
tantamount to committing political suicide. Finally, legislators can find
other parties or organizations (someone else) to bear the costs of new leg-
islation. The entities that have been paying to implement most of these
laws affecting the employment relationship are businesses and other com-
mercial enterprises. Ultimately, the costs are passed along and paid by in-
dividual consumers.

Exhibit 3-1 presents a listing of all of the foregoing laws by decade of pas-
sage. It is not difficult to see the shift from the pre-1964 concerns with
collective bargaining and wage and hour issues to the growing post-1964
concerns with social responsibility.

A simple comparison of the pre-1964 years with the present day demon-
strates how significantly the employment environment has changed.
Although very few of the laws reviewed replaced features of earlier legis-
lation, most of the legislation enacted since 1964 has exerted new and of-
ten different influences on how work organizations treat employees and
how managers can direct their own departments. The accumulation of
nearly four decades of legislation affecting the employment relationship
has transformed personnel from the days of an employment office to the
modern HR department. A contemporary department manager must com-
ply with countless rules for supervising and directing employees. Although
the accumulation of new legislation seems to have slowed somewhat, most
experts agree that the future is likely to bring more, not less, regulation.

A new law can come into being in a relatively brief period of time, yet
the changes in human behavior required by that law can require a very
long time to implement. A useful illustration is provided by Title VII of the


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A Cumulative Effect 59

Exhibit 3-1 Summary of Employment Legislation by Decade

• Norris-LaGuardia Act (1932)
• National Labor Relations Act (1935)
• Social Security Act (1935)
• Fair Labor Standards Act (1938)

• Labor-Management Relations (Taft-Hartley) Act (1947)

• Labor-Management Reporting and Disclosure (Landrum-Griffen)

Act (1959)

• Equal Pay Act (1963)
• Civil Rights Act (Title VII) (1964)
• Age Discrimination in Employment Act (1967)

• Occupational Safety and Health Act (1970)
• Rehabilitation Act (1973)
• Health Maintenance Organization (HMO) Act (1973)
• Employee Retirement Income Security Act (1974)
• Taft-Hartley Act Amendments (1975)
• Pregnancy Discrimination Act (1978)

• Consolidated Omnibus Budget Reconciliation Act (1986)
• Immigration Reform and Control Act (1986)
• Pension Protection Act (1987)
• Drug-Free Workplace Act (1988)
• Employee Polygraph Protection Act (1988)
• Worker Adjustment and Retraining Notification Act (1988)

• Americans with Disabilities Act (1990)
• Older Workers Benefit Protection Act (1990)
• Civil Rights Act Amendments (1991)
• Family and Medical Leave Act (1993)
• Retirement Protection Act (1994)
• Small Business Job Protection Act (1996)
• Health Insurance Portability and Accountability Act (1996)

35310_CH03_Final.qxd 1/30/07 4:15 PM Page 59

Civil Rights Act of 1964. Employment discrimination has been prohib-
ited by law for more than four decades, but problems of discrimination
continue to exist in many organizations. However, the work force in the
United States is becoming increasingly diverse. Organizations that elimi-
nate discrimination will be the ones best able to properly value and man-
age this diversity.

Discrimination cannot be legislated out of existence. Discrimination is
extremely personal as it resides in individual attitudes, likes, and dislikes.
It is the product of both home and culture. Therefore, no job is completely
immune from the possibility of discrimination.

For the greater part of four decades employee rights have been an ex-
tremely active legal topic in the federal and state legislatures and thus in
the courts. We can expect this interest in individual rights to continue,
probably even to intensify from time to time. The employment environ-
ment has changed and will continue to change. Those who manage within
this environment must either change with it or be left behind.

The legal aspects of HR have changed dramatically in the past 70 years.
The emphasis on the right of workers to form unions and establishing ba-
sic parameters such as length of a working week and establishing a mini-
mum wage has changed. The emphasis of most recent legislation has been
grounded in social responsibility. Government has compelled employers
to become more socially responsible. In the process, the costs of govern-
ment-mandated changes have been shifted to consumers.

American workers can expect equal access to employment and receive
equal pay for similar jobs. They can expect to work in safe surroundings
without being discriminated against on the basis of age, gender, race, re-
ligion, national origin, or personal preference. Persons with disabilities
must be treated like any other workers. They can expect to work in an en-
vironment that is free of drugs and harassment. American workers can
take time off during a pregnancy or illness. They can expect access to health
care benefits after losing their jobs. To a degree, pension rights have been
established. Information related to one’s health is now protected and con-
sidered to be private.

Human resources personnel must be familiar with the requirements of
the legislation discussed in this chapter. This task has made the jobs and
activities of HR employees more complex and challenging. Compliance with
the legal requirements has imposed additional costs on organizations. Most
experts expect that this trend will continue although the pace of implementing
changes is likely to slow.


35310_CH03_Final.qxd 1/30/07 4:15 PM Page 60

Returning to the initial case study, it is reasonably certain that County
Hospital’s request for dismissal of the complaint will be unsuccessful. The
Americans with Disability Act prohibits potential employers from impos-
ing major limitations on pre-employment physical examinations. Concerning
Susan and her complaint, the potential employer should attempt to nego-
tiate a reasonable agreement and offer her employment in some capacity,
rather than allow the State Division of Human Rights to conduct a full in-
vestigation and run the risk of imposing a costly settlement. The Division
might consider Susan to be a handicapped person (anyone who has a phys-
ical or mental impairment that substantially limits one or more major life
activities). If it so rules, the Division can then sue County Memorial Hospital
on Susan’s behalf.

However, Susan’s case is far from cut and dried. Different jurisdictions
have rendered varying decisions related to any disability. For example, a
New York state court ruling declared obesity to be a handicap, but a
Pennsylvania decision stated that obesity can be but is not always auto-
matically a handicap. As is often the case with disputes that arise under
some aspect of employment law, clarification of the law in its application
is left to the courts. Courts in different jurisdictions and locations do not
always see the same situation in the same light.

1. Skrentny, R. (1987). Immigration reform—What cost to business? Personnel

Journal, 66(10), 53-59.
2. Hearst News Service. (2000). High Court Scrutinizes Disabilities Act. Democrat

& Chronicle, Rochester, NY, October 12.
3. Newsday. (2002). High Court Limits Disability Law. Democrat & Chronicle,

Rochester, NY, January 9.
4. Associated Press. (2002a). Seniority Outweighs Disability, Court Says. Democrat

& Chronicle, Rochester NY, April 30.
5. Associated Press. (2002b). Top Court Disallows Dangerous Jobs for Disabled.

Democrat & Chronicle, Rochester, NY, June 11.
6. Entin, A. (2001). Implementing HIPAA: A manager’s blueprint. The Health

Care Manager, 20(2), 49-59.
7. Hagan, K. T. (2004). HIPAA Security Rule. Available at: http://www.schwabe.com/

showarticles.asp?Show=49]. Accessed December 22, 2005.

Discussion Points

1. Why is 1964 and the passage of the Civil Rights Act (Title VII) a turn-
ing point in the evolution of HR? Stated differently, other than 1964
representing the beginning of a steady flow of regulations to follow,
what occurred that constituted a change of direction? Why?

Conclusion 61

35310_CH03_Final.qxd 1/30/07 4:15 PM Page 61

2. Define and describe a contemporary bargaining unit as defined by the
National Labor Relations Act. How, if at all, does it differ from a bar-
gaining unit in 1935?

3. When and how was the Equal Employment Opportunity Commission
established? What is its purpose?

4. What is a bona fide occupational qualification? Provide at least two
specific examples.

5. What is the intended goal of the right-to-know laws? In your opinion,
have they been successful? Why or why not?

6. Well before the passage of the Americans with Disabilities Act, in some
instances employers were required to provide reasonable accommo-
dation of the limitations of an employee or applicant. When did this
occur, and what were the conditions under which this requirement

7. What appears to have been the primary intended purpose of the
Employee Retirement Income Security Act? Why was this legislation
deemed to be necessary?

8. What have been the primary effects of the Immigration Reform and
Control Act on businesses?

9. Pose two hypothetical examples of situations in which a health care
employer might legally require a polygraph (lie detector) test as a con-
dition of either initial or continued employment.

10. Viewing the Family and Medical Leave Act from the perspective of a
working department manager, describe the ways in which this legis-
lation has affected a supervisor’s ability to manage.


Buckley, J. F., & Green, R. M. (2004). State by State Guide to Human Resources

Law 2005. Frederick, MD: Aspen.
Guerin, L. (2005). Create Your Own Employee Handbook: A Legal and Practical

Guide with CD (2nd ed.). Berkeley, CA: NOLO Publishing.
Kaiser, S. E. (2004). Develop an Affirmative Action Program as a Risk Management

Tool. Lincoln, NE: iUniverse.
Shilling, D. (2004). The Complete Guide to Human Resources and the Law.

Amsterdam: Wolters Kluwer Company.

Edelman, L. B. (1992). Legal ambiguity and symbolic structures: Organizational

mediation of civil rights law. American Journal of Sociology, 87, 1531-1576.
McGlothlen, C. A. (1999). 7th Circuit ruling allows employers to cap AIDS ben-

efits. AIDS Policy Law, 14(14), 7-9.


35310_CH03_Final.qxd 1/30/07 4:15 PM Page 62

O’Brien, G. V., & Ellengood, C. (2005). The Americans with Disabilities Act: A
decision tree for social services administrators. Social Work, 50(3), 271-279.

Popovich, P. M., Scherbaum, C. A., Scherbaum, K. L., & Polinko, N. (2003). The
assessment of attitudes toward individuals with disabilities in the workplace.
Journal of Psychology, 137(2), 163-177.

Ritchie, A. J. (2002). Commentary: Implementation of the Americans with Disabilities
Act in the workplace. Journal of the American Academy of Psychiatry and Law,
30(3), 364-370.

Sassi, F., Carrier, J., & Weinberg, J. (2004). Affirmative action: The lessons for
health care. British Medical Journal, 328(7450), 1213-1214.

Schiff, M. B. (2004). A primer on case law under the Americans with Disabilities
Act. Tort Trial and Insurance Practice Law Journal, 39(4), 1141-1196.

Takakuwa, K. M., Ernst, A. A., & Weiss, S. J. (2002). Residents with disabilities:
A national survey of directors of emergency medicine residency programs.
Southern Medical Journal, 95(4), 436-440.

Weill, P. A., & Mattis, M. C. (2003). To shatter the glass ceiling in healthcare man-
agement: Who supports affirmative action and why? Health Services Management
Research, 16(4), 224-233.

Westreich, L. M. (2002). Addiction and the Americans with Disabilities Act. Journal
of the American Academy of Psychiatry and Law, 30(3), 355-363.

Conclusion 63

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35310_CH03_Final.qxd 1/30/07 4:15 PM Page 64

Human Resource
Activities and

Chapter Overview

After reading this chapter, readers will be able to:

• Identify the services that are almost always, often, and
occasionally provided by a human resources department

• Subdivide human resource services according to the major tasks of
acquiring, maintaining, retaining, and discharging or separating

• Identify the activities for which a department manager can expect
contact and involvement with human resources, and the likely
extent of that contact and involvement

• Compare and contrast line management and human resource
management as to background

• Perspective, and other characteristics for the purpose of explaining
some of the tensions that develop between the two groups

• Understand and eventually overcome the apparent differences
between human resources personnel and line managers

A human resources (HR) department is involved in a number of activ-
ities that together comprise four major activity groupings: acquiring
employees, maintaining employees, retaining employees, and separat-
ing employees. Within these activities, the specific activities of em-
ployment and recruitment, compensation and benefits administration,
and employee relations are undertaken. Also to be found in many HR




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departments are labor relations (if unions are present), training and de-
velopment, employee health and safety, security, and childcare and other
employee services. Generally, all of the activities that may be found within
a given HR department relate in some way to acquiring, maintaining, re-
taining, or separating employees.

Human resources services are provided by a staff (as opposed to line)
activity. This means that no individual in HR has direct authority over
employees in any of the departments of a health care organization. As
such, HR is oriented towards service. It exists to provide services to em-
ployees at all levels of an organization.

Case Study: Who Has a Recruiting Problem?

Jane Cassidy is the Director of Nursing at Community General Hospital.
The institution recently completed a physical expansion that included,
among other additions, a new 36-bed medical/surgical unit. Until recently
Jane had worked in conjunction with HR employment manager Carrie
Smith and had fared reasonably well in keeping her nursing staff up to re-
quired levels in spite of a general shortage of nurses in the local area.
However, the opening of the new unit has strained the nursing depart-
ment’s resources to the extent of leaving the department short several reg-
istered nurses.

Community General’s nursing shortage is particularly evident on the
evening shift (3:00 PM to 11:30 PM). There are more than enough people
willing to work days. Jane has been fortunate in having a thoroughly sta-
ble crew who prefer to work nights.

Employment recruiter Carrie has regularly gone out of her way to do
everything possible to locate candidates for nursing positions. Being ex-
tra cautious about the possibility of scaring good candidates off before
they can be interviewed, Carrie has been deliberately vague with candidates
concerning available shifts and hours. Unless specifically asked, she has not
mentioned to anyone that new graduates being hired are expected to work
day-evening or day-night rotations.

In response to the long-running recruiting efforts of Jane and Carrie, a
well-qualified registered nurse applies for employment. Both are impressed
with this nurse. She seems energetic and personable and is immediately
available. She is quite willing to take a position on the evening shift.

Unfortunately, although this candidate is willing to work 3:00 PM to
11:30 PM, she stated during her initial screening interview with Carrie that
she cannot work any weekends. She will say only that weekend work
causes severe inconvenience in her family life, and she repeats her will-
ingness to work evenings, straight evenings, but only Monday through
Friday. Nevertheless, Carrie refers this candidate to Jane, quietly suggest-
ing that Jane see if she can talk her into rotating weekends. The applicant


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has yet to learn that scheduling practices in Community General’s nurs-
ing department require everyone below the level of day, evening, or night
supervisor to work every other weekend, although Carrie has become
aware of a few situations that might constitute quiet exceptions to the
scheduling policy.

Considering the critical need for nursing help on evenings as well as
weekends, what can Carrie and Jane tell this applicant? If Jane has to ad-
here rigidly to her scheduling policy and the candidate refuses to accept
the job, what problems might Jane face? If Jane alters the scheduling pol-
icy and offers the applicant a Monday through Friday without requiring
weekends, a position that she accepts, what problems might Jane then

How can Carrie, as an HR professional, provide further help to Jane,
a supervisor in nursing services, as she attempts to recruit sufficient staff
for the nursing department?

Finance, operations, and sales and marketing are examples of organiza-
tional subdivisions that are encountered in most companies or businesses.
The tasks performed within these functional areas are similar in most or-
ganizations, as are the tasks performed within each functional area of a
health care organization. Human resources, however, differs in that the tasks
performed by HR personnel may be quite varied. Only within the recent
two decades have training programs been created to prepare people for ca-
reers in the field of human resources.

Regardless of the form or operational purview of a particular health care
organization, whether hospital, long-term care facility, free-standing clinic
or urgent care center, physicians’ group practice, or other entity, all HR
departments have similar goals and pursue a similar overall mission. These
working groups exist to provide service to an organization and its em-
ployees. However, not all HR departments are organized in the same fash-
ion and not all provide the same services or perform exactly similar tasks
or activities. Under some organizational structures, activities that are of-
ten associated with HR may be performed by other departments or may
even be separate departments in their own right.

In the sections that follow, we will subdivide the activities of HR into
three categories or levels. The first encompasses activities that are com-
monly associated with HR and usually part of the HR department. The
second includes tasks that are often but not always performed by people
from an HR department. The third discusses activities that are occasion-
ally associated with HR or sometimes found outside of an HR department

The Activities of Human Resources 67

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Category I: Typical HR Activities
Of the four groups of activities that follow, the first three are invariably
components of HR. The fourth is usually part of HR if a union is present
in an organization.

EEmmppllooyymmeenntt oorr RReeccrruuiittmmeenntt
This activity addresses the original function of what was previously described
as the employment office. Different names may survive from the past, but
employment or recruitment or some variant of either word is usually part
of the organizational designation for this activity. The heart of this activ-
ity is concerned with finding or identifying prospective employees, screen-
ing them and providing them for interview by supervisors and managers
throughout a larger organization. The same employees extend official of-
fers of employment and performing a number of other tasks that are nec-
essary to bring new hires into an organization.

With a diminishing number of exceptions, employment for an entire
health care organization is centralized in HR. The few exceptions that may
still be encountered, especially in hospitals of medium to large size, typi-
cally involve nursing departments that continue to conduct their own re-
cruiting. In the past, this was a much more common practice than at present,
although some nursing departments maintain a designated nurse recruiter
who frequently works closely with HR. Physician recruiting is often co-
ordinated by an institution’s medical director although the paper work is
usually delegated to HR.

CCoommppeennssaattiioonn aanndd BBeenneeffiittss AAddmmiinniissttrraattiioonn
Historically, administration of benefits was the second significant area of
responsibility to be assigned to HR. Depending on an organization’s size
and mode of operation, compensation and benefits may be combined as
a single activity or may be pursued separately by individuals who special-
ize in each. This latter situation (separation of the activities) is often the
case in larger organizations.

The activities associated with benefits administration ordinarily in-
clude explaining benefits and the policies that govern them to employees
and answering questions related to benefits. These people assist employ-
ees in accessing their benefits. They maintain relationships with benefits
providers such as insurance carriers and pension overseers. These HR
employees must stay current with regulations that concern benefits and
must maintain employee benefits records. They participate in periodic
assessments of the appropriateness of benefits. When necessary, they be-
come involved in designing and implementing changes to benefits programs
and packages.

Compensation activity is, by definition, concerned with wages and
salaries. Primarily, this includes recommending starting pay for new hires


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that are consistent with their education and experience as well as taking
into account the compensation of existing employees. Compensation en-
compasses answering questions related to wage and salary issues and rec-
ommending corrective action when necessary. Specialists in compensation
monitor an organization’s wage structure to ensure that pay equity exists
throughout an organization. They recommend changes in the wage struc-
ture that are consistent with pay changes in the local community, indus-
try, and individual occupations as necessary.

EEmmppllooyyeeee RReellaattiioonnss
Some may refer to an activity such as employee relations as being on the
soft side of HR. This is in contrast to elements that are on the hard side,
primarily compensation and benefits. The distinction is based on the rel-
ative ease with which matters can be quantified. Hard issues primarily re-
fer to compensation and benefits that can be quantified using dollars and
cents or other numerical measures. Soft issues encompass relations with
people. An employee relations practitioner is likely to be involved, for ex-
ample, in advising supervisors and managers on how to proceed in ad-
dressing selected employee problems or monitoring applications of the
organizational disciplinary process. They may listen to troubled employ-
ees and refer them to sources of assistance as needed. Experts in employee
relations counsel individual employees as needs arise and serve as em-
ployee advocates when necessary. They may represent the organization in
relations or negotiations with external advocacy agencies such as the State
Division of Human Rights. Names of agencies are not uniform and vary
from state to state.

LLaabboorr RReellaattiioonnss
Labor relations exists as a separately identified entity in larger organiza-
tions but only when some or all of an organization’s non-managerial em-
ployees are unionized. The emphasis is on larger organizations because in
a smaller setting, even with a union present, there may not be enough con-
tinuing activity to justify having a specialist in labor relations. When this
is the case, labor relations activities become part of another HR practitioner’s
job. For example, an employee relations specialist or the HR director may
take on labor relations activities when they become necessary.

The scope of labor relations includes continuing contact and ongoing
relations with elected officials of one or more unions representing some
or all of an organization’s eligible employees. A majority of labor relations
activities consist of hearing and resolving complaints. A collective bar-
gaining agreement defines steps for processing grievances. A labor relations
specialist represents the employer in related matters such as arbitration
hearings and other formal processes. Many organizations have personnel
who are actively involved in promoting labor relations or trying to pre-
vent unionization when additional union organizing occurs. After a union

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is formed, specialists in labor relations participate in contract negotiations
and other related activities when necessary.

Category II: Frequent HR Activities
Depending on the size of a particular institution, the way in which it is or-
ganized, and how its activities are distributed, some of the following may
exist as separate departments. Others may be housed within HR. Some may
not require an individual that is solely dedicated to the task so the few du-
ties are incorporated into the job descriptions of other HR practitioners.

EEmmppllooyyeeee HHeeaalltthh aanndd SSaaffeettyy
These may be separate activities. Employee health is often located sepa-
rately from safety. In small organizations, they are frequently combined.
Either or both may be components of HR. Almost as commonly, they may
be contained within other organizational units. Employee health is often
found within one of the organization’s medical divisions. However, such
a reporting arrangement can create problems with confidentiality of records.
The arrangements can become confusing. In theory, employee health should
be a subsidiary component of HR, with the director of employee health
reporting directly to the chief of HR. The rationale for such an arrange-
ment is that employee health renders service to employees by performing
pre-employment physical examinations. This is clearly related to HR’s em-
ployment section. However, because physicians render the services, they
should report to an institution’s medical director or chief of medicine. This
is just as clearly not a section of HR.

TTrraaiinniinngg aanndd DDeevveellooppmmeenntt
Training and development is often a subsidiary activity of HR. However,
depending on organizational size, it is frequently situated as a separate,
free-standing entity with a reporting relationship to another department.
In health care settings, training and development is often a component of
a nursing department or an equivalent group with a more broadly encom-
passing name such as patient care services. Many nursing departments have
developed and maintained educational capabilities. These evolved long be-
fore spreading to other disciplines because activities of long-standing con-
tinuing education (in-service) requirements that were developed by the
nursing profession. As a result, in some quarters training and development
has long been the province of nursing alone. When educational needs of other
professions emerged, nursing simply attended to them. Thus, in many health
care organizations, this remains the norm: education originates in nursing
and is provided by nurses but easily crosses departmental boundaries.
Sometimes training and development are split. Clinically-oriented educa-
tion remains in the nursing department, originating and being presented


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by nurses. Other training that is not clinically-based often originates and
is presented by personnel from HR.

The security department is typically self-contained. The exception occurs
in small organizations where it may have a reporting relationship to plant
maintenance or building services. A distinctly separate security depart-
ment with a manager of its own may report to the head of HR. Equally
likely is a reporting relationship within the plant facilities chain of com-
mand or directly to the administrator who oversees general services for an
entire organization.

CChhiilldd CCaarree
If a health-care organization operates a child-care center or child-care pro-
gram, it is equally likely that the individual who manages child care will
report either to the chief human resource officer or to another person such
as the administrator for general services. Because a child care center is sub-
ject to unique state licensing arrangements that govern staffing and facil-
ities, it usually appears as a distinct and separate entity. The rationale for
attaching it to HR is the service to employees aspect of the activity. There
are differences in how health care organizations having child care pro-
grams define their scope of services. Some limit themselves exclusively to
an employee clientele, but many are open to any member of the commu-
nity. Often, child care programs give priority to employees, but after meet-
ing employees’ needs, they fill the remaining capacity from other persons
in the community.

AAwwaarrdd aanndd RReeccooggnniittiioonn PPrrooggrraammss
Responsibility for award and recognition programs will ordinarily be
part of some department or group’s assigned duties rather than being a
separate entity. Exceptions occur in extremely large organizational set-
tings. The most common exception is a large teaching institution that is
an element of a university and thus served by the parent organization’s
award and recognition group. In smaller health care organizations, awards
are often coordinated by a member of a public relations or community
relations department or, occasionally, by an administrative assistant. For
the majority of health care organizations, award and recognition pro-
grams are the responsibility of HR and often fall to an employee rela-
tions practitioner.

EEqquuaall EEmmppllooyymmeenntt OOppppoorrttuunniittyy//AAffffiirrmmaattiivvee AAccttiioonn
If separate offices for Equal Employment Opportunity (EEO) or Affirmative
Action (AA) exist within an organization, then they will usually, although
not always, be found within the HR department. A person who is desig-
nated to be responsible for compliance with EEO regulations is frequently
an employee relations practitioner or HR executive. This person has the

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primary responsibility for monitoring the organization’s compliance with
all applicable anti-discrimination laws. The individual in this position will
be charged with some of the responsibilities that were described within
the realm of employee relations, particularly those that relate to external
advocacy agencies such as a state Division of Human Rights and the local
branch of the federal Equal Employment Opportunity Commission (EEOC).

Affirmative Action programs are no longer actively mandated for the
organizations to which they formerly applied. As a result, HR personnel
who had responsibility for Affirmative Action programs have frequently
been assigned to other duties. Affirmative Action required organizations
holding government contracts to demonstrate that positive efforts were
being made to align the composition of an organization’s work force with
those living within the organization’s labor market area. In other words,
the goal of an Affirmative Action program was to achieve a work force in
which the percentages of women and minorities mirrored those of women
and minorities in the labor market area. Most of the compliance require-
ments have been reassigned and are now included in EEO mandates. EEO
monitoring of workforce composition and compliance with regulations

Category III: Infrequent, Occasional or Outsourced HR Activities
The following activities are sometimes found within the structure of an HR

RRiisskk MMaannaaggeemmeenntt
Risk management is present in most health care organizations, indeed, in
most organizations of any size or type. Interests of risk management in-
clude monitoring malpractice and liability actions brought against the or-
ganization while overseeing and constantly evaluating forms of insurance
coverage. Risk managers study loss trends such as costs associated with
Workers’ Compensation. The goal of these activities is to manage risk in
an effort to achieve an appropriate balance between costs of doing busi-
ness and potential exposure to a variety of legal risks.

Although formerly a component of HR in some organizations, risk
management is currently found elsewhere in the administrative structure.
With its increasingly significant legal implications, risk management is fre-
quently coordinated by a person that reports to the organization’s legal coun-
sel. Increasingly, if risk management duties are assigned to more than one
person, then risk management may become a separate department and its
manager often has a legal background.

EExxeeccuuttiivvee CCoommppeennssaattiioonn AAddmmiinniissttrraattiioonn
This activity is rarely left to persons in HR. More commonly, it is taken
care of at the executive level within finance. If executive managers are not


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included in an organization’s payroll system, then executive compensa-
tion is most likely to be accomplished through an external confidential
payroll service. Such an arrangement is quite uncommon in health care
organizations although it is far more likely to be encountered in other busi-
nesses. Executive compensation is almost certain to be externally admin-
istered if an organization’s top executives are under individual contracts
or their salary arrangements include incentive compensation.

OOrrggaanniizzaattiioonnaall DDeevveellooppmmeenntt
Organizational development encompasses a wide variety of tasks. In some
organizations, it is little more than management development under a dif-
ferent name. True organizational development, however, goes beyond sim-
ply providing the continuing education necessary to keep managers current
with developments in health care as well as to helping them cope with the
changing times. Organizational development encompasses the changing re-
quirements of an entire organization. It asks an ongoing question: How
should this organization be changing its philosophy, mission, and vision,
and its organizational structure to meet the demands brought on by chang-
ing social and economic environments and the changing health care delivery
milieu? In many organizations, organizational development is considered
to be a luxury. It is often among the first departments to be cut when budg-
etary limitations or other economic hard times occur.

A comprehensive approach to organizational development needs should
include succession planning. Succession planning complements manage-
ment development and expands upon it by preparing managers and other
individuals at all levels not only to keep current but also potentially to ad-
vance within the organization. This facet of organizational development
emphasizes the internal development of managerial talent. A comprehen-
sive approach to organizational development usually includes some means
of identifying and educating potential supervisors and managers from
among the employees who do not hold management positions.

Organizational development exists as a separately identified activity in
a minority of healthcare organizations. The work is typically coordinated
by a person reporting directly to the director of HR. Organizational de-
velopment activities are often conducted in parallel with employment,
compensation and benefits, and other HR work. In rare situations, typi-
cally very large health care provider entities, organizational development
may be found as a separate office in parallel with HR. In such a situation,
its head reports to the same executive as the director of HR.

Category IV: Employee Assistance Program
An employee assistance program (EAP) is intended to assist employees in
addressing particular personal problems that can affect their work per-
formance. It is ordinarily described as an employee benefit. An employee

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assistance program is primarily a referral program that helps individuals
to identify and focus on their own needs and problems. Employee assis-
tance programs help to secure professional referrals for troubled employ-
ees. A capably functioning EAP can help control absenteeism, tardiness,
and other circumstances that can affect job performance. Addressing such
personal problems usually contributes to improvements in quality and
productivity. Employee assistance programs commonly address alcohol
and drug abuse, family and marital difficulties, legal and financial prob-
lems, compulsive gambling, and other personal problems and issues.

A majority of healthcare organizations have EAPs. The initial referral
point within a healthcare organization is usually an office located in HR
or in employee health. The latter may itself be a component of HR. The
professionals that provide assistance to workers are often employed by an
outside entity and provide their services on a contract or retainer basis.
Employees may use EAP resources with the assurance that no one within
their organization has to know about their personal problems. This im-
proves confidentiality and reduces the opportunities for embarrassing sit-
uations to develop in the workplace. The HR role is limited to simply
putting an employee who expresses a need in touch with the external EAP

OOuuttppllaacceemmeenntt SSeerrvviicceess
Outplacement involves assisting displaced employees in finding new em-
ployment. Outplacement services are offered and provided in instances of
reductions in the work force or elimination of specific management posi-
tions. Occasionally, they are offered to individuals as part of a severance
or termination package. Because it is costly and not needed on an ongo-
ing basis, outplacement usually does not exist as a permanent component
of HR or any other organizational element. However, something that may
resemble formal outplacement occasionally occurs when someone in HR
or elsewhere in an organization is able to assist a displaced employee in
finding a position with another employer.

The activities of payroll were once a common adjunct to the employment
activities of early personnel departments in many organizations. Both of
these basic needs impact all employees. Before benefits became common,
the only activities required for all employees were hiring them and paying
them. There was a compelling logic in having these two activities located
in adjoining offices and coordinating their activities. As time passed, pay-
roll requirements became increasingly more complicated.

Financial activities have become increasingly more sophisticated. As a
result, payroll was organizationally relocated.

In some organizations it is still possible to find payroll attached to HR.
However, these instances are uncommon and their number is steadily de-


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clining. Today, most payroll activities are performed in one of two loca-
tions. In the majority of organizations that process their own payrolls, this
activity is part of the finance department. Another department such as
data processing or information systems, which may or may not be part of
finance, will actually print and distribute checks and reports. A growing
number of organizations, especially those of small to medium size, utilize
external contractors that specialize in payroll services. When outside pay-
roll services are used, the input information from which they work is usu-
ally submitted to them by the finance department. Only occasionally is
such information supplied by HR.

The foregoing activities are summarized in Exhibit 4-1.

Outsourcing is the business term that is currently used to describe the
practice of having services that were once performed by organizational
employees supplied by an outside party or vendor. Outsourcing some-
time becomes necessary because of changes in organizational structure,

The Activities of Human Resources 75

Exhibit 4-1 Human Resource Department Organizational Areas or


Usually components of HR:
• Employment or recruitment
• Compensation and benefits administration
• Employee relations
• Labor relations (if one or more unions are present)

Often components of HR:
• Employee health and safety
• Training and development
• Security
• Child care
• Award and recognition programs
• Equal Employment Opportunity/Affirmative Action

Occasionally components of HR:
• Risk management
• Executive compensation administration
• Organization development
• Employee Assistance Program
• Outplacement services
• Payroll

35310_CH04_Final.qxd 1/30/07 4:07 PM Page 75

the reduction in number of employees, or mergers. Reengineering en-
compasses these circumstances. Reengineering is not the only reason that
organizations seek outsiders to perform needed services. A business or
organization might consider outsourcing for any of several reasons. The
services to be performed may require special skills or expertise. The de-
mand for such services may not be sufficient to justify hiring a skilled per-
son to do it. A reasonable example is managing pension fund investments.

Also, outsourcing is often the solution when a given task requires ex-
pensive equipment but there is insufficient work to justify purchasing the
equipment. For example, an organization may want to have its annual re-
port printed on multi-colored, special paper. If owned, the printing equip-
ment would be unused during the rest of the year. By virtue of specialization
or sophistication, an outside supplier may be able to perform a task more
economically than could company employees. This is one reason why out-
placement services for displaced executives are provided on a contract ba-
sis by an external entity. Reductions in staff sometimes create a need for
tasks that must be completed for which no time is available among em-
ployees who are not discharged. Such necessary organizational require-
ments are sometimes referred to as orphans or orphan functions. A particular
necessary task may occur irregularly and require insufficient time to jus-
tify training and retaining someone to do it. Preparing, publishing, and
printing an employee newsletter provides a convenient example. Finally,
some work is of a sufficiently sensitive nature that confidentiality is best
served by having it performed by an outside vendor. Coordinating an EAP
and administering an executive compensation program are two examples
of sensitive programs.

The decision to outsource any particular task will ordinarily involve
considerations of cost, capability, and confidentiality. Many outplacement
decisions are driven by staff reductions brought about by reengineering or
organizational downsizing. Often when a decision is made to eliminate a
position, many of the responsibilities associated with that job may be elim-
inated, modified, or transferred to another person. Remaining essentials
may have to be outsourced.

Among the HR activities described in this chapter, the most likely can-
didate for outsourcing is outplacement services. This is not only logical,
but also understandable because it is a specialized activity that is only oc-
casionally required. The next most likely activity to be outsourced is an
EAP. This is done to maintain employee privacy and confidentiality. Other
commonly outsourced HR services are pension plan administration and
Workers’ Compensation and disability programs administration.

External vendors (outsourcing) are being used for two other important
services: payroll and legal services. Increases in complexity of compensa-
tion programs, changes in tax withholding requirements, concern for se-
curity, and achieving economic savings are driving the trend to use outside


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vendors for processing payroll. And most health care organizations are
not sufficiently large to justify employing a full-time attorney, so legal ser-
vices are most commonly provided by a law firm engaged on a retainer.

The foregoing discussion of HR analyzed the services by categories. Each
category included services on the basis of their likelihood of being included
in a typical HR department. Alternatively, the services supplied to an or-
ganization by HR can be discussed by dividing them into groups on the
basis of how they relate to an organization’s employees. These general-
ized activities include employee acquisition, support or maintenance, re-
tention, and separation. This section reflects such organizational groupings.

Employee Acquisition
This category of activities includes everything that is undertaken to find
employees and bring them into an organization. In most health care or-
ganizations, this means all employment or recruitment activities. Human
resources personnel may attend job fairs at local colleges and training fa-
cilities or travel to regional or professional meetings to recruit prospective
employees. Placement of advertisements for employees is coordinated by
HR although other persons in the organization may provide input on the
copy or text of such ads. Pre-employment testing is usually coordinated
by HR even if the actual services are provided by persons elsewhere in the
organization or external to it. A critical HR activity is checking references
and verifying credentials. All new employees are given the same initial or-
ganizational employee orientation by HR. In general, HR coordinates or
supplies any activities that are undertaken from locating employees to suc-
cessfully situating them in their positions within the organization.

Employee Support or Maintenance
Many HR activities are intended to support or maintain employees by ad-
dressing needs that arise relative to their employment. These activities in-
clude administering compensation and benefit programs, enforcing
personnel policies and procedures for the entire organization, and coor-
dinating disciplinary and other corrective processes as needed. In union-
ized environments, the latter includes formal grievance procedures as
outlined in the collective bargaining agreement. Human resources main-
tains or coordinates personnel record keeping. This includes ensuring
that employee records are maintained in a secure location for long peri-
ods of time. Human resources may administer Workers’ Compensation
and disability programs or coordinate them if the services of an external
vendor are used. Other ongoing activities related to employees that are

Human Resources from a Different Perspective 77

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often provided or coordinated by HR include employee assistance pro-
grams, labor relations activities, security and parking, communications
to large groups of employees, and any other service that may be provided
for the purpose of supporting or maintaining employees as effective pro-
ducers. Services that are sometimes coordinated by HR include operat-
ing an employee health clinic, maintaining a cafeteria for employees and
members of the general public, and coordinating savings and investment

Employee Retention
Significant overlap can exist between the tasks of maintaining and retain-
ing employees. Compensation and benefits administration provides a con-
venient example. If compensation is not perceived by the persons employed
in a particular position as being fair or equitable when compared with
other positions or with community standards, then compensation alone
will provide little incentive to retain employees in the organization. Likewise,
if the contents of a benefit package are clearly less than other employers
are providing, then benefits will have minimal to no effect in retaining em-
ployees. The importance of compensation and benefits in retaining em-
ployees is embodied in the need to keep them competitive so that valued
employees will be encouraged to remain loyal to the organization.

Immediate monetary compensation, such as pay and benefits, are not
sufficient to motivate good employees. Numerous other incentives, activ-
ities, or perquisites are offered to help retain employees. The variety of
such incentives is limited only by the imaginations of organizations offer-
ing them or employees requesting them. However, some are fairly common.
These include retirement plans, performance appraisal and performance
management programs, and award and recognition programs. Other non-
cash incentives that organizations may offer include opportunities for
training and development, tuition assistance programs, and career devel-
opment and succession planning programs. Some programs may appeal
to a relatively small cadre of employees. However, for those who need
them, employee assistance programs and child-care assistance are highly
appreciated. These are important in both maintaining and retaining em-
ployees. All employees not only appreciate but have come to expect phys-
ical safety and security in all organizational facilities and reasonable parking

Succession planning is critical to the success of any organization. Many
in health care plan only for the succession of the top few executives.
Employees appreciate the chance to have input into their careers and wel-
come the assistance that is often provided by HR. Some relatively large or-
ganizations are able to provide opportunities for career development.
Promising employees are identified and offered positions on task forces,


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committees, or other temporary teams. In very large organizations, career
ladders and parallel path progressions are possible.

Employee Separation
This category includes all activities involved in separating employees from
an organization regardless of the reasons for separation. Some paperwork
and filing always accompanies any separation. When an employee is dis-
charged for cause, all disciplinary actions must be documented. Activities
after discharge may involve external agencies. Employees who are laid off
must be reported to the state so that they may receive unemployment com-
pensation. Outplacement or access to similar services may be offered.
Individuals who retire often appreciate counseling and planning assistance.
Administrative work related to a pension plan is required to begin the flow
of financial benefits. Occasionally, HR coordinates or arranges retirement
celebrations. All voluntary separations should include an exit interview.
Most separations from an organization involve cessation of benefits. An
interview or some other contact with HR is required to complete the nec-
essary paperwork. When selected benefits are to be continued (for exam-
ple, health benefits under COBRA legislation), HR usually completes
alternative paperwork to ensure that services continue to be provided with-
out interruption.

The foregoing are summarized in Exhibit 4-2.


This section will initially identify the points at which a department man-
ager can expect to come into regular contact with employees from HR or
with the programs and activities that HR coordinates. A department man-
ager will benefit by learning how to optimally utilize the services offered
by HR to the fullest extent possible.

A typical department manager can expect to have frequent contact and
considerable involvement in activities involving employment, employee
relations, and labor relations (if there are unions present). Depending on
the nature of a manager’s supervisory responsibilities, periods of active in-
volvement with training and development will be the norm. A manager
should expect to have some involvement with activities involving com-
pensation, benefits, safety, employee health, and payroll. The degree of
involvement will depend on how such services are organized and provided
as well as on the rate of turnover of departmental employees. The same
manager should expect minimal involvement with HR personnel related
to security, parking, child care, risk management, and other HR concerns.

Where Department Managers and Human Resources Personnel Meet 79

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Exhibit 4-2 Human Resource Department by Four Major Activities

Employee Acquisition:
• Employment and recruitment activities
• Attend job fairs and professional meetings
• Coordinating advertisements
• Preemployment testing
• Reference checking and verification
• Initial organizational orientation

Employee Support or Maintenance:
• Compensation administration
• Benefits administration
• Personnel policies and procedures
• Performance appraisal programs
• Disciplinary and corrective programs
• Coordinating grievances (in unionized environments)
• Personnel record keeping
• Worker Compensation programs
• Disability programs
• Employee assistance program
• Labor relations (in unionized environments)
• Parking
• Communication programs
• Employee health clinic
• Cafeteria
• Savings and investment programs

Employee Retention:
• Retirement plans
• Performance appraisal and management programs
• Award and recognition programs
• Education, training, and development
• Tuition assistance
• Child-care assistance
• Succession planning programs
• Career development opportunities
• Career ladders and parallel path progression

Employee Separation:
• Discharge and dismissal procedure documentation
• Unemployment compensation
• Outplacement services
• Retirement counseling
• Exit interviews
• Terminal benefits processing

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Contact with these services usually occurs when individual employees en-
ter or leave a department’s workforce.

The background, education, and experience of most department man-
agers in health care organizations are usually based on their basic educa-
tion or on their technical or professional specialties. A few have some
general business knowledge but the majority are not overly familiar with
HR processes and requirements. Some basic HR knowledge and involve-
ment with HR is necessary for individuals who want to supervise and co-
ordinate their department’s employees in an effective manner.

A successful manager must remain involved in recruitment and employ-
ment processes as a normal part of department activities. The intensity of
this activity will depend on the turnover rate in the department and on
how much employment activity is necessary.

When a manager finds it necessary to acquire a new employee, the ini-
tial step is to create or update a job description as necessary. A personnel
requisition must usually be secured from higher management before HR
can be contacted.

In some instances, a manager may be able to submit a personnel req-
uisition directly to HR if the need is for a direct replacement of a depart-
ing employee. The requirement for such approval depends on the personnel
practices of the organization. If the requisition seeks an additional em-
ployee, however, it usually requires thorough justification and subsequent
approval by one or more managers in higher positions in the organiza-
tion. This requirement intensifies when budgets are tight.

When a personnel requisition is received by HR, it is typically assigned
to an employment recruiter who identifies an appropriate number of can-
didates. A department manager’s next involvement is usually when HR
sends a file containing several applications or resumes of applicants who
meet the stated minimum requirements of the job. The manager then re-
views these documents and advises the HR recruiter which ones should be
called for interviews.

An HR recruiter will conduct screening interviews. As long as the can-
didates remain appropriate after being reviewed by others for compliance
with EEOC, ADA, and other legal requirements and with organizational
hiring guidelines, HR will arrange interviews for them with the depart-
ment manager. Following the interviews, the manager compiles a list that
ranks the candidates. This list is sent to the HR recruiter who contacts the
selected candidates. Depending on the size of an organization, the recruiter
or a senior administrator or executive negotiates with the candidate and
reaches an agreement on starting pay and other relevant details. One of
these people extends a formal job offer and sets the desired starting date
for the new employee.

Where Department Managers and Human Resources Personnel Meet 81

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For a variety of reasons that will become evident, formal offers of em-
ployment should originate only from HR. The responsibilities of most
managers focus on providing services or producing products or informa-
tion, but HR personnel are people professionals. Some senior executives
may extend offers of employment should that be the norm for a given or-
ganization. Direct supervisors should not negotiate salaries with candi-
dates because of the potential for ill feelings (if a particular salary request
is not granted) after the job has been accepted. An offer is ordinarily made
contingent upon positive reference checks and having the applicant pass-
ing a pre-employment physical examination. Once an applicant has been
completely cleared and begins to work, it is a department manager’s re-
sponsibility to ensure that the new employee is oriented to the department
and properly started on the job in all other respects.

A department manager will have no active role in administering employee
benefits. However, the department manager is ordinarily an individual em-
ployee’s primary source of information about the organization as well as
the job (or is least perceived as such by most employees). For this reason,
managers can expect to receive regular questions about benefits from their
employees. This suggests that a manager should become familiar or have
a reasonable working knowledge of commonly used benefits such as paid
time off (vacation, sick time, personal time, and holidays). Answers to
routine questions will save time and allow HR personnel to concentrate
on questions concerning more problems. When large numbers of man-
agers reply to all questions related to benefits with “I don’t know, go ask
HR,” HR appears to be lax in sharing information. This impression does
not support HR in the short term. Over a longer period, an organization
will suffer.

Most managers will benefit by having two levels of knowledge about
HR. The first is knowing how the organizational benefits structure per-
sonally affects a manager. This knowledge will enable a supervisor to an-
swer many common questions that employees might ask. The second is
knowing from whom in HR employees should seek answers to more com-
plex questions.

A department manager must be familiar with an organization’s compen-
sation structure because it affects the pay of all departmental employees.
This includes knowing about relevant wage scales, what they mean, where
departmental employees are relative to the scales and the relative position
of each employee. Information about relative positions is needed to answer
questions that are related to others who perform similar tasks, have sim-


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ilar lengths of employment but who might be paid at different rates. A
manager should have sufficient knowledge of the compensation structure
to recognize when inequities have crept into the department’s pay rates
and to raise questions about these inequities to HR.

The best information about how a job is performed resides with the
person who does the job and the manager who directs that individual in
doing the job. The department manager and an individual employee on the
job are the primary repositories of knowledge of how a particular job is
or should be performed. A manager must be able to apply this knowledge
when creating, reviewing or maintaining job descriptions. An accurate,
up-to-date job description is an absolute necessity when determining the
pay grade and salary range for any particular job. Thus, this essential com-
ponent of compensation administration is largely the responsibility of a
departmental manager. Human resources ordinarily participates in writ-
ing and updating job descriptions but cannot create quality job descrip-
tions without departmental input.

Employee Relations
Each time a problem arises concerning an employee, the potential exists
for a department manager to interact with HR. This involvement can come
about because of complaints about employees. These may be made by or-
ganization employees or by persons from the outside. They may be infor-
mal or formal, such as a grievance. Complaints may be filed with agencies
such as Human Rights or an Equal Employment Opportunity Commission.
They may originate as lawsuits or disciplinary actions. They may be brought
by a department manager or other person.

One employee-related activity that requires a manager’s direct interac-
tion with HR on a regular and recurring basis is compiling and filing per-
formance appraisals. Human resources will ordinarily administer the
appraisal system, keep the system up to date, provide training in the sys-
tem’s use, and follow up on appraisal completion. A manager’s role is to
perform the appraisals of employees who are directly supervised accord-
ing to the guidelines established by HR and in accordance with timetables
established by the organization.

Personnel Records
Human resources maintains an organization’s personnel records. Department
managers have a few regular areas of contact with personnel records. Much
of the information that is filed comes to HR from department managers.
Performance appraisals and disciplinary actions are the most common of
these items. Managers occasionally have a need to review some fact or ele-
ment of a subordinate’s personnel record. Such requests often pertain to
the work record and qualifications of someone who wishes to transfer into

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the department. Organizations create their own guidelines regarding ac-
cess to personnel records. In general, information contained in personnel
records is highly confidential and should not be available to any supervi-
sor without a valid reason for access. Requested information should be pro-
vided by an employee from HR. Personnel records should be kept in a
secure location with access restricted to as few people as possible. Competent
legal counsel should determine the parameters governing the long-term
storage of personnel records.

It is no secret that in many work organizations there is a degree of strain,
at times even some animosity, between HR and managers in other depart-
ments. This is true of employees in health care as well as in other organi-
zations. Often these differences simply slow down the normal flow of
business. Occasionally, however, the differences develop into overt antag-
onism that can significantly interfere with the efficient conduct of business.

“Line managers and staff human resource professionals spend a great
deal of time talking at each other and often past each other and privately
questioning each other’s views about what goals and values are impor-
tant.”1 Why do such differences between HR and department managers
exist? An examination of the differences between line management and HR
may help to develop an understanding of why there is sometimes a credi-
bility gap between the two.

Background and Qualifications
The backgrounds of HR practitioners are often varied. Some, a relative few
but increasing in numbers over the past 15 years, have received specific train-
ing in HR. Despite the increase of people with specialized training, there
are people educated in a number of different academic backgrounds work-
ing in HR, including business, psychology, sociology, organizational be-
havior, industrial relations, and education. People who started their careers
in clinical or technical specialties have assumed management positions
throughout health care organizations but they are not commonly en-
countered in HR.

Supervisors and department managers in health care organizations tend
to be prepared in specific technical or professional occupations, invari-
ably the operational areas that they manage. On average an HR practitioner’s
education has been liberal and nonspecifically focused. In terms of scien-
tific training, personnel from HR are likely to have training in a so-called
soft science such as those already mentioned. In contrast, other supervi-
sors and managers in health care organizations are likely to have training
in so-called hard sciences such as biology, chemistry, and physics. The ed-


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ucational focus of persons with hard science training tends to be narrower
than their colleagues with softer science training. The different educational
backgrounds are relatively unimportant; they are simply different. However,
people’s initial training often sets a tone for their later outlook on organi-
zational values and how they embrace concepts and facts or how they view
theory and practice.

Staff Managers
Line managers frequently have to supervise and coordinate a variety of
people who bring a mix of values into their jobs. Some of these people will
require close, nearly constant supervision, while some are capable of in-
dependent work. The members of a manager’s working group may include
an extremely broad mix of skills and educational backgrounds within a
single discipline. Consider, for example, a nursing manager who may su-
pervise a group including nurse practitioners who have training at the mas-
ters level as well as a variety of other nursing personnel with training that
ranges from a bachelor’s degree (registered nurses) to an associate’s de-
gree (registered nurses, licensed practical nurses, and nursing assistants)
to persons with a high school education (clerical personnel). Such a di-
versity of educational preparation often poses managerial challenges.
Human resources organizations, in contrast, are usually considerably
smaller than most line departments. They tend to be relatively cohesive
groups that are composed of people who share similar values and have a
common occupational outlook.

Management Style and Approach
The supervisor of a line department will ordinarily tend to manage with
a downward orientation. Many decisions and supervisory interventions are
accomplished on a one-to-one basis. The downward orientation clearly
marks the subordinates of such a manager as being subordinates in the
overall scheme of operations. A manager may sometimes have to perform
the duties of a practitioner but, depending on department size and work-
load, such instances tend to be relatively minor components of a man-
ager’s responsibilities.

With the exception of clerical support staff, HR employees (HR prac-
titioners) are more likely to view themselves as colleagues who are com-
parable with each other rather than as part of a hierarchical structure.
With the exception of the largest health care organizations (multi-site sys-
tems, teaching hospitals and the like), in most health care settings the chief
HR officer is likely to have some practitioner duties in addition to super-
visory responsibilities. Because of this mix of duties, people throughout the
HR department regard them as organizational equals.

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The positional goals and expectations placed on line managers are usually
relatively clear and easy to define. Line managers are expected to perform
their assigned job duties to ensure consistency of quality and output. They
are simultaneously expected to adhere to policies and procedures of the
organization. Furthermore, they are expected to remain faithful to the mis-
sion, vision, and goals of the organization.

The expectations of an HR department may not be nearly as clear or
recognizable as those placed on line departments. The expectations asso-
ciated with HR will influence the manner in which line departments re-
gard HR. Human resources may be perceived as being expected to control
the affairs of other departments, retain the status quo, avoid making waves,
or innovate. These perceptions will influence whether line departments
regard HR with apprehension, indifference, contempt, or caution, or em-
brace HR as a helpful or useful organizational ally. As long as the expec-
tations of HR and the line departments differ noticeably from each other,
there is likely to be a degree of tension between them.

Orientation and Training
In regard to matching an appropriate person with each task to be per-
formed, line management tends to hold the belief that selection is the most
important factor. Put differently, line managers feel that selecting the right
person for a job is the most important factor related to accomplishing the
task. Human resources practitioners, on the other hand, tend to believe that
development is the most important factor. With proper development, any
of several people have the potential to complete a given job. This some-
times leads to sharp differences between line management and HR in the
area of recruiting. Human resources may supply several candidates all
having the potential to execute a particular job as expected if they are
properly developed. However, none of the candidates may appear to have
the exact qualifications or experiences or be precisely the right person for
the job. This perception develops because a manager, knowingly or oth-
erwise, often holds out for an ideal fit between candidate and position.

Line managers frequently exhibit a tendency to believe that employee par-
ticipation in decision making is a notion that is no more than a theoreti-
cal abstraction, one that complicates matters by slowing things down and
generally failing to contribute to departmental success. Human resources
practitioners have a different view of employee participation in decision-
making. Human resources proponents generally feel that when participa-
tion is properly implemented it can generate improved organizational
performance and increased employee satisfaction.


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Employee Empowerment
The highest priority for line managers in a health care organization is tak-
ing care of patients and delivering services. As a result, they are often hes-
itant to delegate important tasks. More frequently, they adopt an approach
that managers or supervisors have the ultimate responsibility to provide
needed services. In the extreme, they (the managers) will provide the re-
quired services themselves. The philosophy and priorities of HR are dif-
ferent. The highest HR priority is performing a particular job or supplying
a needed service. They often advocate employee empowerment as a vehi-
cle for individual growth and development. This approach is taken because
of their belief that in order to grow, people must have the freedom to fail.

Line managers frequently act according to the belief that exercising con-
trol protects a department’s staff and enhances an organization’s ability to
deliver. The human resources view, however, is that a controlling manager
stifles creativity, discourages employee participation, and impedes em-
ployee growth and development.

Staff Performance
Line managers, especially in departments having a considerable mix of
staff skills, qualifications and educational levels, will ordinarily have to in-
tegrate or cope with varying levels of individual performance. As a con-
sequence, managers must occasionally provide counseling, criticism,
disciplinary action, and termination. Such people problems can consume
a considerable portion of a line manager’s time. In contrast, an HR man-
ager usually supervises professionals and a few support personnel having
comparable skills. As a result, their people problems are fewer and they
are far less likely to have to take corrective actions.

Reward Assumptions
Line managers often tend to believe that compensation is the most effec-
tive means of influencing performance and that their staff members are pri-
marily motivated by the promise of material rewards. Human resources
practitioners tend to place organizational culture, supportive management,
employee participation and opportunities for personal development above
monetary compensation as providing motivation for employees over the
longer run.

Regarding Change
The belief system of line managers seems to be that effective change
occurs slowly over time. As a consequence, true organizational change is
always slow and incremental. The HR view is generally that genuine

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organizational change is achievable and can occur over a short term if it
is driven and supported by top management.

The orientation of line managers ordinarily views success or failure as oc-
curring in the short run. The typical HR view usually involves a longer-
term perspective.

What Results in Practice
In summarizing the apparent differences between line management and
HR, the following are useful. Line managers believe that HR departments
impede progress by frequently obstructing what a department manager
wants or needs to do. Furthermore, they view HR as being largely ob-
structionist and commonly citing laws to support their positions on why
particular actions cannot be taken. In contrast, HR personnel feel that de-
partment managers regularly try to evade laws and policies and generally
insist on making decisions and taking actions that have the potential to cause
legal problems for the organization.

What Can Be Done
Many rank-and-file employees, along with some department managers, do
not trust HR. This often exists to the extent that some employees never
go to HR with their needs because they feel that doing so will endanger
their employment. As a result, these employees never utilize the HR processes
that are available to them. Many employees apparently do not perceive HR
as a resource available to them. Rather, they view HR as a department
that relates primarily with their managers and thus mainly serves the cor-
porate hierarchy.

Department managers and HR personnel can both improve their situ-
ations by giving each other the benefit of the doubt concerning their mo-
tives. Translated, this means that HR’s mission in life is not to obstruct and
frustrate department managers and that department managers should not
pour their energies into finding ways around HR. Rather, each should try
to use every instance of disagreement as an opportunity to know more
about the other.

A top priority of HR should be communicating how HR can be an im-
portant resource for all employees. This must be demonstrated to rank-
and-file employees as well as managers. If HR is not communicating this
critical information, then department managers and administration per-
sonnel should ensure that this does occur. The HR department should
never forget why it exists. Human resources represents employees and is
an advocate for them. Human resources must ensure that managers are aware
of employee needs and are motivating them to perform; HR must contin-


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ually propose and champion programs and services that appear to be most
needed by the employees of the organization that they serve. Senior man-
agement must never allow HR to forget why it exists and that it is needed
by all in the organization.

The activities of HR are reviewed from different perspectives. Most HR
departments provide three basic services: employment or recruitment, com-
pensation and benefits administration, and employee relations. When
unions are present, HR frequently coordinates labor relations. Human re-
sources provides other services in some but not all health care settings and
may also coordinate employee health and safety activities, training and
development, security, child care, award and recognition programs, and
Equal Employment Opportunity and Affirmative Action responsibilities.
The following activities are occasionally coordinated by HR: risk man-
agement, executive compensation administration, organizational devel-
opment, employee assistance programs, outplacement services, and payroll.
Alternatively, some of these latter activities may be outsourced.

Viewed from a different organizing perspective, HR activities may be
grouped in an alternative manner. The groupings include employee ac-
quisition, employee support or maintenance, employee retention, and em-
ployee separation. Line managers throughout an organization and personnel
from HR interact most commonly on issues involving a small number of
basic issues or areas. These include employment, benefits, compensation,
employee relations, and personnel records.

Despite these similarities, readers must remember that all HR depart-
ments or operations are not the same. Furthermore, the training and ex-
periences of most line managers and HR managers are different. As a result,
the expectations of people in these two groups are often different.

Concerning the nurse recruiting situation at Community General
Hospital, one might question the degree to which nursing director Jane
Cassidy and employment manager Carrie Smith are actually working to-
gether. Carrie seems to be putting forth a fair amount of effort to locate
candidates. However, she is deliberately vague about hours and shifts.
Although she is appropriately sensitive about scaring off good candidates
before they can be interviewed, she creates extra work for nursing staff and
herself by not being open about hours and shifts and other scheduling re-
quirements. When talking to new graduates, her hesitation in discussing
the nursing department’s rotation practices is unfounded because many
new nurses seeking hospital employment expect to rotate shifts.

Jane might be considered luckier than many other nursing directors be-
cause of the availability of a group of nurses who prefer working steady

Conclusion 89

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nights. She has the good fortune to have staffing problems that are con-
centrated on one shift instead of two shifts as is often the case.

Before Carrie and Jane talk with their recent applicant, they should
quickly review their scheduling situation and current practices. If Jane
continually has to adhere rigidly to her scheduling policy and the candi-
date nurses refuse the job as a result, then the shortage situation will worsen.
A method must be found to recruit and hire qualified nurses during a time
of shortage, even if doing so requires some compromise among existing
employees and the internal movement of personnel to lessen the impact of
any remaining schedule restrictions.

The nursing department and HR’s recruiting personnel should consider
closer collaboration. A key component of any new collaboration should
include assembling a group of persons from both departments to review
all of the nursing department’s scheduling practices to look for creative al-
ternatives to replace the apparently rigid practices now used when sched-
uling nurses. The policies and practices governing nurse scheduling must
be revised to reflect the reality of the nursing marketplace. Jane and Carrie
must both be involved in this effort. With creative scheduling practices in
place, no acceptable reason should exist to reject a qualified nurse appli-
cant during a time of shortage. Considering the fact that quiet exceptions
already exist, creative scheduling is already being practiced. This should
ease the difficulty of the task.

1. Leskin, B. D. (1986). Two different worlds. Personnel Administrator, 31(12),


Discussion Points

1. Outline a long-term approach that you would recommend for nar-
rowing a credibility gap that might exist between an organization’s
HR department and its department managers.

2. Advance an argument either for or against having the employee health
and safety clinic located within an HR department.

3. Describe the objectives and activities of risk management. Is risk man-
agement essential in a contemporary health care organization? Why,
or why not?

4. Why is it a common practice to outsource an organization’s Employee
Assistance Program (EAP)?

5. List several elements of a hypothetical organizational development
program. Explain how and why such a program differs from man-
agement development.


35310_CH04_Final.qxd 1/30/07 4:07 PM Page 90

6. Why is it preferable for a department manager to respond directly to
the majority of employees’ HR-related questions, rather than simply
telling employees to “go ask Human Resources”?

7. What are screening interviews? Where and why are they ordinarily

8. Provide several reasons for why a department manager should be fa-
miliar with the organization’s compensation scales even though the
manager is not expected to make specific salary quotations or nego-
tiate salaries with prospective employees.

9. List three or four differing academic backgrounds that might be found
among HR practitioners. What are the advantages or disadvantages
of each in equipping an individual to provide HR services?

10. Describe the components of a typical outplacement service package.
Explain why such services are almost always provided by an external


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Matthias, R. E., & Benjamin, A. E. (2005). “Intent to stay” among paid home
care workers in California. Home Health Care Service Quarterly, 24(3), 39-57.

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The Manager-

Chapter Overview

After reading this chapter, readers will:

• Recognize that groups comprising the majority of health care
organization departments are typically heterogeneous

• Appreciate the value and importance of employee participation
and input

• Be able to compare and contrast production-centered management
and people-centered management, recognizing that most health
care activities require people-centered management

• Understand the importance of having a department manager
remain visible and available to the staff

• Explain the value of a true open-door policy
• Describe a manager’s essential downward (toward the employees)

orientation as opposed to an upward (toward higher management)

• Appreciate the importance of establishing and maintaining a solid
one-to-one relationship with each employee in the department and
the need to know each as a whole person to be an effective people-
centered manager

• Understand the department manager’s key role in employee




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This chapter advances the belief that every manager is truly a coordinator
of human resources (HR). Furthermore, this essential coordination is
played out within a one-to-one relationship that an effective manager
should have with each employee. However, all work groups are composed
of individuals, most of whom are different from each other in some way,
so that a manager’s relationship with each employee may likewise be dif-
ferent in some respect from all other such relationships. All health care ac-
tivities must be more people-focused than production-focused. Managers
must lead by example, remaining visible and available to employees while
encouraging employees yet depending on their participation and input. A
health care manager must cultivate a genuine open-door attitude toward
employees and must exhibit the essential downward orientation that says,
“Although these persons are members of management, their primary con-
cern is for an organization’s clientele and the employees who provide ser-
vices.” A manager’s task is to ensure that all employees are valued for what
they can contribute.

Case Study: “She Knows It All, Just Ask Her”

Two or three months ago, occupational therapist Alice Walters said to
Kelly Miller, her manager and the director of rehabilitation services, “Kelly,
it’s obvious to me that we’re not approaching the departmental budget
sensibly. All we do is carry last year’s actual expenditures forward, tack
on some amount for an inflation factor and pile on some other guesses.
We should be budgeting from a zero base, building up every line item and
making each one justify itself every year.”

Kelly replied something about simply following the budgeting instruc-
tions issued by the finance department and doing it the way they were told
to do it.

Within a few days of the budget question, Alice approached Kelly with
another question. “Shouldn’t we change the way we perform performance
evaluations? Surely most smart managers know that it’s better to evalu-
ate employees on their anniversary dates than it is to evaluate them all at
the same time, on the same day, as we do it.”

Kelly responded as before. As a manager, she was simply complying
with the policies and practices of the organization. They discussed the mat-
ter for another five minutes. Although Kelly was not willing to take on
higher management and work to change the evaluation system, she con-
ceded that Alice had brought up a number of good points. To Kelly, it
seemed as if Alice were picturing an idealized evaluation system in text-
book-like terms. It was flawless but only in theory.


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In the following weeks, Alice said more and more to Kelly about how
both the organization and the department should be managed. It had taken
Alice only a matter of days to get beyond generalized techniques such as
budgeting and evaluation and to start offering specific advice on the man-
agement of rehabilitation services.

Kelly soon realized she could expect Alice to offer some critique related
to most of her actions in running the department and many of executive
management’s policies in managing the organization. Kelly was disap-
pointed with this annoying change in her relationship with an otherwise
good employee. Kelly had always seen Alice as a better-than-average per-
former as a therapist and somewhat opinionated but not to any harmful
extent. Recently, however, she had come to regard Alice as a sort of abra-
sive conscience, a critical presence who monitored her every move.

The worsening situation came to a head one day when Alice tried to
intercede in a squabble between two employees. When Alice entered the
situation, she proceeded to criticize Kelly’s handling of the matter in the
presence of the other employees. Kelly immediately took Alice into her
office for a one-on-one discussion. She first told Alice that although she
was free to offer suggestions, opinions, and criticisms regarding man-
agement, she was never again to do so in the presence of others. Kelly
then said, “Lately, it seems that you have a lot to say about management
in general and about how I run this department in particular. Why this
sudden interest?”

Alice responded, “Last month I finished my first course in the man-
agement program at Community College, Introduction to Management
Theory. Now I’m in the second course, Supervisory Practice. The concepts
are not difficult. When I see things that aren’t being done right, I feel that
I have an obligation to speak up.”

Kelly ended the discussion by again telling Alice that she expected all
such commentary to be offered in private and never again in front of oth-
ers. Overall, the conversation did not go well. On one or two occasions,
Kelly felt that Alice’s remarks were edging toward insubordination. Because
of the uneasy feelings left after the discussion, Kelly requested a meeting
with Carl Mason, the organization’s director of human resources.

After describing her relationship with Alice in some detail, with a ges-
ture of helplessness Kelly said, “She knows everything, I guess. Just ask her,
she’ll tell you. On the strength of a course or two of textbook management,
she suddenly has all the answers. What can I do with her?”

Consider how Kelly Miller might address the problem presented by
Alice Walters. Can Kelly do anything to curb the intrusions of an appar-
ent know-it-all employee? If you were in Kelly’s position, how could you
encourage Alice to modify her apparently superior attitude? What sug-
gestions would you offer to Kelly as she attempts to move her relationship
with Alice to a more productive level?

Chapter Summary 95

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Some managers, particularly those who cling to apparently old-fashioned and
inappropriately narrow views of management, regard many employee-related
concerns as things they call employee relations rather than management.
Their concepts of management are referred to as production-centered. They
are concerned first, foremost, and always with getting the work done.

In organizations where HR practitioners are utilized to the maximum
possible extent or nearly so, some managers have come to rely on them so
heavily that, by default, they have transferred the primary responsibility
for addressing all people-related issues to the HR department. Regardless
of HR’s strength and relative position in an organization, local depart-
mental managers should retain responsibility for day-to-day employee
concerns and remain involved with employee problems. However, HR
should always be available for advice and assistance. By definition, this is
an important role for HR. Many issues involving employees should not au-
tomatically default to HR. Most recurring, common people-related tasks
should be part of a manager’s job and should not be referred to HR.

In the minds of some people, HR is an unnecessarily elaborate and stuffy
title encompassing activities that were formerly called personnel. Remember
that personnel means people. In some modern organizations, the depart-
ment that many refer to as HR is known by other names such as “people
systems” or “employee affairs.” In no way should HR manage the people
who perform the tasks in an organization. In providing the people sys-
tems, literally the processes and procedures for serving all employees, HR
simply provides a framework within which relations with employees should
be conducted.

Workers in health care organizations bring with them an extremely broad
range of educational backgrounds and levels of sophistication. Within a
single group of directly reporting employees, a manager may have em-
ployees who require regular or even constant supervision (virtual hand-
holding). In contrast, they may supervise employees, such as health
professionals, who have been trained to act independently, make most of
their own decisions, and determine most of their own behavior. These per-
sons often require only the most general of directions.

Consider some examples appearing in many hospital organizations.
Food service personnel can vary widely from entry-level employees who
are hired without any specialized skills or training to therapeutic dietitians
who possess master’s degrees. A manager in such a setting may be re-
sponsible for several levels of staff, each of which may have different needs.


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Diagnostic imaging (radiology) employees may range from entry-level
clerks and transporters to highly skilled special-procedures technologists
and even physicians with whom a department supervisor must maintain
working relationships even though they do not report directly to the man-
ager. The manager in this venue may be responsible for as many levels of
staff as a food service manager while additionally relating to physicians
who can be either medical staff members or employees of the organization.

Other possible scenarios involve patient billing and housekeeping. In
either activity, a single manager may be responsible for a number of per-
sonnel all of whom are at the same level of education and sophistication
(depending on how the activity is organized). In a modestly sized nursing
unit, a nurse manager may have several levels of staff such as nursing as-
sistants and unit clerks, licensed practical nurses (LPNs), registered nurses
(RNs), and nurse clinicians. Managing people with such diverse back-
grounds requires skill.

In addition to multiple levels of education and sophistication, a het-
erogeneous work group can present its manager with another potentially
troublesome condition, namely differences among employees regarding
their work ethic. For instance, significant differences in work ethic some-
times appear between newer employees and more established (experienced)
employees or between older (in years) members of a group and younger
workers. Although peoples’ attitudes toward work and employment have
shifted over the course of several generations, not all problems related to
work ethic can be attributed simply to younger or newer workers having
less experience.

Variations in work ethic suggest that within a single working unit or
group, a manager may have some employees who would never willingly
miss a day’s work or never intentionally shirk a responsibility, and some
employees who think nothing of missing work on a whim and allowing
responsibilities to go unfulfilled. In addition to working on bringing out
the best in each employee, a department manager must provide an exam-
ple of a continually positive work ethic for others.

An anonymous person—more likely several such anonymous people—
claimed that, “When all is said and done, there’s much more said than
done.” In few circumstances does this hold to be truer than it is in em-
ployee participation. Most managers claim that they believe in employee
participation and remain open to input from their employees; however,
for the majority, their behavior contradicts their words. Managers repeat
words that they believe ought to be said or are politically correct be-
cause that is what experts are saying about contemporary management.

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This is especially true in best-selling management books. Although they
speak phrases and concepts from Management 101 and say what they
believe they are expected to say, on a day-to-day basis they continue to
function as they have for years.

As noted in an earlier chapter, some managers speak of their belief in
participation, but in practice, they only superficially tolerate it. They may
believe themselves to be participative managers when in fact their style is
consultative. A consultative manager is usually honest, conscientious, and
completely well intended. However, such a person can rarely relinquish
enough control to allow employees to participate or realize their full po-
tentials. For managers who behave in this fashion, any experience or process
that involves sharing authority or control with employees smacks of ab-
rogating responsibility and is perceived as a weakness. Too often, this
streak of authoritarianism remaining in modern management stifles em-
ployee participation.

Management has evolved for decades and will continue to do so for
years to come. At the start of the twentieth century, management, for
all practical purposes, was largely authoritarian. In most settings, the
boss was the only person in charge, and was to be obeyed without ques-
tion. During the same era, the top manager was likely to be the owner
or major stockholder of the organization. The human relations move-
ment in management, a twentieth century phenomenon, began to take
hold in the 1930s. Throughout the 1940s and 1950s, it steadily ex-
panded. Today, many managers have been educated specifically for man-
agement. However, like their supervisors and others who have preceded
them, they have acquired much of their managerial perspective from
role models that they have observed and for whom they have worked.
It is not surprising to find residual authoritarianism among many who
manage today. Remember that their role models have been at least partly
authoritarian. Authoritarianism in management is steadily weakening,
but it is far from gone.

Department managers should always make it clear to subordinates that
employees’ ideas are valued and that their input is not only welcome but
also needed. Employee participation should be valued and promoted. Even
consultative managers who reserve the right of final decision are well ad-
vised to solicit employee input, consider it carefully, and occasionally use
employee ideas. In the end, such an approach or strategy usually pays div-
idends for both individuals and organizations.

When it comes to sources of knowledge about how to perform work
better, faster, or more economically, the person who knows the inner
workings of a job best is someone who performs the duties day in and day
out. Successful department managers remember this fact. The most suc-
cessful managers are those who have learned how to tap into this source
of knowledge.


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Depending on the particular work environment and kinds of work
performed, most managers will tend to be either production-centered or
people-centered. Because of the nature of some tasks such as manufac-
turing, a manager is required to be production-centered. In production-
centered situations, the work is ordinarily highly repetitive, many units of
output are similar, output can be scheduled with some accuracy, and jobs
can be rigidly defined in considerable detail. In a production-centered sit-
uation, employees are ordinarily assigned to workstations. Other than
keeping up with the pace of an assembly line, they have little control over
how they complete their jobs. In an assembly environment, the speed of
the line determines the rate of output. If a particular employee does not
keep pace, then another employee is substituted at that workstation. In a
production-centered situation, a manager’s priority concerns are usually
keeping supplies and services entering the process and thus keeping the
output flowing. In a production-centered environment, processes control
the people. A manager’s primary focus is on output.

In a people-centered environment, the willingness of employees to work
maintains output rather than the pace at which the work arrives or the
manner of supplying the processes. In people-centered situations, the work
is often irregular and varied. Rarely are two units of output identical. For
this reason, scheduling output with true accuracy is very difficult. Jobs
cannot be rigidly defined because demand on workers can be so highly
variable. In people-centered environments, employees control the processes.
A manager’s primary focus is on people, who are the producers, rather
than machines.

Most situations found in a health care organization require people-
centered management. In a healthcare organization, people primarily con-
trol the processes. Thus, people must be the primary focus of a successful
manager. The following sections discuss some of the principal require-
ments of an effective people-centered manager of health care workers.

Exhibit 5-1 compares and contrasts several dimensions of production-
centered management and people-centered management. Based on the
characteristics encountered in the majority of health care delivery settings,
it is evident that a manager using a people-centered approach to supervi-
sion best handles most situations that exist in health care settings.


Reality and Perception
A health care department supervisor must be generally visible to em-
ployees and must be both perceived as available and actually available.

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The matter of perception is stressed because, as far as employees are con-
cerned, much of a manager’s state of being visible and available is psy-
chological. Although employees may never articulate the thought, seeing
a manager around in a department and knowing that the manager can be
accessed should the need arise provides most people with a level of com-
fort. Many employees are able to work independently for prolonged
stretches. Some may even prefer to do so. However, on those occasions
when a manager’s judgment or expertise is required, they should know
how to reach the manager in a reasonably short amount of time. Even
though only a few employees may be affected, a manager’s presence in and
around a work group will tend to limit inappropriate behaviors.

Consider the case of a manager who looked forward to moving from
her small, glass-encased cubicle in the corner of the department to new
and larger quarters some distance away from her staff. Formerly, all em-
ployees in the department could see that the manager was available. After
the move, it was impossible to know her availability without leaving the
department and traveling through 300 feet of corridor. Within weeks fol-
lowing the move, complaints about the manager had noticeably increased.
“Now she’s hard to find when we need her.” “She pays more attention to
higher management than to us.” “She no longer cares about us and our
needs. Just look how she couldn’t wait to get away from us.” Her formerly
happy employees uttered these phrases. Over the weeks and months that
followed, staff absenteeism and tardiness increased, productivity decreased,
and interpersonal problems among staff members increased. Absentee
management may be appropriate in some retail business situations, but it
is rarely appropriate when managing a department of people in an orga-
nizational setting.


Exhibit 5-1 Comparison of Production-Centered and People-Centered


Production-Centered People-Centered

Nature of the work Repetitive Variable

Nature of the output Homogeneous Heterogeneous

Pace controlled by The process Employees

Character of labor More manual More intellectual

Manager’s primary focus The process Employees

Arrival of work More predictable Less predictable

Completion of work Predictable intervals Irregular Intervals

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Absence Impedes Communication
A manager often creates communication problems by not being reasonably
accessible. When employees are forced either to wait to get answers or to
take chances and act independently, time and material resources are wasted
through delay and error. This may be especially troublesome in emergencies
when time must be devoted to tracking down a missing manager.

Employees should perceive a department manager as the employees’
direct conduit when communicating with other organizational elements
or supervisors. This is especially true for interactions with higher man-
agement. Employees may perceive a manager who is not readily visible or
available as being uninterested and uncaring. This is true for supervisors
who seem dedicated primarily to activities such as meetings, committee work,
conferences, and the like that occur outside of a department. If allowed to
remain unresolved, this relationship may become cold and distant. In any
event, employees see such a supervisor as indifferent and impersonal. For
many members of a working group, their department manager is a repre-
sentative of the organization itself. This supervisor is the one member of
management that these employees know best and may be the only mem-
ber of management with whom they have a speaking relationship. If em-
ployees perceive their supervisor as being cold, uncaring, and impersonal,
then they are likely to perceive the entire organization in the same man-
ner. In most instances, a first-line manager is a worker as well as a man-
ager. These supervisory responsibilities provide an additional resource to
a department. When a manager is unavailable, a potentially productive
resource is lost.

A Genuine Open Door Attitude and Actuality
Managers may occasionally use phrases that they learned in Management
101. Words alone are not sufficient. Managers must back up the words with
actions. Few managers have not said, “My door is always open.” Unless
the door is, in fact, usually open, employees quickly perceive reality. Few
supervisors or managers are able to practice a truly open-door policy.
Supervisors are usually busy people, especially in times of shrinking man-
agerial hierarchies and expanding responsibilities for individual managers.
Contemporary managers must wrestle with problems, attend a myriad of
meetings, make and take telephone calls, and generally engage in many time-
consuming activities. The effect of these responsibilities makes it nearly im-
possible for supervisors to sit behind desks, inside rooms with physically
open doors just waiting for employees to drop in.

Some managers are not easily accessible at any time because they are
genuinely too busy. Even though a manager has said, “My door is always
open,” the manager’s attitude says, “The door may stand open, but I
dislike interruptions and you should not consider entering without an

Visibility and Availability 101

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appointment.” The reality of an open door policy depends as much on
a supervisor’s attitude as in the position of the door. Even managers who
are generally visible and available to their employees most of the time
can discourage contact by projecting an attitude that discourages employees
from approaching.

Easier for a First-Line Manager
An honest open door policy, or a condition approaching that goal, is eas-
ier for a first-line supervisor to maintain than it is for someone at a higher
level of management. A first-line supervisor can usually address many
problems and issues that enter via an open door in a direct manner. Persons
in more senior managerial positions, however, usually must exert greater
care when addressing issues brought directly to them by rank-and-file em-
ployees because of an espoused open-door policy. The actions of higher
management must not subvert the authority of an employee’s immediate
supervisor. Thus, a higher manager’s response must often consist of refer-
ring the matter down to the first-line supervisor or other source of assis-
tance, such as the HR department or another intermediary.

A policy of easy access to first-line supervisors is often very successful.
First-line managers should remain appropriately visible and available and
should strive to offer reasonably accessible open doors. They should ob-
serve an open door whenever possible. When other tasks require them to
restrict access, they should have an alternative means for employees to
schedule specific appointments. Barring an emergency, managers should
always keep these appointments.

Show, Don’t Tell
As suggested, many supervisors trap themselves with their own words by
saying, “My door is always open.” It quickly becomes obvious that, in
most instances, employees cannot have direct access to their manager, and
employees immediately realize the inconsistency between the manager’s
words and actions. A similar dilemma sometimes develops when supervi-
sors claim to believe in participative management. Immediately following
the very first instance in which a manager fails or is unable to allow em-
ployee participation, employees perceive the inconsistency between the
supervisor’s words and actions.

Contemporary supervisors are subject to the nearly constant tempta-
tion to say the right things, that is, to repeat phrases that are well inten-
tioned, trendy and intended to convey the impression that employees always
stand high among the manager’s concerns. These proper statements rep-
resent people-centered management right out of textbooks. However, no
matter how well intentioned a supervisor may be, it is not always possi-
ble to completely live up to words even though the supervisor may speak


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them with utmost sincerity. Such statements create inconsistencies that
most employees eventually recognize. When inconsistencies between what
one says and what one does become evident, contradictory perceptions
result. The majority of employees see only that the leader has claimed to
have one guiding belief but has acted contrary to that belief. When this oc-
curs, a leader’s credibility suffers.

Individual employees’ perceptions of their manager’s behavior may be
correct, partly correct, or not at all correct. The actual degree of correct-
ness is irrelevant. The perception itself is relevant because to the perceiver
perception is reality. If an employee perceives a leader or supervisor to be
untruthful for saying one thing and acting contrary to it, then the percep-
tion becomes the truth.

It is rarely beneficial for supervisors to tell employees what kind of
leader they are. This invariably leads to negative perceptions at the first
sign of contradictory behavior. Successful managers do not attempt to ver-
balize their supposed leadership style to employees. Subordinates are quite
capable of deducing a leader’s style from actions and behavior on the job.
In other words, supervisors should show others their leadership styles and
traits rather than talking about them.

Strongly related to visibility and availability is the perception of whether
a departmental manager or area supervisor is oriented upward or down-
ward in the organizational structure. There is a strong and natural in-
clination for individual managers to be upwardly oriented, that is,
spending more time being oriented to organizational superiors and ex-
ecutives than being focused on their subordinates. Contemporary college
students use the term “sucking up” to describe such an orientation. To
a degree, such behavior is needed because persons higher in an organi-
zational hierarchy control the resources that an individual seeks or de-
sires. Supervisors receive praise and rewards from their own managers.
Such an upward orientation may lead to some increased organizational
status and promotional visibility. Associations with organizational su-
periors and executives often provide managers with enhanced feelings
of importance and self-worth.

The forces encouraging people to embrace an upward orientation can
be relatively strong. Pressures to maintain a downward orientation to-
ward members of the immediate work group and their needs may not be
nearly as strong. However, downward is the direction in which the de-
partment supervisors must look because successfully leading subordinates
is the primary reason for the existence of this particular managerial posi-
tion. A first-line manager or supervisor is the leader of a group of people

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who perform the hands-on work for an organization. They depend on
their leader for guidance. Therefore, supervisors should have an orienta-
tion that is primarily downward toward their own departments and to
their own employees and the persons that they serve or the services that
they provide. The manager is primarily the leader of a department’s em-
ployees and is only secondarily a member of a greater organizational hi-
erarchy called management.

A manager who is career minded and who wishes to advance within an
organization is often inclined to seek the visibility obtained by maintain-
ing an upward orientation. Although it may appear counterintuitive, su-
pervisors who display an obvious interest in accomplishing the work of
the department and who remain solidly oriented in a downward direction
are most successful over time. Managers whose primary orientation is to
their subordinates gain the most valuable experience for themselves and
turn out the best work. They also build a reputation of caring for their
subordinates. Simple visibility coupled with an ability to talk in a con-
vincing manner has led to the promotion of many supervisors with lim-
ited people skills and capability. However, truly effective individuals in
upper management are more likely to make promotions based on actual
operating results rather than on superficial indicators. Quality leaders and
managers require time to mature. Reputations require time to be established.
Once they are exposed as being shallow, they are rarely rebuilt without chang-
ing employers.

As with other elements of leadership, employees will readily perceive
the fundamental orientation of their supervisor. A manager who employ-
ees view as having an upward, self-serving orientation is likely to be seen
as being separate from the working group and insulated from other em-
ployees by virtue of trying to belong to upper management. A downward
oriented supervisor is not only more readily accepted by subordinates but
also more respected by employees as being an advocate. Subordinates gen-
erally view such a person as a full-fledged team member for whom they
will willingly produce.

A successful department manager must assiduously cultivate and main-
tain a one-to-one relationship with each employee. This requires conscious
effort. Effective avenues of communication are essential but they are not
automatically formed. Establishing and maintaining such a relationship with
each employee should be a key concern of every department supervisor.
This activity may receive higher priority treatment than departmental pro-
ductivity for brief periods. Maintaining a department’s productive capac-
ity is an ongoing priority concern. In labor-intensive working environments


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such as health care organizations, a department’s productive capacity re-
sides in its people.

Managers should treat each employee as a full-fledged, contributing
member of a team. This is one of the most effective means of maintaining
a labor-intensive department’s productive capacity. This requires deliber-
ate action to forge and maintain relationships between the supervisor and
each employee. Managers should ensure that no one is excluded, although
individuals will occasionally exclude themselves.

Most department managers are busy people, often having more de-
mands placed on them than can reasonably be met on any given work day.
This being the case, many supervisors tend to ignore employees who sim-
ply perform their job duties in an acceptable manner, never complaining
or causing difficulties. Troublesome employees are relatively uncommon,
but they often consume inordinate amounts of a manager’s time.

In any work group, consider who is noticed and who is not. Employees
who perform at an outstanding level or who exceed the expectations
of their positions are usually seen. They often do not require much of a
manager’s time, although they surely do attract a supervisor’s attention.
Troublesome employees get a manager’s attention and consume time. These
people consistently make mistakes, have performance problems, violate work
rules or policies, or do not meet the minimum expectations of their posi-
tions. The majority of employees, positioned between the outstanding per-
formers and the troublesome ones, frequently go unnoticed and thus receive
little or none of their manager’s time and attention.

The 80–20 rule nicely summarizes this relationship. The rule states that
20% or fewer of employees consume 80% or more of a supervisor’s time.
The majority of employees in the middle group produce acceptable work
day after day. They are neither outstanding nor problematic. Their work
is always acceptable. They are the quiet ones who, for all practical pur-
poses, managers ignore.

However, even the quiet ones should receive some attention from the
supervisor if they are to maintain their output at an acceptable level and
not become troublesome employees. Unless supervisors maintain rela-
tionships with these subordinates, their productivity often spontaneously

Other than addressing task-related matters, some supervisors only con-
vene face-to-face meetings with subordinates on two occasions. They meet
to appraise performance, usually once each year. When necessary, they
meet to address problems via counseling, disciplinary action, or other cor-
rective processes. The invitation, “Come into my office,” raises consider-
able apprehension under such circumstances.

We recommend periodically meeting with each employee even in the
absence of a pressing reason or need to do so. The agenda can be conver-
sation about the job or some discussion about the department’s role or the

Essential Individual Relationships 105

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organization and its future. Such meetings foster open environments and
create opportunities for employee to ask questions and air perceived prob-
lems or complaints. These meetings can be instrumental to maintaining pos-
itive relationships with individuals. An occasional few minutes of ordinary
social conversation that is totally unrelated to work can nurture essential

We are underscoring the importance of knowing each subordinate as a
whole person, not simply as a producer of services or output. Doing so not
only ensures continued steady performance from an employee but also
provides additional advantages for a supervisor. By knowing and under-
standing each employee, a supervisor will acquire knowledge other than
that normally associated with individual capabilities. A manager will learn
who occasionally needs more guidance or assistance. A supervisor will un-
derstand which subordinates are sufficiently motivated to take on addi-
tional tasks or learn new skills. Understanding employees allows a manager
to evaluate potential candidates for promotion.

Regular communication with employees is a necessity for persons as-
piring to be effective employee-centered managers. This means commu-
nication in a variety of settings and personnel combinations. Regular staff
meetings should include the entire department. Project teams, work-
improvement committees, and ad hoc working groups allow subordinates
opportunities to experience and develop leadership skills. Against a back-
drop of regular meetings and interactions, formal or semi-formal one-on-
one meetings such as appraisal interviews and counseling or disciplinary
sessions become less threatening. Frequent informal or one-on-one con-
versations facilitate positive employee relations.

To elevate one’s visibility and availability and to promote informal chan-
nels of communication with subordinates, supervisors should simply walk
around and talk with their workers. Employees appreciate meeting on their
own territory. Managers can also visit mobile persons on their job sites to
exchange a few words. Some experts refer to this as management by walk-
ing around. This is an extremely effective employee relations practice.

A Team is Comprised of Individuals
We hear much about the necessity for teamwork in the effective delivery
of health care as well as in other endeavors. However, one does not create
a strong departmental team without being attentive to the needs of indi-
vidual employees. It is essential that a department manager strive to cre-
ate a team environment in which all individuals are encouraged to feel that
they are important elements of the group.

People who feel they are on the inside, that they are included, knowl-
edgeable, and appreciated parts of the team will prove to be more satis-
fied and productive than if they feel they are excluded or otherwise left out.


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A supervisor’s treatment of subordinates and the relationship with each
employee are the most important factors in determining whether an indi-
vidual worker feels included or excluded.

Regarding their employees, some managers have adopted an attitude that
can be summarized by, “If this person doesn’t work out, there’s no problem—
I can always hire another one.” However, associated with such an approach
are costs that are not always readily apparent. Employees who are ignored
or taken for granted contribute to turnover. Costs associated with turnover
are both obvious and hidden (direct or indirect).

Aspects of turnover that contribute to the overall cost of doing business
include the diminishing efficiency of an individual who is preparing to
leave. Each departing employee should be interviewed (called an exit in-
terview) to gather information about the reasons for leaving. Such data can
help to avoid problem situations in the future. The employee may be en-
titled to severance pay. Some departing employees may be eligible for un-
employment compensation. The company may offer outplacement services.
Such services are relatively uncommon at lower organizational levels, but
companies generally provide them to senior managers and executives.
Outplacement services are often costly. In addition, clerical time is required
to modify benefits and close out company records. While these costs are
unavoidable and may be difficult to quantify accurately, they do represent
real expense to any organization.

Other costs associated with losing an employee include the value of
output that is lost while a position remains vacant. A new replacement
employee is not as efficient in executing the duties of a position. The em-
ployee must take time to learn the new job. New employees require ori-
entation and initial training. Until they have acquired proficiency, most
people require additional supervision. The organization must supply
new persons with equipment such as an identification badge, an em-
ployee handbook, and keys. The HR department frequently coordinates
these activities. The HR department routinely processes paperwork and
a myriad of forms.

Less-obvious expenses related to employee acquisition include attend-
ing job fairs and developing and producing recruitment literature. The
cost of a pre-employment physical and other testing is often allocated to
the HR department. Recruiting for executive and senior managerial posi-
tions may involve travel and relocation fees. If an external source was in-
volved, then an agency or finder’s fee may be due.

Costs related to turnover are easily overlooked because so many of them
are hidden. In summary, turnover is important to an organization because

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it is both costly and disruptive. Much turnover stems from how employ-
ees feel about their employment milieu, their supervisors, and how they
are treated. Employees are more likely to remain if they feel valued as in-
dividuals and as producers and if they feel accepted as part of a group.
Employees who remain loyal to their employers find acceptable amounts
of challenge and interest in their work and see opportunities for personal
growth and advancement.

Programmatic options to retain employees are available. However, gen-
erous benefits and employee-friendly programs alone will not retain all
employees. Among the strongest influences in determining whether par-
ticular employees will remain or depart are the relationships that employees
have with their direct supervisors or department managers.

Consider that an individual’s feelings of being accepted and valued, of
being challenged and finding interest in the work, are entirely controllable
by a manager. Depending on organizational policies, a manager may ex-
ert some influence on opportunities for growth and advancement. In the
contemporary labor market, top performers, especially professional and
technical employees, rarely encounter much difficulty finding new em-
ployment when they want it. For some occupations, such as nursing and
medical technology, competing organizations are ready and willing to re-
cruit good employees.

Two aspects of supervisor-employee relationships critically influence
the likelihood of continued employment: how employees are treated and
how employees are used. Treatment as individuals is equally important to
all employees. Generally, fair and respectful treatment has a positive in-
fluence on all employees while the opposite makes negative impressions.
The effect of employee utilization varies with individual levels of enthusi-
asm and motivation. Being effectively used, continually challenged, hav-
ing their ideas heard, being given responsibility, and having opportunities
for growth, are extremely important. Top organizational performers find
positive and encouraging responses from managers to be motivating.
Managers strive to retain these people. Some of them will leave an organ-
ization for other opportunities to advance their careers. While organiza-
tionally challenging, such actions are preferable to premature departures
because of dissatisfaction.

Individuals are unlikely to remain loyal or maintain their employment
if they feel unwelcome, excluded, or otherwise think that they have few
opportunities to excel or advance. Moreover, one of the most important
factors in determining whether valued employees will choose to remain or
depart is an individual relationship with their immediate supervisors or the
department manager.


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Every supervisor has responsibilities in the realm of human resources.
Local supervisors work as extensions of regular HR personnel. Health
care workers and providers have broad and varied backgrounds. Their
need for active supervision varies. Their individual work ethics vary.

The words and actions of supervisors and other managers must be con-
sistent. Supervisors must support open door policies with time that can be
devoted to listening to employees. They must forward and act upon so-
licited input. Persons making suggestions or providing input should re-
ceive feedback from the supervisor to whom the suggestion was initially
made. Workers often know more about production processes and prob-
lems than do specialist engineers. Prudent supervisors listen to suggestions
that subordinates offer.

The willingness of employees to work is crucial in a people-centered
working environment. Successful supervisors are perceived to be avail-
able. Not being present is detrimental to a supervisor’s effectiveness. The
perception of absence may be because of a closed door, physical separa-
tion from a working environment or a reputation for not listening. The re-
sult is similar: ineffectiveness and decreased productivity.

Effective managers and supervisors have bi-directional orientations
rather than simply being fixated on upper management and personal ad-
vancement. Supervisors who earn reputations for personal gain have ex-
treme difficulty overcoming them. In many cases, starting over in another
organization is the only way to shed a poor reputation.

Most people appreciate some individual attention. Supervisors who
take the time for one-on-one relationships usually are rewarded with pos-
itive employee attitudes and increases in productivity that far exceed the
time invested in employee interactions. Though 20% of employees require
80% of supervisor time, effective managers are able to devote some time
and attention to all subordinates. Understanding employees as persons
usually facilitates earning their loyalty and respect. Regular communica-
tion with all employees, even if it means walking around and having brief
conversations, promotes respect for supervisors by their subordinates.

Teams are composed of individuals. The weakest member limits a team’s
strength. Conscientious and caring supervision can augment a team’s
strength and utility to an organization. Ignored workers become unhappy
employees. In time, they may leave. Recruitment and replacement are
costly. Avoiding these expenses by effective supervision contributes to an
organization’s financial vitality and success.

Returning to Kelly and Alice, to moderate a disruptive influence in the
department (and contribute to her own peace of mind), Kelly should make
a serious effort to curb Alice’s know-it-all intrusions. Kelly could benefit

Conclusion 109

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by working with Alice in a one-to-one situation. Alice’s superior attitude
is based on book learning and some common sense. Kelly should put Alice
into situations in which she is compelled to use the knowledge that she
claims to have. This may require some thoughtful delegation on Kelly’s part.
However, people who must act on their claims of knowledge and exper-
tise often learn how reality tempers abstract learning. If Alice is success-
ful, then the organization may identify a potentially effective manager. If
the situation is not critical, then Alice can have an opportunity to fail with-
out incurring serious costs to the organization. Alice should learn and ben-
efit from either outcome. Alice may discover that the gap between classroom
and work station is much greater than she may have imagined. Giving
Alice a structured opportunity has a high probability of succeeding for all
concerned. Kelly, Alice, and the organization will learn more about Alice
and her true capabilities.

Kelly must directly address Alice’s know-it-all attitude and behavior.
Alice must understand how others in the department perceive her ac-
tions and attitude. However, Kelly must acknowledge Alice’s initiative
and willingness to learn. This requires some care and good judgment by
Kelly. If Alice demonstrates that she is indeed knowledgeable, then Kelly
could profit by using Alice as a sounding board for ideas and potential
solutions to problems. Alice may have plenty to offer, but Kelly must
learn to guide Alice so that the outcome is beneficial for the department
and organization.

Discussion Points

1. Why does this chapter advance the idea that every manager is, or
should be, a manager of human resources?

2. Describe a health care organization or department that has a hetero-
geneous work group consisting of at least three levels of staff that dif-
fer in their educational backgrounds and job responsibilities.

3. Explain what the following statement means: The streak of authori-
tarianism remaining in modern management stifles participation.

4. Provide two or three examples each of activities that you believe could
thrive under production-centered management or proceed most ap-
propriately under people-centered management. Are these related to
health care? Why or why not?

5. In your opinion, what is usually the major problem associated with a
manager’s claim to having an open-door policy? Why?

6. Why should it be necessary for a department manager to pay any par-
ticular attention to employees who steadily fulfill their responsibili-
ties and cause no problems?


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7. “This is a simple job we’re filling. It is a no-brainer,” the department
manager said, “so just send me a warm body. If the first person doesn’t
work out, we can always get someone else, and we’ve lost nothing.”
Comment on this statement. Why do you feel as you do?

8. Why is a department manager’s visibility and availability to employ-
ees considered to be important?

9. How does a department manager come to know which employees re-
quire what kinds of attention at what times?

10. If teamwork is so critically important in contemporary health care or-
ganizations, then why does this chapter place such strong emphasis
on one-to-one relationships between supervisors and each of their


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Chapter Overview

After reading this chapter, readers will:

• Understand the importance of a properly prepared position or
job description

• Know how to conduct a position analysis
• Appreciate the contribution made by a position’s incumbent
• Know the components of a position description
• Know how to create a position description

Position descriptions or job descriptions are the documents upon which
the day to day operations and activities of the employees of an organi-
zation are based. They should support the mission, goals, and objectives
of the organization that creates them. All job descriptions in an organi-
zation should use the same format and a common vocabulary. Well-
written position descriptions include statements that clearly delineate
duties and responsibilities and fully describe compensable factors such
as the level of responsibility, the number of persons supervised, the re-
sources controlled, and the experience and minimum level of education
needed to successfully complete the job.

Case Study: Creating a New Job Description

Julie Miller, the Health Officer of a large suburban health department,
was planning for the future. The board had discussed creating a new po-
sition for someone to conduct training for employees of the health de-
partment. Registered sanitarians are the most common classification of




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employees in the health department. They are not only difficult to recruit
but also difficult to retain. Providing them with additional and ongoing
training should help with retention.

Matt Jefferson has been employed as a registered sanitarian for the past
six years. He recently completed a Master of Public Health degree. He ap-
proached Julie to ask for the training position, briefly making his case that
he was the best person to become the trainer. Julie told Matt that, ac-
cording to departmental rules, a search would have to be conducted to
find the best candidate for the position. Matt replied that if the job de-
scription were written carefully, a sanitarian clearly would be the best can-
didate. After thanking Matt for his thoughts, Julie began to work on the
position description, which she thought could be completed in half an
hour. What comments or advice would you offer to Julie?

Lists of activities delineating a particular employee’s tasks are called job
descriptions or position descriptions. The term job description is older and
evolved from the field of industrial psychology. Position description is a
newer, more inclusive designation. The two terms are interchangeable.
With changes in the flow of work, position descriptions change. This is es-
pecially pronounced in fields related to health. Managers must be aware
of such changes and ensure that the descriptions of the activities that their
employees perform remain current and accurate. This is relatively easy for
supervisors to address with an annual review of the descriptions for their
supervisees. Human resources (HR) must be willing to record changes in
an organization’s master files.

Managers or supervisors must conduct a job analysis when preparing po-
sition descriptions. The format of a position description varies among and
within organizations. However, one general format is usually found through-
out a single organization. Health departments may use separate formats for
clerical, nonexempt positions and managerial, exempt positions. “Exempt”
refers to the status of a position relative to the Fair Labor Standards Act
(FLSA) of 1938 and its subsequent amendments, meaning exempt from the
overtime provisions of FLSA. The FLSA established the length of a working
week in the United States, which is currently set at 40 hours. It requires em-
ployers to pay affected employees at a rate of one and one-half times their
hourly wage for hours worked in excess of the maximum work week. All
work performed in excess of the maximum working week is called overtime.

According to the FLSA a position may be designated as exempt if it
meets certain requirements addressing salary, level of responsibility, and
the management or supervision of others. As long as a job meets the FLSA
test as professional, administrative, or executive, it is a “salaried” position


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exempt from the overtime requirements of FLSA. Such positions typically
include those of managers and supervisors, and any time these employees
work in excess of 40 hours is assumed to be a part of their normal job du-
ties. Employees who are paid by the hour are fully covered by FLSA reg-
ulations; they are referred to as being non-exempt.

A position description generally has three main parts: identifying in-
formation, a job summary, and a list of the principal duties performed.
The process of generating a position description begins with an analysis
of the job or position.

Positions, not individuals, are classified. Occasionally, the temptation
exists to write a position description for a specific individual, tailoring the
requirements and experiences so that a pre-selected person becomes the
best candidate in a job search. This should be avoided. If that person leaves
the position, then the specifications will not readily change. Finding a re-
placement may then become difficult. It is better for all concerned that a
position description be written for a job and not for a particular person.

A job description is the most obvious and visible output of a job analy-
sis. Comprehensive and accurate job descriptions, developed as a result
of job analysis, are used when selecting, training, evaluating, and com-
pensating employees.

The basis of any employment decision is job analysis, the most funda-
mental activity in human resource management. Accurate information
about all positions is required to direct and efficiently control the activi-
ties and operations of any organization. Federal regulations and compe-
tition have both increased the importance of job analysis. HR does not
produce revenue, yet HR requires significant cash outlays in an organiza-
tion’s annual budget. Supervisors and managers must have current and
accurate information about all positions in order to operate their busi-
nesses, deliver services, and conduct programs in an efficient and timely
manner. Smaller healthcare provider organizations and health departments
have often omitted compiling complete sets of position descriptions. They
rely on the professional nature of many employees’ duties for guidance in
supervising and evaluating professional employees.

Position descriptions provide more than just guidance for an employee’s
day. They are integral to an organization’s efforts to be fair and equitable
to all employees. Organizations providing healthcare services that do not
have current position descriptions for all employees become vulnerable
with regard to accusations of discrimination in employment practices. One
way to defend against charges of unfair employment practices is to con-
duct job analyses and prepare job descriptions.

Position Analysis 115

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A job analysis involves extensive studying of a specific position and yields
information for a position description. The person conducting a job analy-
sis gathers information about positions from several sources. These include
interviews with people currently in the position (also referred to as job or
position incumbents), observing their performance of the job’s duties or
tasks, worksheets or questionnaires completed by employees, and infor-
mation from sources such as the Dictionary of Occupational Titles.

Position analysts will compile their findings and review the resulting
job analysis with the current position incumbent. Once agreement is reached
with regard to the job description’s accuracy, the preliminary document is
given to an incumbent’s supervisor for review. Supervisors may add, delete,
or modify descriptions of duties, knowledge, skills, abilities, or other char-
acteristics. After supervisors approve individual position descriptions, they
are forwarded to upper management for final approval. A final position
description is prepared, signed, and dated. Copies are given to both in-
cumbent and supervisor. A copy is also filed for future reference.

Job incumbents have an important role in the process of generating accu-
rate position descriptions. Position incumbents can assist in the process of
analysis by taking time to think about their jobs. They should keep a di-
ary of work-related activities or make notes about their job duties. These
should include all activities that occur during one complete cycle of du-
ties. Typically, a year may be required to complete all job duties. Unless
job analysis occurs when budgets are being prepared, budget-related tasks
may be overlooked.

At the beginning of an analysis interview, incumbents should explain
their concept of the job to the analyst. The analyst should try to make the
job incumbent focus on the facts. Job incumbents should avoid overstat-
ing or understating characteristics of a position, such as duties, required
knowledge, skills, or abilities. Both analyst and job incumbent should re-
main focused and should minimize discussion of extraneous issues. Analysts
are only concerned with the position. Personal performances, fairness of
wages, complaints, and relationships with supervisors or coworkers are
not relevant.

Senior managers determine the extent of a position’s impact on an or-
ganization and the boundaries of a job. Position analysts do not determine
consequences as part of their work. Such decisions are made by senior
managers. For example, salaries will not be reduced or a position elimi-
nated because of the analysis process. An analyst may recommend title
changes or other position realignments, but the final decisions are made
by senior management.


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A position description usually includes the following elements: job iden-
tification information, a job summary, a principal duties performed sec-
tion, and a job specification section.

Job Identification Information
Job identification information must include, at a minimum, the position
title, the department location, and the last date on which the content of
the position description was verified. Other data, such as the title of the
supervisor, help to show how the position fits within a larger organization.

Job Summary
The job summary provides an overall rendering of the purpose, nature, and
extent of the tasks performed by the person in the position. In a well-
constructed system, the job summary should relate to the mission state-
ment of the department in which the position is located and to the global
mission of the organization.

Principal Duties Performed
This section presents job facts in an organized and orderly fashion. When
preparing the principal duties performed section, a job is normally broken
down into approximately five to eight different tasks or functions for the
purpose of describing the position. The job tasks should be listed in order
of decreasing frequency or occurrence. This means the task that requires
the most time to complete or that is the most critical for a given position
should be listed first. For each duty listed in this section, a description of
the job’s activities (i.e., what is done on the job), how the task is accom-
plished, and why it is necessary should be provided. This is a convenient
method of organizing a position description. It quickly and effectively
communicates a great deal of information about a position to a reader
who is unfamiliar with the job or position.

Position descriptions should be written using sentences that are com-
plete, clear, and brief, using action verbs and the present tense. In prepar-
ing a job summary, the purpose of the position must be clearly stated. This
statement should be as brief as possible while still accomplishing its pur-
pose. Words should be carefully selected to convey the maximum amount
of specific meaning. General or vague terms should be avoided unless they
are absolutely essential as a substitute for a long and detailed explanation.

The principal duties performed section follows the job summary and
includes major job tasks, as previously outlined. Many organizations in-
clude a fourth section in their descriptions that covers job specifications.

Elements of a Position Description 117

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Job Specification
The job specification section outlines the minimum specific skills, effort,
and responsibilities required of an incumbent in the job. Job specifications
provide the basis and justification for values that will be assigned to fac-
tors used in evaluating a position. Factors are elements created by a job
analyst and subsequently used when comparing different positions within
a single organization. Job specification statements must describe the ex-
tent to which a given factor is present and the degree of difficulty en-
countered in the position for that factor.

When writing job specifications, individual statements should be defi-
nite, direct, and to the point. Any unnecessary embellishments or compli-
cated sentences should be avoided except where they materially add to an
understanding of the details contained in the statement. Any specifications
that apply only to occasional duties should be indicated accordingly so
that the percent of time or frequency with which the specification applies
will not be overestimated.

Education requirements for a position description must be supported
by the analysis of actual duties. Higher educational requirements are le-
gal but must be such that the skills or training can only be acquired through
formal education. Minimum levels of schooling must be used. Artificially
high educational requirements have been adjudged to be a form of dis-
crimination. They are not only illegal, but also unethical. Skills must be
supported by position analysis. These are factors that are linked to com-
pensation. Other factors that must be compensated include the level of re-
sponsibility expected of an incumbent, the number of people supervised,
the amount of funds managed, and the resources controlled.

Job specifications are then translated into position descriptions. These
descriptions are for specific job categories, for example, Secretary 2, Nurse
Aide 1, Sanitarian-In-Training, or Environmental Supervisor 1. The title
indicates the major duties of a position. The number after it may indicate
the level of the position in the organizational hierarchy. Higher numbers
usually denote more senior or more responsible positions. Whereas job
specifications may be recorded for individual incumbents, position de-
scriptions are developed for general categories of jobs. Well-written posi-
tion descriptions should contain the items listed in Table 6-1. An example
of a completed job description in the described format appears in Appendix
A, which can be found at the end of this chapter.

A position description becomes a vitally important HR management
document for managers and supervisors in that it sets out the major du-
ties and responsibilities for persons in specific positions. In many cases, the
position description may be detailed to the level where it can be used for
performance appraisals and employee evaluations.


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The preparation and verification of a position description and its
specifications comprise the first step in developing a base salary com-
pensation program. The next step in the process involves rating posi-
tions, or job evaluation. Job evaluation is essentially a comparison of
available information for each position with rating scales that have been
established to assist in determining order among many different posi-
tions. Job evaluation establishes the relative position of each individ-
ual position with respect to all jobs in an organization. Typically, an
HR department performs the job evaluation. If it is a new or highly con-
troversial position, then an interdisciplinary job evaluation committee,
composed of members from various sectors of an organization, may
evaluate a job.

Many people consider position descriptions to be dry and uninteresting.
However, they are important documents for any organization. Position
descriptions should be closely linked to organizational goals and objectives.
They are used when determining compensation levels. Job descriptions
have a regular format, style, and language. They should be prepared with
care and periodically reviewed for accuracy and currency.

Returning to Julie, the Health Officer who began to write a job description
for the new training position, a pause is in order. Job descriptions are not

Conclusion 119

Table 6-1 Position Description Components

Component Explanation

Title Specific title for the job
Status Exempt or nonexempt
Summary of duties Major tasks to be performed
Salary range The minimum, midpoint, and maximum

for the job
Knowledge required Specific training needed to perform the

job; specific experience, both type and
amount needed to perform the job

Skills required Specific skills expected
Effort required Both mental and physical; any heavy lifting
Responsibility Consequences of an error
Working conditions Hazards or other poor working conditions
General statement “Other duties as required”

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essays. They are based on an analysis of the new position. A thorough
position analysis usually requires more than 30 minutes to complete.

Julie apparently intended to specify a Master of Public Health degree
as the minimum level of education for the job incumbent. While such a de-
cision might appear to create a good opportunity for the sanitarian, for-
mal schooling is not the only place where expertise in training can be
obtained. An employee with several years of work experience who has
had some leadership responsibilities should be able to become a success-
ful trainer. Artificially high educational requirements are a form of dis-
crimination. Julie should be reminded that job descriptions are written for
positions, not people. To ignore this advice is to court problems when seek-
ing a replacement for the proposed new employee.

Discussion Points

1. What is the principal difference between “exempt” and “nonexempt”

2. What are the main provisions of the Fair Labor Standards Act?
3. What is a job analysis?
4. Why is a job analysis important?
5. Briefly describe each of the main elements of a position or job description.
6. What, if anything, does a job incumbent contribute to a position

7. How is the education level required for a position established?
8. Describe several uses for a position description.
9. In addition to actual duties performed, what other information is con-

tained in a properly prepared position description? Why is it included?
10. Why is the statement, “Job descriptions are written for positions, not

people” important?


Byars, L. L., & Rue, L. W. (2003). Human Resource Management (7th ed.). New

York: McGraw-Hill.
Cushway, B. (2006). The Handbook of Model Job Descriptions. London: Kogan Page.
Farr, J. M., Ludden, L. L., & Shatkin, L. (2001). Dictionary of Occupational Titles

(2nd ed.). Indianapolis, IN: JIST Works, Inc.
Mader-Clark, M. M. (2006). The Job Description Handbook. Berkeley, CA:

NOLO Publishing.


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Plachy, R. J., & Plachy, S. J. (1997). More Results-oriented Job Descriptions: 226
Models to Use or Adapt—with Guidelines for Creating Your Own (2nd ed.).
Chicago: AMACOM.

Wilson, M. (2004). Volunteer Job Descriptions and Action Plans. Loveland, CO:
Group Publishing.

Barber, A. E., & Roehling, M. V. (1993). Job postings and the decision to inter-

view: A verbal protocol analysis. Journal of Applied Psychology, 78, 845–856.
Cohen, J. (1992). A power primer. Psychological Bulletin, 112, 115–159.
Conway, J. M., & Peneno, G. M. (1999). Comparing structured interview ques-

tion types: Construct validity and applicant reactions. Journal of Business and
Psychology, 13, 485–506.

Fooks, C. (2005). Health human resources planning in an interdisciplinary care
environment: To dream the impossible dream? Canadian Journal of Nursing
Leadership, 18(3), 26–29.

Hall, A. (2005). Dialing for jobs: How to make the most of a phone interview.
Biomedical Instrumentation and Technology, 39(5), 377–378.

Kristof-Brown, A., Barrick, M. R., & Franke, M. (2002). Influences and outcomes
of candidate impression management use in job interviews. Journal of
Management, 28, 27–46.

Rosse, J. G., Stecher, M. D., Miller, J. L., & Levin, R. A. (1998). The impact of re-
sponse distortion on pre-employment personality testing and hiring decisions.
Journal of Applied Psychology, 83, 634–644.

Smaglik, P. (2005). Seeking soft skills. Nature, 438(7069), 883–885.
Van Iddekinge, C. H., Raymark, P. H., & Roth, P. L. (2005). Assessing personal-

ity with a structured employment interview: Construct-related validity and sus-
ceptibility to response inflation. Journal of Applied Psychology, 90(3), 536–552.

Van Iddekinge, C. H., Raymark, P. H., Eidson, C. E., & Attenweiler, W. (2004).
What do structured interviews really measure? The construct validity of be-
havior description interviews. Human Performance, 17, 71–93.

Wichroski, M. A. (1994). The secretary: Invisible labor in the workworld of women.
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Conclusion 121

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Appendix A

Sample Position Description

Job Title: Community Practice Facility Controller

Unit or Section: Administration

Status: Exempt

Department: Finance

Salary Range: (intentionally left blank)

Basic Function: Plans, directs, and coordinates, on an efficient and eco-
nomical basis, all facility accounting operational ac-
tivities, including cost accounting, financial accounting,
general accounting, information systems, and general
office services

Scope: Work encompasses involvement in a broad range of
accounting activities that are essential to the mainte-
nance of facility operations and the dissemination of
financial information to the board, senior managers
and owners

Summary of Duties:

1. Coordinates all essential accounting operational functions in a timely
and accurate manner, developing methods geared to providing man-
agement with information vital to decision-making processes.

2. Directs the development of methods and procedures necessary to en-
sure adequate financial controls within each of the facility’s opera-
tional areas.

3. Performs analysis and appraisal of the facility’s financial status.
4. Prepares recommendations with respect to future financial plans, fore-

casts and policies.
5. Works closely with the Chief Executive Officer on confidential fi-

nancial matters and expedites such matters to conclusion.
6. Directs this operation within the accounting parameters established by fa-

cility, third party provider, state, federal and GAAP rules and regulations.
7. Manages the organizational area in a manner that fully complements

and interfaces with all other coordinating agencies or business partners.
8. Performs other duties and responsibilities as directed by the CEO.


35310_CH06_Final.qxd 1/30/07 4:17 PM Page 122

Number of
Supervision Exercised: Employees:
A. Direct: General supervisors in operational areas 2–3
B. Indirect: Other facility supervisors, administrative

and clerical personnel 15–20

Training and Education:

Certified Public Accountant (CPA) required; graduation from an accred-
ited school


Must have at least five years of experience in accounting with some
supervisory responsibility.


Budget of $3,500,000 per year
Responsible for all required insurance, hospital, state and federal filings

for tax and other financial purposes


Minimal physical effort required; no lifting
Mental effort requires ability to concentrate on numbers for long periods

of time and to work under occasionally severe deadlines

Working Conditions:

Works in well-lighted office; no exposure to hazards in the normal course
of work.

The above constitutes a general summary of duties. Additional duties may
be required.


Supervisor: Date:

Department manager: Date:

HR Department: Date:


Person: Title: Date:

Appendix A: Sample Position Description 123

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Managers and the
Recruiting Process

Chapter Overview

After reading this chapter, readers will:

• Recognize and describe the steps in the recruiting process
• Understand the essential partnership between a department

manager and human resources in recruiting employees
• Be sensitive to the problems potentially encountered through a

department manager’s active involvement in checking references
or answering references requests

• Know the preferred reference checking approaches and
understand the concepts of defamation and negligent hiring

• Understand a department manager’s role in locating job candidates
• Recognize both the advantages and occasional disadvantages of

promotion from within the organization
• Appreciate special recruitment concerns, such as recruiting during

periods of labor shortage

Every department manager should participate in recruiting as an active part-
ner with the employment section of human resources (HR). This collabo-
ration begins with determining and approving a staffing need, identifying
recruiting channels to be used, and agreeing on the contents of a position
description (also called a job description). The content of an existing job de-
scription must be revised and updated as necessary. The partners specify




35310_CH07_Final.qxd 1/30/07 4:22 PM Page 125

any special recruiting requirements that may be present, consider both in-
ternal and external candidates as they become available, and conduct pro-
fessional interviews to identify the most appropriate of available job candidates.

Because of contemporary legal concerns, primarily the risk of charges
of defamation or negligent hiring, a department manager’s involvement in
checking references and responding to reference requests should be mini-
mal or nonexistent. This task is best left to HR. Of special interest to de-
partment managers is the advisability of promoting from within an
organization. This is helpful during periods of staff shortage. Employees
occasionally maneuver to enhance their salaries.

Case Study: “Didn’t Cut It? Hire Another”

Kathy Gray was hired by Meadows Nursing Home for the position of
business manager. Hers would be a small department: two employees other
than herself plus one open clerical position. Although she had consider-
able experience with business office operations, this was Kathy’s first su-
pervisory position.

One of the first tasks facing Kathy was hiring someone to fill the open
clerical position. She asked the individual who handled HR matters for help
in finding some candidates for her to interview. There was no HR de-
partment as such, just one person who also coordinated purchasing for the
home. Kathy’s manager, nursing home administrator Sam Weston, chose
to sit in on the interviews, citing Kathy’s newness to supervision as his rea-
son. Because Kathy had never interviewed or hired before, Weston rea-
soned that he should assist her in the process.

Kathy and her boss jointly interviewed four candidates. Of these, two ap-
peared to be reasonably qualified for the job. One of these was a young
woman named Louise Bennett who worked in the home’s food service de-
partment. The other was a young woman named Emily Smith whose total
work experience consisted of working in a convenience store for a few months.

Following the interviews Kathy expressed her desire to hire Louise
Bennett from food service because she seemed to have the ability and ex-
hibited a strong desire to better herself. She reasoned that selecting Ms.
Bennett would show a commitment by the home to develop employees
from within the organization. Weston disagreed, telling Kathy that she
could do the hiring “the next time a job opened.” Weston himself made
the decision to hire the other candidate and personally communicated the
offer to Emily Smith.

As the 30-day probationary period progressed it became increasingly
evident to Kathy that Emily was not shaping up in a satisfactory manner.
Even after providing Ms. Smith a good orientation, providing her with
reasonable guidance, and extending her every benefit of the doubt because


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she had been “the boss’s choice,” Kathy still had to conclude that the nurs-
ing home would be making a mistake by keeping Emily.

On the twenty-eighth day of Emily Smith’s employment, Kathy Gray
went to see Sam Weston. She had kept Weston informed, so it was no sur-
prise to him when Kathy said they should let Smith go and start over.

“Okay,” Weston replied. “She didn’t cut it? Hire another person.”
Kathy hesitated, then finally said, “I don’t believe I should be the one

to let her go. I’m not the one who hired her.”
“She’s your employee,” Weston said, “so you get rid of her.”
What management errors were committed? Remembering that Emily

Smith reported to Kathy even though Weston had hired her, do you believe
that Weston dodged his responsibility by ordering Kathy to get rid of
Emily? How might this whole situation have been handled in a more pro-
fessional manner? What effect might the Smith incident have on the future
relationship between Kathy Gray and Sam Weston?

Many laws and other legal requirements exert considerable influence on
the employment process. Especially pertinent are those having to do with
opportunities for equal employment, particularly Title VII of the Civil
Rights Act of 1964.

An HR department is primarily concerned with much of the legislation
already reviewed. However, there are implications for a department man-
ager. Managers must be aware of many aspects and nuances of HR law
when interviewing prospective employees.

Obtaining employees is an area of activity in which a department manager
and HR personnel must usually work closely together. Although the process
may vary somewhat from one organization to another, the following dis-
cussion represents a fairly standard recruiting relationship between HR
and the other departments in an organization.

Initially, the department manager provides an approved personnel req-
uisition to HR. The requisition may specify replacement for an employee
who is resigning, retiring, or being discharged. Alternatively, it may re-
quest an employee to fill a position that did not previously exist. A de-
partment manager will have procedures to follow involving steps mandated
by the organization before HR receives the requisition. The specific steps
to be taken are usually related to the nature of the requisition.

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If a request is for a new employee who represents an addition to a de-
partment’s work force, in the majority of organizations, the department
manager will be expected to go through a justification process to secure
approval for the added position from higher management. This process may
or may not involve input from HR. However, for a new or additional po-
sition, HR will be unable to recruit without approval from higher man-
agement. In some organizations, if the personnel requirement is for a direct
replacement, then a department manager is empowered to initiate a req-
uisition and submit it directly to HR.

Close attention may be brought to bear on staffing levels. In organiza-
tions that are experiencing financial difficulties or undergoing reengi-
neering or a significant rearrangement of personnel, senior managers may
elect to review all positions that become available to determine if they
must remain unfilled. In such an environment, higher management may
reserve the right of review and approval for all staffing requests, even di-
rect replacements.

Once a personnel requisition is approved, it travels from a department
manager to HR. The HR department may or may not know a particular
requisition is coming. Human resources will expect a requisition if it is to
replace a retiring employee or person who has been discharged because HR
will have been involved in processing the retirement or the discharge. If
the requisition is for an employee to fill a newly created position, then HR
may not receive advance notification.

The next step involves the job description for the position in question.
A department manager or direct supervisor usually has the responsibility
to provide an accurate job description that is either new or updated, as ap-
propriate. If a requisition is for a direct replacement that was known in
advance to HR, then the appropriate job description will usually be recovered
from company files and reviewed. A department manager and direct su-
pervisor will typically be asked to examine the position description and de-
termine if it should be updated. If a request is for a newly created position,
then HR will expect to receive a new job description along with or im-
mediately following the requisition. The HR department is often able to
assist in developing or updating a job description. However, most of the
information necessary for doing so will be available to a direct supervisor
or department manager rather than to HR.

An accurate job description is essential for getting the recruiting process
properly underway. Human resources will require an understanding of
the major job duties for the open position so that they can produce a job
posting seeking internal applicants, if possible, and to advertise for ex-
ternal applicants. As soon as people begin to apply for the position and
screening interviews are started, HR will require information from the
job description to describe the position to applicants in an accurate and
correct manner.


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At the time an approved personnel requisition is submitted, a department
manager should have an accurate, up-to-date description of job duties and
a check list of the experience and qualifications to look for in the individu-
als who are to be interviewed. This information is contained in a compre-
hensive and correctly written job description. A department manager should
be prepared to review appropriate internal candidates as well as those from
outside, interview the best prospects for the position in question, and have
all applicants’ references checked and academic credentials verified as nec-
essary. These steps must be completed for all applicants. Typically, between
two and five applicants are interviewed for an open position.

When the HR department receives a personnel requisition, its initial
consideration is to determine whether the position is to be posted and
circulated within the organization. Most organizations, especially large
ones, maintain job-posting systems for use by existing employees. These
provide opportunities for promotion or transfer to present employees. In
some locations, internal posting and external advertising will commence
at the same time. Typically, an organization-wide employer posting sys-
tem will provide a reasonable time period, typically a week, for internal
candidates to apply before external candidates are considered. An ex-
ception occasionally arises when a position requires specialized training
or a specific skill that is known to be missing among present employees.
Such positions usually involve skilled technical or professional expertise.
In such a situation, an external search is started immediately upon re-
ceipt of a requisition.

Regardless of the source of candidates, HR has the job of providing a
department manager with a number of candidates who meet the stated min-
imum qualifications of the position. The number of candidates to be sup-
plied varies. Salient factors involve normal departmental or organizational
practices, considerations of equity and diversity, and the labor market from
which candidates are to be sought. Conducting interviews is costly in terms
of time and expense. Some high-skill professions may be in such short sup-
ply or high demand that an organization may have only one or two quali-
fied candidates. For most entry-level positions, HR should be able to provide
a department manager with five or six reasonably qualified candidates with-
out consuming too much time conducting screening interviews.

When hiring entry-level personnel, a department manager should be
able to select one suitable employee from among five or six candidates
who all meet the published minimum requirements for the position. Human
resources and department managers do not always agree on the appro-
priate number of candidates. Managers may insist on interviewing an ex-
cessive number of candidates, searching for one who significantly exceeds
the minimum requirements of the position, looking, in short, for the ideal
person. Finding the ideal candidate would reduce or eliminate the need
for training. However, the effort and expense involved in searching for an

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ideal candidate usually exceeds what is allocated for the search and re-
sults in extra work for the recruitment system. An ideal candidate rarely
appears. If a position requires an ideal candidate (for example, an assis-
tant for a senior executive), then the minimum requirements submitted in
a requisition should be adjusted to reflect such a need.

When applicants are plentiful, HR may simply forward the resumes of
people who appear to be minimally qualified. Such a determination is
made by reviewing statements that have been made on paper and not by
actually conducting screening interviews. Managers then review the ap-
plications and select candidates to interview. While some managers pre-
fer to work in this manner, such an approach creates more work for them
and subverts the effectiveness of an established system. These managers
are conducting their own initial screening as well as interviewing candi-
dates. Human resources is usually and inappropriately blamed when a
poor selection decision is made.

Human resources time that is spent finding and referring candidates
and a department manager’s time that is spent interviewing are normal or-
ganizational costs related to recruiting. Lost productivity as well as train-
ing and orientation activities must be included when calculating the true
cost of recruitment. The latter are indirect costs, but they are real. The ex-
tent that department and HR personnel are able to cooperate in recruit-
ment will directly affect the efficiency of the process.

When meeting with candidates, department personnel should avoid dis-
cussing compensation except in the most general terms, such as describ-
ing the pay range for a position. Discussion or explanation of employee
benefits should not be attempted by departmental personnel. Benefits in-
formation can rapidly become complicated, especially when an organiza-
tion has a benefits structure that includes choices and when HR is the only
department prepared to address or explain benefit options.

Managers are strongly advised not to extend an offer of employment
during a departmental interview. This admonition is even more important
when a candidate interviews well and the manager is being swayed by the
performance. All offers of employment are ordinarily processed through
HR. Formal offers must be extended conditionally and considered firm
only upon completion of successful reference checks and receiving proper
medical clearance via a pre-employment physical examination.

An occasional point of contention between a department manager and
HR is the timeliness of having a new employee start once an offer has been
made and accepted. Managers often feel that new persons ought to be able
to start work immediately unless there must be a period of notice for an-
other employer must be made.

Human resources will ordinarily take all reasonable steps to have
new employees begin work quickly and efficiently. Reference checking


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is absolutely essential and requires time. An organization’s employee
health service or employee health physician, not HR, controls ap-
pointment times for pre-employment physical examinations.

Human resources may be pressured by line management to short-cut
the process by allowing a new hire to begin work immediately and take
care of reference checking and the physical examination during a person’s
first two or three days of work. This practice is extraordinarily dangerous
and should be avoided. It may be difficult or impossible to reverse the hir-
ing decision if a person is already on the payroll when reference checks come
back negative. A contingent offer can be withdrawn before a new person
begins work, but once that individual is hired the contingency is gone.
Also, removing a new hire from the job after officially starting presents some
difficulties if the individual fails the physical examination. In many parts
of the country, state codes prohibit workers from starting employment in
a health care facility without passing a proper pre-employment physical
examination that includes a screening test for tuberculosis.

Department managers who want to become personally involved in check-
ing applicant references or personally answering reference requests should
be strongly discouraged or forbidden from doing so. Let a centralized ac-
tivity such as HR take care of reference checking. References are best
checked, and reference information on past employees is best given out,
through a single, central point where the people conducting the activity are
familiar with all applicable laws, can check all pertinent applicant refer-
ences in a similar way, and can respond to all reference information requests
in a consistent manner.

Exchanging reference information is another activity that generates fric-
tion between HR and managers of other departments. On the surface, al-
lowing health professionals who manage other health care employees to
exchange reference information with other organizations without HR in-
tervention seems logical. Paraphrasing a manager who insisted on per-
sonally requesting and dispensing reference information about high-tech
employees, “It requires someone with my level of specialized knowledge
to render judgments on an individual’s capabilities.” The reason why a
manager should not become involved in exchanging reference informa-
tion is contained in the statement. The key word is judgment.

Judgments have no place when responding to a reference request. Reference
responses should include nothing that is subjective in any way. This prohibi-
tion includes opinions as well as judgments. Subjective statements can always
be challenged because they cannot be rendered as absolute, objective truths.
Only information that can be verified in a personnel record is completely safe

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to give out when answering a reference check. Furthermore, only informa-
tion that is relevant to the request should be offered.

Reference requests are best answered by someone who has access to a
personnel file. The comments from a person who was not well acquainted
with the employee in question are more objective than are comments from
a person who was personally acquainted with the employee being con-
sidered. All reference requests should be answered impersonally and di-
rectly from the record. Time and again, attorneys and advocates have told
us, “Information that is not in a file or record does not exist.” Documentation
to substantiate statements made in a reference conversation is imperative.
Anything said in response to a reference request must be verifiable in a
personnel file.

Organizations often become overwhelmed with fear of legal repercus-
sions resulting from reference requests on both the receiving and sending
sides—especially on the sending side. Many have adopted the practice of
either not answering at all or limiting their answers to the verification of
job titles and dates of employment. Some organizations exhibit an obvi-
ous double standard concerning references. When checking references of
potential new hires, they try to obtain as much information as possible
from prior employers. In contrast, when they respond to reference requests,
they limit their responses to minimum levels of content, verifying only
dates, titles, and occasionally salaries.

There are opposing sides concerning the legal dangers involved in giv-
ing and receiving reference information, with one side receiving far more
attention than the other. The more obvious apparent risk is being charged
with defamation. Many employers fear being sued by an unsuccessful can-
didate who feels a job opportunity was lost because of comments received
from a reference. As a precaution, many former employers tend to limit
their answers to reference-information seekers and to disclose as little in-
formation as possible.

The other potential legal hazard related to reference checking is negli-
gent hiring. This potentially occurs when an applicant’s references are not
checked prior to extending an offer to hire. A negligent hiring charge may
occur when a hiring organization does not make a good-faith effort to
check references on an incoming employee who later causes harm to peo-
ple or property. Many people do not consider this to present as much risk
as defamation, but it has the potential to inflict serious harm on an or-
ganization. Assume that an employer hires a new employee without check-
ing references and that employee has a record of serious misdeeds known
to the former employer. If that employee causes harm while working for
the organization that failed to check references, then the organization is
at risk of being charged with negligent hiring. A secondary danger exists
for the person’s past employer. If the past employer had relevant and doc-
umented knowledge of a serious problem (for example, assault or theft)


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and did not reveal that information upon request, the former employer
could be at risk for legal action brought on by the new employer.

Charges of defamation are relatively common. Unsuccessful candidates
file a charge of defamation, claiming that they were not hired because of
something said in a response to a reference request. A few such complaints
go on to become legal cases that can require months or years to resolve. They
are time-consuming and can be costly. For department managers who choose
to give reference information, they can become extremely frustrating. Legal
actions involving negligent hiring are not nearly as common as those involving
defamation, but negligent hiring cases tend to be considerably more seri-
ous and decidedly more expensive. A final reason for restricting all refer-
ence contacts to HR is simply practical. Should a charge of defamation or
negligent hiring become a full-scale legal battle, HR, not an individual de-
partment, assumes the responsibility for all legal issues and activities.

Organizations are usually fairly safe in answering reference requests
with documented truth from the personnel record, as long as what is said
is pertinent in assessing the person for the job being sought and as long as
the information is not conveyed with malicious intent. Those who are re-
sponsible for answering reference requests should do so without attempt-
ing to interpret the record. They should supply information directly from
a former employee’s record. For example, concerning attendance one might
say, “Absent nine times and tardy twelve times in three months,” but
should never say, “Frequently late or absent. The person can’t be depended
upon to be there when needed.” The former is in the record and cannot
readily be disputed. The latter is imprecise and renders a judgment.
“Frequently” does not have a quantifiable definition. The judgment about
dependability is a personal opinion or interpretation. Judgments and opin-
ions are subjective. An exception to this guideline can sometimes occur if
a supervisor has rendered a judgment in writing; relaying the words of an-
other can sometimes be considered an objective recitation of information
that is already contained in the record. But one must remain cautious in
doing so; if the judgment that is repeated is inflammatory or otherwise
controversial, the effect might be to simply shift some of the emphasis for
defamation charges to the individual rendering the original judgment.

Even if no HR department exists, as is the case in some very small or-
ganizations, reference requests should still be centrally addressed. The per-
son responsible for maintaining the organization’s personnel files should
handle the request.

A note documenting the information in a reference call should be added
to the personnel record. The date, information provided, name of the or-
ganization, contact information and person receiving the information, and
the name of the person supplying the information should be noted on a
separate sheet and added to the permanent personnel file. Such informa-
tion is usually sufficient to resolve most legal claims.

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Regardless of precautions and guidelines about handling reference requests
and information, there is often a tendency for some managers to exchange
such information with peers and colleagues. In most locations, many of the
people in the organizations comprising the local health care community
tend to be well acquainted with each other. Managers are ordinarily ac-
quainted with their counterparts as they often attend conferences together
or belong to the same professional organizations. It is often natural for
managers to speak with each other about employee capabilities, especially
as employees change jobs and move from employer to employer within the
same community. A manager who engages in such conversations is essen-
tially trading reference information. Although this is likely to continue, su-
pervisors should nevertheless observe the essential rule: offer no judgments
and convey nothing that cannot be verified in the personnel file.

The foregoing advice was disputed by a department manager who said
in effect, “It’s no one’s business what I might say in a private conversation
with a friend and colleague. We can discuss anything we wish and nobody
can do anything about it.” That manager was asked to consider the following:
“If you find yourself in the witness chair in federal court, under oath, and
you are asked specific questions about a particular conversation with your
friend and colleague, how will you answer? How will your friend and col-
league answer?” It is best to avoid the possibility altogether by leaving the
giving and receiving of reference information to the HR department.

A constant concern of HR is finding and retaining people with the skills
and talents needed by the organization. This should be a continuing con-
cern for a department manager.

Newspaper advertisements are only one method for finding employees.
They are not nearly as effective as some may believe, although they are prob-
ably the most readily visible means of locating people with specific skill
sets. Differences often arise between a department manager and HR con-
cerning the frequency of advertising and the size of ads. Some managers
tend to miss advertising deadlines or see them as unrealistic.

In most communities, the Sunday newspaper is best for running em-
ployment advertising. Most employment ads appear on Sunday, and that
edition offers the greatest variety of size and category options and usually
includes special sections of interest such as Medical or Health Care. A
newspaper’s deadline for Sunday advertising is commonly noon on Thursday.
Display advertising may have earlier deadlines. Given the volume of busi-
ness in both HR and line departments during any given week, meeting the


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advertising deadline often presents a challenge. Managers who are unable
to get an ad approved and accepted until Friday will see the advertisement
in print the following week. Remember that the deadline is imposed by the
newspaper, not HR. For this reason, HR will frequently issue reminders
of advertising deadlines to managers whose departments have open per-
sonnel requisitions.

Special health care employment publications exist to serve with national,
regional, and local markets. Professional journals with national circulations
often carry employment advertising. With all of these publications, longer
lead times are involved because of publication schedules. This is especially
true of professional journals. Organizations planning to use such focused ad-
vertising must often extend the length of their recruiting schedules.

An advertising executive once said that half of every dollar spent on
advertising was wasted. Unfortunately, he was unable to identify which half
was wasted. Some HR employment recruiters have said that they obtain
no more than one-third of new employees as a result of print advertising.
Others have commented that no more than 30% of all jobs ever get ad-
vertised in print.

A considerable proportion of the better-paying jobs such as technical, pro-
fessional and managerial positions, are filled through networking.
Networking ordinarily works in the following manner. Someone seeking
a position makes personal contacts among friends, relatives, acquaintances,
and former colleagues. Individuals who are serious about networking con-
tact people working within or in organizational proximity to their field of
interest. These activities spread the word that one is seeking a particular
kind of position. By forwarding networking contacts and referrals to other
individuals, the original person often encounters a series of individuals
who would otherwise have been unknown, unidentified, or unavailable,
and who are then able to be directly accessed. This series of contacts, re-
ferrals and subsequent contacts constitutes the network.

In attempting to establish networks, people should begin with the rel-
evant personal contacts with whom they are best acquainted. They should
follow leads or referrals to others through a series of networking or cour-
tesy interviews. At each encounter or meeting, the job seeker should leave
a current resume. Serious job seekers are advised to carry a supply of busi-
ness cards and several copies of their resume at all times. The timing or
existence of networking or potential employment opportunities cannot be

Employers engage in networking to find people to fill specific positions.
Recruiters attend professional society meetings, conferences and conven-
tions, and other gatherings of people who work in the occupation of interest

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to actively build networks of potential candidates. Many department man-
agers have made initial contact with people they later hired at such gath-
erings. Considerable networking also takes place at job fairs.

Job Fairs
Job fairs are gatherings of employers who are interested in gaining expo-
sure for their organizations and promoting them as good places to work.
A typical job fair is organized in a fashion that resembles a vendor’s room
at a convention. All individual employers have tables and displays of in-
formation about their organizations. An employer’s table will commonly
be staffed by one to three people, usually an employment recruiter from
HR and a department manager or employee of a particular specialty.

Job fairs are sponsored by municipalities, business organizations, trade
associations, Chambers of Commerce, colleges and universities, and other
organizations. They are usually well publicized. Candidates who attend job
fairs are reminded to bring a supply of current resumes. Universities or
other organizations that educate health care workers, for example, a school
of nursing or a college of Health and Human Services, hold job fairs that
are attended by its graduating seniors. Local and regional health care em-
ployers are invited to attend.

Recruiting Trips
A department manager may become involved in recruiting trips. Human
resources should be notified and involved with the planning of such ex-
cursions. These trips may involve going to conferences, conventions, col-
leges and universities, and other gatherings of persons that have the skills
desired by an organization.

A department manager’s participation in such trips may be essential
when recruiting professional employees such as registered pharmacists,
nurses, and physical therapists. Before leaving for such a trip, an HR re-
cruiter provides information about the organization. During the recruit-
ing trip, the department manager addresses questions asked on a
professional-to-professional level. Experience has shown that recruiting trips
involving a department manager or other professional from within the
specific department who is seeking an employee tend to be more success-
ful than a trip made by an employment recruiter alone. After the trip has
identified candidates, HR should provide the same services that it does
when recruiting for any other position.

Search Firms
Search firms are frequently referred to as headhunters. They are often uti-
lized to locate and secure employees for some hard-to-fill jobs. These are
usually middle or upper management positions or professional positions


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that are in short supply on the labor market. The services of search firms
are also used when an organization does not want to publicize a vacancy
or wishes to conduct a confidential search.

The department manager may have occasion to suggest the use of a
search firm. However, it is usually HR that engages the services of a search
firm, and it usually does so only with administrative or executive concur-
rence. Search firms charge for their services. These changes are commonly
equal to 40% of the annual salary of the person being recruited. Given
the fiscal climate within health care in recent years, search firms are en-
gaged by many organizations only after other options have been exhausted.

The Internet
By way of resume-posting websites such as Monster.com or
CareerBuilders.com, the Internet offers HR and department managers a
sometimes fast and efficient means of assessing the state of the supply of
job seekers in any given occupation. Few pertinent postings can indicate
a seller’s market in which the available few can expect to command gen-
erous offers; many pertinent postings can indicate a buyer’s market with
more people seeking positions than there are available.

The Internet can also be used to some extent to assess supply and demand
regionally, recognizing that available individuals in any occupation will not
necessarily be evenly distributed throughout the country. We say “to some
extent” because not all job seekers will be registered with these services.

The department manager is cautioned to coordinate the contacting of
potential candidates located via the Internet with HR. It is HR that must do
the actual contacting. Another caution to observe in looking up potential job
candidates on the Internet: It is likely that not everyone who posts a resume
is seriously seeking new employment. Many, of course, are doing just that,
but there are also those who are not actively looking to change jobs but have
simply posted in case the “ideal” position should seek them out.

Senior managers of most organizations endorse a philosophy of develop-
ing and promoting employees from within their organization. Many health
care organizations have sent written copies of policies to this effect to all
employees. Such policies recognize that one of the job-related conditions
important to many employees is the opportunity for personal promotion
and growth.

Despite having written policies, however, some department managers
tend to look outside for their new employees. This practice frequently cre-
ates conflict because employees hear one message but see something dif-
ferent occur in practice.

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It is necessary to strike a balance between internal transfer and pro-
motion and external recruiting. To a considerable extent, an organization
benefits by filling vacancies from within and promoting employees as va-
cancies occur. External recruitment is used to fill the entry-level positions
vacated by those being promoted. However, filling all responsible posi-
tions by promotion from within can create organizational stagnation as
people who think and act in the manner of their organizational role mod-
els simply perpetuate that behavior. From time to time, new personnel are
necessary. Coming from outside of the organization, new people bring
new or different ideas with them.

Filling all of the better jobs from outside can demoralize existing staff,
many of whom desire to be promoted. After being passed over or denied
promotion when management hires someone from outside, they become
keenly aware of the contradiction between the espoused organizational
policy of internal development and the actuality of external recruiting. In
reaction to such a situation, the more promising employees tend to leave
and seek employment elsewhere. The less promising employees stay, to
the long-term detriment of an organization. Over time, employees from
both groups find ways to seek personal equity.

As already mentioned, an important condition of employment for many
people is the opportunity for growth and promotion within their organi-
zation. The important word in this statement is opportunity. Employees
will know whether such opportunity is or is not present. Individuals who
may never take advantage of it are nevertheless demoralized by its ab-
sence. The perceived absence of opportunity for growth and promotion
imposes a figurative ceiling on potential advancement for all employees.

Most HR departments in health care operate a job posting system that
provides information to employees about opportunities for promotion
and transfer. These systems usually give existing employees a few days to
bid on transfer or promotional possibilities before the jobs are made avail-
able to external applicants.

It is healthy for an organization to promote from within for nontechni-
cal, nonprofessional positions, especially those for which most of an appli-
cant’s expertise is developed through on-the-job training and experience in
departments that provide service and support for a larger organization. This
leaves entry-level openings that can then be filled by outside applicants. This
practice makes a great deal of sense because it permits managers to fill po-
sitions of increasing responsibility with people who are familiar with the or-
ganization and have proven themselves in entry-level positions.

Some department managers frequently tend to look externally because
they are unsure that internal candidates, obviously untested at a higher
level, can perform the required duties. However, this is a risk common to
all placements whether from inside or outside. If a supervisor knew for cer-
tain that a particular person could handle a more responsible job, then the


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move might not represent a growth opportunity for the individual. Whether
any particular employee comes from within or from the outside, there is
always a risk associated with the placement. Some highly experienced man-
agers have hired external candidates possessing marvelous qualifications
who turn out to be disastrous for an organization. Growth and develop-
ment require learning. Sometimes learning is not successful and results in
mistakes. People learn from making errors. The goal of any supervisor is
to limit the magnitude of possible mistakes.

There is an additional reason why department managers are encouraged
to look closely at potential internal candidates before looking to the out-
side. When a qualified internal candidate who is a member of a protected
class under Equal Employment Opportunity does not get a desired posi-
tion that subsequently is given to an external candidate, there is always the
likelihood of a charge of discrimination. Many HR practitioners have re-
ceived formal complaints that can be summarized by, “I didn’t get the pro-
motion because I was discriminated against because I am a member of a
protected class.” Protected classes include people identified on the basis
of their race, creed, color, national origin, religion, gender, age, or sexual
orientation. For this reason, and in support of development from within,
department managers are always encouraged to look closely at qualified
internal candidates before resorting to recruiting external candidates.

Salary bumping ordinarily involves skilled occupations that are in short
supply in a given community or for which the supply in an area is mar-
ginal. As a result, openings in these occupations usually take longer than
average to fill. Salary bumping begins when a group of employees at one
organization applies pressure for more money. They may exert this pres-
sure themselves or use an advocate. An advocate may often be a physician
whose income depends, in part, on the occupation in question. For ex-
ample, an anesthesiologist may be an advocate on behalf of nurse anes-
thetists or a surgeon may be an advocate for surgical physician assistants.

The group or the advocate requests higher pay for practitioners of the
occupation, citing supposedly higher pay at other organizations in the area
and expressing the fear that these better-paying employers are going to
lure away some members of this group. Some present employees may even
moonlight (use their professional skills and work for a second employer
in the off-duty hours from their primary employers) for other employers
in the area and can produce proof of higher pay at these other places.
People who moonlight usually do receive higher hourly rates than regular
employees to compensate for the absence of benefits. The group or the ad-
vocate attempts to trade on the fear that other local employers will lure

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away the best employees unless the group’s salaries are increased across
the board, that is, for every present employee in the group.

Some organizations do try to lure people with scarce skills away from
other employers in their area, and sometimes they succeed. Pay rates for the
occupation in question get bumped upward as organizations recruit each
other’s employees. However, this process does nothing to alleviate the short
supply of individuals with the needed skill in the local area. It does noth-
ing to recruit more help into the area. Salary bumping simply raises personnel
costs for all local employers while the shortage continues to exist.

Some professional employees project an attitude of free agency. They
behave as though considering themselves readily available to change or-
ganizations for what might appear to be a better deal. These employees
feel greater loyalty to an occupation or profession than to any organiza-
tion. They are prepared to move freely, usually for more money, among
comparable institutions as long as they feel that the professional experi-
ence remains about the same from one employer to another. Their profession,
rather than any particular organization, holds their allegiance.

Free agent employees are becoming more common among persons
trained in occupations that remain in chronic short supply. As free agents
move among organizations, they have the effect of raising the price for
their skills in the community without altering the supply.

A department manager who hears stories to the effect that other local
health care employers are threatening to recruit away the best people
should appreciate that this may be true. However, an alternative explanation
is salary bumping. When a manager hears such stories, he or she must re-
sist the temptation to join the voices calling for increased salaries. Intelligent
investigation is a more suitable alternative activity. Take the information
to HR who will have the means to verify or refute such claims.

Recruiting becomes more difficult during periods of low unemployment
and at times when particular important skills are in short supply. When
workers with particular skills become difficult to find or recruit, the spe-
cialists in demand have their choice of employers. Economists describe
this as a seller’s market. Under such conditions of shortage, a number of
special approaches may be taken to attract new employees.

Internship programs have proven themselves to be effective for recruiting
scarce professionals. For example, a hospital that provides an internship
experience for one or two pharmacy students may find the students will-
ing to return as employees after graduation. An individual who has had a
pleasant internship experience as a student is more likely to become an
employee than is a candidate for whom the organization is new and strange.


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Moving expenses may be paid or partial moving allowances offered to
professional and managerial employees recruited from out-of-town. This
is essentially a standard practice when recruiting top management per-
sonnel. As particular professionals become more scarce and in greater de-
mand, organizations are more likely to offer such inducements when
recruiting needed personnel.

Some organizations assist spouses in locating suitable employment as
part of the recruiting process for scarce professionals. Dual-career cou-
ples are becoming increasingly more common. Supplying employment as-
sistance to a spouse may determine the difference between success and
failure when recruiting a sorely needed professional.

Signing bonuses have been used as incentives during periods of em-
ployee shortage. As of this writing, numerous advertisements for nursing
personnel offer signing bonuses to new employees. A common industry prac-
tice is to pay one-half of the bonus when the person is hired and pay the
second half when the individual has been successfully employed for a stated
period of time, usually between three months and one year. Personnel
shortages that continue often contribute to salary bumping.

During shortage periods, a finder’s fee or bounty may be offered to or-
ganizational employees who refer candidates for specific positions. The
finder’s fee or bounty is paid to the person making the referral when a new
candidate is then hired to fill a vacancy in a shortage occupation. This pro-
cedure is often called an employee referral program. The finder’s fee is or-
dinarily paid out in the same manner as a signing bonus, one-half of the
bonus when the new person is hired and the second half when the new in-
dividual has been successfully employed for a stated period of time, usu-
ally between three months and one year. Occasionally, a signing bonus
and finder’s fee are both paid to secure the services of a single new employee.
However, a sound employee referral program increases in usefulness as
the job market tightens and fewer good people are readily available.

In spite of the visible costs involved, an employee referral program can
save money when compared to the costs of advertising. In many instances,
a signing bonus and finder’s fee together add up to less than the cost of a
modest sized display ad placed in an area newspaper. The savings gener-
ated by an employee referral program can be significant when compared
with the cost of using a search firm. An employee referral program can of-
ten be shown to generate new employees at the lowest cost per hire of all
recruiting practices.

Generally, hiring managers, executive management, and HR personnel
are not eligible for finder’s fees. Other rules may apply in an employee re-
ferral program. For example, an employee will usually be barred from re-
ferring a family member or other relative into a job in the referring person’s
own department. Most organizations have policies governing nepotism
or the employment of family members.

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Finally, extremely specialized arrangements may be made with indi-
viduals who are needed to fill critical positions. It is common to employ
physicians, for example, using individual or personal-service contracts.
Another occasionally used practice involves an arrangement to pay off an
individual’s outstanding student loans in exchange for a contractual agree-
ment to remain with an organization for a specific amount of time.

All department managers can have a considerable impact on the extent to
which their organizations appeal to prospective employees as reasonable
places to work. A manager’s leadership style and treatment of employees
sets the tone for the department and helps to create a particular image for
that work group. The attitudes of workers are clearly visible if they are com-
fortable with their working environment. Such an attitude is usually visi-
ble well beyond departmental boundaries. If enough departments project
this kind of a positive image, then an employer earns a reputation as a
good place to work.

Whether referral and reward programs do or do not exist, a fundamen-
tal truth of recruiting remains. Whether they are satisfied directly or indi-
rectly, satisfied employees are often an organization’s most effective recruiters.

Legal constraints affect recruitment. The HR department provides ser-
vices in partnership with other departments in an organization. An accu-
rate position and job requisition are usually required before HR can begin
to recruit. The HR department provides a procedural template for orga-
nizational recruitment. This must be followed to avoid legal difficulties.

References are critical elements in any recruitment activity. They must
always be checked by HR personnel. Responses to reference requests must
be factual and objective, reflecting only information that is contained in
written personnel records. Department managers are strongly advised to
refer all reference inquiries to HR.

Several strategies are available for locating and recruiting suitable em-
ployees. These include print and media advertising, networking, job fairs,
recruiting trips and search firms. Promotion from within is a sound orga-
nizational practice that is not universally observed. Salary bumping oc-
curs when organizations succumb to pressure to increase the salaries of scarce
personnel beyond their market value. Other recruiting plans include in-
ternships, paying for moving expenses, assisting spouses of candidates to
secure appropriate employment, paying a signing bonus or finder’s fee, or


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making other, specialized arrangements to successfully recruit specific
needed personnel. Happy, satisfied employees are often an organization’s
most effective recruiters.

Returning to the case study, on the surface it appears as though new-
comer Kathy Gray knew more about some important aspects of manage-
ment than did her boss. Believing that he was helping her because of her
newness to the organization, Sam Weston actually undercut what little au-
thority Kathy may have had as a new supervisor. As long as Weston had
put Kathy in place, he had an obligation to let her do her job as she saw
fit, while he made himself available in the event that she asked for help.
As long as Kathy knew the correct steps to take, Weston should have al-
lowed her to take care of the hiring without his help or interference.

It is fundamental to the hiring process that the person who will directly
supervise the new employee serve as the primary interviewer and make
the hiring choice. Because Weston did the actual hiring, a case can be made
that he should be the person to terminate the person’s employment.

The future relationship between Kathy Gray and Sam Weston may be in-
fluenced by this experience for some time into the future. At the very least,
Kathy will have to be sensitive to the possibility of micromanagement on
Weston’s part. This will continue until she is able to prove to him that she knows
the job and does not require his close supervision on an ongoing basis.

Discussion Points

1. It has been said that an appropriately operated HR department actu-
ally hires no one in the sense of selecting a person who will be offered
a position. Why is this so?

2. When an employee provides notice of termination or a manager oth-
erwise learns of an employee’s impending departure, a manager’s very
first action should be to submit a requisition for a replacement. Do you
agree or disagree with this statement? Why?

3. Describe in detail at least three important uses of complete and up-to-
date job descriptions.

4. Why is it important to begin the search to fill a position by consider-
ing persons already employed by the organization?

5. A colleague of yours who supervises a similar department in another
local institution telephones you and asks for your assessment of a for-
mer employee of yours who is applying at his institution. Should you
continue the call? Why? How much and what kinds of information
should you provide? Why?

6. Explain the concept of negligent hiring and provide a hypothetical ex-
ample of it.

Conclusion 143

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7. Explain the rationale for insisting that all checking of employment
references and providing of information in response to reference re-
quests should be concentrated at a single point in an organization.

8. Describe the principal hazards in espousing a policy of development
from within an organization while aggressively recruiting from the

9. Provide three examples of the free-agent type of employee and de-
scribe the circumstances that create free-agent status for them.

10. How is it possible that employee referral programs, which often in-
clude the payment of signing bonuses and finder’s fees, can often gen-
erate the lowest cost-per-hire of all recruiting practices?


Evers, A., Voskuijl, O., & Anderson, N. (2005). Blackwell Handbook of Personnel

Selection. Malden, MA: Blackwell.
Maitland, I. (2005). How to Recruit. London: Ashgate Publishing.
Sidney, E. (2005). Managing Recruitment (4th ed.). London: Ashgate Publishing.
Singer, M. (2005). Fairness in Personnel Selection: An Organizational Justice

Perspective. London: Ashgate Publishing.
Strayer, S. (2005). Vault Guide to Human Resources Careers. New York: Vault.com.
Weddle, P. (2005). Weddle’s Directory of Employment-Related Internet Sites: For

Recruiters and Job Seekers 2005/6 (5th ed.). Stamford, CT: Weddle’s Publishing.
WetFeet. (2005). WetFeet Insider Guide to Careers in Human Resources 2005.

San Francisco: CA, WetFeet, Inc.
Widdop, D., & Jones, D. (2005). 34 Activities for Recruitment and Selection.

London: Ashgate Publishing.

Anonymous. (2005). HSJ awards 2005. Reducing health inequalities. Winner:

Recruiting workers provides a valuable link with hard to reach groups. Health
Service Journal, 115(5982), supplement 48–49.

Cable, D. M., & Turban, D. B. (2001). Establishing the dimensions, sources and
value of job seekers’ employer knowledge during recruitment. Research in
Personnel and Human Resource Management, 20, 115–163.

Casey, B. R. et al. (2005). Rural Kentucky’s physician shortage: Strategies for pro-
ducing, recruiting, and retaining primary care providers within a medically un-
derserved region. Journal of the Kentucky Medical Association, 103(10),

Ferris, G. R., Berkson, H. M., & Harris, M. M. (2002). The recruitment interview
process: Persuasion and organization reputation promotion in competitive la-
bor markets. Human Resource Management Review, 12, 359–375.

Gatewood, R. D., Gowan, M. A., & Lautenschlager, G. J. (1993). Corporate im-
age, recruitment image, and initial job choice decisions. Academy of Management
Journal, 36, 414–427.


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Goltz, S. M., & Giannantonio, C. M. (1995). Recruiter friendliness and attraction
on the job: The mediating role of inferences about the organization. Journal of
Vocational Behavior, 46, 109–118.

Gullatte, M. M., & Jirasakhiram, E. Q. (2005). Retention and recruitment: Reversing
the order. Clinical Journal of Oncology Nursing, 9(5), 597–604.

Kristof, A. L. (2000). Perceived applicant fit: Distinguishing between recruiters’
perceptions of person-job and person-organization fit. Personnel Psychology,
53, 643–671.

Lee, R. J., & Mills, M. E. (2005). International nursing recruitment experience.
Journal of Nursing Administration, 35(11), 478–481.

Mathias, J. M. (2005). Hospital focuses on recruiting new grads. OR Manager
21(10), 35–36.

Conclusion 145

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Civil Service

Chapter Overview

After reading this chapter, readers will:

• Be able to provide a brief history of the development of state and
local civil service systems

• Understand the purpose of the civil service system job

• Know the difference between a classified and an unclassified employee
• Explain why position classification and compensation are very

important and controversial parts of public administration
organizations governed by civil service

• Describe the general recruitment process for persons interested in
being employed by healthcare organizations governed by civil
service systems

• Discuss the objectives of discipline and appeals systems

Many contemporary healthcare organizations are administered through
state and local governments and therefore are governed by a personnel
administration process known as the civil service system. Civil service
systems are defined by either state or local laws and are overseen by a
body that is typically referred to as a civil service commission. Some of
the main features of personnel administration governed by civil service
law include position classification, compensation, hiring, promotion,
and dismissal. The methods used by the administrators for these types
of healthcare organizations to recruit, select, and develop their employ-
ees is crucial to the quality of care offered to people and the effective use
of tax dollars.




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Case Study: Only One Year until Retirement

Jerry Quinn has been employed as a laboratory technician at a small mu-
nicipal hospital for the past 29 years. The hospital is covered by the city’s
civil service commission. For efficiency purposes, administrators at the fa-
cility recently decided to contract with a local company to provide all lab-
oratory services for the hospital. As a result, the hospital will be abolishing
all laboratory technician jobs, and Jerry is being laid off. Jerry is very up-
set because he needs only one more year to retire, and, except for a few
clerical vacancies at the hospital, there really aren’t any other jobs avail-
able in the community. What is Jerry to do at this point in his life? What
are Jerry’s career options?

Contemporary state and local healthcare organizations that are governed
by civil service law are likely to be at least partially publicly funded.
Examples of such organizations include hospitals operated by state and lo-
cal governments, state and local health departments, and mental health clin-
ics. Almost 1.4 million people in the United States are employed by publicly
administered state and local healthcare organizations. Persons employed
by these organizations include physicians, nurses, medical laboratory tech-
nicians, information technicians, hospital attendants, and health aides.
Employees working in healthcare organizations that are covered by civil
service are government employees even though they may not seem to fit
the stereotypical role of a government worker.1

This chapter briefly describes the evolution of federal, state and local
civil service systems. Uses and expectations of the system are discussed, in-
cluding a review of some of the merits and disadvantages with these sys-
tems. Readers must understand that civil service laws and practices at both
the state and local levels vary widely and, as a result, generalization is dif-
ficult. Ohio’s civil service system will be the model most often referenced
in this chapter. It is typical of civil service systems encountered in other states.

From the beginning of the country, employees were needed by the federal
government. A system that was based on merit began in 1789 and evolved
until the 1880s. The American Civil War introduced problems. In the years
following the end of the war, federal workers were hired on bases other
than merit. History has termed this approach a spoils system that allowed
officials in the federal government to reward friends by giving them jobs.


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On December 6, 1881, Senator George H. Pendleton of Ohio, chairman
of the Senate committee on Civil Service Reform, introduced a reform bill.
The spoils system was denounced by the press and from pulpits, but
Congress, apparently underestimating the strength of the popular feeling,
still dragged its feet on civil service legislation. When finally enacted on
January 16, 1883, Senator Pendleton’s bill marked the beginning of the merit
system in federal service.

The new Civil Service Act established basic principles that have not
changed in 120 years. They were incorporated into similar legislation by
individual states as they created civil service systems for hiring state em-
ployees. The modern era of personnel administration began in 1938.
Corruption had reentered the process of hiring government workers.
Beginning in the late 1950s, the focus of federal personnel activities shifted
to attracting and retaining highly qualified employees. The federal work-
force became more diverse, largely because of legislative and outreach pro-
grams. Reforms of the federal civil service system were made between 1977
and 1979. These reforms reshaped the institutions responsible for the merit
system ideal and launched the federal personnel management system in a
new direction.

The Civil Service Reform Act of 1978 marked the beginning of a pe-
riod of change for government personnel management. The intent of the
law was to strengthen and diversify the federal civil service system. The
Civil Service Reform Act included a statement of fundamental merit sys-
tem principles. For the first time, it included prohibited personnel practices.
The intent was to define principles rather than procedures.

The civil service systems that cover most state and local public employees
evolved in the late nineteenth century. Before civil service systems were adopted
by state and local governments, people were hired and fired largely on the
basis of the spoils system. Under the spoils system, elected officials felt they
had the right to reward their friends and supporters with government jobs.

The impetus for reform can be traced back to 1877 through the actions
of the New York Civil Service Reform Association. The hard work of this
association led to the elimination of the spoils system and the establish-
ment of merit principles for public service employees in New York City and
New York State. In 1883, New York was the first state to pass a civil ser-
vice law that applied to state and local public employees. This movement
was slow to catch on. By 1934, only eight other states had passed civil
service laws.

In the early twentieth century, external forces were at work that con-
tributed to the demise of the spoils system. During this time period, a

History of State and Local Civil Service Systems 149

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rapidly growing private economy with well-paying jobs made govern-
ment employment less attractive. Not only were workers in the private
sector paid more, but also they were not required to return or kick back
any part of their salaries to political affiliates.

States took more interest in adopting civil service regulations in 1939
when the federal government required them to establish civil service sys-
tems for state employees administering federal Social Security Board pro-
grams. State civil service systems quickly caught on and became more of
the norm from that point on.2

The basic structure of the traditional civil service system evolved as a
series of rules that were designed so that all employees were treated in a
similar manner. This basic organizing approach included common salary
structures and position classifications that were based on employee re-
sponsibilities. Furthermore, job security was enforced by a civil service
commission. The overarching goals of contemporary civil service systems
remain remarkably similar to those that existed at the beginning of the
movement. These goals include recruiting and promoting professionally
trained employees and insulating them from political pressures. Elaborate
rules and regulations designed to protect employees from political inter-
ference and the promotion of professional competence are essential com-
ponents of a civil service system.

Both disadvantages and merits are associated with personnel adminis-
tration of state and local healthcare organizations governed by civil ser-
vice laws. Personnel administrators have a responsibility to clearly
understand and adhere to applicable civil service laws. State and local
civil service systems typically govern four key components of personnel
administration. The four key components are classification and com-
pensation, hiring and promotion, layoff, and dismissal and appeal.
Although there are some overlaps, each of these components will be dis-
cussed separately in more detail.

Classification and Compensation
The basis of civil service systems is the position and classification system.
The fundamental theory behind position classification is that positions are
classified, not people. Position classification involves identifying the du-
ties and responsibilities of each position in an organization and then group-
ing the positions according to their similarities. Everyone working in the
same classification and step should have the same qualifications, receive
the same pay, and experience similar levels of work responsibility.2


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In a typical classification system, a job analysis is conducted for each
position. This is accomplished by collecting information about work du-
ties and activities so that a position description can be written and the job
can be classified. The position description usually includes the position’s
duties and responsibilities, the scope of the job, and the nature of super-
vision. The ultimate goal is to align each job in its proper place within an
organizational structure.

Each position is actually an occupation or type of job. In most classifi-
cation systems, each position has a number or series associated with it.
For example, in Ohio’s civil service system, a nurse is an occupation or
position title made up of a series of nurse positions (e.g., Nurse 1, Nurse
2, Nurse 3, and Nurse 4). A Nurse 2 has more responsibilities than a Nurse
1, but fewer responsibilities than a Nurse 3. Usually, a higher number in
a series connotes more responsible duties, with the degree of supervision
being received becoming less frequent.3

Based on the duties and responsibilities involved, each job classification
is assigned a pay range. For most classified employees, pay ranges consist of
a series of steps. New employees are normally appointed at step one. Step
increases are generally given after a probationary period is completed and
annually from that time. As long as an individual maintains satisfactory per-
formance on the job, step increases continue until the maximum step is
reached. A basic tenet of the step increase system is a learning curve. This
implies that the longer persons work in a particular position, the better they
know their jobs and the more productive they become. Once an employee
reaches the maximum step, it is assumed that all individuals with at least that
level of experience will be performing at the same level. Additional com-
pensation after a person has reached the maximum step (i.e., stepped out or
red-lined) normally results from increases given because of increases in cost-
of-living allowances.4 Exhibit 8-1 provides an example of a pay schedule
for a classified position, Nurse 1, hired by a healthcare organization.

Typically, individuals employed in a healthcare organization adminis-
tered by a state or local government are placed into classified (protected or
nonexempt) or unclassified (exempt) service. Persons placed in unclassified
service positions are usually employed as principal managers, supervisors,

Using a Civil Service System 151

Exhibit 8-1 Pay Schedule for Nurse 1

Range Step 1 Step 2 Step 3 Step 4 Step 5

Hourly $19.89 $20.39 $21.42 $21.96 $22.51
Annually $41,371 $42,411 $44,554 $45,677 $46,821

Source: Ohio Department of Administrative Services, 2005.

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and employees with special duties including trust and financial responsibil-
ity. Persons placed in classified or nonexempt service are usually line staff
workers. The latter may be represented by a labor union or otherwise known
collective bargaining unit.3

Union or collective bargaining agreements can supersede many aspects
of civil service law. It is important to note that collective bargaining rights
were given to many state and local public employees in the 1960s and
1970s. Collective bargaining includes a mutual good faith obligation to
negotiate between a public employer and a union with designated repre-
sentatives. Typically, subjects to be bargained include wages, hours, terms
and other conditions of employment.

Union or not, a classified employee can be subject to taking an exami-
nation when applying for a position at a state or local healthcare organi-
zation. A brief discussion about examinations is warranted, although fewer
and fewer organizations require examinations. There are times when in-
dividuals with the basic qualifications are hired into positions without tak-
ing an examination even though an examination is required. This usually
happens when an examination for a particular position is not available
when the position has to be filled.

In organizations in which examination is a requirement to qualify for a
civil service position, a classified employee will be classified as certified or
provisional. A certified employee has passed a civil service examination and
has been appointed from an eligibility list or has been in the same classifi-
cation series for two years without an opportunity to take an examination.

A provisional employee is hired without taking a formal civil service ex-
amination and has not been in the same classification series for two years.
Provisional employees must pass a civil service test when it is available or
must serve in the same class series for at least two years to become certified.3,4

Pay ranges for unclassified employees typically consist of a minimum
and maximum rate. New, unclassified employees may be appointed any-
where within the range, depending upon their qualifications. Increases
generally are based on the ability of employees to administer their duties
successfully and usually given no more frequently than once every six
months. Exhibit 8-2 provides an example of a pay schedule for an un-
classified position, Director 1, hired by a healthcare organization.


Exhibit 8-2 Pay schedule for Director 1

Range Minimum Maximum

Hourly $42.43 $59.80

Source: Ohio Department of Administrative Services, 2005.

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When recruiting individuals for employment in both classified and un-
classified positions, if a candidate’s qualifications exceed those required for
a position, then the additional qualifications have no effect on how that
individual is classified or considered. Future opportunities may exist within
an organization for over-qualified candidates. Otherwise, being over-
qualified generally has no benefit. For example, a person with a graduate
degree in hospital administration applying for a position as a hospital or-
derly, would, if hired, be placed in the same classification and pay range
as a candidate holding only a high school diploma.

The classification system works well for organizations in which em-
ployees are assigned duties and responsibilities that are routine and pre-
dictable and have little or no variation. Theoretically under such conditions,
administration and staff should enjoy a fairly congenial relationship. What
employees do and what they are paid are standardized and predictable. The
classification system works fairly well with lower level jobs that are not
highly specialized.

Classification systems become difficult to manage when different posi-
tions involve a variety of duties. In these situations, selecting the correct
series is important because it can determine the qualification requirements
for a job, the salary that will be paid, and even the position’s potential for
career advancement.

Classification systems have become increasingly complex as jobs in the
work environment continue to become more specialized. Healthcare or-
ganizations for the most part require a highly specialized workforce al-
lowing for flexibility and teamwork. An overly rigid classification system
does not work well in this type of environment. Furthermore, it has be-
come increasingly difficult to compare highly specialized jobs to one an-
other in a reliable way.

Rapid advancements in technology in general and personal computers
in particular have increased the difficulty for personnel administrators who
try to accurately inventory all of the duties associated with any position.
For example, in the past a nurse might create a rough draft of a letter for a
secretary to type. With word processing software, the same nurse can type
and print the letter. The duties of the nurse and the secretary have changed.
The secretary has more time available for additional duties. Although this
may seem efficient from an organizational perspective, the nurse has less
available time for activities requiring professional preparation.

Position classification systems are closely linked to different systems
that are used to establish pay rates. Equal pay for equal work provides the
underlying rationale. In other words, individuals in the same job classifi-
cation are paid the same. This is considered to be a viable system and
works well in organizations where each employee in a similar classifica-
tion produces an equal quantity of work at the same level of quality.

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One potential problem with pay setting systems that are linked to po-
sition classification systems is that administrators cannot pay valued or
harder working employees more than other employees in the same classi-
fication. In short, the system is not well designed to recognize and reward
highly motivated employees. Furthermore, pay setting systems connected
with position classification systems are not designed for flexibility when
hiring entry-level employees. This can hinder recruiting high quality can-
didates in cases where entry level salaries are considerably less than salaries
that an entry-level person in that job could earn outside the government.2

In summary, for many organizations, the position classification system
can be an effective management tool. However, in order for it to remain
effective, a position classification system must be kept current. Personnel
administrators are challenged trying to keep up with this responsibility. Like
position classification, compensation systems for state and local public
employees are an important and controversial component of civil service
employment systems. In order for civil service classification and compen-
sation schedules to work effectively, they must be considered by employ-
ees as both adequate and equitable.

Hiring and Promotion
The hiring process for individuals seeking employment by state and local
healthcare organizations often begins by qualifying to take a civil service
examination. A civil service commission typically administers such exam-
inations. Examination announcements are advertised in a variety of media
to reach people in different segments of the population. Once an applica-
tion is obtained, interested individuals must pay close attention to the min-
imum qualifications required for taking the examination. For those who
qualify, competitive examinations are meant to ensure that the public has
access to public jobs. Competitive tests are meant to determine the most qual-
ified persons for a job based on their performance on the examination and
their ability to demonstrate appropriate knowledge, skills, and abilities.5

Civil service examination methods vary and may include any one or
more of the following elements: written, oral, physical, demonstration of
skill or an evaluation of training, education or experience, or a measure
of learning ability. Requirements for examinations are established prior to
the examination and are specified in the examination announcement.3

Once a competitive examination for a position is completed, an em-
ployment list based on the examination results is established and names
of highest scoring individuals are certified to the organization’s personnel
administrator for selection. Civil service laws often have a provision that
adds extra points to examination scores of veterans. Personnel systems
usually follow the rule of three, which permits the person authorized to
do the hiring to choose among the top three certified individuals.


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The governor of Ohio appointed a task force to study and make rec-
ommendations about civil service examinations. The task force observed
that civil service examinations for state employees were not related to job
performance.3 The task force recommended a de-emphasis of written job
knowledge tests. Other concerns by the task force were related to exces-
sive reliance on civil service testing when it does little to measure impor-
tant criteria such as past performance, work ethic, previous attendance
records, and reference checking for potential employees.6

For positions not requiring competitive testing, the hiring process for
state and local healthcare workers is similar to that used in the private sec-
tor. This method is referred to as competitive hiring and involves select-
ing applicants using a series of screening techniques. These include
competitive interviews, reference checks and, when applicable, job related
tests whereby the best candidate is selected for a job. From this process,
candidates for employment are objectively rated and results of interviews
and tests are quantitatively scored.

Good employees working for state and local healthcare organizations
usually have opportunities for promotion to higher-level positions. Civil
service systems typically require that new positions and vacancies be
posted internally before attempting to fill them from the outside.
Organizations usually turn to the outside only when there are an insuf-
ficient number of well-qualified individuals for internal consideration. In
some state and local healthcare organizations, a competitive promotional
examination may be required.

The practice of promoting from within can serve to maintain an orga-
nization’s vitality and competence without harming employee morale.
However, there is always a potential to become too organizationally ho-
mogenous when filling positions from the inside.

In summary, hiring and promoting appropriate people for healthcare
organizations has an obvious impact on the quality of services provided.
Recruitment techniques vary among organizations covered by civil service
law. Typically, organizations will issue public announcements of job va-
cancies and schedule examinations when applicable. Organizations under
civil service have a reputation of being very slow in the recruitment and
promotion process. This is often attributed to the number of regulations
associated with the civil service system. This slowness can discourage ap-
plicants who may have opportunities with other employers.7

Layoff of an individual working in a state or local healthcare organization
is the involuntary separation of an employee because of lack of funds, lack
of work, or job abolishment. Civil service laws govern layoffs. State and
local healthcare organizations with budgetary problems often view layoffs

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as the only alternative. This is one of the most unpleasant tasks adminis-
trators have to perform. Most will avoid it as long as possible.

Layoff procedures under civil service law have the potential to be com-
plicated. Layoffs must be made on the basis of job classifications, not in-
dividual employees. In addition, when determining the order of a layoff,
a retention point formula may be required. Retention points usually include
factors for seniority and performance evaluations. Seniority and per-
formance evaluation ratings are incorporated to determine which em-
ployee will be laid off. Bumping rights often exist. These allow more senior
employees to bump or displace less senior employees from positions for
which they meet minimum qualifications. Unless there are restrictions (e.g.,
bumping is not allowed outside an identified bargaining unit), layoffs can
cause serious disruption of organizational operations. Persons who are
bumped can, in turn, bump other, less senior employees. Once the bump-
ing process has run its course, which can take months, it is entirely possi-
ble for a mid-level manager to assume a clerical position.2,4

Dismissal and Appeal
Disciplinary procedures are typically well addressed by civil service law gov-
erning state and local healthcare organizations. Early corrective actions usu-
ally have positive effects and prevent the ultimate removal of any employee.
It is essential for personnel administrators to follow procedures and keep
good records. A written file must be created. The importance of good
record keeping cannot be overemphasized. Discipline must always be based
on a careful assessment of facts.

Discipline under civil service takes on many forms. Oral and written rep-
rimands are the most common. If reprimands continue to be ineffective,
only then should a more severe form of discipline be considered: reduc-
tion in position, suspension, reduction in pay, or removal.

The main causes for disciplinary action include incompetence, inefficiency,
dishonesty, drunkenness, immoral conduct, insubordination, discourte-
ous treatment of the public, and neglect of duty.

A positive approach can be developed through the principle of correc-
tive discipline. If lower levels of discipline prove ineffective, then more se-
vere forms of discipline must be considered. More severe forms of discipline
such as suspension or demotion are less than satisfactory, except when an
offense is very serious or flagrant. Suspension creates hostility. Reduction
in pay or position can hamper organizational performance by reducing an
employee’s motivation. For very serious or flagrant offenses, immediate sus-
pension may be warranted. Dismissal should be made only after allowing
time for a thorough investigation and assessment of relevant facts.

Civil service laws will typically have provisions for employees to appeal
disciplinary decisions made by administration. Some organizations have


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an independent appeal system apart from their civil service system. For
those with unions or bargaining units, this provides an additional avenue
for appeal. In some cases, workers who are unsuccessful with a collective
bargaining appeal have the option of shifting to a civil service procedure.

Due process standards must be adhered to during any appeals process.
Due process normally involves an oral hearing, an attorney to represent
an employee, and an opportunity to cross-examine witnesses. The proce-
dures are generally cumbersome and time-consuming. Experts agree that
they often favor an employee. Terminating a civil service employee who
is a consistently poor performer can be a daunting task. Personnel man-
agers going through the appeals can be consumed by the process and ac-
complish little other work.2

Personnel administration of healthcare organizations that are governed
by civil service systems has both merits and disadvantages. Reform meas-
ures have been underway for years to help correct some of the problems
with the systems. The rapid pace of change in the workplace resulting pri-
marily from advances in technology has accelerated the need for reform
in some key areas of civil service. Attracting and maintaining a competent
workforce for health-related organizations governed by civil service should
be a main goal of reform efforts.

Returning to the case study at the beginning of this chapter, Jerry Quinn
was told that he would be laid off as a result of the hospital closing down
the laboratory and abolishing his job. He was perplexed because he had
only one year before he could retire. Jerry met with the hospital’s person-
nel administrator and was informed that he could stay employed at the hos-
pital and get his last year in and retire if he were to bump down to a lower
position for which he might be qualified. Jerry agreed to the offer and ac-
cepted a clerical position. The job consisted of handling all the paperwork
for laboratory results. It paid less, but he was able to complete his last year
of service and retire. Without the civil service system, Jerry would not have
been able to pursue his retirement dream.


1. Heilig, G., & McKay, D. R. (1999). Civil Service Handbook: Everything You
Need to Know to Get a Civil Service Job. San Jose, CA: IDG Books.

2. Hays, S. W., & Kearney, R. C. (2003). Public Personnel Administration: Problems
and Prospects. Upper Saddle River, NJ: Prentice Hall.

3. Ohio Department of Administrative Services. (2005). Available at www.das.ohio.gov/.
Accessed September 27, 2005.

Conclusion 157

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4. County Commissioners Association of Ohio. (2005). Available at www.ccao.gov/.
Accessed September 25, 2005.

5. Columbus Civil Service Commission. (2005). Available at www.csc.colum-
bus.gov/. Accessed September 27, 2005.

6. Ohio Civil Service Employees Association. (2005). Available at www.ocsea.org/.
Accessed September 27, 2005.

7. Ohio Municipal League. Available at www.omunileague.org/. Accessed September
26, 2005.

Discussion Points

1. What are three advantages of a civil service system?
2. What are three disadvantages of a civil service system?
3. Do you favor a civil service system? Why or why not?
4. Is testing the best way to identify the best candidate for a job? Why

or why not?
5. List two alternatives to testing that can be used to identify the best

candidate for a job. How do they compare with testing? Why?
6. Discuss the advantages and disadvantages of classification and com-

pensation systems.
7. Should civil service employees be allowed to unionize? Why?
8. Why are layoffs under a civil service system more difficult to accom-

plish than layoffs in private companies?


Maidment, F. H. (2004). Human Resources 05/06 (15th ed.). New York:

Noe, B. G., Hollenbeck, J., & Wright, P. (2005). Human Resource Management: Gaining

a Competitive Advantage with OLC Card (5th ed.). New York: McGraw-Hill.
Pynes, J. E. (2004). Human Resources Management for Public and Nonprofit

Organizations. San Francisco, CA: Jossey-Bass.
Rees, D., & McBain, R. (2005). People Management: Challenges and Opportunities.

New York: Palgrave Macmillan.
Renckly, R. B. (2004). Human Resources. New York: Barrons.

Columbus Civil Service Commission; www.csc.columbus.gov/.
County Commissioners Association of Ohio; www.ccao.gov/.
Fedworld.com; http://www.fedworld.gov/jobs/jobsearch.html.
Office of Personnel Management; http://www.opm.gov/.
Ohio Civil Service Employees Association; www.ocsea.org.
Ohio Department of Administrative Services; www.das.ohio.gov/.
Ohio Municipal League; www.omunileague.org.


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a Successful
and Legal

Selection Interview
Chapter Overview

After reading this chapter, readers will:

• Be familiar with the specific laws that have implications for the
interviewing process

• Know how to prepare for an interview prior to an applicant’s arrival
• Understand the interviewing process from the perspective of an

interviewing manager
• Know the specific kinds of questions that can and cannot legally

be asked in an employment interview
• Know how to recognize and apply methods useful when probing

for additional information that could be helpful in arriving at an
employment decision

• Understand how an interviewer should respond or react when
receiving legally forbidden information that is voluntarily given

• Understand the present-day concept of “behavioral interviewing”
and how it may or may not differ from what one might consider
“ordinary” interviewing

• Recognize that some applicants have a tendency to interview the
interviewer and know how to address this mode of behavior

• Be aware of the potential for fraud and distortion on résumés and
applications, and know how to address suspicions concerning
such material




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Many laws, foremost among them Title VII of the Civil Rights Act, affect
the interviewing process and provide a number of potential legal traps for
an unwary interviewer. Interviewing is not to be entered into lightly and
interviewers must be fully prepared. An interviewer must know all about
the job that an applicant is seeking and must know as much about each
applicant’s background and qualifications as is practical. Customary in-
terviewing guidelines must always be followed. Interviewers must con-
stantly be vigilant to stay within legal boundaries when asking questions
and conducting interviews. An interviewer must always be conscious of
the possibility that an applicant may interpret a statement or question as
being discriminatory. Therefore, interviewers must always remember to keep
an interview focused on the job and on an applicant’s ability to perform
it rather than on personal attributes. An experienced interviewer’s strongest
tool is often silence paired with effective listening. Selection interviewing
is an acquired skill in which people can improve with time and experience.

Case Study: “It Wouldn’t Be Fair to Her”

Nurse recruiter Carrie Taylor was experiencing some of the same problems
as others in the region who did the same kind of work. Because of a wide-
spread nursing shortage, she had positions that often required weeks or
months to fill. Candidates of all skill levels and degrees of desirability were
chronically in short supply. Carrie’s needs were particularly acute in crit-
ical care areas and in her medical center’s transitional care unit, where
people were sent for rehabilitation services or to await placement in long-
term care facilities. In view of these acute needs, Carrie was especially
cheered when she received an application from an experienced nurse who
desired a position in the transitional care unit.

The applicant was a registered nurse named Lynn Taylor. She was not
related to Carrie, but their common name provided a perfect conversa-
tional ice-breaker. Lynn interviewed well, but Carrie was dismayed by
some of what she saw and much of what she heard. Lynn’s small stature,
frail build, and apparent age disappointed Carrie. Lynn Taylor appeared
to be in her middle fifties. Carrie was put off because she knew how de-
manding, both physically and mentally, the transitional care unit could
be. When Carrie asked Lynn about a significant gap in her work history,
without going into great detail Lynn said enough so that Carrie could read-
ily conclude that Lynn had undergone breast cancer surgery.

Based on the interview, Lynn Taylor was not offered the position for which
she applied. Carrie felt badly about not having anything to offer Lynn but
was convinced that Lynn would be unable to keep up with the demands
of the transitional care unit.


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Some weeks after the Lynn Taylor interview, the transitional care position
remained unfilled. At the same time, the medical center received a complaint
Lynn had filed with the State Division of Human Rights. The document
claimed that Lynn Taylor had been illegally denied employment based on age
and disability. Because the complaint entered the organization via the human
resources (HR) department, the HR director met with Carrie in an attempt
to determine whether the charge of discrimination might be valid. Carrie ex-
plained the basis for her decision, adding, “She seems like nice lady and she’s
a knowledgeable nurse, but she’s older and physically limited. It just wouldn’t
be fair to put her in a position where she’s bound to fail.” Consider Carrie
Taylor’s reasoning. Was it sound? Should she have offered the position to
Lynn? How would you respond to the allegations in the complaint?

Legal statutes affecting employment practices are discussed in Chapter 3. The
laws having the most effects on interviewing include the Equal Pay Act (1963),
Title VII of the Civil Rights Act (1964), the Age Discrimination in Employment
Act (1967, amended in 1986) and the Americans with Disabilities Act (1992).
Most states and many municipalities have enacted laws and ordinances that
address local issues. All requirements in this legislation must be met.

As employment legislation has been enacted, many of the questions and
practices that had been used on most application forms and employment
interviews have become illegal. Over the past three decades, approximately
two-thirds of the information formerly requested on a typical employment
application has become inaccessible because of legal constraints. These
prohibitions apply to interview questioning and designate what can or
cannot legally be asked of job applicants.

This chapter encompasses the process of employee recruitment from
preparation for an interview to appropriate follow up after interviews
have been concluded. The concerns presented here extend beyond the le-
galities of an interview. The perspective is that of a department manager
interviewing a prospective employee. Pertinent legal precautions are pre-
sented as appropriate in the process.


Review the Job Description
All position descriptions in every department should be reviewed at reg-
ular intervals and updated as necessary. These reviews should be con-
ducted each year. A job description should be reviewed for completeness

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and accuracy whenever a manager is preparing to interview a candidate
to fill an open position.

Before interviewing any candidates for a position, the position de-
scription should be thoroughly reviewed and updated as necessary. Ideally,
this should be undertaken as soon as authorization is received to fill a new
or vacant position. Both the manager and the HR recruiter need the job
description early in the process. This is why a revised or new position de-
scription should accompany the personnel requisition to HR.

The individual who supervises an unfilled position is most familiar with
its characteristics and requirements. An outside manager or HR recruiter
may be only generally familiar with a particular job’s structure and re-
quirements if there are a number of different positions within a single area
of responsibility.

An interviewer should review the appropriate job description shortly
before an interview is scheduled so that pertinent information about the
position is fresh in the interviewer’s mind. Reviewing a job description for
reference during an interview is sometimes acceptable. However, inter-
viewers are cautioned not to rely on the position description during an in-
terview. Recruiters are expected to know about the position and what will
be expected from employees that are hired for that position.

Review the Application or Résumé
An individual’s job application or résumé should be thoroughly reviewed
before an interview begins. Reviewing an application or résumé for the
first time during an interview is unprofessional and rude. Such behavior
is unsettling for applicants.

Sometimes an interviewee will be sent to an interviewing manager with
a résumé or an application in hand. When this occurs, the interviewer
should take a few minutes in private to go over the material before start-
ing the interview. Human resources should not ordinarily send an appli-
cation or résumé along with the applicant unless recruitment is urgent and
the organization has agreed to accept and interview applicants on a walk-
in basis. Under normal recruiting conditions, an interviewer should have
the résumé or application in advance of the interview. If this is not routine
in an organization, then HR should review its standard operating proce-
dures for recruiting.

In reviewing an applicant’s information, interviewers should be espe-
cially sensitive to any gaps in the individual’s employment record and back-
ground. Periods of months or years for which no information is supplied
should be a reason for caution. Such omissions often obscure information
an applicant would prefer not to reveal. If gaps are detected, then make a
note to ask about them during the interview. Both the HR recruiter and


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the department interviewer should similarly look for gaps in the screen-
ing process.

Be alert for the possibility of exaggeration or out-and-out fraud in an
applicant’s background, especially in the areas of education and work ex-
perience. Résumé fraud is discussed in detail later in this chapter.

Arrange an Appropriate Time and Place
Arrange for a place to conduct the interview where the interviewer and ap-
plicant will be reasonably comfortable and can talk without interruption.
Borrow a private office or use a conference room if possible. A private of-
fice with a door is preferred. An open-topped or doorless cubicle is not pri-
vate. If open space must be used, then a semi-enclosure or a corner table
that is at some distance from the nearest person should provide a modicum
of privacy. The area used should allow for a conversation without being
overheard. Trying to conduct an interview within the hearing of others
can be distracting for an interviewer. To an applicant, it is not only unset-
tling but also unfair.

Physical comfort is a consideration. Surroundings do not have to be
plush or elegant, but the seating should be comfortable and the tempera-
ture should be reasonably controlled. If using a desk or table, the interviewer
and applicant should face each other across a corner of the surface or out
in an open area rather than across the full expanse of the desk or table.
An expanse of surface can be intimidating to an applicant.

Make sure to allow adequate time for the interview. How long an in-
terview should take depends on the kind of position that is being filled
and the depth to which an interviewer wishes to probe. For entry-level po-
sitions, thirty minutes should be adequate. For technical and professional
positions, an hour is a minimum length of time. Promising candidates may
be given more time, especially if other activities, such as providing a fa-
cility tour, are components of the interview.

Interruptions hamper the exchange of information. Experienced man-
agers do not take or make telephone calls when conducting interviews.
Drop-in visitors should be tolerated only in an absolute emergency be-
cause they disrupt the rhythm of an interview. In addition to being ex-
tremely disruptive to applicants, interruptions disturb an interviewer’s
train of thought and increase the difficulty of establishing a conversational
rapport with the applicant.

Prepare Some Opening Questions
Have three or four relatively easy, non-threatening questions prepared to
initiate the conversation. A careful review of an applicant’s résumé usu-
ally presents some useful elements for starting a conversation.

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Remembering a few basic guidelines can assist interviewers when con-
ducting professional, effective interviews.

Be on Time
Short of encountering a dire emergency, there is no reason to be late for an
interview. If an interviewer is late, then the reason should be plausible and
preferably visible. An employee selection interview is as important an event
for an organization as it is for an applicant. By extension, it should be im-
portant to an interviewer. Casual tardiness by an interviewer displays dis-
regard for the value of an applicant’s time and can leave an applicant with
a less-than-desirable impression of the organization.

If Possible, Help the Applicant to Relax
Most experts suggest beginning an interview with a bit of small talk or
some inconsequential social chatter to help get the conversation started.
With most applicants, this is sufficient to initiate a conversation. Although
some applicants remain nervous, it is still best to make an attempt at help-
ing them to relax.

Never forget that applicants may be intimidated by their interviewers
and the authority of their positions. An interviewer’s position in an or-
ganization may not be particularly important, but to applicants, inter-
viewers are authority figures who are perceived to have strong voices in
determining whether or not they are hired.

Interviewers have a psychological upper hand in an interview situation.
The interview is taking place in their territory. They are representatives of
the organization who may have the power to extend or withhold em-
ployment. Applicants react to perceived differences between themselves and
their interviewers by becoming nervous, so any step an interviewer can
take to relax an interviewee and put the conversation on an equal footing
will contribute to a more productive interview.

Adjust Language to Accommodate an Applicant
Successful interviewers put themselves on an applicant’s level of educa-
tion and sophistication when choosing their words by using terms that an
interviewee is most likely to understand. Avoid the use of acronyms or ab-
breviations without explanation, and do not use jargon. This helps to di-
minish feelings of being an outsider. This suggestion can be ignored when
an applicant is known to be an equal in terms of job experience. Use lan-
guage that is appropriate for the position under discussion. The use of ap-
propriate language is important in health care. A single manager may have
direct responsibility for persons with a variety of educational levels. For


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example, interviewers use different language when conversing with nurse
practitioners than with applicants for a nursing assistant position. Politeness
and humility always contribute to effective communications.

Avoid Both Short-Answer and Open-Ended Questions
An important interview objective is getting an individual to speak about
knowledge, experience, reasons for seeking a particular position, personal
likes and dislikes, and career goals. Interviewers will not learn much of sub-
stance if their questions can be answered by single words such as yes or
no or by brief phrases. Effective questions require individuals to speak at
least a sentence or two in response. In only a few instances are short-
answer questions fully appropriate, as in, for example, “Do you have a cur-
rent nursing license?”

In contrast, interviewers should not ask completely open-ended ques-
tions that provide no clear guidelines to applicants as to appropriate con-
tent or when to stop speaking. A classic example is the opening line often
used by interviewers who believe they are being clever and insightful, “Tell
me all about yourself.” A request of this nature has no recognizable bound-
aries and any answer can ramble on for a considerable time without pro-
ducing much value. Because the question provides no guidelines as to how
much a person is expected to say, it is inherently unfair to an applicant.

The most effective questions are those that require some thought and
can be reasonably answered in three or four sentences. Interviewers should
try to get applicants to talk about themselves relative to potential em-
ployment. However, they should do so in such a way that they can main-
tain control over the conversation and avoid causing an interviewee to
either talk without closure or freeze from confusion when asked an unfair,
open-ended question. Examples of appropriate questions include, “How
did you become interested in this occupation?”; “What part of your most
recent position did you like best, and why?”; “Of what accomplishment
of the last year or two are you most proud?” and “Tell me about some-
thing that went wrong on the job, and what you learned from it.”

Interviewers should be sure to allow a pause between an applicant’s re-
sponse and the next question. This gives the applicant a chance to embel-
lish the response, because most applicants tend to fill in periods of silence.

Avoid Leading Questions
Be careful to avoid leading applicants toward a desired response. This is
a particular hazard when interviewing someone who is making a positive
impression. Interviewers in such a situation often begin to ask their ques-
tions in a manner that encourages an applicant to provide answers that they
want to hear. A sharp applicant will recognize leading questions and co-
operate by providing “correct” responses. For example, if the interviewer

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asks, “You left County Hospital because you weren’t being sufficiently
challenged, right?” the applicant knows the answer the interviewer wants
to hear.

Avoid Writing during an Interview
Interviewers who find it necessary to make written reminders during an
interview should limit them to one-or-two word notations. If more de-
tailed notes are required, then the brief reminders can be expanded into
sentences or paragraphs after the interview is concluded.

There are two sound reasons for not writing while an applicant is speak-
ing. First, it is unnerving. In addition to causing the applicant to wonder what
is being written down, it is impolite, it restricts eye contact, and it conveys
the impression that an interviewer is giving less than complete attention.
Second, it is not possible to listen carefully while writing. This is simultane-
ously performing two important communication tasks. Few people can do
this without both processes suffering. It is far better to give an applicant un-
divided attention and save writing until an interview has been concluded.

Promise and Ensure Follow-Up
At the conclusion of every interview, indicate to all applicants that they will
be advised of the outcome after all interviews for the position have been
completed. Pledge follow-up, but provide nothing else. Do not promise
that an offer will be forthcoming, even if the person who has just inter-
viewed is the leading candidate. A manager or supervisor should not make
an offer or quote a salary without confirmation from HR. An applicant’s
specific questions about pay and benefits should be answered by HR and
not by an interviewing department manager.

Having promised follow-up on behalf of the organization, interview-
ers have an obligation to ensure that the steps or activities are undertaken
and delivered. It is extremely important that all applicants who have given
their time for an interview receive closure within a reasonable period fol-
lowing the interview. Allowing unsuccessful applicants simply to fade away
without acknowledgment creates ill will toward the employer among mem-
bers of the community.

The foregoing interview steps are summarized in Exhibit 9-1.

Inquiring about an applicant’s personal life, beliefs, values, and attitudes
is illegal. Information about an individual’s personality is restricted to ob-
servable phenomena. In an employment interview, the focus must remain
on the position and whether an applicant has the skills needed to accom-
plish a given task for the organization. Experienced interviewers speak of


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evaluating interpersonal chemistry. To the extent that this is assessed, the
evaluation cannot be made using words. In short, an employment inter-
view provides an opportunity to develop some knowledge of what a prospec-
tive employee can contribute to an organization.

As a general rule, keep all interview questions related to an applicant’s
capacity to perform the job in question. The following sections discuss
subjects and provide commentary about the legal status of topics that may
arise in an employment interview.

Race, Color, Religion, Creed, National Origin,
Sex, Marital Status, Birth Control Practices
These subject areas are addressed together because there are no questions
concerning them that legally can be asked. This means that an interviewer
may not ask questions about the origins of a person’s name or where the
individual’s family came from. Asking about the existence of a family is
not permitted. This prohibition extends to questions that can be inter-
preted as fishing for forbidden information. A judge in a court of law per-
forms any needed interpretations. Information of this nature cannot be
requested or collected on an employment application.

The reasoning behind these prohibitions is to eliminate the possibility
of discrimination based on such information. For example, at one time it
was common to ask young female applicants if they were engaged, and if
so, when they planned to marry. Married women of childbearing age were
asked if they planned to have children. Divorced or separated women were
asked if they were single parents and how many children they had.
Information obtained in responses to such questions was used to make
hiring decisions. Many managers believed that avoiding people who might
not remain with an organization for very long or who might experience
more absences than others who lacked particular responsibilities simply
reflected prudent business practices.

Anti-discrimination legislation has imposed changes. It is now illegal to
make employment decisions based on personal information. Contemporary

Interview Questioning: To Ask or Not to Ask? 167

Exhibit 9-1 The Manager and the Interview Process

Be on time
Help the applicant to relax
Adjust language to accommodate an applicant
Avoid both short-answer and open-ended questions
Avoid leading questions
Avoid writing during an interview
Promise and ensure follow-up

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interviewers must do their best to determine whether or not an individual
is capable of performing a given job, not to determine the likelihood of be-
ing absent from work or leaving employment.

The only legal question that an applicant can be asked about age is: “Are
you at least 18 years old?” It is permissible and sometimes necessary to ask
this because the employment of workers younger than 18 years is gov-
erned by state child labor laws. Many employment situations are prohib-
ited for those younger than 18 years.

With the exception of being younger than 18 years, prohibitions on
questions about age relate to discrimination laws. The Age Discrimination
in Employment Act, passed in 1967 and amended in 1986, prohibits dis-
crimination on the basis of age. Under the law, only a small number of
bona fide occupational qualifications exist when age can be considered to
be a legitimate employment criterion. For the vast majority of employ-
ment situations, the single criterion that prevails is an individual’s ability
to perform a job.

The Americans with Disabilities Act prohibits employers from asking whether
an applicant has a disability or has ever been treated for any number of spe-
cific medical conditions. Employers are forbidden to ask about an appli-
cant’s Workers’ Compensation history at any time prior to making an offer
of employment. The only questions that can be asked before an offer of em-
ployment has been made are questions concerning a person’s ability to per-
form the duties of the job under consideration. Questions asked prior to
employment cannot be phrased in such a way as to solicit information about
medical conditions or physical limitations. For example, if a job requires
driving, then an interviewer may ask if an applicant has a driver’s license
but may not ask if the person has any visual limitations.

When inquiring into an applicant’s ability to perform the major duties
of a job, an interviewer can ask persons if they have any medical, physi-
cal, or mental impairment that might interfere with their ability to perform
the specified job duties, or whether there are positions for which they
should not be considered because of an impairment. It is illegal, however,
for an interviewer to inquire about the nature of any impairment. The key
to questioning in this area is to focus on ability, not disability.

It is permissible for an interviewer to ask whether an applicant has ever worked
for the organization under a different name. Employers have this right because
they are entitled to have access to an applicant’s prior work record. Interviewers


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may ask whether any additional information is available concerning a name
change or using different names to adequately complete reference checks. An
interviewer is forbidden to ask a female applicant’s maiden name or the orig-
inal name of any applicant whose name has been changed by court order.

Address and Duration of Residence
It is permissible to ask an applicant’s place of residence and how long the
person has been a resident of that municipality.

Birthplace and Date of Birth
No questions can legally be asked concerning an applicant’s place of birth
or the birthplace of an applicant’s parents or any other family members. In
most instances, because age cannot legally be considered when making hir-
ing decisions, it is illegal to ask an applicant’s age. For similar reasons, em-
ployers are prohibited from requiring applicants to submit birth certificates,
baptismal records, naturalization records, or any other proof of age.

The practice of requiring applicants to supply photographs with their ap-
plications is illegal. Even suggesting that a photograph may be submitted
at an individual’s option is blatantly illegal.

It is lawful to ask whether an applicant is a citizen of the United States,
but it is unlawful to ask of what country an individual is a citizen. This
question is construed as asking about national origin. Applicants who are
not citizens can legally be asked whether they intend to become citizens
or if they have the legal right to remain and work in the United States.
This legal permission takes the form of the well-known “green card.” It
is not permissible to ask whether an applicant or an applicant’s parents or
spouse are naturalized or native-born United States citizens. An applicant
cannot be required to produce naturalization papers.

It is legal to ask what foreign languages applicants are able to speak and
write with fluency. However, it is not legal to ask them about their native
language or to ask individuals how they acquired the ability to read, speak,
or write a foreign language.

It is legal to ask about an applicant’s academic, vocational, or professional
education and the public or private schools that he or she attended. This

Interview Questioning: To Ask or Not to Ask? 169

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discussion can and should include the relevance of particular programs or
courses taken.

Interviewers should concentrate most of their questions in this area. The
primary objective during this phase of interview conversation should be
to gather sufficient information about an applicant’s work history to make
an informed decision about whether an individual’s experience is applicable
to the position being discussed. When talking about employment experi-
ence, it is usually most helpful to begin with an applicant’s present or most
recent position and work backward in time.

It is permissible to ask the names of an applicant’s relatives who are already
employed within an interviewer’s organization without specifying their
relationship. This includes a spouse. This is relevant when an organization
has rules about nepotism. However, prospective employers may not ask
about relatives and specify the relationship as this is interpreted to be dis-
criminatory on the basis of family status. It is illegal to solicit any infor-
mation concerning an applicant’s spouse, children, or other relatives who
are not employed by the interviewer’s organization.

Notify in Case of Emergency
In the pre-employment stage of recruiting, it is illegal to ask an applicant
for the name and address of a person to be notified in the event of acci-
dent or other emergency. This is one of the elements of information (along
with date of birth, marital and family status, and other personal infor-
mation) that organizations are not permitted to solicit until an offer of
employment has been extended and accepted.

Military Experience
It is permissible to ask about the nature of an applicant’s military experi-
ence in a branch of the armed forces of the United States. However, inter-
viewers may not ask about general military experience without specifying
armed force of the United States or a branch thereof. Furthermore, inter-
viewers are not permitted to ask applicants about the character or terms
of their discharge or separation from military service.

Although the question of arrest was standard on employment applications
and during interviews for many years, it is no longer legal. It is, however,
permissible to ask if an applicant has ever been convicted of a crime and
to ask for details associated with the conviction.


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Information acquired through this line of questioning must be used
with care. If an individual is rejected for employment because of a crimi-
nal conviction, then there should be a reasonable relationship between the
nature of the crime and the position for which the person is applying. For
example, an organization may be acting reasonably and properly by re-
jecting a convicted embezzler for a finance position or by rejecting some-
one with a drug-related conviction for a pharmacy position. The same
organization would be likely to encounter a claim of discrimination for re-
jecting someone with a felony Driving While Intoxicated conviction for a
position as a cook or housekeeper.

In the past, employment applications routinely asked applicants to list all
clubs, societies, and other organizations to which they belonged. This is
now illegal, because the names of many organizations allow prospective
employers to infer personal information such as national origin or religion.

One absolute prohibition concerning external memberships involves
inquiries into whether an applicant is or ever has been a member of a la-
bor union. Employers, especially those who may be union-free, ordinar-
ily do not want to knowingly hire people that they fear might attempt to
spread interest in union organizing. Legal history has provided many in-
stances of applicants claiming that they were rejected for employment be-
cause of union affiliations. Asking about prior membership in a labor
union is considered to be an unfair labor practice.

To remain legal, any inquiry about organizations must be limited to ask-
ing about membership in groups that applicants consider being relevant to
their ability to perform the duties required by the position under considera-
tion. For all practical purposes this limits questions about organizations to
technical and professional societies related to an applicant’s occupational field.

Job applicants may reveal personal information during the course of an
interview. Such admissions are legal and within the realm of their personal
rights. Interviewers may not respond with questions on the same topics.
Potential employers may not use such information when making hiring
decisions. The latter activities are illegal. As an example, a female appli-
cant may talk about her recent divorce, her three dependent children, and
the fact that her church is assisting her to pay for cancer treatment that is
thought to be due to benzene exposure on her last job. An interviewer may
not ask for any details and must not use any of the offered information
when making a hiring decision. The only relevant consideration is whether
or not the applicant has the ability to perform the duties and responsibil-
ities of the position for which she is applying.

Exhibit 9-2 provides a number of specific questions as examples of pro-
hibited inquiries. These questions, or variations of them, may not be asked
of a job applicant whether in an interview or on a job application.

Interview Questioning: To Ask or Not to Ask? 171

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Exhibit 9-2 Examples of Forbidden Pre-Employment Questions


Concerning an applicant’s general history, in a pre-employment in-
terview, a potential employer may not ask the following:

1. Do you attend church regularly? What church do you go to, and
who is the pastor?

2. What religious holidays do you observe?
3. What is your nationality, ancestry, descent, parentage, or lineage?
4. Of what nationality are your parents? Your spouse?
5. What is your native language?
6. Are you married? Divorced? Separated?
7. Where does your spouse work? What does he (or she) do for a

8. Do you have children? What are their names and ages? Do you

have a reliable arrangement for child care?
9. Was your name ever changed by marriage or court order? If so,

what was your original name?
10. When were you born? How old are you?
11. Where were you born?
12. Where were your parents born? Where was your spouse born?
13. Of what country are you a citizen?
14. Are you a native-born or naturalized citizen of the United States?
15. Do you own your own home or do you rent?
16. How did you acquire the ability to read, write, or speak English?
17. What is the name, address, and relationship to you of the indi-

vidual to be notified in case of accident or emergency?
18. What kind of discharge did you receive from the United States

19. To what clubs, societies, lodges or fraternal organizations do

you belong?
20. How many children do you plan to have?
21. Have you ever had your wages garnisheed or attached?
22. Have you ever filed for bankruptcy, either personally or as a

business owner?
23. Has your spouse ever worked here?
24. What is your height? Your weight?
25. Would your spouse approve of your employment here should

you be hired?

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Exhibit 9-3 provides a number of examples of legal pre-employment in-
terview questions.

Interview Questioning: To Ask or Not to Ask? 173

Exhibit 9-2 Examples of Forbidden Pre-Employment Questions (cont.)


Concerning an applicant’s medical history, in a pre-employment in-
terview, a potential employer may not ask the following:

1. How is your health in general?
2. Do you have any relevant medical problems or conditions?
3. Have you or any member of your family ever been treated for

any of the following diseases or conditions? This is followed by
a check-off list that may include: cancer, heart disease, high
blood pressure, diabetes, epilepsy, AIDS, back problems, carpal
tunnel syndrome, hearing loss, contact dermatitis, drug or al-
cohol abuse, tendonitis, arthritis, tuberculosis, sexually trans-
mitted diseases, and mental illnesses.

4. Are you taking prescription medication? What drugs, prescribed
for what conditions?

5. Have you ever been hospitalized? For what conditions?
6. Do you have any disabilities or medical, physical or mental lim-

itations that could prevent you from performing the duties of
the job in question?

7. Are you in any way disabled or do you have a disability?
8. If you are presently out of work because of a disability, what is

the prognosis?
9. Will you require time off for medical reasons?

10. Have you ever been injured on the job or had any other work-
related accidents?

11. Check off on a list of potentially disabling impairments, any
physical limitations that you may have.

12. Is any member of your family disabled?
13. Have you ever filed a Workers’ Compensation claim?
14. Have you received any payment for a Workers’ Compensation

15. Are you disabled in any way? If so, how did you become

16. What is the prognosis of your disability?
17. Will you require time off for treatment or medical leave due to

anticipated incapacitation because of your disability?

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Exhibit 9-3 Examples of Legally Permissible Pre-Employment Questions

Concerning an applicant’s personal information, in a pre-employment
interview, a potential employer may legally ask the following ques-
tions or request the following information:

1. What is your full name?
2. What is your address and the telephone number at which you

can be reached?
3. What is your prior work experience? For each prior employer,

this may include:

• Employer’s name and address
• Jobs or positions held
• Duties performed
• Skills needed to perform job duties
• Tools, machinery, equipment, and vehicles used in

job performance
• Name of immediate supervisor
• Rate of pay received
• Length of time on the job
• Reason for leaving

4. What do you know about the requirements of the job for which
you are applying?

5. What skills, education, training or experience have you had that
is relevant to performing the duties of this job?

6. Do you hold the licenses or certifications that may be required for
employment in the position in question, for example, a driver’s
license, an electrician’s license, a registered nursing license?

7. What were the primary duties and most important responsibil-
ities on your most recent job?

8. What do you believe was the most difficult part of the job you
have been most recently doing? Why?

9. What safety procedures were you required to follow at your
most recent employment?

10. Are you applying for full-time, part-time or temporary work?
11. Are you able to work the particular shift or shifts on which this

job is ordinarily used?
12. Are you able to work overtime or weekends when it is necessary?
13. Are you able to meet this organization’s attendance standard?
14. If hired, when are you able to begin work?

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After discussing more concrete subjects, such as qualifications and expe-
rience, interviewers often spend some time discussing less tangible issues.
They are attempting to develop an overall impression of an applicant’s
personality and attitude toward work and career. Because too much can-
not be asked in an interview, it is important to develop a gut feeling or
personal sense about each candidate. Gut feeling is highly subjective, but
it is a legitimate part of the interview process. It refers to the feeling an in-
terviewer develops about an individual during an interview. Such feelings
can provide clues about how other employees will regard the new person
if an offer of employment is extended.

Exhibit 9-4 offers a number of possible questions that can be used when
assessing an applicant in areas other than specific qualifications and ex-
perience for the position under consideration. In addition to assessing in-
tangibles, an interviewer should keep another question in mind throughout
the conversation: “How well do I believe this person would fit into the

Probing for Intangibles 175

Exhibit 9-4 Examples of Questions to Use in Probing for Intangibles

Concerning the information supplied by an applicant in a pre-em-
ployment interview, a potential employer may legally ask the fol-
lowing questions or request the following less tangible information:

1. What aspects of a job are most important to you?
2. What are your own personal criteria for your success?
3. What are your short-term career goals? What are your long-

term career goals?
4. What are you seeking in the position under discussion that you

are not getting from your present position?
5. What past goals have you set for yourself, and what have you

done to accomplish them?
6. In what way would a position with our organization help meet

your career goals?
7. What factors do you believe have contributed the most to your

8. What has prevented you from moving ahead as rapidly as you

would have liked?
9. What job would you choose if you were completely free to do

10. Which of your jobs did you enjoy the most? Why?
11. How did you get each of the positions you have held?

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present work group?” Whoever is hired will have to work, often closely,
with current employees on a daily basis. Concern for how a new person
may relate to existing employees is very appropriate.

What Is an Applicant Really Seeking?
While assessing intangibles and throughout an interview, an interviewer
should be attempting to judge whether the applicant is trying to obtain a
more desirable position or escape from something that is dissatisfying. In
others words, an interviewer is trying to determine if an applicant’s driv-
ing force is positive or negative. Is the applicant seeking advancement,
more interesting work, better compensation, a preferred occupation, growth
or personal satisfaction? Conversely, is the applicant trying to get away from
an unpleasant environment, undesirable hours, an unpleasant supervisor,
a quarrelsome mix of personalities, or some other unknown factor?

It is not always easy to determine whether a person’s motivations for
seeking a new position are positive, negative, or mixed. However, the time
allocated to making a decision is still worth the investment. A person who
is seeking a more desirable position is more likely to remain as a positive
performer over time. An individual whose primary motive is to escape
something is more likely to be a mediocre performer who is likely to leave
and become a turnover statistic.

There are some legitimate exceptions to the prohibitions against making hir-
ing decisions based on some of the categories of forbidden information dis-
cussed in this chapter. For example, physical condition and age can legitimately
be considered as bona fide occupational qualifications for police officers,
fire fighters, airline pilots, and surgeons. Gender may be relevant for ap-
plicants applying for a position as an attendant for a men’s or women’s fit-
ting room or to model gender-specific clothing. Having a driver’s license is
a legitimate requirement for operating a taxicab.

As already noted, forbidden information must never be used as the basis
of an employment decision, even when it is voluntarily given.

Most interviewers receive forbidden information at one time or another.
This puts an interviewing manager in an uncomfortable position of having
heard unsolicited information and then having to ignore it. This is easier
said than done. The situation is similar to a comment made in court that is
followed by a judge’s admonition to “Disregard that last remark.” It is easy


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to disregard something that has not been heard, but it is not so easy to ig-
nore something that has been heard. The information is known. The best
advice is conscientiously to avoid using it when making a decision.

Applicants often volunteer personal information in a plea for sympa-
thy that they hope will lead to a job offer. Examples of such pleas include,
“I really need this job because I’m a single parent,” “I’ve been out of work
for months and my husband is ill,” or “We get our health insurance through
my wife’s employer, so I could save you some money on benefits.”

On occasion, applicants deliberately drop items of personal informa-
tion and later claim they were the victims of discrimination when the job
is given to someone else. An example of such an insertion is, “I happened
to mention that I was pregnant. I know that’s why I didn’t get the job.”
Interviewers who hear comments that contain personal information are en-
couraged to report them in writing to their supervisors as soon as is prac-
tical after an interview is concluded. They should later file documentation
summarizing the strengths and weaknesses of each candidate and rank all
persons in the applicant pool. Finally, interviewers should note the rea-
sons for recommending an offer of employment to the successful hire and
the reasons for not recommending other applicants.

To reiterate, no matter how it is obtained, forbidden information should
never be used as a factor in an employment decision. Because interview-
ers may be required to defend a particular employment decision, an HR
recruiter and hiring manager should always be able to state succinctly and
honestly why one person was hired in preference to others.

Ordinarily, an employment recruiter in HR has the responsibility to make
a formal offer of employment. This includes the starting pay, which will
have been settled upon in conjunction with the department manager. It is
fairly common practice for the offer to be conveyed by telephone and then
followed with a formal written offer by letter.

Human resources usually has the duty to notify unsuccessful applicants
and thank them for applying and making themselves available for inter-
view. When conveying regrets, HR personnel will not tell unsuccessful can-
didates why they did not get the position. Each is simply told that someone
who appeared to be more suitable or more appropriately qualified was
given the position.

Occasionally, unsuccessful applicants will call a department manager
directly and ask specifically why they were not hired. Managers who re-
ceive such calls can handle them in one of two ways. The caller can be po-
litely referred to HR for the official response, or the manager can simply
say that the position went to the applicant who seemed best suited for the

After the Interview 177

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position. Organizations must always be able to defend their reasons for
rejecting any particular candidate should that become necessary. However,
an organization is under no obligation whatsoever to explain to unsuccessful
applicants why they were not chosen.

It is often helpful to maintain a brief written record of the reasons for
rejecting candidates in a recruiting process, especially if many applicants
are involved and the final hiring decision might be seen as close or arbi-
trary. However, interviewers should exercise care about what is written and
how it is expressed. Such notes can be made public in the event of a legal
action that follows a hiring decision. A good rule of thumb is never to
write anything about an applicant or employee that would be embarrass-
ing if it appeared in the daily newspaper.

The concept of behavioral interviewing is growing in popularity and is seen
in many quarters as generating a greater degree of reliability than so-called
“ordinary” interviewing. And it is receiving increasing visibility in man-
agement literature. One needs to ask, however, if behavioral interviewing
is truly something new or if this is but a new label describing a practice that
should have been followed all along and which has in fact been followed
by better (meaning more successful) interviewers. In other words, how
much of behavioral interviewing is genuine improvement over older ways
and how much simply represents a new name attached to a process that has
acquired a measure of tarnish for having been carelessly practiced by many?
Just as “delegation” became so abused through improper application that
thorough and proper delegation became redefined as “empowerment,” so
much interviewing was so poorly accomplished that some apparently felt
the need for a unique label for proper, effective interviewing.

The fundamental underlying premise of behavioral interviewing is the
belief that the most accurate predictor of an individual’s future perform-
ance is past performance in a similar situation. It has been described as a
relatively new style of interviewing developed by industrial psychologists
during the 1970s. It was perhaps given that name during the 1970s, but
long before it was so labeled, numerous insightful interviewers practiced
the process without the benefit of a special name. Many of the numerous
sources of information about behavioral interviewing describe traditional
interviews as including questions such as “Tell me all about yourself”
(which really is not a question but rather is an open-ended instruction).
Recall that an earlier section described questions like “Tell me all about
yourself” as highly inappropriate. The same section included a pair of ex-
amples that might have come directly from a list of behavioral interview-
ing questions, specifically: “What accomplishment of the last year or two


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are you most proud of?” and “Tell me about something that went wrong
on the job, and what you learned from it.” Other examples include ques-
tions like: “Describe an instance in which you had to go above and beyond
the call of duty to get a job done,” and “Have you ever had to sell an un-
popular idea to others? How did you proceed, and what were the results?”
Also note that many of the questions listed in Exhibit 9-4, “Examples of
Questions to Use in Probing for Intangibles,” are applicable to behavioral

A behavioral approach to interviewing is preferred in the majority of in-
stances of dealing with candidates for technical, professional, and manage-
rial positions, especially when the candidates are experienced. The approach
may have to be narrowed somewhat in interviewing, for example, new grad-
uates who have had no work experience in their fields. And one’s inter-
viewing approach may have to be further narrowed in assessing personnel
for entry-level positions, especially those who are new to the work force.

Regardless of what the approach may be called, the premise is un-
doubtedly sound: past performance in a similar situation is probably the
best predictor of future performance. However, behaviorally oriented or
not, selection interviewing is far from being a perfect process. No one has
yet devised a reliable way to separate the applicants who simply talk a
good job from those who will later do a good job.


A Second Possible Direction
Occasionally the process of an employee selection interview becomes re-
versed and the applicant takes the lead and interviews the interviewer, ef-
fectively interviewing an entire department or organization. Some applicants
seem to do so naturally, whereas a smaller number of sharp applicants de-
liberately turn the focus of an interview around. This process requires the
interviewer to be able to recognize such a situation and then reclaim con-
trol of the interview to end the reversal.

More Silence than Talk
Some interviewers tend to dominate the conversation and speak at length
about the organization, their departments, and themselves. The object of
an employment interview is to get applicants to talk about themselves and
to discuss appropriate job-related topics. An interviewer must control the
interview with proper questions and must concentrate on what an appli-
cant is saying.

Non-stop talking by an interviewer limits the information that can
be gained from an applicant. It sends an inappropriate message about

The Interviewer’s Behavior 179

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the organization to an applicant. The proper role of an interviewer in-
volves more silence than speech. From the perspective of an interviewer,
the most productive parts of an interview occur with one’s mouth shut
and ears open.

More Points to Keep in Mind
Effective interview technique includes being in complete control of an in-
terview situation without obviously appearing to do so.

Successful and experienced interviewers resist the temptation to make
a hasty judgment concerning a job candidate. Research has demonstrated
that a majority of interviewers make up their minds about candidates dur-
ing the first few minutes of contact. The remainder of the interview does
little to change that mind set. Always keep in mind that even though first
impressions are sometimes proven to be correct, they are just as often
proven to be incorrect.

Never encourage an applicant to criticize a present or past employer.
Be wary of an applicant who voluntarily does so. Conversely, one indica-
tor of a promising applicant is how diplomatically an individual describes
an apparently unpleasant employment experience.

Remain aware of the nonverbal clues that may be exhibited during the
course of an interview. Remember, too, to recognize the need of applicants
to compensate for normal nervousness. This is especially true for applicants
who have little or no interviewing experience.

Be conscious of the halo effect when interviewing. This occurs when in-
terviewers allow one or two obviously positive traits to bias their judgment
favorably when assessing unrelated characteristics.

In every interview, try to convey an overall positive picture of the or-
ganization offering the employment opportunity. By espousing the belief
that an organization is a good place to work, some of the positive view-
point will be communicated to an applicant.

Be honest about the negatives of the job, if any. Most jobs include du-
ties that are boring or repetitive. Some jobs include decidedly unappeal-
ing tasks or situations that may be physically or emotionally discomforting.
Remain upbeat overall, but do not overlook the negatives during an em-
ployment interview. Applicants who accept a position only to discover the
unpleasant parts after starting work are likely to feel that they have not
been treated honestly.

To reiterate, a department manager should never become directly involved
in checking references. This is stressed because often department managers
have been told, even in some of the management literature, to check refer-
ences themselves. They are advised to go directly to applicants’ former su-


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pervisors and bypass the HR departments of an applicant’s former employer
and of their own organization. Some of the same sources will pointedly ad-
vise them to avoid their organization’s HR department. A common ration-
ale for these recommendations is that HR is usually too frightened of legal
repercussions to request any usable information. Following this advice can
easily place them at the center of a legal action. As long as an organization
has an HR department, HR should be making the reference checks.

At times it seems that writing an employment résumé involves putting
nearly as much fiction as fact on paper. Experts have estimated that up to
40% of résumés include exaggerations or outright untruths. As many as
75% include some degree of fluff designed to make facts appear more sig-
nificant than they actually are. This is accomplished by putting a favor-
able spin on information.

Deception on employment résumés can take a number of different forms.
These involve positive spin, embellishment, exaggeration, lying or a com-
bination of these devices. Many variations exist.

A résumé may be deliberately ambiguous. One of the most frequently
encountered examples of ambiguity has to do with education. An indi-
vidual will claim to have “attended Prestige University in the BS Program
in Chemistry.” The hope is that readers of this résumé will assume that the
applicant received a BS degree in Chemistry. In truth, the length of atten-
dance is not known, no major was completed, and the person was not
awarded a degree.

Another deception is to shift dates of education or experience deliber-
ately to conceal periods of unemployment or, occasionally, a period of im-
prisonment. An honest résumé may well include one or more gaps.
Applicants know that they are likely to be questioned about these gaps.

A variation on date shifting is using years to create the impression of
having worked longer in a place than was actually the case. For example,
a résumé may report working for “Ajax Hospital, 2000–2001.” The hope
is that readers of this résumé will assume that employment extended from
January 1, 2000 to December 31, 2001. In truth, the length of employment
may have been from November 2000 through January 2001. The same ap-
proach is used to conceal gaps in employment.

Another common strategy is to exaggerate job responsibilities, report
inflated job titles, and provide inflated salaries. In truth, this is a danger-
ous practice because basic employment information such as titles and po-
sition responsibilities are easily verifiable through reference checks. Salary
data is relatively easy to verify. These actions are intended to make appli-
cants seem more appealing than might otherwise be the case.

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Interviewers occasionally encounter claims of a more prestigious in-
stitution awarding an individual’s degree. For example, an applicant may
list “Stanford MBA” on a résumé. In truth, the person has been awarded
a master of business administration (MBA) degree from Obscure
University. This practice is openly fraudulent. Official copies of educa-
tional transcripts are often required as a condition of employment.
Presenting fraudulent documentation is usually a reason for immediate
discharge from a position.

Candidates may claim to have degrees and other credentials they do
not possess. Honors and awards may be invented. Numbers of publica-
tions and conference presentations may be inflated or openly invented.
Such claims are easily verified.

Résumé fraud increases during periods of job scarcity. However, it is pres-
ent to some extent on a continuing basis, so employment recruiters and
other interviewers should be alert to the possibility of fraud in every ré-
sumé that they review.

Spotting Embellishments and Inconsistencies
There is no reliable way to uncover every instance of fraud, exaggeration,
or untruth that may appear in the résumés an organization receives. The
task of verifying every fact on every line would be very time-consuming
and costly. However, interviewers who remain alert to subtle signs and
signals are likely to know when closer examination is warranted.

Look for gaps in a person’s record. It is common for someone who
wants to cover something up simply to omit it. Be alert for overlapping dates
and inconsistent details. An occasional untruth can upset the chronology
of one’s experience and the person manipulating the facts often fails to ad-
just other information as necessary. Ask questions about the prestigious
school an applicant claims to have attended or the city in which the ap-
plicant claims to have worked. Many people who have put themselves in
the position of making things up as they go along will fumble, stumble, or
hesitate in coming up with responses.

Always consider an applicant’s reason for leaving a particular position
and ask for clarification, especially if the job being sought represents a
downward or lateral career move. The majority of people that have been
terminated from a job for cause, not laid off, will use wording that char-
acterizes their departures as voluntary.

During an interview, question the applicant about specific details that
appear in the résumé. A person who has lied or exaggerated will often find
it more difficult to remember everything that he or she has written. Try to
decide whether a job candidate’s answers seem memorized or rehearsed.
Someone with nothing to conceal does not need to have pat answers pre-
pared in advance.


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Always be conscious of non-verbal clues. Excessive nervousness, failure
to look an interviewer in the eyes, or physical fidgeting in a chair can be in-
dicators of fraud. However, be careful not to confuse simple nervousness with
fraud. Ask an applicant for permission to have specific information verified.
This will usually be done by HR. An applicant who has faked something sig-
nificant will often withdraw from the process right after the interview.

Upon request, HR will frequently become involved in verifying résumé
information. This is done when work references are checked. However, ver-
ification must sometimes go beyond ordinary reference checks. When con-
firming information by telephone, an HR representative will go through
a company’s operator or HR department rather than using a telephone
number that the applicant may have provided. Some people who fake their
experience have friends or relatives pose as former employers. If there is
any doubt about as to whether a reference’s address is genuine, HR will
test the address by mailing something there.

Many who are new to recruiting responsibilities are initially uneasy about
interviewing prospective employees. Because of this uneasiness, and because
of being too careful and worrying excessively about the process, inter-
viewing becomes more difficult for them than it has to be. Individuals who
take interviewing seriously and conscientiously, try to do it effectively, and
endeavor to learn from each interview experience will find that their skills
improve with practice. Being too casual or disorganized when interview-
ing can result in the loss of a potentially good employee and can leave that
person with a poor impression of an organization. On the other hand, be-
ing overly careful, dragging out the recruitment process by interviewing
too many candidates and delaying a decision also can lead to the loss of a
potentially good employee.

It is useful to remember that when selecting employees, there is no guar-
anteed perfect choice. Some risk of error is always present. Experts re-
mark that while a personal interview is a problematic and marginally
reliable means of filling a job vacancy, no better means are available.

The parameters of a recruitment interview are proscribed by legal statutes.
Preparation for an interview begins before an applicant arrives. Interviewers
should review the relevant position description, review the applications
and résumés of all candidates, arrange for a room or area suitable for in-
terviewing, and prepare opening questions.

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Interviews should begin on time, with initial questions designed to help
candidates to relax. The language used should be appropriate for the can-
didate. Leading questions and inquiries that result in excessively long or
very short responses should be avoided. Writing during an interview should
be kept to an absolute minimum if not completely avoided. Closure and
follow-up should be promised and promptly delivered.

Guidelines concerning legal and forbidden topics must be closely fol-
lowed. Interviewers must be alert for irregularities in documents or the in-
tent of applicants. Interviewers must remember that others have the
responsibility to extend job offers and check references. Guidelines for ap-
propriate behavior at all points in the interviewing process must be followed.
Interviewing is an acquired skill that usually improves with practice.

Returning to the initial case study involving interviewer Carrie Taylor
and applicant Lynn Taylor, Carrie has placed the organization at risk by the
manner in which she allowed herself to be influenced by Lynn’s “frail build,
small stature, and apparent age.” Lynn revealed enough personal infor-
mation for Carrie to conclude that Lynn had received surgery for breast
cancer. Carrie allowed this personal information to influence her thinking
about Lynn’s capabilities. Carrie’s motives may have been honest and her
concern for Lynn genuine, but her actions were illegal. Carrie did not have
the right to conclude that Lynn was “bound to fail.” She was not legally
entitled to base an employment decision on that subjective conclusion. As
long as the specifications of the nursing position in the transitional care
unit did not delineate specific physical requirements that Lynn could not
meet, Carrie had no basis for rejecting Lynn as a viable candidate.

Lynn could be legitimately rejected for the position on physical grounds,
but doing so is not within Carrie’s scope of authority. Such rejection must
come from the organization’s employee health physician and would ordi-
narily occur when an applicant who has a tentative offer of employment
does not pass a pre-employment physical examination.

In response to the Human Rights complaint, the organization should
attempt to negotiate a settlement that includes an examination of Lynn by
employee health to determine whether she is physically capable of handling
the transitional care position. Using an occupational physician from an
outside agency would minimize bias. When an individual is turned down
for employment on the basis of a personal observation or forbidden in-
formation, the final determination appropriately involves an assessment
of the individual’s ability to perform the job.

Discussion Points

1. In interviewing a prospective employee, why should you consider it
important to inquire about the presence of information gaps or time
periods that are not accounted for in an applicant’s work record?


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2. Why should an interviewing manager review all available informa-
tion about an applicant before beginning an interview? Managers are
busy people. Is arriving for an interview with an application in hand
and then beginning an interview on time not sufficient?

3. If an interviewer wants the applicant to do most of the talking, what
is wrong with opening an employment interview with the question, “Tell
me all about yourself?”

4. Provide three examples of interview questions that are legal but which
provide an interviewing manager with little or no useful information.

5. Why do you believe it is no longer appropriate to ask whether a job
applicant has ever been arrested? Is it not in an employer’s best inter-
ests to avoid taking on workers who have criminal records?

6. Can you make use of personal information in rendering an employ-
ment decision if the information was voluntarily provided to you?
Why or why not?

7. An interviewing manager should be prepared to respond in consider-
able detail to any unsuccessful job candidate who calls asking why he
or she was not offered employment. Do you agree or disagree with this
statement? Why?

8. Why do experts recommend that the proper role of an interviewer in-
volves more silence than speech?

9. Develop a brief procedure or protocol (a simple list of points to be
covered) for reviewing an employment application or résumé for pos-
sible inaccuracies or embellishments.

10. Write (or quote from the chapter) a concise statement which, if con-
scientiously applied in interviewing, will ensure that only legal ques-
tions will be asked.

11. Why should an interviewing manager attempt to assess an applicant’s
intangible factors that are not directly reflected in the record of edu-
cation or experience?

12. Why is it advisable to keep writing to a minimum while interviewing
an applicant? Is it not helpful to capture as much information as pos-
sible about the person?


Bunting, S. (2005). Interviewer’s Handbook: Successful Techniques for Every Work

Situation. London: Kogan Page.
Cook, M. (2004). Personnel Selection: Adding Value through People (4th ed.).

New York: John Wiley.
Phillips, J. J. (2005). (Human) Capital. Chicago, IL: American Management Association.

Conclusion 185

35310_CH09_Final.qxd 1/30/07 4:18 PM Page 185

Schell, M. (2004). Human Resource Approved Job Interviews and Résumés.
Vancouver, BC: Approved Publications, Inc.

Taylor, P., & O’Driscoll, M. P. (2005). Structured Employment Interviewing.
London: Ashgate Publishing.

Blackman, M. C. (2002). Personality judgment and the utility of the unstructured

employment interview. Basic and Applied Social Psychology, 24, 241–250.
Borman, W. C., Hanson, M. A., & Hedge, J. W. (1997). Personnel selection. Annual

Review of Psychology, 48, 299–337.
Cook, K. W., Vance, C. A., & Spector, P. E. (2000). The relation of candidate per-

sonality with selection-interview outcomes. Journal of Applied Social Psychology,
30, 867–885.

Goffin, R. D., Rothstein, M. G., & Johnston, N. G. (1996). Personality testing
and the assessment center: Incremental validity in managerial selection. Journal
of Applied Psychology, 81, 746–756.

Landy, F. J., Shankster, L. J., & Kohler, S. S. (1994). Personnel selection and place-
ment. Annual Review of Psychology, 45, 261–296.

Ones, D. S., & Viswesvaran, C. (1996). Bandwidth-fidelity dilemma in personal-
ity measurement for personnel selection. Journal of Organizational Behavior,
17, 609–626.

Paunonen, S. V., Rothstein, M. G., & Jackson, D. N. (1999). Narrow reasoning
about the use of broad personality measures for personnel selection. Journal of
Organizational Behavior, 20, 389–405.

Ryan, A. M., & Ployhart, R. E. (2000). Applicants’ perceptions of selection pro-
cedures and decisions: A critical review and agenda for the future. Journal of
Management, 26, 565–606.

Schmit, M. J., & Ryan, A. M. (1993). The big five in personnel selection: Factor
structure in applicant and nonapplicant populations. Journal of Applied
Psychology, 78, 966–974.

Smith, D. B., Hanges, P. J., & Dickson, M. W. (2001). Personnel selection and the
five-factor model: Reexamining the effects of applicant’s frame of reference.
Journal of Applied Psychology, 86, 304–315.

Smither, J. W., Reilly, R. R., Millsap, R. E., Pearlman, K., & Stoffey, R. W. (1993).
Applicant reactions to selection procedures. Personnel Psychology, 46, 49–76.

Steiner, D. D., & Gilliland, S. W. (1996). Fairness reactions to personnel selection
techniques in France and the United States. Journal of Applied Psychology, 81,


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Employee Training
Chapter Overview

After reading this chapter, readers will:

• Appreciate the importance of training and development as
continuing activities

• Be able to outline the essential role of department managers as teachers
• Appreciate the importance of new-employee orientation
• Understand applicable principles in addressing staff training and

development needs
• View cross-training as a means for improving employee capability

and departmental effectiveness
• Know how to approach on-the-job training
• Understand employee mentoring
• Appreciate the importance of developing potential managers
• See how human resources can help managers meet departmental

training needs

Training ensures the future of any organization. It helps to ease the tran-
sition into an organization and facilitates movement within an organiza-
tion. Training takes many forms. New-employee orientation, mentoring,
on-the-job and off-site training are common examples. Managers often
provide training in formal or informal settings. Cross-training of employ-
ees with similar types of jobs provides organizational flexibility. Giving de-
velopmental opportunities to potential leaders facilitates succession planning.

Case Study: A Blue Monday

“Monday mornings should not be so complicated.” At least that is what
Sam, the health commissioner thought. The new epidemiologist was
scheduled to report for work at 10:00 AM. A second new employee was




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scheduled to begin on Friday. “Two new people on two different days in
the same week,” thought Sam with an air of defeat.

Sam had been reading about the importance of developing potential
new managers. The usual departmental duties would not diminish. Because
the previous Friday was a state holiday, the morning volume of e-mail was
extra heavy. This had become more of a problem since a prankster had spread
Sam’s e-mail address to web sites that specialized in body reshaping sur-
gery or drugs to enhance performance. “Why couldn’t both new employ-
ees start tomorrow?” mused Sam. What advice would you give to Sam?

Senior managers in most healthcare departments can be counted on to sup-
port and praise the value of continuing education. Unfortunately, many man-
agers drop training and development when budgets get tight and expenses must
be reduced. This is partly because of the difficulty of pinpointing cost savings
that can be attributed to continuing education. Most individuals in manage-
ment believe or know intuitively that education ultimately saves money. The
problem is that it is more difficult to measure the results of education in terms
of costs versus benefits than it is to measure cost savings in most other areas
of organizational activity. As a result, money spent on education is often
viewed as resources that are expended with few tangible results.

As important as training and development are to every health care or-
ganization, in many instances they receive minimal attention from upper
managers. Simply reminding department managers that they have a re-
sponsibility for employee development is insufficient. Managers should
be encouraged to view training and development as important because it
keeps valuable employees interested and challenged.

Factors that motivate employees are found primarily in the nature of
work. Among the strongest motivating factors are the opportunity to do
interesting and challenging work and the opportunity to learn and grow.
Better performing employees usually are so motivated. They are also the
individuals who are most likely to leave in search of more interesting and
challenging work and greater overall opportunities. One way for depart-
ment managers to increase the chances of retaining their better employees
is through visible support for training and development.

A department that places no emphasis on training and development
may seem to be standing still. In reality, it is actually going backward be-
cause the world continues to move ahead. With technologic, economic, leg-
islative, financial and social change constantly occurring, no department
or organization can afford to stand still. A certain amount of forward
progress is necessary simply to remain abreast of change. As contrary as
it may sound, one must move ahead to stay even. Therefore, maintaining


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or improving the abilities of staff must be an ongoing effort. Continuing
education is essential.

Under the blanket heading of training are an entire range of employee de-
velopment activities, from providing new-employee orientation to assist-
ing employees in moving up into management. Employee development
should be one of the most important aspects of a manager’s job.

Managers are likely to have a greater depth and breadth of technical
knowledge and expertise in the areas or activities they manage than is found
anywhere else in an organization. Managers tend to be educated in the
fields in which they work. In addition, they have the advantage of practi-
cal education acquired through experience. Therefore, managers are primary
resources for information about their departments and the work they per-
form. Department managers are uniquely positioned to pass on their knowl-
edge and expertise to others. Department managers have the responsibility
for maintaining and improving the capability and competence of their staff.

The Manager as a Teacher
Because the department manager is usually well-versed in the department’s
tasks and activities, the manager is best suited to do some, although prob-
ably not all of the teaching in the department’s continuing education pro-
gram. For some of the topics the manager will clearly be the most qualified
individual and the most readily available instructor, but chances are there
will be a few topics that other individuals can better address. For exam-
ple, if you supervise in health information management (formerly medical
records) and you are interested in cross-training several assistants in chart
completion review, it might be best to use the person regularly assigned to
this task as the instructor. With proper encouragement and assistance, the
person who knows best how to perform a given task can be the best re-
source for teaching that task to others. Regardless, however, even if the de-
partment manager does not do all of the teaching, this manager nevertheless
remains responsible for the department’s continuing education program.

Teaching a class can loom as a formidable task to the manager who has
not previously done so. But the manager who is hesitant to adopt the role
of instructor can rest assured that just about everyone involved in teach-
ing or any other form of public speaking has experienced similar qualms.
It helps to regard one’s early experiences in teaching as learning experiences
in themselves, remembering that one is not a professional teacher but that
the department’s employees are familiar faces, not a group of unknown “stu-
dents.” The keys to building one’s effectiveness as an instructor are prepa-
ration and practice. The more one teaches a given subject, the better it can

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be taught in the future. And the more often one faces a group of learners,
the less troublesome the feeling of uneasiness about teaching will become.

The manager who will serve as a teacher is advised to acquire knowl-
edge of adult learning principles. Pertinent information is available from
a number of sources including some of the resources listed at the end of
this chapter. Also, in most healthcare organizations of any appreciable size
there are internal resources to tap. Depending on organization size, human
resources (HR) may have a training function that can assist managers or
there may be a separate education department available. At the very least
it is usually possible to obtain information about adult instructional meth-
ods from Nursing Inservice Education.

From a manager’s perspective, teaching should be an integral part of man-
agement’s role. Teaching is also an essential part of managerial delegation.
Unfortunately, in the pursuit of everyday business employee instruction is
often overlooked.

External Requirements
The importance of continuing education and training is underscored by
the extent to which different accreditation and regulatory agencies assess
training activities during their periodic surveys. For example, the Joint
Commission on Accreditation of Healthcare Organizations (JCAHO) pub-
lishes specific requirements for the continuing education of nurses and cer-
tain other personnel, and regularly checks during surveys for documented
evidence of its performance. And in most states there are state require-
ments for all-employee orientation to address certain specific topics and
annual refresher education on a number of topics.

Another indicator of the importance placed on continuing education ex-
ternally is the fact that many health care practitioners are required to pro-
vide evidence of a certain number of continuing education units each year
to maintain their professional licensure.

Each health care department manager should have a new-employee ori-
entation plan for his or her own department, and there should also be an
orientation plan for the organization overall. Orientation plans are re-
quired by accreditation and regulatory agencies.

An organization usually provides a general new-employee orientation
that addresses common matters. Ordinarily provided by HR, a general
orientation addresses such matters as the organization’s structure and lead-
ership, employee benefits, the performance appraisal process, the organi-
zation’s dress code, employee parking, facility security, infection control,
and universal precautions. Employee health and other benefits, the em-


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ployee assistance program, employee work rules, and generally applica-
ble policies are also typically included.

A department orientation should provide an introduction to the peo-
ple in the department and program areas and to the physical space, equip-
ment, processes, and special department policies, as well as on-the-job
guidance in getting started doing the work for which the new person was
hired. One of the most inappropriate ways of treating new employees is
simply to allow them to begin working without the benefit of orientation.
Even experienced and well-educated new employees require some guidance
concerning variations specific to a particular department or program area,
as well as some time to ask questions about the new job.

As part of a new employee’s orientation, it may help to appoint a mentor.
A mentor is an experienced person who can provide guidance through the
new person’s first few days or weeks on the job. Mentoring offers valuable
benefits; it provides a personally guided orientation for a newcomer and it
affords an opportunity for further development to an experienced employee.

Training must be a high priority for every manager. Running a program
area and getting out the expected work is a supervisor’s number one pri-
ority; nevertheless, training is important, especially regarding new or re-
vised work procedures and the correction of performance problems.

When assessing employee performance, supervisors continually com-
pare observed performance with expectations. Managers may have to be
teachers when helping employees correct performance problems. When
an employee displays performance problems that command a manager’s
attention, it is always appropriate to consider whether reasonable efforts
are being made to help the employee succeed. Many employees fail at their
jobs because they were inappropriately trained, insufficiently oriented, or
inadequately supported.

It may sometimes be necessary to impose a requirement for a particu-
lar kind of education or training as a condition of continued employment.
For example, an individual whose telephone manners have elicited many
complaints may be required to complete a program in telephone etiquette,
or an individual whose job requires writing but who has experienced prob-
lems with grammar may be required to take a remedial English language

If a variety of learning needs seem to be present throughout a department,
then it is helpful to conduct a needs analysis for basic remediation. One

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approach consists of making a simple chart for each job description in a
department with columns indicating the principal required skills and rows
listing the employees whose work includes those activities. It becomes a
matter of assessing all employees in terms of whether their skills are ade-
quate to meet normal job expectations. Each assessment that falls short
of normal expectations indicates a learning need. This approach helps
managers focus training activities on areas of greatest need. In addition to
managers’ assessments, noticeable performance problems also indicate
areas of need, as do tendencies toward repetitive errors or actions that
generate chronic complaints by customers, coworkers, and others.

A manager’s initial assessment of training needs is translated into train-
ing objectives. Learners must initially know where they are headed. Once
this is determined, learners and managers can consider how to get there.

A learner’s motivation is a key to the eventual success of training.
Managers must be prepared to help employees answer one particular ques-
tion about what they are being asked to learn: “What’s in it for me?” In
correcting a severe performance problem, the answer may be as basic as,
“You get to remain employed.” There are numerous other possible re-
sponses such as, “You get to learn something that may eventually help you
to be promoted,” or, “You get more variety in your work,” or, “You get
to do something more challenging than what you’ve been doing.”

The following principles may assist a manager when addressing staff train-
ing and development needs. All employees who are expected to learn some-
thing deserve to know why they are learning, and all employees should be
advised of specific goals and objectives. Employees learn better when they
actually become involved in the process. The more hands-on or learn-
while-doing components that can be incorporated, the more likely a train-
ing program is to be successful. Employees will more quickly and more
accurately absorb material that applies to their daily work rather than
having to learn material that they see as irrelevant. Thus, in-department
employee training should be practical and immediately applicable rather
than theoretical.

Most employees will accept new ideas more readily if these ideas sup-
port their previous beliefs. New material, techniques and processes are
best presented within the context of a department’s mission. For example,
“We’re still here to serve members of the community, but now it can be
done more quickly and at lower cost.” Some employees learn best when
allowed to pursue their own areas of interest or needs at their own rate.
For these employees, managers must provide clear expectations, necessary
information and materials, and general guidance. Many employees must
be encouraged to find learning pleasant. For some employees, the possi-


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bility of education of any kind essentially means going back to school,
which renders them resistant to training. These people must be shown
what is in it for them.

Department managers who supervise employees working in comparable
positions in terms of job grade or pay scale have the opportunity to im-
plement cross-training. For example, an office manager may have three
clerical-level employees who are assigned in different capacities: a file clerk,
a program secretary, and a data entry specialist. These three jobs reside in
the same pay grade. As long as the three people simply do their own jobs,
the department has limited flexibility. If one person is on vacation or is ill,
no one is trained to assume the missing person’s duties. If all three people
are capable of doing all three jobs, the employees can be moved around
as needed. Resources can be shifted as workloads or backlogs demand,
and any of the three people can cover for any of the others as necessary.

This type of flexibility can be obtained by training the three employees
in each other’s jobs. This requires time and effort. Each of the people can
train the other two in job particulars, with the supervisor providing gen-
eral guidance. This training will ultimately repay the time and effort in-
volved. A department gains considerable flexibility in addressing backlogs
and covering for vacations and illnesses. The individuals gain greater interests
and challenges associated with their work through increased task variety.

On-the-job training is appropriate under many circumstances. For some
learning needs, it may be the best available approach. Much on-the-job train-
ing is best accomplished under the direct supervision of a manager or un-
der the direct guidance of an experienced employee. Employees receiving
on-the-job training receive step-by-step instructions on how to accomplish
a task while actually performing it. After employees perform the task a suf-
ficient number of times under this direct guidance, the instructor may then
reduce or eliminate the verbal guidance and simply watch the employee
until assured that the activity is being performed in a satisfactory manner.
Thus assured, the instructor may further withdraw to a position of being
readily available to answer questions.

On-the-job training is not simply allowing employees to learn by trial
and error with only a rough idea of expected results. However, this is pre-
cisely what it becomes when managers decide that they are too busy to
address training in a proper manner and simply turn new employees loose
on the job.

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Improper or inadequate on-the-job training can be dangerous or de-
structive. Employees may learn to perform their tasks in a highly ineffi-
cient manner, creating inappropriate work habits that will become deeply
ingrained and difficult to correct. It is far better for managers to ensure that
sufficient time and attention are devoted at the start of the learning process
so that on-the-job training can succeed as intended.

Another common but inadequate approach to training, or at least sat-
isfying annual inservice education requirements, is to give staff members
files or folders of information to review. Often, accreditation agencies or
state regulations require these documents to be reviewed. A reading pack-
age is circulated among the staff with instructions for each recipient to re-
view the documents as required, check off to indicate that they have done
so, and pass the material to the next person. This is the loosest and weak-
est approach to training. Short of questioning each recipient in detail, there
is no way to ensure that the material has been read and absorbed.

Most people recall a certain portion of information they hear (perhaps
10%), a somewhat greater portion of what they both see and hear (maybe
20%), and almost all of what they simultaneously see, hear, and do (90%).
This suggests that the most effective job-related training should include a
combination of lecture, demonstration, and hands-on practice.

Using multiple channels of sensory input increases the likelihood of learn-
ing. This is why personal reading alone can be the least effective way of
learning, and why lecture alone is not a great deal better. When multiple
senses are used simultaneously, the chances of learning increase. Also, re-
peating the same material after a lapse of time, and presenting it in varying
forms can be highly effective in ensuring that the material will be retained.

Mentoring can be most effective if it is officially sanctioned. It need not take
place within the context of a formal program, but it should be acknowl-
edged as an actively used employee development technique rather than sim-
ply an ad hoc practice whereby people might happen to link up with each
other. The extent of the formality required may be minimal. A new employee
and an experienced employee or mentor are intentionally brought together
by a department manager, and all three parties agree on the objectives of the
relationship, specifying what the new employee is expected to learn. The
manager remains close enough to the process to be able to evaluate both the
new employee and the mentor during and after the relationship period.

By officially addressing mentoring as a means of employee develop-
ment, an organization sends a strong message to all employees concern-
ing its commitment to their development. Although mentoring is one of
the least costly development tools available, it can be extremely effective.


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Its visible use proclaims that the organization cares about the develop-
ment of its people.

For a new employee, a mentor can be a valuable facilitator, sounding
board, and source of advice and guidance. The mentor benefits as well.
Mentoring can provide a sense of fulfillment and satisfaction, especially
for a senior employee who is in need of additional challenges and who can
benefit from more interesting work experiences. The process helps men-
tors further refine their skills and keep them sharp.

Employees most likely to realize significant benefits from a mentoring re-
lationship are those who demonstrate a willingness to learn, are proactive
in expressing this willingness, and are ambitious and enthusiastic. Effective
mentors are able to assume full responsibility for their own growth and de-
velopment. They are receptive to coaching and constructive feedback and
have the ability to change behaviors based on positive experiences.

Experienced employees who are considered for mentoring responsibil-
ities should be persons who are willing to serve voluntarily and give the
undertaking the time and energy it requires. No mentor should ever be
unilaterally assigned or forced to serve. Similarly, managers should not
force new employees to work with any particular mentor. Both parties
should have an option to change a mentoring relationship if either be-
comes dissatisfied. Potential mentors should possess sufficient knowledge
and expertise in the new employee’s areas of responsibility. They should
have good interpersonal skills and patience, and they should be support-
ive, friendly, and effective listeners. Above all else, potential mentors should
demonstrate interest in the development of others.

An essential part of every supervisor’s responsibility is to help identify and
develop new managers. This includes identifying and developing one or
more potential successors. Many managers fall short of properly addressing
the latter need.

The development of potential successors is closely associated with the
practice of proper delegation. This is the primary means by which suc-
cession planning evolves. It is an area of concern or threat for some man-
agers, especially people who are often insecure in their positions and fear
the competition provided by intelligent, up-and-coming subordinates.
Many managers simply do not think beyond the present. They are ill-
prepared to imagine being moved up or out or becoming incapacitated
and no longer able to function in their positions.

Development of a potential new manager may not occur within a de-
partment because it requires serious and progressively more responsi-
ble delegation. This takes time and planning on the part of management.

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Such development requires delegation of tasks that are increasingly
more responsible. Suitable tasks are often sufficiently appealing or im-
portant that managers retain them personally rather than giving them
up to subordinates.

At the very least, the manager who has a potential successor in the
process of development usually has readily available coverage for vaca-
tions and illnesses as needed. No person is or should be absolutely indis-
pensable, but the loss or absence of a group’s leader when there is no
ready back-up person can create significant inefficiency and inconven-
ience to an organization.

A manager who entertains ambitions about advancing higher in the or-
ganization should take seriously the need to develop a potential successor.
Higher management will often look closely at a manager’s track record in
delegating tasks and especially at whether that manager has one or more
capable successors in the wings. Enlightened higher management may well
conclude that a supervisor who has paid no attention to developing a po-
tential successor shows little strength in delegation, a skill that becomes
increasingly important as one moves up in the organization. Executives in
an organizational hierarchy may be unwilling to promote a manager if do-
ing so means having to conduct an external search for a successor or pro-
moting an untried insider.

No manager wants to lose good employees. However, some of them
are going to be lost regardless of a supervisor’s actions. Managers who
put time and effort into developing potential successors may see many of
them eventually lost to other departments or other organizations as they
take advantage of opportunities to advance their careers. But these em-
ployees are likely to be lost to the organization anyway if they are not given
opportunities to develop. Some of them will be lost even sooner if they
remain unchallenged in their jobs. Therefore, prudent managers should
take full advantage of the talents that are available in their groups by del-
egating tasks to the better and more willing employees and helping them
to develop.

Only rarely does a manager have anything to fear from a subordinate
who is encouraged to develop and grow and learn some aspects of the
manager’s job. In fact, having one or two sharp, up-and-coming employ-
ees is often just what a manager needs to remain effective and to continue
to grow.

It is customary for an organization’s general new-employee orientation to
be presented or at least coordinated by HR. As far as this orientation is
concerned, ordinarily all a manager has to do is ensure that each new em-


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ployee attends. However, some managers have to be reminded of the ne-
cessity for all new employees to attend the orientation. Some of these new
employees may be filling positions that have been empty for some time
and the department may be behind in its work. Occasionally, managers may
decide that new employees cannot be spared for the few hours required
for orientation. There may be a tendency to regard orientation as just an-
other HR thing that intrudes on a manager’s ability to run a department
or program. In most instances, a general orientation to the organization
includes topics that are required by accreditation or regulations. Orientation
then becomes partly a response to external requirements and partly a ser-
vice performed to get new employees pointed in the proper direction.

Beyond ensuring that new employees attend general orientation, it is
the manager’s responsibility to be aware of training needs and either at-
tend to them or refer them as necessary. When addressing issues of em-
ployee training and development, a department manager should expect
HR to work with supervisors to diagnose particular problems and de-
termine the kinds of training or education that might be helpful, to pro-
vide certain kinds of needed training, to secure the involvement of other
in-house training expertise, to identify external sources for specifically
required training, to determine how these sources are accessed, and to
guide employees in using an organization’s tuition assistance program
when appropriate.

Training needs should be addressed on a continuing basis, both to as-
sess present circumstances to determine the skills and attitudes that must
be adopted or improved to meet current needs, and to attempt to deter-
mine future needs based on trends that appear to be coming during the
next one or two years. Information for evaluating training needs can be
gathered in a variety of ways, including questionnaires completed by man-
agers and employees, focus group discussions, individual interviews with
managers and employees, and exit interviews at which departing em-
ployees are asked for their opinions concerning developmental needs.
Topics that are frequently mentioned merit consideration as potential
program topics.

Human resources can contribute information relevant to determining
training and development needs from direct contact with people on the job,
both managers and rank-and-file employees; from reviewing performance
appraisals, performance improvement records, and disciplinary actions; and
from monitoring trends in public health.

When guiding training and development activities, HR may recommend
involving both managers and employees in preparing training agendas and
determining program content. It often starts with needs that employees
appear to be the most strongly motivated to address. Human resources
focuses on present jobs and needs first, then looks to the future, focusing

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primarily on behavior, in the belief that if skills are appropriately implanted
or modified then proper attitudes will follow. It will use on-the-job expe-
riential learning to the maximum practical extent, supplemented with
training from other sources.

When evaluating training efforts, HR will attempt to determine whether
the needs assessments that were conducted were accurate, whether tar-
geted skills have been learned and incorporated in new behaviors, and
whether employee attitudes appear to have been modified. Human re-
sources must assess what has been learned and how this audit of results
can support the next cycle of training.

Training and development should be ongoing and essentially continuous
activities. Managers are central to training efforts, identifying needs and
often serving as trainers. New employees must be properly and completely
oriented to a health care department as well as their own specific program
areas. Cross-training provides flexibility, especially in times of crisis. On-
the-job training is important and often conducted by a mentor. Potential
new managers rarely emerge without assistance. They must be nurtured
and developed by providing opportunities for them to actually supervise
others or guide programs. Human resources personnel may provide as-
sistance in training and development.

Returning to the harried health commissioner in the opening case study,
Sam should seek volunteers to serve as mentors for the new employees. This
will provide support for the new people and give Sam a chance to evalu-
ate the leadership potential of two subordinates. Sam should decide to
take the new employees to lunch on their third day of employment.

Although it would be efficient to provide one initial orientation session
for both new employees, Sam should avoid the temptation. This would re-
quire the new epidemiologist to either start without any training or to
waste four working days. Either alternative sends a negative message to
the new employee.

One year later, both new employees had become fully integrated into
the health department. One of the mentors seized the opportunity to shine
and was promoted seven months later. Both mentors reported increased
job satisfaction. Sam noticed the improvement in their job productivity.
The epidemiologist volunteered to serve as a mentor in the future.

Discussion Points
1. Why are training and development opportunities important to some

employees but apparently not to others? To which employees do they
appear most important?


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2. Why is having training and development opportunities available to
employees important even if many do not take advantage of them?

3. Why must in-service training or on-the-job education be continuing?
4. Why is education usually one of the first line items to be reduced or

eliminated when it becomes necessary to cut budgets? Is such an ac-
tion organizationally prudent? Why?

5. What activities could a department manager undertake to continue in-
volving employees in education with little or no direct budgetary impact?

6. How you would implement a program of cross-training among three
or four roughly comparable positions? Use actual or hypothetical po-
sitions as an example.

7. How do a department manager’s skills as an instructor, teacher, or
mentor relate to the ability to delegate tasks?

8. Why should a department manager who plans on remaining in place
for as long as practical develop one or two capable employees as po-
tential successors?

9. It is frequently claimed that it is difficult if not impossible to quantify
the cost effectiveness of education. Do you believe this to be true? Why?

10. What are the advantages of using capable senior employees as men-
tors or trainers for newer employees?


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Compensation and

Chapter Overview

After reading this chapter, readers will:

• Describe the role that human resources and department managers
have in matters of compensation

• Understand the roles of human resources and department
managers regarding benefits

• Be able to discusses statutory benefits such as Workers’
Compensation and short-term disability

• Have a better understanding of a manager’s role in the
employment process and what occurs behind the scenes in human

• Understand human resources’ role in performance appraisals
• Be familiar with basic guidelines for managers who become

involved in legal actions
• Know about human resources’ involvement in external agency

investigations and how these involve department line managers

Compensation and benefits are two significant human resources (HR) ac-
tivities. All employees expect their compensation to be fair and expect
HR to collect information related to compensation in a regular and sys-
tematic manner. Managers should be familiar with compensation scales
for their employees. Exchanging pay scale information with professional
colleagues in different organizations is essentially illegal.

Next after their pay, most employees are vitally interested in their ben-
efits. Benefits fall into two broad categories: those that are mandated by
law, and those that are voluntarily offered by the employer. Organizational




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policies surrounding benefits have been changing. Currently many or-
ganizations are changing from defined benefit to defined contribution pen-
sion plans, and organizations which for years have offered the same benefits
to all are adopting flexible or “cafeteria” plans that allow a range of em-
ployee choices. Statutory benefits include Workers’ Compensation, un-
employment compensation and insurance, and disability insurance.
Government agencies investigating claims may involve an organization’s
employees, and inquiries from external agencies should be referred to HR.

Case Study: First Impressions Can Be Wrong

Sara Hupp, the CEO of the Westside Health Consortium, summoned Rob
Jameson, the Vice President for Human Resources and Pat Collier, the
Chief Financial Officer, to her office.

“Rob, I agree with your suggestion to change the structure of our ben-
efits package. Pat has supplied financial data to support your suggestion.
The costs for benefits continue to rise with no end in sight. I am asking both
of you to work together to develop options for a new plan to replace our
existing approach that gives all employees the same benefits. I know that
individual and family needs change with time. Westside must institute
changes to control costs as well as to attract and retain skilled employees.”

What steps should Rob and Pat take? What suggestions would you of-
fer to them at this point in time? Why? Should Sara provide any additional
guidance? If so, what information should she give? Why?

Not all of the activities of HR are visible to department managers. Many
of the activities discussed in this chapter are hidden in the sense that they
occur within HR and elsewhere and are rarely the responsibility of a de-
partment manager. Compensation and benefits are matters of concern for
most employees. This chapter is intended to provide a basic understand-
ing of compensation and benefits.

One of HR’s primary responsibilities is to maintain an organization’s com-
pensation structure. Human resources ordinarily strives to remain current
and competitive with compensation levels in the healthcare industry and
the local labor market. On a predetermined basis, usually annually, HR is
expected to make recommendations for changes in compensation. These


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recommendations are usually reviewed by an organization’s board of di-
rectors before being implemented.

Annual compensation recommendations often include suggestions re-
lated to the timing of changes and the rationale for the suggested distri-
bution of increases. Recommendations usually include the basis for the
changes being proposed. These are typically related to prevailing industry
or area compensation practices. Proposed wage increases may include all
employees, often referred to as cost-of-living adjustments, or they may be
restricted to employees in specific professional groups.

Knowing the Compensation System
Supervisors and department managers are usually the first persons to re-
ceive questions regarding compensation and benefits from their employ-
ees. To respond adequately to such inquiries, a department manager should
be knowledgeable about how pay increases are related to performance
and the general level of performance required for receiving merit-based
increases. A supervisor should know the differences between merit pay in-
creases and increases provided through pay-scale changes, also sometimes
referred to as cost-of-living increases. A manager should know when merit
increases or scale increases can usually be expected to occur and how and
when other types of pay increases such as probationary increases are

A manager should be familiar with current pay scales for all positions
in the department, and should maintain current pay scale data on file for
reference. When pay scales are changed, HR usually supplies up-to-date
published pay scales to department managers. Current pay-scale infor-
mation is needed when addressing particular employee questions, but the
dissemination of this information should be selective, based on an individual’s
need or right to know.

Strategic planning figures prominently in compensation administration.
Organizations must make decisions about the nature and extent of the
compensation and benefits that they will offer to their employees. Will
they decide to pay their employees at the regional median, similar to oth-
ers in their region? Some consciously decide to pay less than the usual
wage. They know that they will be saving some money but will be ac-
cepting a higher than normal degree of employee turnovers as a conse-
quence of their decision. Others decide to pay at a rate or level greater
than that of other organizations. They accept the higher wage costs in ex-
change for more highly skilled or reliable employees and a lower than
usual level of employee turnover.

Organizations must make similar deliberate decisions concerning ben-
efits. Will their benefits package be similar to or different from those of
other organizations? A common question reflects the nature of the local

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pool of prospective employees and the extent to which they will have to
compete for employees.

Yet another strategic decision reflects the nature of benefits that will be
offered. Traditionally, organizations have offered all employees a similar
package of benefits that typically differs only in reflection of years of ser-
vice. Many contemporary organizations are making strategic decisions to
allow individuals to select benefits from among a menu of options. Such
an approach is referred to as a flexible benefits plan or a cafeteria bene-
fits plan under which employees are allotted a certain amount of benefits
credits to distribute as they see fit among available benefits. Employees
appreciate being able to select options that are relevant to them, and or-
ganizations are able to better contain their benefit expenses.

Historically, benefits were paid to provide incentives for individuals to
choose one organization over another. After employment began, benefits
provided incentives to continue employment. Thus, companies were able
to attract and retain desired employees. Funding for benefits reflects a fi-
nancial commitment by employers. The ability to pay for benefits must be
periodically reviewed as budgets are developed, as new employees are
hired, and as collective bargaining agreements are negotiated.

Organizations maintain a mix of employees at differing wage levels.
The variety and extent of benefits that are offered broadly reflect the wage
mix of an organization. Phrased differently, benefits are usually propor-
tionate to wages. Some benefits are mandated; Workers’ Compensation and
unemployment insurance are common examples. All benefits other than
those required by law are provided at the discretion of the employer.

Individual employees have the right to know the hourly rate minimum
and maximums for their pay scale as well as their own actual rates of pay.
However, individual employees are not entitled to know other employees’
pay scales or any other individual employee’s rate of pay. Department man-
agers have the responsibility to safeguard this aspect of employee privacy.

When Compensation Challenges Arise
A department manager is often the initial target when employees challenge
the compensation system. Some individuals challenge the equity of their
own rates of pay; they compare their pay with that of others who have sim-
ilar positions. The perceived similarity may be based on occupation, job
title, or another means of comparison. A typical claim is that they are un-
derpaid for performing the same or comparable work. Their information
is often second-hand, inaccurate, or outdated.

A department manager should recognize several responsibilities related
to possible pay inequities. First, a manager should know enough about the
pay level for each person being supervised to recognize pay inequities within
the group when or before they surface. In a relatively small group, substan-
tial pay inequities are uncommon. A manager who has a small group of em-


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ployees should be well aware of how these people stack up against each
other in terms of pay. In a larger department, the cumulative effects of sev-
eral years of hiring at differing levels as well as merit and probationary and
annual pay increases may mask inequity until an employee raises the issue.
When this occurs, the manager should do some preliminary research con-
cerning the inequity. If warranted, the problem should be referred to HR for
further analysis and a recommendation for change or correction.

A manager’s other responsibility related to alleged pay inequities is to
work with HR when the challenges involve claims of underpayment in
comparison with what persons of comparable skills are supposedly re-
ceiving at other local facilities. Employees will sometimes approach the
department manager with such challenges looking for the manager’s sup-
port and advocacy. They want the manager to champion their cause and
seek to have one or more pay scales increased and corresponding pay raises
granted for individuals.

Although conscientious and caring managers are probably inclined to
be advocates for their employees, claims of pay inequity relative to other
organizations are best referred to HR. This action should be taken before
agreeing to take on any employee’s cause. Assessing such claims of in-
equity requires detailed information about wages paid in the immediate
area. There are legal and practical restrictions on how such information
may be obtained. It is no longer safe to simply survey wage rates around
one’s local area to obtain information that might help in adjusting rates
for equity and competitiveness.

In the early 1990s the United States Justice Department put a stop to
the direct sharing of wage and salary information. As part of a consent de-
cree involving the settlement of a civil antitrust complaint, the Justice
Department laid down some rules for surveying rates of pay, specifically:

• Surveys must be designed, conducted, and published without the in-
volvement of participating organizations (accomplished, for example,
by a hospital association or neutral third party).

• Surveys can include only historical or current pay information (that
is, they cannot ask for intended increases).

• Surveys cannot request actual pay rates, only ranges and averages for
specific job titles.

• Surveys must disseminate data of 10 or more organizations if cur-
rent information is involved, or 5 or more if the data is more than
3 months old.

• No one organization’s data may represent more than 25% of the
weighted value of any statistic (in other words, the data from one
large facility cannot dominate the results).

• Data must be presented in such a manner that no individual partici-
pating organization can be identified.

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Managers should never give in to the temptation to conduct a personal
wage survey by calling on contacts or colleagues throughout the commu-
nity to determine what other organizations are paying for the specific kinds
of skills in question. Since the early 1990s, the free exchange of wage in-
formation has been legally regarded as price-fixing under antitrust regu-
lations. The Justice Department eventually decided that not-for-profit
healthcare organizations should be held to the same standards as other in-
dustries. Therefore, department managers who solicit or exchange wage
information with colleagues at other institutions are technically engaging
in an illegal activity. Rather than attempting to verify the validity of em-
ployees’ claims of wage inequity relative to other organizations, a depart-
ment manager should take the issue to HR and rely on HR to conduct the
appropriate investigation.

Wage surveys are permitted, but only when conducted according to es-
tablished guidelines. They must be done by a third-party organization,
such as a membership association of hospitals or other providers. Further,
they must include a sufficient number of organizations surveyed and have
their data arranged in such a way that no participating institutions can be
readily identified. Generally, five or six organizations are enough for an
appropriate survey, provided that none can be readily identified. For ex-
ample, a survey cannot have separate categories for “university medical
centers” or “hospitals of 100 to 200 beds” if only one of each is included
in the survey’s sample or area of coverage.

Interviewing Prospective Employees
The department manager is expected to be conversant with all pay scales
used in the department. Thus, in most organizations a manager may cite
the appropriate pay range for a job during an interview. However, a man-
ager should not make a specific financial offer during an interview. Having
made a decision to offer a position to a particular applicant, the manager
should collaborate with the HR recruiter to determine the starting pay
that will be offered. The official offer will flow from HR to the applicant.

There are several reasons for making formal offers only through HR.
First, all offers of employment are conditional pending successful reference
checks and passing a pre-employment physical examination. Second, it is
the responsibility of the HR department to protect an organization’s com-
pensation system against inequities. This can best be accomplished if all
offers emanate from a single office. Third, some organizational policies for
determining starting pay offers may state, for example, that people with
a given amount of experience may be offered a starting pay at a specified
percentage of the pay grade. This is also most easily controlled if all offers
emanate from a single point.


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A department manager should have a voice in recommending starting
pay if there is any flexibility in so doing. This input should be made in
conjunction with HR, remembering that HR always extends the formal
offer of employment.

A department manager should have basic benefit information available
for employees. At a minimum, this should include information in the per-
sonnel policy and procedure manual and the employee handbook. No
matter how strongly employees are urged to become familiar with their ben-
efits, many of them show no interest in doing so until a specific need arises.
When a specific need does arise, they do not read about the benefit. Rather,
they choose to ask a person, usually their department manager or some-
one in HR. This is especially true concerning health and dental insurance
benefits, about which many employees remain nearly completely ignorant
until a specific need emerges.

Department managers are not expected to be experts in the interpreta-
tion of employee benefits. However, managers should be sufficiently con-
versant with the benefits structure to answer simple questions and to know
the appropriate person in HR to refer employees for inquiries about ben-
efits. Some areas of employee benefits can become complex. For example,
a large hospital may carry five or six different health insurance plans, each
having hundreds of details. Questions about them are best addressed by
a person who is qualified and knowledgeable about the different plans.

Flexible Benefits Plans
Flexible benefits plans proliferated through the 1980s and 1990s. They
are commonly referred to as cafeteria plans, and their use recognizes that
the majority of workers prefer to have some control over their benefits.
The array of options available is often a consideration when determining
whether an applicant will accept employment with a particular employer.

The three benefits most preferred by the majority of employees, in or-
der of their preference, are health insurance, a pension plan, and paid va-
cation. Despite the fact that these have formed the core of most organizational
benefit plans, they are not of equal importance to everyone.

Employee benefits are available in many different forms and variations.
This is useful when not all employees want or need the same benefits. Even
pension benefits, which will ultimately be a concern for everyone, are not
a consistent choice for all employees at all times. Younger employees of-
ten pay less attention to pension plans than do older workers. Younger
employees prefer to have cash or additional paid vacation time. Older

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workers tend to prefer pension benefits. Choices were introduced into ben-
efits programs as employers endeavored to stretch benefits budgets as
much as possible while giving employees options for the benefits that they
perceived were most needed. Flexibility and choice will be increasingly
important features of benefits programs in the future.

Flexible benefits plans have proven their appeal to many employees.
An increasing number of employers are offering plans that are either en-
tirely flexible or partly flexible around a small number of core benefits.
Programs that allow an employee to waive medical coverage after estab-
lishing that coverage is provided by other means and applying the value
of that benefit elsewhere have been especially successful. Plans that per-
mit buying or selling some vacation time by trading it off for other bene-
fits are quite popular.

A logical progression beyond flexible benefits is the use of benefits
vouchers. These provide employees with the equivalent of a set amount of
money to apply outside of an organization as they choose. Stated differ-
ently, such a plan allows employees to spend an organization’s contribu-
tion toward their benefits on whatever is most meaningful to them. Vouchers
have proven to be especially advantageous to some employees during lay-
offs and downsizing. Many employer-furnished benefits end when em-
ployment is terminated but benefits secured externally with vouchers are
purchased for a fixed period of time and do not necessarily end when em-
ployment ceases.

Another emerging trend is voluntary benefits. This approach allows
employees to purchase specified insurance coverage and financial products
for savings and retirement at their place of employment. Voluntary bene-
fits have been used in work organizations for many years in the form of
supplemental insurance programs. The concept appears to be spreading
to include some products or options formerly regarded as core benefits.

Portable benefits are becoming more common in benefits administra-
tion. This concept has been advanced by many as the solution to maintaining
benefits for workers in a mobile society. It recognizes that individuals may
work for several different organizations during the course of a normal ca-
reer and therefore may be best served by benefit products that can move
with them. Defined benefit pension plans are being replaced by defined con-
tribution plans. Because defined contribution plans limit liability expo-
sure, they result in savings for employers. They also allow organizations
that formerly offered defined benefit plans to escape the hassle of gov-
ernment reporting, avoid annual funding of plans, and get out from un-
der the constantly increasing premiums charged by the Pension Benefit
Guarantee Corporation (PBGC). Common defined contribution products
include 401(k) plans for investments and savings and 403(b) plans for tax-
deferred annuities. Individuals owning either product can transfer them to
subsequent employers.


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Also, the Health Insurance Portability and Accountability Act (HIPAA)
addresses an aspect of benefits portability by providing for continuity of
coverage when workers change employers.

Some experts have predicted that the ultimate development in benefits
administration is to offer no benefits at all other than those required by
law, such as those required by the Federal Insurance Contributions Act
(FICA, that is, Social Security), Workers’ Compensation coverage, and un-
employment insurance. Employers will simply pay their employees the
value of the organization’s benefits contribution as a part of their salary
and allow them to spend the money as they choose. This is in conflict with
the direction and philosophy established by the government in employ-
ment legislation that encourages employers to assume greater social re-
sponsibility for their employees. Many workers in the lower tiers of the
economy presently receive no benefits other than those required by law.
The government has been trying to address and improve the situation of
these people, especially with regard to health insurance.

Statutory Benefits
Statutory benefits programs exist by virtue of legal requirements. These
programs are usually administered by HR. Foremost among these are
Workers’ Compensation and unemployment compensation in all states. A
number of states have a requirement for short-term disability compensa-
tion. Human resources usually coordinates these programs although there
are implications for a department manager.

Workers’ Compensation laws are in effect in all 50 states, American
Samoa, the District of Columbia, Guam, Puerto Rico, and the Virgin
Islands. Including both medical benefits and compensation for lost in-
come, billions of dollars in Workers’ Compensation benefits are paid to
American employees every year.

The medical benefits paid under Workers’ Compensation laws gener-
ally equal full actual medical expenses. The amount of benefit paid for
lost wages varies considerably from state to state. Nationwide, the most
common benefit paid amounts to two-thirds of wages up to a specified
maximum. Most states place limits on both maximum and minimum
weekly benefits, the total number of weeks that benefits can be received,
and the total dollar amount of benefit eligibility. Most states also provide
lifetime payment for permanent disability. Some states pay additional
amounts for dependents, rehabilitation services, and other benefits.

Department supervisors cannot exert much influence over Workers’
Compensation costs, because managers are members of a group of people
in an organization who have separate but not well-defined roles in con-
trolling Workers’ Compensation costs. The best approach to controlling
such costs is to have an effective accident prevention program. Here, a man-
ager’s role is to be constantly aware of the requirements of the program

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and ensure that all employees observe those requirements. Specifically, it is
up to managers to ensure that employees are thoroughly educated in safe
work practices, including, in the healthcare setting, safe handling of nee-
dles and other sharp objects and safe lifting techniques. Puncture wounds
have always been a concern in health care, and back strain resulting from
improper lifting remains one of the most common on-the-job injuries ex-
perienced by healthcare personnel. Managers must enforce compliance with
organizational safety procedures that have been mandated by governmen-
tal entities. They must also ensure that their employees are trained and ap-
propriately use all required safety equipment as they perform their jobs.

When pursuing an effective accident prevention program, a manager is
clearly responsible for encouraging a high level of consciousness about the
need for safety among employees. Managers must discipline their employees
for unsafe practices. Ignoring a safety procedure is no different than violat-
ing any other work rule or policy. Violators must be appropriately counseled.
Continued violations must be handled through progressive discipline.

A department manager should assist HR in monitoring Workers’
Compensation claims and challenging those that appear to be inappro-
priate. To monitor claims properly, a manager must be thorough and timely
in providing all documentation that may have a bearing on a claim. This
includes all necessary incident and accident reports. These should be pro-
vided as soon after the fact as possible. They must be clear and detailed.

Questions arise about whether a particular injury occurred during work-
ing time or on an organization’s property. It may be necessary to determine
whether Workers’ Compensation is appropriate or whether the case should
be processed as a short-term disability resulting from an off-the-job oc-
currence. Employees may report off-the-job accidents as occurring on the
job, especially in states and organizations that lack a short-term disabil-
ity benefit or where Workers’ Compensation benefits are more generous
than short-term disability benefits. After an injured employee’s personal
physician, the employee’s supervisor is often the next most important per-
son in determining whether a given occurrence legitimately falls under
Workers’ Compensation.

Unemployment Compensation
The Social Security Act of 1935 made the individual states responsible for
their own unemployment compensation insurance programs. A federal
tax was imposed on employers, but most of this tax could be offset by
state taxes. All programs were to be controlled at the state level.

Unemployment insurance programs are in effect in all 50 states, the
District of Columbia, and Puerto Rico. These programs are continually un-
dergoing change. The majority of these changes lead to increased benefits
for employees and increased costs for employers.


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Although differences exist throughout the country, employers are gen-
erally subject to experience rating. This means that they are taxed ac-
cording to their past records. An employer that decreases its unemployment
claims by employees will also decrease its unemployment tax costs. The
majority of business organizations, and virtually all profit-making busi-
nesses, are taxed directly using experience-based rates established by each
state. In a number of states, not-for-profit organizations, including most
healthcare organizations, pay for their unemployment on a dollar-for-
dollar basis rather than paying a tax based on a percentage of their pay-
roll. This means that such organizations pay their actual unemployment
costs as they are incurred.

Because unemployment compensation is intended to make up for wages
lost due to periods of unemployment beyond an employee’s control, un-
employment compensation is not ordinarily made available to people who
voluntarily resign their employment or who are discharged for cause.
Rather, unemployment compensation is intended primarily for employees
who are laid off through no fault of their own or who otherwise find that
their services are no longer required. Individuals who have been dismissed
because of their apparent inability to meet the requirements of their posi-
tions generally qualify for unemployment compensation. In a few states,
employees who are on strike can receive unemployment compensation af-
ter a specified waiting period, usually six or more weeks from the start of
the strike.

To the extent that it is possible for a department manager to influence
some forms of employee turnover, a manager can have an effect on an or-
ganization’s unemployment compensation costs. Care and thoroughness
in hiring will help limit the likelihood of acquiring an employee who may
turn out to be unable to succeed on the job. It is not possible to refine the
hiring process to the point where right choices will always be made.
Nevertheless, if a manager sticks to minimum education and experience
requirements and does not rush a decision based on insufficient informa-
tion or an insufficient number of candidates, it is often possible to mini-
mize or avoid performance problems before they begin. This also minimizes
potential unemployment costs.

A manager should scrupulously follow all of an organization’s policies
regarding hiring, orientation, disciplinary action, and applicable legal
processes. Disciplinary actions, especially those taken in a series that could
eventually result in termination, are especially important. All such actions
must be thoroughly documented and should be taken strictly in accor-
dance with policy and Equal Employment Opportunity guidelines. It is
frequently necessary to use records of disciplinary actions to refute non-
legitimate claims for unemployment compensation. Because the primary
purpose of disciplinary action is correcting behavior, it is often necessary

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to produce documentation of a series of related actions to demonstrate
that an employee had the opportunity to correct errant behavior but failed
to do so.

A manager should remove a sub-standard performer during the pro-
bationary period. An organization’s probationary period may be too short
to be able to make a definite decision concerning an individual’s ability,
especially in the case of a marginal employee. However, the probationary
period is usually sufficient to give a manager a fairly clear indication of an
employee’s potential. Separations for reasons related to performance is
usually easier to justify if they occur during a probationary period. Because
unemployment costs are related to the length of time an employee has
worked for an organization, separation by the end of the probationary pe-
riod reduces costs.

Working in conjunction with HR, a manager should challenge all un-
employment claims that appear inappropriate. Many people automatically
file for unemployment regardless of why or how they left their positions.
They have nothing to lose by trying to collect benefits. Many former em-
ployees will state their reasons for termination clearly in their favor. The
former employer then has the responsibility to dispute such claims to
avoid unemployment costs. If a claim goes undisputed, then a former em-
ployee, deserving or not, will automatically collect unemployment com-
pensation. Thus, every effort should be made to dispute claims that appear

A manager should consider the use of temporary help when it will only
be needed for a short period of time. Hiring a regular employee to cover
a given need and then laying the person off when the need has passed in-
creases unemployment costs. Using temporary help for particular tasks or
for brief periods of time will avoid such costs. In most parts of the coun-
try, 26 weeks of work are required for an employee to become eligible for
unemployment benefits. Thus, any need that is less than six months long
and can be met by using temporary help will reduce an organization’s un-
employment costs.

Short-Term Disability
Unlike Workers’ Compensation and unemployment compensation, which
are statutory requirements throughout the country, short-term disability
is not a universal legal requirement. The reason for disability coverage is
not important. It requires conscientious attention to cost control.

The premium for disability insurance is linked to usage. Technically,
this is called an experience rating. The claims actually paid in a given year
are reflected in the subsequent year’s premium rates. Therefore, most or-
ganizations pay dollar-for-dollar. They eventually pay the total actual costs
for all claims plus administrative expenses.


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The single action that can have the greatest impact on an organization’s
overall disability costs is a corporate decision to become self-insured. Such
a policy is typically coupled with a comprehensive employee health and
safety program. At the level of an individual department, a manager can
pass along information to employees concerning personal health and safety
in general and particular hazards or illnesses that are germane to an or-
ganization. Supervisors should urge employees to take advantage of an-
nual physical examinations or health assessments and should always be
prepared to refer employees to the employee health office when questions
arise or problems become apparent. Finally, managers should scrupulously
fulfill all departmental responsibilities related to disability procedures by
ensuring that all necessary forms are complete and submitted in a timely

From a department manager’s perspective, involvement in a legal action
may take the form of brief periods of extremely intense and demanding
activity, interspersed with lengthy stretches characterized by little or no
visible activity. A department manager who may become involved in a le-
gal action against the organization must be patient. Attorneys’ schedules,
court calendars, and official waiting times all extend the time that is re-
quired to resolve legal actions. There is little point in allowing the sus-
pense of a situation to impact the routines of employees when the timing
of events lies well beyond their control.

Supervisors must accept the normal sequence of events. During long
quiet periods, nothing may seem to occur. Many activities such as mo-
tions, depositions of various individuals, and settlement conferences that
do not involve a manager may be transpiring. Managers should simply
accept the apparently slow pace of resolution. Managers should not be
overly concerned about being called for deposition or trial testimony.
Expert preparation and support will be provided.

Individuals who are named in a suit or summoned in a case must ap-
pear in court. Because there is no way to avoid such an appearance, wor-
rying about doing so is a waste of time and energy. Resigning one’s
employment will not remove the legal obligation. When completing any
form, offer only what is necessary and always do so objectively and with-
out personal bias or name-calling. Complete all forms, being attentive to
dates and signatures. Managers should remain sensitive to the implica-
tions of a case in their day-to-day dealings with employees. Words as well
as actions have the potential to create problems. In response to direct ques-
tioning, do not discuss an open case with others in the organization ex-
cept for those few who are actively managing the organization’s involvement.

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Smart managers avoid the temptation to make predictions concerning the
eventual outcome.

Human Resources staff members often spend a considerable amount of time
interacting with representatives of different government agencies. A list of
the agencies that are commonly encountered by an organization follows.

Equal Employment Opportunity Commission (EEOC) and the State
Division of Human Rights (DHR)
These two agencies address allegations of employment discrimination.
Filing a complaint with one is essentially filing with both of them. In many
states a complaint reaching EEOC first is automatically referred to DHR
for initial processing. The initial point of contact for both agencies is usu-
ally Human Resources. HR typically gathers the requested information
and formally responds to a complaint. The manager of a complaining em-
ployee’s department will often be contacted for information to help in de-
veloping the organization’s response. That manager is likely to be interviewed
during investigation of the complaint.

Occupational Safety and Health Administration (OSHA)
Using no particular schedule or set frequency, this agency may send rep-
resentatives to perform routine surveys of safety practices or to inves-
tigate specific complaints or allegations of unsafe practices that have been
received. Human Resources is often an organization’s point of contact.
The initial contact may be a particular administrator, a risk manager or
a safety manager. Engineering may also be involved since many safety
issues involve the physical plant. The manager of a department where
a potential unsafe practice is observed or alleged can expect to become

State Employment Service
Human Resources is heavily involved in every claim for unemployment
compensation. Since an employee’s level of compensation is based on in-
come, information about earnings must be provided. Human Resources
must supply the reason for termination and must indicate whether or
not the claim will be protested. A protested claim usually results in a
hearing before an administrative law judge. A hearing usually involves
the former employee’s immediate supervisor as well as a Human Resources


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Citizenship and Immigration Services (CIS)
Investigators from the CIS will periodically arrive in Human Resources to
audit personnel files for the presence and accurate completion of required
I-9 forms. Ordinarily, a department manager will have no involvement in
an I-9 audit except as the channel for an I-9 related question from HR to
an employee. Occasionally, CIS investigators will come looking into the
immigration status of specific individuals. Such investigations can involve
questioning of a department manager.

Department of Labor (DOL)
The Department of Labor monitors compliance with wage-and-hour laws.
Since both states and the federal government have wage-and-hour laws,
an organization may be visited by either state or federal DOL representa-
tives. Their interest may be a routine audit of selected wage payment prac-
tices. Overtime payments are often the subjects of investigation. The DOL
also investigates employment practices such as compliance with child la-
bor laws. DOL investigators occasionally investigate irregularities in wage
payments. The primary points of contact in such investigations are usu-
ally Human Resources and Payroll. Department managers can become in-
volved in providing information to determine whether an employee is
properly classified as exempt or nonexempt or whether time worked has
been appropriately reported.

Few people look forward to an investigation by an external agency.
However, such contacts are inevitable. Most Human Resource depart-
ments regard external agency inquiries as opportunities to review selected
practices for possible violations and determine how these practices can be
improved. Even though an external investigator may appear to be unnec-
essarily forceful, nothing is accomplished when HR personnel or others
respond by being defensive or uncooperative.

A considerable part of Human Resource’s role regarding external agen-
cies is knowing the law as well as an agency’s guidelines and procedures.
When internally investigating a specific complaint, HR should first de-
termine whether it is valid. If it is, HR can recommend corrective action
in addition to formulating the organization’s response to an external
agency. There is no gain in resisting a complaint if an organization ap-
pears to be in the wrong. However, HR professionals are usually well
aware that an external investigator who is acting on an individual’s com-
plaint has heard only one side of the story. Unless the particular com-
plaint to be addressed is a discrimination charge from EEOC or DHR
that cannot be disposed of at an early stage, Human Resources is usually
able to keep a department manager’s involvement with external agency
representatives to a minimum.

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Compensation and benefits are important aspects of employment for most
people. Compensation information is coordinated by HR. Benefit policies
are changing. Organizations are trying to reduce expenses associated with
benefits. Flexible benefit plans have evolved as organizations try to pro-
vide meaningful and relevant benefits to employees with a wide range of
ages and interests. Rather than simply paying for a standard benefits plan
for all, organizations are allowing individuals to make their own decisions
regarding benefits. Benefit programs are usually administered by an HR
department. Workers’ Compensation, unemployment compensation, and
insurance and disability insurance are required by law. All other benefits
are offered at the discretion of an employing organization.

Returning to the initial case study, Sara either should provide a general
dollar amount to offer to each Westside employee or she should instruct
Pat to develop such an amount. Rob and Pat should contact other organ-
izations in the area that compete for employees to ascertain what compo-
nents their benefits packages include. They should consider obtaining the
opinions of a sample of Westside employees as to the desirability of the ben-
efits under consideration. Once the fundamental questions of dollar amount
and plan elements are addressed, Rob and Pat can develop a plan for Sara
to consider. Based on their years of service and relative position within the
organization, the plan should define the dollar amounts Westside will pro-
vide for its employees and the options from which they can choose for
their benefits. Because they are thorough, Rob and Pat should develop a
range of options for Sara to review. Ultimately, Westside’s board of direc-
tors will have to approve the proposed changes in benefits.

Discussion Points

1. What is meant by the term statutory benefits? Provide several examples.
2. Why should a department manager be thoroughly familiar with pay

scales appropriate to department personnel but refrain from making
specific pay offers to potential employees?

3. How should a supervisor reply to a male employee who complains that
he is being paid less than another individual who is doing the same
work? How should a supervisor reply to a female employee making the
same complaint about a male colleague? Are the responses different? Why?

4. Why should a department manager avoid comparing employee pay
scales with those of other organizations?

5. An employee asks, “What is the difference between a defined benefit
pension plan and a defined contribution plan?” How would you re-
spond to such a question?


35310_CH11_Final.qxd 1/30/07 4:06 PM Page 216

6. Why is interest in portable benefits in health care increasing?
7. In your opinion, what should be a department manager’s primary role

in attempting to control Workers’ Compensation costs?
8. Managers disagree whether a particular instance of time lost due to in-

jury or illness should be considered under Workers’ Compensation
(job-related) or short-term disability (not job-related). Knowing that
an employer ultimately pays for both, why is this distinction important?

9. What role should a department manager have in controlling the cost
of unemployment compensation?

10. How should managers react if representatives of an external regula-
tory organization arrive at their departments to audit their activities?


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Chapter Overview

After reading this chapter, readers will:

• Know the reasons for having an up-to-date performance appraisal

• Understand the primary objectives of performance appraisals
• Recognize traditional approaches to performance appraisals
• Appreciate common obstacles to performance appraisals
• Avoid the problems presented by appraisal instruments that

require evaluators to render personality judgments
• Understand that sound position descriptions are the essential

starting point for an effective appraisal process
• Know the kinds of standards and measurements that can be

applied in appraising performance
• Be able to define the critical difference between the terms standard

and average as they are used in performance appraisals
• Know the two most common approaches to appraisal timing
• Be able to schedule and conduct a performance appraisal

• Know when and how self-appraisal can be a constructive element

of the performance appraisal process
• Appreciate important legal implications of performance appraisals
• Recognize the features of practical performance appraisal forms
• Know the role of human resources in performance appraisal,

including the times in the process when a department manager
becomes involved




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Performance appraisals are important to employees and organizations.
They provide structured opportunities for supervisors and employees to
talk about progress and performance. Knowledgeable organizations use
structured forms for all employees and use written protocols to provide
guidance for the process.

Poor or obsolete forms hinder the appraisal process. Useful forms are
objective, easy to understand and use, and relatively brief. They rate per-
formance, not personal characteristics or attitudes. The best appraisal
forms are related to position descriptions and ask for evaluations that can
be supported by data. Employees should be evaluated in terms of stan-
dards rather than averages.

A written appraisal must be followed by a personal interview to discuss
the evaluation and the opportunity for employee input. Self appraisals or
team evaluations are used as appropriate. Human resources (HR) should
oversee employee appraisal programs.

Case Study: An Appraisal Conversation

“This is stupid and a waste of time,” lamented Stu Johnson. “I supervise
these people every day and know their working habits well. Upper man-
agement pays me to get work done, not to write out appraisals every year.”

“Ah, even ignoring the fact that regular appraisals are required by pol-
icy, your employees look forward to them,” replied Marcia Stannis, a col-
league of Stu.

“Humph. If they want to know how they are doing, all they have to do
is walk into my office and ask me. I’ll be glad to tell them.”

“How often does that happen?” asked Marcia.
“Maybe once every year or so,” replied Stu.
“Do you walk around the office?” asked Marcia.
“Sometimes, when I have time,” was the reply.
“How often is sometimes?”
“Every few weeks,” said Stu. “You know that we’ve been busy this past

“Did you know that Julie has completed her degree?” asked Marcia.
“Or that Jeff is applying for a promotion?” Marcia continued.
“Huh? When did he do that?”
“Last month. Remember Jim, the problem employee?”
“How could I forget him? He was so lazy,” Stu recalled.
“He lost his lawsuit for wrongful dismissal.”
“That seems appropriate.”


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How would you describe Stu’s management style? In your opinion, was
he as knowledgeable about his employees as he thought? Why? Why do
you think Jim lost his lawsuit?

Performance appraisal is a structured event. It involves a periodic exami-
nation of performance to ascertain how well a particular employee is per-
forming relative to what is expected. Performance appraisal is based on
two documents, a position or job description and a performance appraisal
form. A permanent record is usually created and retained in an employee’s
personnel file.

Different organizations may use different names for the performance
appraisal process. The more common titles are performance evaluation,
performance review and performance assessment. A newer term is per-
formance management. Performance management purports to encompass
not only evaluation but also the overall development and improvement of
an employee as a producer. When completed correctly, however, per-
formance appraisals include everything that performance management
claims to include.

Performance appraisal is used to facilitate improvement in employee per-
formance, provide formal or official feedback to employees concerning
their job performance and collect information for decisions concerning
compensation and other personnel transactions such as promotions and

The primary purpose of an appraisal is to improve employee perform-
ance in the present job. A secondary purpose is to maintain the perform-
ance at an acceptable level. The process contributes to two developmental
objectives for an employee. It delineates an employee’s progress toward ad-
vancement and assuming greater responsibilities. It helps senior managers
to identify employees who are capable of advancement. Performance ap-
praisals periodically remind employees about what their employers expect
from them. From the perspective of individual employees, performance
appraisals should enable them to know how they are performing. It also
helps them to know what is needed to improve their performance.

Performance appraisal in health care is mandated by organizations and
agencies that accredit and regulate healthcare facilities. In some instances,
mandated evaluation has led to the development of performance appraisal

The Need for Performance Appraisal 221

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systems that are little more than a formality. Such evaluation systems have
minimal value.

Many methods have been employed to assess employee performance. The
most often used ones employ rating scales. These are based on comparing
an employee’s performance with a scale that represents expectations. Other
approaches are sometimes used. Under particular circumstances each of
the following has been effectively used.

A supervisor periodically describes employee performance at whatever
length is considered necessary. After the contents are discussed with the
employee, the essay is signed by both parties. The employee is given a copy
and a copy is placed in the personnel file.

Critical Incident
Any positive or negative event that occurs outside of the ordinary is writ-
ten up and retained for the next formal performance discussion.

Employee Comparison
Employees in a group are compared with each other and rank ordered
from the best performer to the poorest performer. A different variation
has supervisors placing their employees into a three-part distribution. A
predetermined percentage is rated above average, a similar percentage
must be rated below average, and the remaining employees are rated in the

In this approach, an evaluating manager must describe employee per-
formance by choosing from among a number of prepared statements. A
variation of this method asks supervisors to select, from a group of pre-
pared statements, the one that best and another that least describes each

Management by Objectives
This is a participative approach commonly used with higher-level techni-
cal or professional employees and managers. The individual is evaluated
on achievement of or progress toward specific objectives developed by the
individual with the manager’s concurrence.


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Although every appraisal system has shortcomings, a rating-scale ap-
proach is most useful and equitable when it is correctly applied. It is nei-
ther appropriate nor fair to appraise the work of employees by comparing
the performance of one to another. The most useful comparison that can
be made via appraisal is the evaluation of individual employee perform-
ance over time; in other words, the only comparison experienced by an em-
ployee is with his or her own past performance. Successive evaluation
periods provide the basis for meaningful long-term assessment. Evaluators
and employees must have similar expectations of how their organization’s
system works. This approach does not rely on the specifics of any partic-
ular rating system.

Appraisal occurs so infrequently it is difficult to consider performance ap-
praisal as a regular part of a manager’s job. Thus, managers often view the
process as extraneous and intrusive. Appraisals become extra work. It re-
quires supervisors to make difficult judgments about subordinates. As a
result, employee appraisals are often dreaded or disliked. Managers are of-
ten uneasy about criticizing employees, especially on a performance ap-
praisal that results in a permanent record in an employee’s file and that could
affect the person’s pay, job future and career.

One common approach to evaluation anxiety or fear is to ignore the
appraisal requirement. When that option is disallowed, supervisors often
accomplish the task in a hurry and avoid making any substantive evalua-
tion decisions. Such an approach has no utility. In business in general as
well as in health care, appraisal is a necessity. The best way to address ap-
praisal anxiety is with knowledge, preparation, and practice. Remember
that neither employees nor managers enjoy appraisals.

Other obstacles to performance appraisals exist in addition to managers’
and employees’ dislike of the process. If evaluation is not taken seriously
by an organization, then managers will view performance appraisal as lit-
tle more than a paper-pushing activity that has little relevance. The length
and complexity of forms can deter department managers. Appraisal re-
sults may be converted to scores when used to determine pay increases. When
this occurs, a performance appraisal becomes a scorecard and the process
becomes competitive.

Ensuring that all managers apply appraisals in a consistent manner is
a common problem. Person-to-person consistency is important, especially
when evaluation scores determine the amount of pay increases. Differences

Obstacles to Performance Appraisal 223

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do exist. Some managers rarely give outstanding ratings. Others consis-
tently give employees high ratings. Some managers cluster their ratings
and group most employees in a narrow band around the middle of the
scale. Different supervisors emphasize different parts of the system. One
may emphasize quality of output while another stresses interpersonal

After mergers occur, managers often have extremely large units with
many employees. Some supervisors feel they do not have sufficient time
to do justice to so many evaluations. Initial appraisals are thorough while
later ones are likely to be rushed. Managers with large numbers of em-
ployees may not be equally familiar with all aspects of every employee’s
work. Older performance appraisal systems were often based on person-
ality ratings. Even though such systems have changed, long-time managers
often continue to render personality judgments when appraising

Older systems of performance appraisal often relied heavily on assessing
personality characteristics. This yielded evaluations that were highly sub-
jective. They did not focus on how an employee performed relative to an
objective standard. Exhibit 12-1 contains examples taken from an old rat-
ing form. Supervisors checked the statement that best described the em-
ployee being evaluated. Comments have been added to demonstrate the
weaknesses of personality-based appraisal.

Exhibit 12-1 is typical of a performance appraisal that relied on sub-
jective evaluations. Managerial uneasiness with such an appraisal is un-
derstandable. A subjective assessment is merely an opinion when expressed
by someone who is not qualified in the particular area of judgment. Few
managers are qualified to render a meaningful decision about personality.
Using documents similar to Exhibit 12-1, managers were required to make
judgments they were not qualified to make and could not possibly defend.
Making matters worse, they knew such judgments could affect people’s

Such appraisals were as unsettling to employees as they were to man-
agers. Few employees will willingly or readily endorse negative assess-
ments. These performance appraisals were common in environments where
authoritarian management prevailed. In such a situation, an evaluator
could freely use personal opinions, unsupported judgments, and personal
biases on evaluations. Employees who wanted to keep their jobs had no
recourse other than checking their anger and returning to work.


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Personality-Based Evaluations 225

Exhibit 12-1 Example of a personality-based rating system

1. Punctuality

__ Always on time
__ Occasionally late
__ Requires occasional reminding
__ Often tardy; treats job as unimportant
__ Always tardy

Commentary: In old evaluation systems, attendance was often
the only quantifiable item. Above, subjectivity has been intro-
duced. Occasional and often are undefined. Treats job as unim-
portant is a conclusion that cannot be verified. Always and never
are very dangerous words. Rarely are they absolutely true.

2. Dependability
__ Perfect since last rating
__ Rarely absent
__ Frequently absent, but for cause
__ Poor record, requires counseling
__ Unsatisfactory; work suffers

Commentary: Each of these statements is completely subjective.
Again there are words, such as rarely and frequently, that have
no absolute meanings. Evaluating whether an employee’s ab-
sences are for cause cannot be done factually without violat-
ing an employee’s privacy. As long as the employee has called
in according to policy, the manager must take each absence at
face value.

1. Appearance

__ Neat and in good taste
__ Neat but occasionally not in good taste
__ Sometimes careless about appearance
__ Untidy
__ Unsuitable for job

Commentary: All five items are highly subjective. What is good
taste and who defines it? When does untidy become casual?
This entire subsection is out of line. If used in an evaluation, ap-
pearance should be brought up only in reference to an under-
stood dress code or set of professional standards of conduct.


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Exhibit 12-1 Example of a personality-based rating system (cont.)

2. Personality
__ Exceptionally pleasing, a decided asset
__ Makes good impression, wears well
__ Makes good first impression only; does not wear well
__ Makes fair impression only
__ Creates unfavorable impression

Commentary: Each of the five statements contains imprecise
terminology. The entire subsection is completely irrelevant to
an employee performance appraisal.

1. Interest

__ Shows intense enthusiasm and interest in all work
__ Shows interest; enthusiasm is not sustained
__ Passive acceptance; rarely shows enthusiasm
__ Shows little or no interest
__ Dislikes work

Commentary: Although often attempted, no one can appropri-
ately evaluate or discipline attitude. These imprecise statements
are useless in appraising an employee. The final one is an un-
warranted and insupportable conclusion.

2. Cooperation
__ Goes all out to cooperate with management and co-workers
__ Promotes cooperation and good will
__ Moderately successful in cooperating with others
__ Cooperates reluctantly and sometimes causes dissension
__ Uncooperative; often breeds trouble

Commentary: How do the first two statements differ? The rest
of the statements can not be successfully defended.

1. Accuracy

__ Rarely makes mistakes
__ Above average
__ Average
__ Below average
__ Highly inaccurate

Commentary: These statements are subjective without a quan-
tified definition of average.

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The appropriate way to appraise performance is to base the evaluation on
what an employee does rather than on what an employee knows. For
decades, managers rated employees on job knowledge. In addition to be-
ing subjective, such an assessment provided little or no value. Job knowl-
edge is immaterial. What really matters is how knowledge is applied or what
results are achieved.

The correct approach to appraisal is to base an evaluation on how well
employees are performing the jobs they are expected to do. Preparation
for appraisal begins by considering the specific tasks that make up the job
being performed.

Solid Position Descriptions
A sound performance appraisal begins with a solid position description.
A position description is usually written by a department manager with
assistance from HR. The person in the job should provide input.

Up-to-date position descriptions are necessary for several reasons, an
important one being their use in performance appraisal. To evaluate em-
ployees on what they actually do requires a clear picture of what is expected
of each employee. The tasks to be performed and the results to be achieved

Performance Appraisals 227

Exhibit 12-1 Example of a personality-based rating system (cont.)

2. Neatness
__ Takes pride in appearance of work; has sense of neatness
__ Usually turns out neat work
__ Apparently lacks sense of neatness; needs reminding
__ Too often sacrifices neatness for quantity
__ Majority of work must be done over

Commentary: All questions depend on a subjective definition
of neat.

3. Quantity
__ Unusually high output; meets emergency demands well
__ Consistently turns out more than average.
__ Finishes allotted amount
__ Does just enough to get by
__ Amount of work done is inadequate

Commentary: Quantity is undefined, rendering it subjective.

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provide a baseline against which to compare observed performance. These
are often referred to as competencies. Criteria refer to the requirements on
a job or position, while competencies refer to mastery of applied knowl-
edge and skills that fulfill the requirements of a position description.

A primary shortcoming of many position descriptions is the extent of
detail their writers attempt to capture. A long and detailed position de-
scription leads to excessive length and detail in a performance appraisal.
Position descriptions should be concise. For most entry-level jobs or non-
professional positions five to eight items describing the most time con-
suming tasks in descending order of time devoted to them is adequate.
These should be able to capture 90 to 95% of the job duties and time spent
in a year. Excessive detail places a manager at risk of paying as much at-
tention to minor concerns as to major job requirements.

Exhibit 12-2 presents a sample position description for the position of
nursing assistant. The duties listed encompass more than 90% of the tasks
an employee performs on a typical day throughout a year. Greater detail
is possible but not desirable. Evaluating supervisors who know the job
and employees as they should will be able to provide competent and com-
plete appraisals.

A position description should be one of the first considerations when
a new position is created. An existing position description should be re-
viewed and updated when it becomes necessary to recruit for the position,
when there are obvious changes in the job such as new methods or equip-
ment or every two years, whichever occurs first. Another good time to re-
view position descriptions for currency is when preparing to conduct
performance appraisals.

Once a position description is current, attention should turn to meas-
uring performance against the task requirements or assessing whether an
employee’s results are acceptable. Objective measures can usually be ap-
plied to many elements of most jobs.

Sources of Standards and Measures
Measures of performance should address four key dimensions: produc-
tivity, quality, timeliness, and cost. Sources of performance standards in-
clude detailed time-study and analysis of methods. Accurate standards can
often be developed using this approach. However, the process is time-
consuming and costly. The approach is most suitable for high-volume,
highly repetitive activities that are infrequently encountered in health care.

Predetermined motion-time systems yield highly accurate standards,
but these are also both costly and time-consuming. This process is most
suitable for high-volume, repetitive activities.

Reasonably reliable standards can be established through work sampling.
This is time-consuming, but not nearly as costly as the other two methods.


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Performance Appraisals 229

Exhibit 12-2 Sample Position Description

Department: Nursing
Position: Nursing Assistant, General Medical/Surgical
Grade: N-3 Job Code: 607
Reports to: Unit Manager (will occasionally report to designated nurse
in charge).
Principal Duties (List in descending order of approximate percentage
of time required):

1. Provides timely personal care of acceptable quality to patients in
accordance with established policies, procedures, standards, and
approved individualized care plans in a manner mindful of patient
privacy, comfort and safety.

2. Performs routine treatments and other patient care duties as as-
signed, competently completing all assigned treatments during
the scheduled shift. Also assists RN or LPN with nursing care and
treatments as needed.

3. Assists RN or LPN in gathering data for patient assessment in-
cluding vital signs and height, weight, intake and output, and other
measurements as applicable; demonstrates ability to recognize
and report abnormal vital signs; demonstrates proper ability to
collect and accurately label specimens.

4. Maintains positive interpersonal relationships with patients, visi-
tors, and other staff while ensuring confidentiality of patient in-
formation and protection of patient privacy.

5. Maintains conscientious work habits consistent with the standards
of the Nursing Department specifically: documenting clearly and
completely, managing assignments with normal supervision, com-
pleting duties within the assigned shift, accepting reassignment
to other units as necessary, and responding favorably to reason-
able requests to remain beyond the shift when needed.

6. Operates equipment and performs work in a safe manner, demon-
strating proper body mechanics in lifting, pulling, pushing and

7. Maintains the clinical and educational standards of the department:
maintains CPR certification and demonstrates effective performance
during “code” procedures; participates in unit and department in-
service education activities; remains current with all continuing
education requirements.

8. Undertakes other assignments as directed by the unit manager or
officially designated charge nurse.

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Nevertheless, work sampling requires special skills and a person who can
be dedicated to developing standards. Work sampling is most applicable
to moderately repetitive activities.

Benchmarks are indicators of productivity that have been developed
through the collective experience of several organizations or published by
interested groups such as associations of health care organizations or tech-
nical and professional societies. Benchmarks are inexpensive. They are of-
ten free to members of an association or available via a purchased
subscription to a statistical reporting service. Benchmarks are readily ap-
plicable but usually not as accurate as the other three sources described.
Benchmarks can be misleading because users often have no clear idea about
the method on which a benchmark is based. Exhibit 12-3 provides exam-
ples of indicators for which standards may be established or benchmarks
acquired. These relate to productivity or quantity, quality, time, and cost.

Benchmarks or other data provide the basis for assessing individuals or teams
of employees. Ranges are preferable to absolute standards. Attendance
provides a simple example. Rather than setting a rigid standard of three
absences in a 12-month period, an organization may establish an accept-
able range of three to five absences in a 12-month period. This allows su-
pervisors to warn employees about problems before they become serious.
It provides a simple system for appraising behavior. Having three to five
absences in a 12-month period constitutes meeting the standard. Employees
with six or more absences fail to meet the standard. Those with two or fewer
absences exceed the standard.

Using Objectives
Some employees may be evaluated on how well they meet objectives that
were based on previous evaluations. Objectives are best established jointly
by individual employees and their managers. A manager ensures that each
objective is pertinent while an employee agrees that each objective is fair
and reasonable. Some appraisal processes, especially those involving tech-
nical, professional or managerial employees, rely heavily on such objec-
tives. Some objectives arise from weaknesses revealed during an evaluation.
Some objectives relate to personal development.

The appraisal approach based on management by objectives, which is
largely applicable to managers and professionals, consists mainly of ob-
jectives negotiated between employees and their immediate superiors. An
appropriate objective always includes an expression of what is to be achieved,
how much will be accomplished, and a date for completion. Without all three
components, an objective is incomplete and lacks legitimacy.


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Scale Points
A number of older appraisal systems require an evaluator to measure or judge
each evaluation criterion using a scale comprised of gradations and check-
off boxes or blanks. Exhibit 12-4 contains actual examples of scales used
for appraisal. Many different evaluation scales have been employed. Most
of them have similar weaknesses in that they require an evaluator to ren-
der a subjective judgment using an arbitrary scale that lacks definition.

Performance Appraisals 231

Exhibit 12-3 Examples of Objective or Quantifiable Indicators

For Productivity (Quantity)
• Number of patients served per unit of time
• Number of items processed or produced per unit of time
• Number of cases handled per unit of time
• Percentage of employees participating
• Percentage of employees absent or tardy

For Quality
• Percentage of retakes (radiology) or test repeats (laboratory)
• Error rate
• Percentage of down time (equipment out of service)
• Number of citations upon inspection or survey
• Percentage of work rejected
• Percentage of orders, bills, or other documents without error

For Time
• Number or percentage of bills out within a specified number of

• Number or percentage of deadlines missed
• Number of days to complete task or project
• Time elapsed, or turnaround time
• Number or percentage of requests answered within a specified

number of days

For Cost
• Expense compared with previous period
• Percentage of variance from budget
• Cost per item, per order received, per bill processed, per patient

• Overtime cost compared with target
• Contract help cost compared with target

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Experience with more modern appraisal systems has shown that a small
number of gradations are most desirable. Having an odd number of gra-
dations places average in the middle position. Some systems use five points.
Many highly effective job description-based systems use only three points.
These are more than sufficient to assess performance. Each task on a job
description should have a corresponding scale to rate the standard or ex-
pectation of behavior. An employee can then fall into only one of three
positions relative to the standard or expectation: failed to meet the stan-
dard, met the standard, or exceeded the standard. Such a three-point scale
is especially appropriate when standards use ranges rather than absolute

Average vs. Standard
In many appraisal systems, average is used to describe a desired level of
performance. For example, a scale may have doing an average job in the


Exhibit 12-4 Examples of Poor Appraisal Scales

Unacceptable Below Competent Very Exceptionally

competent competent well

Low High

1 2 3 4 5 6 7 8

Definitely Substandard Doing an Definitely Outstanding

unsatisfactory but making average above

progress job average

Fails Average Good Exceeds Excellent

to meet expectations


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center position. However, organizations often use standards or standard
performance to indicate a minimally acceptable output. All too often, these
terms are incorrectly and inappropriately interchanged. Average and stan-
dard are not the same.

Equating average with standard suggests that half of all employees are
below the minimum acceptable level of performance and should proba-
bly not be employed. A goal of every reasonable appraisal system should
be bringing all employees to a minimum or higher level of performance or
rating. Standard becomes the floor beneath which performance will not
be tolerated.

Thus, standard is conventionally used as the minimum acceptable level
of performance. If that is the minimum and all other levels of output are
above it, then the true average or mean of a group is also above standard.
Average may be a convenient way to compare or group scores once eval-
uations have been quantified. Mean is a more precise term. In any event,
average should not be used to describe the expectations of a performance
appraisal process.

Appraisal Timing
An employee’s initial performance appraisal is typically done at the end
of the probationary employment period. This typically occurs at 3 or 6
months of service. The probationary evaluation is completed to determine
whether the employee has learned the job adequately, after which the in-
dividual enters the regular evaluation cycle. In most organizations, em-
ployees are evaluated annually although in some organizations the time
interval is 6 months.

There are two common approaches to an annual appraisal. All em-
ployees may be evaluated at the same time once each year or employees
are evaluated on or near their employment anniversary dates. Each ap-
proach has advantages and disadvantages.

For some supervisors, completing all evaluations during one brief pe-
riod improves the consistency in applying evaluation criteria. Completing
all appraisals at the same time can support a pay-for-performance com-
pensation system by allowing the accurate distribution of a predetermined
amount of money because all appraisal scores are known at the same time.
For some, it simply gets them finished.

Critics of simultaneous appraisals note that the task usually consumes
a major amount of a manager’s time and forces other important matters
to be temporarily ignored. The quality of appraisals can diminish as the
evaluator works through the group. This risk rises as the number of em-
ployees increases.

Proponents of anniversary date appraisal ordinarily contend that the ap-
praisal workload is distributed more or less evenly throughout the year,

Performance Appraisals 233

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thereby avoiding a rush within a brief period. These persons believe that
appraisals become fairer because they are not rushed.

Opponents of anniversary date appraisal often contend that the process
requires constant monitoring by higher management and HR rather than
oversight for only a few weeks. They note that psychologically, the ap-
praisal task is never completed. An evaluator’s interpretation and appli-
cation of appraisal criteria may be subject to change over time. If the
appraisal process feeds a pay-for-performance system, then it is extremely
difficult to distribute a budgeted amount for increases because not all
scores are known at the same time.

Performance appraisal should be completed faithfully for every em-
ployee at the appointed time. Managers and their employees should have
established relationships. Simply meeting once each year for an appraisal
interview is not sufficient. A manager must maintain an ongoing rela-
tionship with each employee and be available to discuss work performance
whenever circumstances warrant. Supervisors make a serious error when
they accumulate issues specifically for performance appraisal.

Describing the Appraisal Procedure
An organization’s performance appraisal process will ordinarily be de-
scribed in a personnel policy and procedure manual. This document will
explain the features of the process and delineate responsibilities for different
stages. This description should be available for reference by employees at
any time. Exhibit 12-5 presents a model policy and procedure for an ap-
praisal process based on anniversary date approach.

Most performance appraisal systems stipulate that each employee receive
a personal interview. An appraisal interview is a requirement; a manager’s
appraisals are not considered complete until all employees have had an
opportunity to discuss their appraisals in detail. Managers should be cer-
tain that each appraisal interview occurs on time. Few events of a work-
place can raise apprehensions and uncertainties faster than appraisal
interviews that are late.

Managers should schedule sufficient time for the meeting. Although an
appraisal interview may seem routine to a manager, it is one of the most
important annual events for many employees, so it should never seem
rushed. Privacy and freedom from interruptions are important consider-
ations. Employees should have several days of advance notice so that they
can be prepared.

If the review involves objectives as well as ratings, then supervisors
should review the objectives before the interview and be prepared to


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The Appraisal Interview 235

Exhibit 12-5 Model Policy and Procedure: Performance Appraisal

It is the policy of the Hospital to provide a formal performance ap-
praisal for each employee at least once each year. The purposes of
the appraisal program are to:

• Maintain or improve performance in the job an employee presently

• Assist in employee development by providing learning and growth
opportunities for those wishing to advance

• Assist the Hospital in identifying individuals with advancement

Performance appraisal applies to designated employees as follows:

1. Newly hired employees:
• The first appraisal will occur at the end of the initial three (3)

month probationary period.
• The second appraisal will occur three (3) months following the

probationary appraisal.
• The following appraisal will occur six (6) months later, or on

approximately the employee’s first anniversary of employment.

2. Employees promoted or transferred:
• The initial appraisal conducted in an employee’s new position

will occur at either three (3) months or six (6) months, depending
on the learning period established for the particular position.

• Following successful completion of the learning period, the
employee will revert to the normal appraisal scheduled per 3, below.

3. All employees:
• Once having successfully completed the first year of employment

or the learning period following promotion or transfer, all
employees will be subject to appraisal on approximately the
anniversary of their employment.

General Provisions of the Performance Appraisal Program:
• Appraisals in addition to those indicated in the foregoing may be

instituted by the department manager when either a significant
deterioration or a marked improvement in performance is evident.

• Regular communication with employees concerning performance
is essential. Continuing positive communication can assist in mo-
tivating and reinforcing outstanding performance, which is the ob-
jective of the appraisal process. Regular communication may also
call attention to specific needs for improvement in performance,


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Exhibit 12-5 Model Policy and Procedure: Performance Appraisal (cont.)

and immediately addressing areas of need will help prevent them
from emerging as major problems at formal appraisal time.

• An appropriate performance appraisal should:
1. Provide an employee with guidance in growing and developing

as a performer
2. Provide a manager with a means for personalizing management

guidance to individual employees
3. Provide an employee with direction consistent with that

appropriate for pursuing the objectives of the department and

4. Provide a manager with a means to assess an employee’s
performance and place a value on the effectiveness of this

5. Result in a more effective work force, as individuals tend to
perform more appropriately when they know what is expected
of them and they are able to gauge their performance against
periodic measurement.

The following procedure applies to the performance appraisal

1. Approximately 30 days in advance of an employee’s scheduled
appraisal date, human resources will send the department man-
ager an appraisal form for the employee with the heading in-
formation completed.

2. The employee’s job description provides the basis for the ap-
praisal. Before attempting the appraisal, a manager should as-
certain that the job description is complete and accurate. If
necessary, the job description should be updated at this time,
before the appraisal is begun.

3. In addressing the appraisal, for exempt (salaried) professional,
technical, and supervisory employees the manager should as-
sess performance primarily against the actual accomplishment
of duties and responsibilities as delineated in the job descrip-
tion. Nonexempt (hourly) employees should be assessed pri-
marily on the timely and accurate completion of assigned duties.

4. As appropriate, and provided that plans and objectives were
delineated when the previous appraisal was discussed, con-
sideration should also be given to employee growth and de-
velopment and improvements in performance that might have
occurred since the previous appraisal.

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The Appraisal Interview 237

Exhibit 12-5 Model Policy and Procedure: Performance Appraisal (cont.)

5. Objective, quantifiable measures of performance should be
applied wherever possible. For example, the Hospital’s standards
for attendance and punctuality may be applied, as may the
output standards available in some departments. For duties for
which no objective measure of performance is available,
managers should be able to reasonably describe a normal
expectation and indicate why, in their judgment the employee
did or did not meet or exceed the expectation.

6. Once completed, each appraisal must be submitted for review
and approval by the next highest level of management.

7. When higher management approval of an appraisal has been
secured, the manager may schedule the employee for an
appraisal conference. Every effort should be made to accomplish
this conference no more than five (5) working days before or after
the employee’s anniversary date.

8. The manager is urged to follow good interviewing practices in
conducting the appraisal conference by providing adequate time,
privacy, reasonable comfort and freedom from interruptions.

9. As appropriate (primarily for technical, professional and
supervisory employees), the manager and employee will jointly
determine goals, objectives, and development plans to be
pursued during the period preceding the next appraisal. As
necessary, they should achieve agreement on interim dates on
which to examine progress between appraisals.

10. At the completion of the appraisal conference, the employee
should be asked to sign the appraisal document to acknowledge
having discussed it and received a copy. If necessary; the employee
may be reminded that signing the appraisal is simply
acknowledgment and does not necessarily mean agreement with
all that it says. The employee may add comments of disagreement
or agreement in the appropriate space on the appraisal form.

11. Should employees refuse to sign their appraisal, a manager should
so note the fact on the form. If, in the manager’s judgment, the
employee is in strong disagreement with the appraisal and may
appeal or take other action, the manager should have another
party witness the refusal to sign and so indicate on the form.

12. Following the conference the completed appraisal is distributed
as follows:
• Original to Human Resources
• Copy to employee
• Copy retained by manager

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discuss them. Managers should come to the interview with ideas or sug-
gestions concerning objectives for the next cycle. If improvement or
correction is needed, managers and employees should agree on appro-
priate steps to achieve both.

As with any other kind of interview, from a manager’s perspective, the
most important parts of an appraisal interview occur while the evaluator
is listening, not speaking. Whenever delivering praise or criticism, man-
agers should be certain to address specifics. Generalizations are not use-
ful and should be avoided in any element of an appraisal. Before concluding
an interview, supervisors should ask their employees to sign the appraisal
form to acknowledge receipt. This does not indicate agreement with the
findings or conclusions. If an employee declines to sign the form, this
should be noted before the form is filed. Be sure to supply signed copies
of all evaluation documents to employees.

Employees occasionally report to more than one supervisor. This occurs
with overlapping shift assignments or split-shift responsibilities of man-
agers. When this occurs, the primary input must come from the manager
who provides the most direct supervision. This is supplemented with in-
put from other involved supervisors. The manager who provides the ma-
jority of direct supervision should be the one who conducts the appraisal

Neither the written performance appraisal nor the appraisal interview
should contain surprises for an employee. Employees should have a good
idea of their standing with their manager at all times. It is a manager’s re-
sponsibility to ensure that this is the case.

Self-appraisal can be a productive component of a performance appraisal
system. However, self-appraisal is not appropriate for everyone. Some em-
ployees are intimidated by it. Others are apprehensive, fearing the possi-
ble consequences of rating themselves too high or too low. Self-appraisal
is most appropriate for higher-level technical employees, professionals,
supervisors, and managers. While self-appraisal has the potential for suc-
cess, many hourly employees are suspicious of the process and manage-
ment’s intent when using it.

While some people rate themselves higher or lower than may be ap-
propriate, research has repeatedly shown that the majority of employees
rate themselves no higher, and frequently lower, than their supervisors rate
them. When it is used, an employee should complete a self-appraisal while
a manager completes an evaluation. These tasks should be completed sep-
arately. Neither appraisal should bias the other.


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The forms should be similar and should address the same major job
description criteria. The forms should be exchanged for the first time
during an appraisal interview. The items on both appraisals should be
compared one at a time. Both participants should note items on which
they appreciably differ. Areas of divergence highlight an important as-
pect of self-appraisal and focus discussion where it is most likely to be

Self-appraisal is not appropriate for every situation. However, when
appraising employees who are required to exercise some degree of inde-
pendent discretion and judgment, self-appraisal can be a constructive ad-
junct to a performance appraisal system. Self-appraisal draws employees
more deeply into the appraisal process and transforms it into more of a
participative activity.

Organizations have been assembling and using teams during recent decades.
While team building is useful for organizations, it must be periodically
evaluated. Teams present evaluation challenges to managers. Individual
evaluations rendered in a team environment can be troublesome because
they tend to undermine teamwork and cooperation by stressing individ-
ual competitiveness. They can encourage competitive individuals to cir-
cumvent team requirements for individual gain and to fail to nurture an
open, problem-solving environment. Individual performance appraisals
do not support team-building because they lack a means of identifying the
effects of individuals on the group or the group on individuals. Individual
appraisals can impede effective team building.

Teams can be appraised as groups. However, a glaring weakness is the
inevitable differences that exist among individuals. People always perform
in different ways. A properly managed team should be able to use the dif-
ferent strengths of all its members. Likewise, it should be clear to groups
who function well that a team is no place for either single stars or individual

As with individual performance appraisals, team evaluations require
criteria and standards. These must be constructed specifically in terms
of team performance. In many organizations, group or team appraisals
supplement rather than replace individual performance appraisals.
Thus, although the emphasis on groups and team performance con-
tinues to increase, most reward and recognition systems are focused on
individuals. This reinforces the need to appraise both team and indi-
vidual performances.

Team Appraisals 239

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The major shortcoming of many performance appraisal systems is that
that they attempt to capture far too much detail. A lengthy, detailed ap-
praisal form creates extraneous work for appraisers and rapidly fills per-
sonnel files with paper. Some organizations have tried to compensate for
this by filing only a summary document. All too often, such an approach
also requires a key for interpretation. Once filed, an appraisal should be
a self-contained record that can be understood on its own if it is referenced
in the future.

No appraisal form is right for all situations. The most useful forms are
those that have a minimum of fill-in spaces and a maximum of open writ-
ing space. Two or three pages should be sufficient for most performance
appraisal forms. Following an appraisal interview and obtaining signa-
tures from both supervisor and employee, three copies should be made of
each performance appraisal. The original should be sent to HR and added
to an employee’s personnel file. A copy is given to the employee and a copy
is retained by the evaluator.

Exhibits 12-6 and 12-7 provide examples of actual performance ap-
praisal forms. Exhibit 12-6 is generic, an open format that can conceiv-
ably be used along with many different job descriptions. The rating scale
is simple and has three options. The numbers attached to these three lev-
els of performance are simply a convenience for converting the appraisal
results into an overall score for organizational use. Exhibit 12-7 contains
an outline that is completed by adding specific information from a posi-
tion description. It uses a three-point scale with the standard or expected
level of performance in the middle. This exhibit allows individual components
to be weighted. Exhibit 12-7 demonstrates how position descriptions and
appraisal forms can be combined into a single document.

Performance appraisal has become a regulatory necessity in health care.
The Joint Commission on Accreditation of Healthcare Organizations
(JCAHO) looks for appraisals in the personnel files during its periodic sur-
veys, as do many state health departments. Performance appraisals should
be completed as a means of employee development, but they must be done
to avoid being cited for deficiencies.

Although there are legal risks associated with completing and retain-
ing performance appraisals, on balance the legal risks of not doing so are
greater. When an employee is terminated for reasons related to job per-
formance or is preferentially chosen for layoff and the action is contested,
performance appraisal documents in the personnel file become a central


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Legal Implications of Performance Appraisals 241

Exhibit 12-6 Generic Performance Appraisal Form

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

Job Description Requirement Rating

No. Task and Expectation (Standard) Not met Met Exceeded

___ ____________________________________________ _____ _____ _____
___ ____________________________________________ _____ _____ _____
___ ____________________________________________ _____ _____ _____
___ ____________________________________________ _____ _____ _____
___ ____________________________________________ _____ _____ _____
___ ____________________________________________ _____ _____ _____
___ ____________________________________________ _____ _____ _____
___ ____________________________________________ _____ _____ _____

Scoring: Number Not Met: ___ x 0 = _____

Number Met: ___ x 2 = _____

Number Exceeded ___ x 4 = _____

Total = _____

Average = _____

Average less than 2.0 means improvement needed

Average of 2.0 means standard performance

Average greater than 2.0 means exceptional performance

Manager’s comments:

Employee’s comments:

Date of discussion: __________________________

Employee signature: _________________________

Manager signature: __________________________

35310_CH12_Final.qxd 1/30/07 4:14 PM Page 241


Exhibit 12-7 Position-Specific Performance Appraisal Form

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

Summary: (obtain from position description)

Requirements: (obtain from position description)

Weight Score

1. First task (from position description
with three specific elements) ____
a. Sub-element one 1 2 3
b. Sub-element two 1 2 3
c. Sub-element three 1 2 3

2. Second task (from position description
with three specific elements) ____
a. Sub-element one 1 2 3
b. Sub-element two 1 2 3
c. Sub-element three 1 2 3

3. Third task (from position description
with three specific elements) ____
a. Sub-element one 1 2 3
b. Sub-element two 1 2 3
c. Sub-element three 1 2 3

35310_CH12_Final.qxd 1/30/07 4:14 PM Page 242

Legal Implications of Performance Appraisals 243

Exhibit 12-7 Position-Specific Performance Appraisal Form (cont.)

Weight Score

4. Fourth task (from position description
with three specific elements) ____
a. Sub-element one 1 2 3
b. Sub-element two 1 2 3
c. Sub-element three 1 2 3

5. Fifth task (from position description
with three specific elements) ____
a. Sub-element one 1 2 3
b. Sub-element two 1 2 3
c. Sub-element three 1 2 3

Manager’s comments:

Employee’s comments:

Date of discussion: __________________________

Employee signature: _________________________

Manager signature: __________________________

35310_CH12_Final.qxd 1/30/07 4:14 PM Page 243

concern. Appraisals should support management’s decisions. Decisions
that cannot be substantiated by documentation are usually assumed to be
the result of discrimination or other personal bias.

Performance appraisals frequently figure prominently in wrongful dis-
charge litigation. When there is a chance that a discharge was based wholly
or in part on substandard performance, a wrongful discharge claim may
be filed and information will be sought in the appraisal records in per-
sonnel files. Thus, many wrongful discharge lawsuits are an outgrowth of
inadequate performance appraisal procedures.

The largest number of legal complaints centered on performance appraisal
issues involves alleged violations of individual rights as specified under
Title VII of the Civil Rights Act of 1964. The second largest number of such
complaints reflects alleged violations of the Age Discrimination in
Employment Act. Performance appraisal records may be examined closely
if performance is used as a criterion in determining who will be included
in a large layoff or planned reduction in force. This is emphasized if there
appears to be a disparate impact on any group or class of employees, a com-
mon complaint from the layoff of older workers.

Although there is no way to avoid some subjective assessments in per-
formance appraisals, these are best kept to a minimum. Always avoid po-
tentially defamatory comments as well as insults, name-calling and
unsupported negative commentary. Whenever entering negative assess-
ments, cite specifics that can be supported by data or otherwise proven.

An organization is not legally obligated to have a performance appraisal
system. Once a system is put in place, however, an employer may be seen
as having created an implied contract with employees to use the system as
established and described. A performance appraisal system should be suf-
ficiently formal to have published instructions for completing appraisals.
These instructions, as well as any evidence that can be presented con-
cerning the training of appraisers in the system’s use, can be helpful in de-
fending the appraisal system against charges of discrimination.

The HR department is usually the custodian of an organization’s perform-
ance appraisal system. Human resource’s role in performance appraisal in-
cludes monitoring job descriptions and evaluation criteria to ensure that these
are always up-to-date and currently applicable. Human resources typically
designs an appraisal system. Ideally, design and modification should be a
joint effort involving HR and managers of both line and support activities.
Human resources should schedule the steps in the process including estab-
lishing dates for forms to be sent out, appraisals to be written and discussed
with employees, and completed documents sent back.


35310_CH12_Final.qxd 1/30/07 4:14 PM Page 244

Human resources should provide forms, lists, and time schedules to de-
partment managers as needed. In a system under which employees are
evaluated on anniversary dates, someone in HR should constantly moni-
tor the system and send out forms and reminders as employees’ anniver-
sary dates occur. Human resources should monitor the incoming appraisals
for completeness and consistency. Under some appraisal systems, appraisers
are required to have their evaluations reviewed by the next level of man-
agement before they are discussed and submitted.

Human resources has a responsibility to hold classes for evaluators,
providing both original and refresher appraisal training every year. Human
resources usually responds to evaluator’s questions about appraisal. It fol-
lows up to ensure that evaluations are completed within the proper time
period. The HR department usually files completed evaluations in individual
personnel files, and addresses employee questions and grievances about the
appraisal process.

Following up on appraisal completion is often stressful for line man-
agers and HR staff. Managers may place a low priority on completing ap-
praisals if they view the process as less than essential. They may complain
about pressure and insufficient time to complete evaluations. In contrast,
HR must follow higher management’s mandate to keep the system mov-
ing. Timely appraisals are always important. Because they provide the re-
minders, many managers view appraisals as being an HR system at best
and HR paperwork at worst.

Most employees perform at a satisfactory or better level. Individual re-
sults are seldom unacceptable. Despite this, many managers neglect to ex-
press appreciation of employee successes and instead focus on failures and
weaknesses. Unfortunately, they take the good for granted. This tendency
to focus on the unsatisfactory simply reinforces the reputation of per-
formance appraisal as a negative process.

Human resources alone cannot guarantee a successful appraisal process.
Nor can a few conscientious department managers working together do
so. A critical element in the success of performance appraisal is the extent
to which top management supports the process. Far too often top man-
agement simply assigns supervisors to complete the process while failing
to participate in any substantive manner. Lack of visible executive sup-
port increases the risk of appraisal becoming a meaningless routine. Many
organizations, including those in health care, have performance appraisal
systems. However, the existence of a system does not guarantee that per-
formance appraisal is carried out in an effective manner.

An Essential Process 245

35310_CH12_Final.qxd 1/30/07 4:14 PM Page 245

The importance of regular, structured employee appraisals cannot be over-
stated. Supervisors must be well-trained and diligent about completing
employee evaluations on time. Forms and procedures must be current.
The personal interview that follows a written appraisal is often dreaded
by employees. Successful managers use the interview as a positive experi-
ence to review and motivate their employees. Human resources supervises
the appraisal process and collects and files completed appraisal forms.

Returning to the conversation that Stu and Maria were having, Stu said,
“I wonder what basis the court used for its decision?”

Marcia smiled. “The two latest annual appraisals that you completed.”
“Yes,” she said, heading out the door of Stu’s office.

Discussion Points

1. Explain the difference between average and standard as these terms
are used in performance appraisal. Discuss how one is erroneously

2. Some management experts have recommended that performance ap-
praisal be abolished. Provide three reasons why performance appraisals
should be retained in modern healthcare organizations.

3. Consider an employee who always performs satisfactorily but has lit-
tle or no opportunity to improve, and can go no higher in the organ-
ization and does not aspire to do so. Why is it considered necessary
to continue periodically appraising this employee’s performance?

4. Why are employee performance appraisals often described as a man-
ager’s least favorite responsibility?

5. Why should all appraisal processes avoid addressing personality char-
acteristics of employees?

6. Why is it appropriate to begin addressing an employee’s performance
with a review and update of the person’s job description?

7. What are the three essential elements of an objective? Why are all three

8. Why do experts recommend that three to five point rating scales be
used for appraisals?

9. Why is it important to ensure that employee appraisals occur when
they are scheduled to occur?

10. What is the primary shortcoming of team appraisal? How can this be
avoided but still using a team appraisal?


35310_CH12_Final.qxd 1/30/07 4:14 PM Page 246

11. Why is the HR department a reasonable place from which to coordi-
nate an organization’s performance appraisal process?

12. Managers do not always provide consistent appraisals. How can this
problem be addressed?

13. How can past appraisals of performance influence the outcomes of
employment-related legal actions?


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Harris, L., Leopold, J., & Watson, T. (2005). Strategic Managing of Human
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Packard, P. & Slater, J. (2005). Skills of Appraisal. London: Ashgate Publishing.
Pauwe, J. (2004). HRM and Performance: Achieving Long Term Viability. New

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Rothwell, W. J. (2005). Effective Succession Planning: Ensuring Leadership

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man resources and firm performance: How much error is there and how does
it influence effect size estimates? Personnel Psychology, 53, 803-834.

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Conclusion 247

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Managers and

Chapter Overview

After reading this chapter, readers will:

• Recognize the inevitability of people problems in any work group
and understand some common origins of such problems

• Understand the primary purpose of most processes for handling
employee problems as correction of behavior

• Differentiate between problems of performance and problems of
behavior and be familiar with systematic processes for addressing

• Be prepared to address excessive absenteeism
• Understand the applicability and operation of an employee

assistance program
• Be able to address different common forms of termination for

cause: discharge for behavior problems and dismissal for
performance problems

• Appreciate the necessity of emphasizing problem prevention
whenever possible

People problems are an inevitable component for anyone who manages
others or supervises their work. First-line supervisors frequently regard peo-
ple problems as intrusions on their work. This is unfortunate when, in
fact, addressing the problems and the needs of employees is a cornerstone




35310_CH13_Final.qxd 1/30/07 4:21 PM Page 249

of a manager’s role. All employees are individuals. Although all are differ-
ent from each other in some way, some are sufficiently different that they
pose behavioral problems and other difficulties for their managers. In pur-
suing the ongoing goal of having people produce goods or deliver services,
a manager must maintain employees as producers. Doing so requires man-
agers to address people problems arising out of issues related to their work-
ing and outside lives.

The primary objective of a manager’s actions in response to people
problems is correcting behavior. Depending on the nature of the problem,
behavioral issues are addressed through individual coaching, counseling,
activities to improve performance, or disciplinary actions. Problems of
performance and behavior can both be corrected. Behavior issues often
constitute breaches of rules or policies.

Disciplinary action is customarily applied in a progressive manner. The
extent or severity of the corrective action is proportional to the gravity of
the problem or infraction. Correcting behavior is the main objective of
managerial actions except under extreme conditions or instances when an
employee must be removed from an organization.

Case Study: Always is a Dangerous Word

“I know what I heard, period,” staff nurse Molly Stern said curtly. Her face
was a mask of anger, and she spoke in the righteous tone that head nurse
Penny Jerome had heard so many times.

“Dr. Benson says otherwise, Molly,” said Penny. “She told me she was
certain the instructions she left for you were just the opposite of what you
actually did. And she really came on strong.”

“She’s wrong,” snapped Molly.
“She seems just as certain that you were wrong.” Penny paused before

adding, “She explained the whole situation to me, and I have to admit that
I understood her instructions. At least I was able to repeat them in my own
words so she was satisfied that I understood.”

Molly shrugged and said, “Then Dr. Benson changed her story between
the time we talked and the time she spoke with you.”

“Are you suggesting that she lied to me?”
“I didn’t say that. I’m only saying that she told me one thing and then

apparently told you something different. Maybe she didn’t realize what she
said. You know how she just rattles off something quickly and runs away.”

Penny said, “Did you consider the possibility that you didn’t under-
stand? It isn’t hard to misinterpret a message when things happen so fast

“I know what I heard,” interrupted Molly. “When I know I’m wrong,
I say so. But in this case I know I’m right. I could not have misinterpreted
Dr. Benson.”


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Feeling that Molly had given her cause to bring up something that had
been nagging her for quite some time, Penny said, “It seems to me that
you’re never wrong, Molly.”

Molly glared at her supervisor. “What do you mean by that?”
“I’ve been head nurse of this unit for three years, and in all that time

I’ve never known you to admit being wrong about anything. This prob-
lem with Dr. Benson is just one more example of how you always turn
things around so that you look innocent. Is it so necessary that you be
right all the time?”

In icy tones, Molly said, “As I said, when I’m wrong I’ll admit it—but
only when I’m really wrong. And I want to know the other times you’re
talking about, the times you said I ‘turned things around.’”

“I don’t have any specifics in front of me, but you ought to know what
I’m talking about. Think about it and you’ll know what I’m saying. You
seem to have an answer for everything, and it’s always an answer that
places you in the right.”

“You can’t think of any specific incidents because there haven’t been any,”
said Molly. She rose from her chair and continued, “You may be my su-
pervisor, but I don’t have to listen to this. Is there anything else you wanted
to say about Dr. Benson’s problem?” She glared down at Penny.

Penny stood. “Just that the incident isn’t to be considered closed. Dr.
Benson insists that it be written up as a formal warning.”

“I’ll protest, of course,” said Molly. “I won’t accept a warning that I
don’t deserve, and I won’t say I’m wrong when I know I’m right.”

When Molly left the office, Penny began to regret having spoken as she
did. She was convinced, however, that she had to try to get through to
Molly about her apparent need to be right whenever a disagreement or a
misunderstanding arose.

What critical error did head nurse Penny Jerome make in her one-on-
one exchange with Molly Stern? Why was that particular action of Penny’s
wrong? How would you recommend that Molly and Dr. Benson resolve
their misunderstanding? How would you respond to employees that are
always right?

Consider the following typical vignette. A chronic personnel problem in-
volving differences between some staff members of two adjoining depart-
ments had surfaced once again. This time, it affected two department
managers, several rank-and-file employees, and an employee relations
manager. A discussion meeting had been scheduled to explore the situa-
tion. After more than an hour of animated discussion during which charges
and counter-charges flew back and forth, the employees were excused and

People Problems Are Inevitable 251

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the others continued for another half-hour. When the meeting finally broke
up, an hour and a half had elapsed and only the most tentative of conclu-
sions had been reached. As the participants rose to leave the room, one de-
partment manager’s pager sounded. The manager checked the message
and muttered, “I was expecting this. It looks like another of my pet trou-
blemakers is acting up again.” As he left the room, the manager also re-
marked, in a voice strained with frustration, “You know, I could probably
get some real work done around here if it weren’t for all these people prob-
lems that keep popping up.”

Most managers have more than enough to do without spending time
tending to the problems of the adults that they supervise. However, any
manager who feels frustration because of people problems must appreci-
ate the fact that people-related problems are part of the job for a first-line
supervisor. A first-line manager supervises people who perform hands-on
work and provides an interface between rank-and-file employees and com-
pany management. Employee frustrations are a component of this posi-
tion. If maintaining rank-and-file employees as effective producers did not
include the frustrations and issues that employees bring to their jobs, fewer
first-line managers would be needed in work organizations. As long as
there are people in the work place, supervisors can expect people problems.
Only when automated equipment replaces human labor will people prob-
lems disappear. Although it is a less than appealing aspect of being a man-
ager, coping with people problems is an inevitable and unavoidable part
of the department manager’s role.

Problem Sources
Problems presented by employees can come about because of job-related
difficulties, personal problems experienced largely outside of work, or a
combination of the two. Some people are much better than others at keep-
ing the working side and the personal side of their lives separate from each
other. However, it is not possible to separate the person on the job com-
pletely from the person off the job. Problems flow both ways. Personal
problems accompany people to their jobs and often affect job performance
and employment relationships. Work-related problems go home and of-
ten affect personal lives and relationships.

Outside observers can say that an employee’s personal problems are no
business of the manager. Such a position is correct but only up to a point.
If an individual’s personal problems are affecting work through deterio-
rating performance, reduced productivity, or disruption of a department’s
ability to operate normally, then a supervisor must become interested be-
cause of the negative effects on operations.

When an employee who has performed satisfactorily for a prolonged
period and has always gotten along with others reasonably well begins to


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shows signs of performance and relationship problems on the job, a man-
ager has every reason to suspect that there is an underlying problem be-
hind the changed behavior. It may not be initially evident whether the
problem has its basis in the work place or on the outside, but the results
of the changed behavior are a manager’s immediate concern. Performance
or relationship problems that affect a working environment are of vital in-
terest to supervisors.

Supervisors who suspect that personal problems are behind declines in
performance must approach their employees in a manner that is respect-
ful of their right to privacy. Although the performance resulting from an
individual’s behavior must be addressed for the sake of the department
and the people being served, events in an individual’s private life are not
the business of a manager.

Supervisors must address the results of behavior. Managers should not
attempt to infer causation. Tell an individual, through whatever channel
is used, about current behaviors or actions that are problems. Point out
errors of judgment or actions and offer suggestions as to how they can be
corrected. Using the resources that are available, provide whatever help is
needed to take appropriate corrective action. Do not, under any circum-
stances, probe for personal information. Supervisors must be clear that
they are there to listen if or when a person wants to talk. Managers must
not ask individuals about problems that seem to lie outside of the work-
ing situation.

If employees volunteer information concerning personal problems, then
listen and be prepared to refer them elsewhere as necessary. Even if em-
ployees reveal their problems and ask for advice, wise supervisors will not
respond to such requests. Managers may feel flattered that employees think
enough of them to reveal a personal problem and ask for their advice. Even
supervisors who are trained professionals working in a human service area
are advised to keep their advice to themselves. Some of the most trouble-
some statements a manager can make begin with, “If I were you . . .”

Refer troubled employees to an appropriate person or agency from
which they can be directed toward an appropriate source of knowledge-
able help. This will usually mean referral to the employee health service
or an organization’s employee assistance program (EAP).

Throughout this chapter, we will make references to corrective processes.
Although there are instances in which the action taken in response to an
employee problem is punitive, the primary purpose of taking steps is to cor-
rect employee performance or behavior. We will speak about disciplinary
action. Although discipline involves punishment, its underlying reason is

Primary Purpose: Correction 253

35310_CH13_Final.qxd 1/30/07 4:21 PM Page 253

to teach or correct problem behaviors. The root of discipline is the word
disciple, which is a learner, pupil, or follower.

Correction is always the primary intent of what we refer to as the cor-
rective process. The primary objective of disciplinary action should always
be to correct behavior. There is an unavoidable punitive aspect in most
corrective processes. Policies that are violated or rules that are broken re-
sult in warnings. Even though we acknowledge the punitive aspect of true
disciplinary action, we do not advocate treating employees with per-
formance problems in a punitive manner. Therefore, it is essential to sep-
arate problems of performance from true behavior problems.

Department managers will find it necessary to address different kinds of
problems presented by employees on the job. Some will involve behaviors
while others will involve performance. These problems must be addressed
using different approaches.

Performance problems relate to meeting the expectations or require-
ments of a job and difficulty doing the work and producing the minimum
level of quality or output required. Behavior problems involve violations
of policies or work rules. These are conduct issues. Usually they are unre-
lated to performance and may have no bearing on how an employee is
performing on the job.

It is sometimes necessary to determine whether a particular employee can-
not perform as expected or will not perform as expected. The former re-
quires a call to an employee’s immediate supervisor to address a performance
problem. The latter may require disciplinary action. These areas occasion-
ally overlap when an individual’s deliberate acts of recklessness, negligence,
or carelessness causes performance to deteriorate below accepted standards.
In other words, when an employee cannot perform, then the issue involves
a performance problem. When an individual will not perform, then the is-
sue involves a behavior problem.

A thorough orientation and education about an organization is a re-
quirement for all employees. Workers are always entitled to know what
is expected of them, whether related to performance or behavior. Concerning
behavior, it is essential that employees are informed of all applicable poli-
cies and work rules. Concerning performance, it is equally essential that
all employees be thoroughly trained and given every opportunity to learn
their jobs. Such opportunities must be consistent among all employees.
Whether behavior or performance is involved, the first area for a depart-
ment manager to examine should be the expectations of an employee. Was
this person fully knowledgeable about the behaviors or performances that
were expected?


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Employees who do not meet their expected performance levels commonly
fall behind in output, produce poor quality work, or simply do not follow
established procedures. The first step a department manager should take
is to look for the source of the problem. The initial critical issue to address
is whether or not the immediate supervisor and predecessor did everything
reasonably possible to help this employee to succeed.

Performance problems, especially those occurring early in a person’s
employment, are often the result of weak or sketchy orientation. To ad-
dress a performance problem, a department manager must positively iden-
tify the problem and proceed to work out, preferably with the participation
of the employee, what must be done to correct the difficulty and a time
frame for action.

The performance improvement process should proceed in the follow-
ing manner. A manager observes a problem situation involving substan-
dard performance in some form. Common issues include unacceptable
quality of work or services delivered, insufficient productivity, complaints
by customers or others receiving services, or complaints by visitors. This
list is not exhaustive. A manager next conducts an investigation to verify
the existence and nature of the problem. Prudent managers ensure that
their facts are correct before addressing the situation with an employee.
A supervisor next meets privately with the problem employee. The pur-
pose of the meeting is to define and discuss the perceived difficulty with
the employee and to elicit the employee’s views and perspective.

A manager should next make every reasonable effort to secure an em-
ployee’s agreement concerning the nature of the problem and what should
be done to correct the unacceptable performance. Ideally, the two should
agree on a brief written description of what is wrong and what is needed
for correction. The agreement should include a timetable for correction,
with both parties agreeing on when corrective action must be accom-
plished. Part of this agreement should specify if interim checkpoints will
be needed to review progress. Some corrective processes may require a
brief period while others may require more time. When the evaluation
points are reached, the supervisor must follow-up in good faith, com-
pletely, and on time. One of the greatest shortcomings encountered with
the process of progressive discipline is a manager’s failure to provide timely

At the end of the evaluation period, the manager must decide whether
the employee’s performance improved as required, improved partly, did
not improve, or deteriorated further. The desired result of an evaluation
period is returning an employee to an acceptable level of performance.
Depending on the actual outcome, however, other subsequent steps can
be taken. These include extending the improvement period in the case of

Addressing Performance Problems 255

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partial improvement or dismissal for failure to meet expected evaluation

How should managers treat employees who modify their performance
well enough to get by the correction period and then go back to substan-
dard performance some weeks or months later? Some department man-
agers may elect to go through the performance improvement process with
such an employee again but most will not look forward to doing so a third
time. The documentation that is created the second time through the process
should include wording to the effect that subsequent performance must re-
main at or above standard or the person will be at risk for discharge.

Exhibit 13-1 presents a model procedure for addressing the need for im-
provement in performance.


Disciplinary Action
A chief reason why many supervisors do not confront problem employee
behavior is their discomfort with the traditional punitive discipline sys-
tems many have to use.1 This comment says a great deal about why su-
pervisors frequently shy away from disciplinary action even when it may
be deserved. Regardless of how a system is designed, most employees, su-
pervisors, and managers perceive their disciplinary systems as punitive.
Repeating, the goal of disciplinary action is to correct behavior. Few man-
agers ever look forward to delivering disciplinary action.

The mere thought of having to take disciplinary action is upsetting and
unsettling to many managers. Impending disciplinary action can make
managers apprehensive. Some managers simply ignore situations, post-
poning action until events resolve themselves or the problems can be en-
tirely forgotten. Others approach disciplinary action with hesitation,
watering it down so much that it becomes ineffective.

Disciplinary action is similar to any other difficult task. Conscientious
attention to the process and practice eventually leads to a degree of fa-
miliarity. At that stage, a manager can apply disciplinary action honestly
and confidently when needed. Most managers never become entirely com-
fortable with the process. Given that disciplinary action has the potential
to affect employment or ruin a career, such unfamiliarity is healthy.

The Process of Progressive Discipline
The complete progressive disciplinary process consists of counseling, one
or more oral warnings, one or more written warnings, suspension with or
without pay, and termination. A considerable range of possible violations
is subject to progressive discipline. Not all infractions are subject to the


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Addressing Behavior Problems 257

Exhibit 13-1 Model Policy and Procedure: Performance Improvement


The following procedure is provided to establish clear direction for
the resolution of problems concerning an employee’s substandard
job performance.

Substandard performance is defined as: A demonstrated lack of
acceptable work performance, or chronically unsatisfactory results
that prevent an employee from attaining or maintaining job standard.

Job standard is defined as: The average or acceptable level of out-
put provided by employees in the same or similar position or classi-
fication, or the standard level of results defined in advance by the
department manager clearly identifying the quality or quantity of out-
put expected.

In the event that nonprobationary employees exhibit substandard
performance of job duties or fail to fulfill all the responsibilities of
their positions, a department manager should make a sincere and
adequate effort to guide them in returning to an acceptable level of
performance. The first steps in this process include:

• Verify the job standard for accuracy and applicability and make any
necessary adjustments

• Advise and guide employees to create a plan for their return to
standard performance and a time frame for doing so, documenting
this effort using a Counseling Form (Attachment A)

• Guide and monitor employee efforts to attain standard performance
• Remove obstacles to employee progress where possible

In the event an employee does not attain job standard within the
agreed-upon time, department managers should next:

• Complete a Work Improvement Evaluation (Attachment B)
• Repeat the creation of a mutually agreed upon plan of action, this

time including referral to Employee Relations or Employee Health
if applicable (should there be some documentation of an under-
lying difficulty or problem to warrant such a referral)

If the second effort is unsuccessful in returning an employee to
standard performance within the agreed-upon time:

• Complete a Performance Expectations Form (Attachment C) plac-
ing the employee on notice of probationary status and calling for
dismissal on the grounds of substandard performance no later
than 30 days following this final notice unless standard perform-
ance is attained during that period


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Exhibit 13-1 Model Policy and Procedure: Performance Improvement

Process (cont.)

Note: Once an employee has been through the Performance
Expectations stage and has again achieved standard performance,
that person’s performance is expected to remain at standard or
better. Without extenuating circumstances (for example, under-
going a corrective or rehabilitative process under the Employee
Assistance Program or the auspices of Employee Health), reversion
to substandard performance will result in dismissal.

Exhibit 13-1 Attachment A Counseling Form

__ Performance Counseling

__ Probationary Counseling

__ Other _____________

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

Summary of Discussion:

Action to be taken by Manager:

Action to be taken by Employee:

Date of Follow-Up Meeting: ______________________________________

Employee Signature: ________________________ Date: _____________

Manager Signature: ________________________ Date: _____________

Exhibit 13-1 Attachment B Work Improvement Evaluation

This document summarizes a work improvement discussion between
manager and employee. An initial effort to correct a documented per-
formance problem was unsuccessful, indicating the need for additional
corrective action represented by the numbered objectives below that must
be met to return the employee to an acceptable level of performance.

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Addressing Behavior Problems 259

Exhibit 13-1 Model Policy and Procedure: Performance Improvement

Process (cont.)

No. Description of objective and the agreed-upon criteria for achievement




Referral to Employee Relations or Employee Health as appropriate:

_________________ Date of next review: _________

Employee Signature: ________________________ Date: _____________

Manager Signature: ________________________ Date: _____________

Exhibit 13-1 Attachment C Performance Expectations

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

Summary of Performance-Problem Discussion:

Follow-up was performed on the following dates:

_____________ _____________

_____________ _____________

Continued substandard performance makes it necessary to place this
employee in probationary status subject to dismissal during or after
30 days from the date of signing unless fully satisfactory and lasting
improvement is demonstrated by the employee.

Employee Signature: ________________________ Date: _____________

Manager Signature: ________________________ Date: _____________

35310_CH13_Final.qxd 1/30/07 4:21 PM Page 259

entire range of progressive discipline. Lesser violations, for example ab-
senteeism or chronic tardiness, may go through all of the steps. With mi-
nor infractions, it may be advisable to repeat a step if a significant time
lapse has occurred between infractions. Some infractions may involve only
two steps. For example, sleeping on the job might call for a written warn-
ing for the initial offense and termination for a second offense.

The initial step in many instances is informal counseling. Counseling is
best undertaken when a manager observes an employee headed for diffi-
culty but not yet at the point of requiring disciplinary action. An oral warn-
ing is the first formal step in the progressive disciplinary process. Although
it is delivered orally to an employee, a supervisor should create a written
record and ask the affected employee to review and sign it. Many organi-
zations have forms specifically designated for documenting oral warnings.

This can be confusing. Although a record is created, in many instances
this record never goes into an employee’s personnel file unless the prob-
lem is repeated and a written record is required. Documentation is essen-
tial to prove that an organization’s processes were followed. If a disciplinary
policy states that an oral warning is the first level of response for a given
infraction, it may later be necessary to prove that the oral warning was ac-
tually given.

At all steps of the disciplinary process, an affected employee is asked
to review and sign the documentation created. The manager may have to
stress that signing does not necessarily indicate agreement with the action.
Rather, it simply acknowledges that the employee has seen the document,
has discussed the problem with the manager and has been provided with
a copy. It is not unusual for an employee to refuse to sign a warning or
even to acknowledge its receipt. When an employee refuses to sign a warn-
ing, a supervisor simply notes in the signature area, “Employee refused
to sign” and ensures that the document is dated. In difficult circumstances
when a manager has reason to believe that disagreement may escalate
and involve others, another manager should witness an employee’s re-
fusal to sign and so note on the document. The second supervisor should
also sign the document.

When Discipline Is Not Progressive
Disciplinary action cannot always be progressive. Some infractions, usu-
ally clearly defined in policy manuals and employee handbooks, call for
immediate termination. These may move to immediate suspension pend-
ing investigation as necessary. Such transgressions ordinarily include fight-
ing or physical assault, using illegal drugs or alcohol on the job, carrying
a weapon on the premises, theft, or threatening other employees or man-
agers. Immediate termination with no chance to change an individual’s
behavior is hardly corrective. However, experts note that when an em-


35310_CH13_Final.qxd 1/30/07 4:21 PM Page 260

ployee is released for a serious infraction, the problem has been corrected
by removing its cause.

Exhibit 13-2 presents a sample progressive discipline policy and pro-
cedure for a healthcare organization, including the recommended treatment
for different infractions.

Addressing Behavior Problems 261

Exhibit 13-2 Model Policy and Procedure: Progressive Discipline

This organization is committed to providing the best possible work-
ing conditions for all employees. Rules of conduct have been estab-
lished to assist the organization and its employees in achieving
organizational goals as well as providing a safe and productive work
environment. All employees are expected to observe all rules of con-
duct and to follow the instructions provided by their immediate su-
pervisor. Supervisors and managers are responsible for applying the
rules to all employees in a fair and consistent manner.

When an employee appears to have violated a rule, the immediate
supervisor should address the specific problem through the pro-
gressive discipline process.

A. Steps in Progressive Discipline
1. Counseling

Before informal or formal disciplinary action is taken, the em-
ployee’s supervisor has the responsibility to counsel the em-
ployee to correct the undesirable behavior. Use the Counseling
Form (Exhibit 13-1, Attachment A), which is retained in de-
partmental files until the employee terminates employment
at which time the form is forwarded to human resources.

2. Oral Warning
a. An informal disciplinary conference may be scheduled when

an employee repeatedly displays undesirable behavior and
does not respond to counseling. The conference should be
summarized on the Record of Oral Warning (Attachment
A), which is retained in the department manager’s files.

b. If further disciplinary action is necessary for the same of-
fense, then the Record of Oral Warning should be for-
warded to human resources for inclusion in the employee’s
personnel file.

3. Written Warning
a. If counseling and oral warnings fail to correct employee

behaviors, then a written warning should be generated.


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Exhibit 13-2 Model Policy and Procedure: Progressive Discipline (cont.)

The employees will be informed that the Record of Oral
Warning and the Written Warning will be included in their
personnel file and they will be ineligible for transfer for six
(6) months. Repetition of the offense will lead to serious
disciplinary action such as suspension without pay or ter-
mination of employment.

b. An employee whose inappropriate behavior has not been
corrected by counseling, oral warning or written warning will
be referred to Employee Relations for further counseling or
to Employee Health or Employee Assistance for evalua-
tion and referrals if appropriate.

4. Suspension without Pay
a. A temporary termination of work at the will of the em-

ployer may be initiated if an employee fails to respond to
the foregoing steps. Time off may be waived at the dis-
cretion of the manager if staffing needs require the em-
ployee’s presence. Waiver of time off does not lessen the
severity of the disciplinary action.

b. At the discretion of the manager, indefinite suspension
pending investigation may be utilized to provide time and
a thorough opportunity to investigate an alleged viola-
tion that has the potential to result in termination.

5. Discharge
Termination of employment for violation of organizational
rules may apply after repeated counseling, warnings, refer-
rals and suspensions or after initial commission of specific
severe violations.

6. General
The organization reserves the right to amend these rules as
necessary. Each manager has the right to initiate the pro-
gressive disciplinary process at any step, depending on the
severity of the offense. All violations leading to potential sus-
pension without pay or discharge must be reviewed with hu-
man resources.

B. Violations and Severity
1. Carelessness: Careless acts that could result in personal in-

jury to patients, employees or visitors, or damage to property.
a. First violation: Written warning
b. Second violation: Up to 5-day suspension without pay
c. Third violation: Discharge

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Addressing Behavior Problems 263

Exhibit 13-2 Model Policy and Procedure: Progressive Discipline (cont.)

2. Insubordination: An employee’s refusal to comply with a rea-
sonable and safe work instruction as required by an imme-
diate supervisor.
a. First violation: Up to 5-day suspension without pay, and

referral to Employee Relations
b. Second violation: Discharge

3. Absenteeism: Excessive absenteeism is the frequent use of
sick time that in the judgment of the department manager ad-
versely affects the operation of the department, regularly oc-
curs before or after scheduled days off, weekends, holidays
or scheduled vacations, or that result in sick time being used
as it accrues. Unexcused absenteeism is absence without
timely notice to a manager or designee prior to the start of
a scheduled shift, per departmental policy.
a. First violation: Oral warning
b. Second violation: Written warning and referral to Employee

Health for counseling
c. Third violation: Up to three-day suspension without pay
d. Fourth violation: Discharge
Note: Failure to appear at work or call in per policy for three con-
secutive work days will result in discharge for job abandonment.

4. Tardiness: Consistent tardiness is the patterned failure to re-
port for work at the designated starting time.
a. First violation: Oral warning
b. Second violation: Written warning and referral to Employee

Relations for counseling
c. Third violation: Up to three-day suspension without pay
d. Fourth violation: Discharge

5. Misconduct: Actions detrimental to the interests of the or-
ganization or that cause harm or disruption to any person or
organizational activity. Some examples include: threatening
or discourteous behavior toward patients or visitors; sexual ha-
rassment; misuse of confidential information; leaving the work
area without permission; gambling; possession of explosives,
firearms or other weapons on organization property; and vi-
olation of safe practices in the performance of work.
a. First violation: Written warning and up to five-day sus-

pension without pay, plus referral to Employee Relations
for counseling.

b. Second violation: Discharge

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Exhibit 13-2 Model Policy and Procedure: Progressive Discipline (cont.)

6. Sleeping: Sleeping on the job is prohibited unless it is rec-
ognized as a legitimate part of an employee’s extended shift.
a. First violation: Written warning and up to five-day sus-

pension without pay, plus referral to Employee Relations
or Employee Health for counseling.

b. Second violation: Discharge
7. Solicitation: Employees may not engage in unauthorized so-

licitation, distribution or posting of materials on organiza-
tion premises.
a. First violation: Written warning
b. Second violation: Written warning and up to three-day

suspension without pay
c. Third violation: Discharge

8. Falsification of Information: Falsification of information on em-
ployment applications or in other work situations is prohib-
ited. This prohibition includes the making of false entries on
time records or punching another employee’s time card.
a. First violation: Indefinite suspension pending investigation

prior to possible discharge
9. Alcohol and Illegal Drugs: Possession, use or being under

the influence of alcohol or illegal drugs on organization prem-
ises is prohibited. Employees using prescription medications
while at work are requested to report such use to the ap-
propriate manager.

Because of the considerable responsibility that all
employees have for the organization’s patients, a manager who
has probable cause to believe an employee to be under the in-
fluence of alcohol or drugs may ask the employee to submit vol-
untarily to an appropriate test arranged by either Employee
Health or the Emergency Department. Refusal to submit to
such reasonable request may result in disciplinary action.
a. First violation: Indefinite suspension pending test results

and, if necessary, the employee’s willingness to enter an
approved rehabilitation program as determined by the
employee’s personal physician and Employee Health

b. Second violation: Discharge
10. Unauthorized Possession of Property: The unauthorized use,

possession or removal of organization property or the prop-
erty of patients, visitors, employees, or others.
a. First violation: Indefinite suspension pending investigation

prior to possible discharge

35310_CH13_Final.qxd 1/30/07 4:21 PM Page 264

Addressing Behavior Problems 265

Exhibit 13-2 Attachment A Record of Oral Warning

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

Specific problem or incident, and rule or policy reviewed and discussed:

Dates of previous discussions or counseling relating to the foregoing:

Action required of Employee:

Employee Signature: ________________________ Date: _____________

Manager Signature: ________________________ Date: _____________

This record will be maintained in departmental files. If further action
is required for the same offense, it will be forwarded to the Human
Resources department for inclusion in the personnel file.

Exhibit 13-2 Attachment B Written Warning

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

Specific problem or incident, and rule or policy reviewed and discussed:

Dates of previous discussions, counseling or warnings relating to the


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Exhibit 13-2 Attachment B Written Warning (cont.)

Action required of Employee:

Employee Signature: ________________________ Date: _____________

Manager Signature: ________________________ Date: _____________

This record puts the employee on notice that additional violations
will result in more serious disciplinary actions such as suspension
without pay or discharge.

Exhibit 13-2 Attachment C Suspension without Pay

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

Specific problem or incident, and rule or policy reviewed and discussed:

Previous actions taken:
Date Action Taken

Suspended for _____ days from above date. Report back on ___________.

Time off waived by manager for the following reason (waiver does
not lessen the severity of the action):

Employee Signature: ________________________ Date: _____________

Manager Signature: ________________________ Date: _____________

This is a final warning. Failure to respond appropriately may result
in discharge.

35310_CH13_Final.qxd 1/30/07 4:21 PM Page 266

Some degree of absenteeism is accepted as a fact of organizational life.
People become legitimately ill or experience family emergencies and other
urgent matters that sometimes keep them away from work. However, as
many department managers have discovered, the line between acceptable
and unacceptable levels of absenteeism is extremely fine and difficult to

Some department managers appear to pay little or no attention to em-
ployee absenteeism. Such attitudes set the standard for a department.
Managers that seem to ignore absenteeism usually wonder why their ab-
senteeism rates are higher than normal for their organization.

Absenteeism costs money. While someone may be receiving paid time
off for being away from work, a job that must be covered incurs the di-
rect cost of a temporary replacement or staff overtime. For nonessential
positions, a replacement may not be needed for an absence of one or two

Employee Absenteeism 267

Exhibit 13-2 Attachment D Notice of Discharge or Dismissal (cont.)

Employee Name: _________________________ ID No. ______________

Department: _____________________________ Hire Date: ___________

Job Title/Grade: __________________________ Job Date: ____________

You are being terminated from employment for the following reasons:

Previous actions taken:
Date Action Taken

___ Check here to indicate that the employee desires an exit interview
to discuss benefits. If the employee declines this opportunity, then
continuation of benefits information will be mailed to the employee’s
home address.

Employee Signature: ________________________ Date: _____________

Manager Signature: ________________________ Date: _____________

35310_CH13_Final.qxd 1/30/07 4:21 PM Page 267

days. However, a department will experience lost productivity as a result
of the absence.

Experience with traditional sick-time benefit programs has suggested
that an organization’s sick-time benefit often generates its own usage.
Consider the experience of two health care organizations in the same com-
munity. One provided a benefit of twelve sick days per year and the other
provided five days per year. In the facility where employees received twelve
sick days per year, the average usage per employee was approximately
seven days per year. In the facility where employees received five sick days
per year, the average usage per employee was slightly more than three days
per year. The organization with the higher rate of sick-time consumption
did not necessarily have less healthy employees than did the other facility.

Such experiences with sick time have encouraged an increasing num-
ber of organizations to reduce their absolute sick time benefit and com-
bine it with vacation and other personal time in a paid-time-off bank.
Under these plans, a person who uses little or no time off for illness has
the time left for other uses. Critics point out that such a policy rewards ill
people to come to work and potentially infect other workers. Both sides
in this argument have merit.

A department manager’s conscientious attention to absenteeism is a sig-
nificant component in controlling employee absences. Some employees
will be inclined to abuse sick time if they see that their manager pays no
attention to their absences. They interpret the lack of attention as ap-
proving their conduct. In truth, this interpretation has merit.

For controlling absenteeism in a department, a supervisor cannot clearly
remember everyone’s attendance, so accurate attendance records are re-
quired. Effective managers do not rely on other departments to maintain
their attendance records. By personally monitoring attendance, they stay
in closer touch with their employees. They check in with employees after
they return from any absence, even a single day. A simple question or state-
ment such as “Feel better today?” or “Good to have you back” tells em-
ployees that their supervisors are aware of their attendance.

Attentive supervisors watch for patterns of absences. Patterns are among
the more reliable signs of sick-time abuse. Common examples of sick-time
abuse include holiday stretching or being absent the day before or the day
after a scheduled holiday. Weekend stretching involves being absent on a
Friday or Monday. Employees tend to be “sick” on Monday more than
on any other day of the week.

Counsel any employee who appears to be getting close to a level of ab-
sences that can trigger disciplinary action. For example, if the policy says
that five instances of unexcused absence in a 12-month period call for
the start of disciplinary action, meet with an individual who has been ab-
sent four times in eight months, explain the policy and point out the con-
sequences of the next unexcused absence. Effective supervisors do not


35310_CH13_Final.qxd 1/30/07 4:21 PM Page 268

wait until disciplinary action is required before speaking up. They do not
avoid taking disciplinary action for absenteeism when it is deserved.
Finally, they are not punitive. A progressive system allows lots of room
for improvement. A supervisor’s intent should be to help employees im-
prove and succeed.

An employee assistance program (EAP) sends a message to employees
that their employer cares about them beyond the usual demands of their
organization. An EAP provides information, assessments, advice, and re-
ferrals for employees who are experiencing personal problems that can
affect them as individuals and as producers of goods or services. Employees
who take advantage of an EAP will receive a confidential assessment that
is ordinarily followed by a referral to an appropriate source for profes-
sional help.

It is common practice to use an external assessment and referral agency
rather than have organizational employees, for example, someone in HR,
perform this task. This helps to preserve employee confidentiality and al-
lows employees to build a level of confidence in the EAP. For obvious rea-
sons, many employees are more likely to share personal issues with someone
outside of their organization than with another employee.

Improvements realized through intervention by an EAP ordinarily re-
quire some time. There is often a temptation to look for short-term im-
provement, rather than long-term benefits for both an employee and the
organization. Quick fixes for the following kinds of problems addressed
through an EAP are unlikely. The EAP frequently addresses difficult is-
sues such as substance abuse (drugs or alcohol), marital or family prob-
lems, financial troubles, compulsive gambling, and other addictions. Most
EAPs ordinarily provide two or three counseling sessions to determine an
appropriate referral path. After these initial visits, an individual’s health
insurance or other applicable program takes over.

Employees can enter an EAP through self-referral, meaning that they
voluntarily approach the EAP themselves. Alternatively, employees can be
referred by a supervisor, a manager, or by an employee health office. If an
individual’s problem has the potential to negatively affect performance or
presents a danger or risk to people or property, then the organization can
mandate referral to the EAP and require completion of a subsequent pro-
gram as a condition of continued employment. An example of a potentially
dangerous problem is alcohol abuse that requires rehabilitation. Managers
and supervisors do not need to know details of a problem. However, when
a problem affects the performance or safety of other patients, visitors, or
employees, it becomes a manager’s business.

Employee Assistance Programs 269

35310_CH13_Final.qxd 1/30/07 4:21 PM Page 269

An EAP usually costs an organization a set, nominal amount of money
per employee or per full time equivalent. Often the cost of an EAP for an
entire year is less than the costs associated with replacing one or two em-
ployees. Most HR experts agree that an EAP is cost effective. To serve its
intended purpose completely, an EAP requires support from senior and
executive managers, adequate funding, an efficient and confidential as-
sessment and referral process, record keeping that ensures confidentiality,
and educating employees and managers about the EAP program and how
to access it.

An EAP can relieve department managers of difficult problems involv-
ing ordinarily good employees who encounter personal difficulties. An
EAP can effectively assist a person for whom termination would be the al-
ternative. Department managers usually agree that there is far more sat-
isfaction in helping to salvage one employee who might otherwise fail than
there is in firing him or her.


Discharge versus Dismissal
It is helpful to distinguish between the two most common kinds of invol-
untary separation. These are discharge and dismissal. Dismissal is related
to performance while discharge is related to conduct and behavior.

Dismissal is the appropriate path for an employee who must be released
because of performance problems. This will apply to newer employees
who are unable to gain sufficient control of their jobs to pass the proba-
tionary period. Dismissal may be appropriate for employees who experi-
ence performance problems and do not respond to corrective processes.
Dismissal should be the final resort following all reasonable efforts to im-
prove performance.

A dismissal is the equivalent of a layoff. It is a separation that does not
involve fault. Human resource experts often refer to this as no-fault sep-
aration. A no-fault separation concedes only that a person did not fit a
particular kind of work and makes no judgments about a person’s ability
to succeed elsewhere. Similar to the situation of a layoff, a dismissed em-
ployee is eligible for unemployment compensation.

Discharge is related to conduct and behavior. Discharge is termination
for cause, more commonly referred to as being fired. Discharge should oc-
cur only after all elements of an organization’s progressive disciplinary
process have been applied and failed to correct the offending behavior.
Employees who are discharged for cause are usually ineligible for unem-
ployment compensation. However, an outside agency ultimately deter-
mines eligibility for unemployment compensation.


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An Important Caveat
No employee should ever be summarily discharged, fired on the spot, or
fired in anger. The nature of the infraction does not affect this rule. An ap-
propriate reaction to the most blatant of offenses that are punishable by
immediate discharge is to place the offender on indefinite suspension pend-
ing investigation and discharge. This provides a cooling off period for all
concerned, and it provides time for a fair and thorough investigation as

Disciplinary action is one area in which department managers and HR
personnel frequently collide. Such controversy, however, can be minimized
by having clearly stated policies governing who is responsible for each part
of the process. A significant number of organizations require managers to
coordinate all disciplinary actions with HR. This is a reasonable require-
ment. Human resources can help to ensure that the elements of a pro-
gressive discipline program are consistently applied and to confirm that
all legal requirements are observed.

Human resources should be allowed to serve as a central monitor for
disciplinary actions, initially rendering an opinion as to whether a pro-
posed action is appropriate to the situation. Another important aspect of
the HR role in discharge is to ensure that all of the proper steps called for
in the policy have been applied.

Active prevention is important in reducing the need for disciplinary ac-
tions and keeping them to a minimum. Two important keys to prevention
are information and education.

Be certain that all new employees are familiar with the work rules and
applicable policies, all of which should be mentioned in the employee hand-
book. These may have been covered during the organization’s general new-
employee orientation, but do not assume so. It certainly will not hurt to
go over them a second time.

Make sure each new employee goes through the employee handbook
and signs and turns in the handbook receipt as required. Employees will
rarely read an employee handbook if they are determined not to do so.
However, a signed receipt shifts the responsibility for knowing the contents
to employees.

Managers should periodically review rules and policies with the entire
staff. This can be conveniently accomplished by covering one or two items
at every regular staff meeting. Personnel policies are periodically revised

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and updated. Publication of a revision presents a good opportunity for a
review. If the rules and policies are kept fresh in employees’ minds, then
they will be less likely to ignore them.

Preventive employee relations has the potential to avoid disciplinary
actions. Successful supervisors remain alert to signs or signals that indi-
cate the possibility of employee problems. They talk to their employees when
they sense problems. Talking is preferable to allowing problems to fester.
Actual problems are far more difficult to manage than are avoided issues.

Remaining visible and available to employees can help to prevent the
need for disciplinary actions. When a department manager is present,
many issues that might otherwise escalate into behavioral problems can
be identified and addressed. The presence of a manager tends to have a
stabilizing effect on a work group. Staying in touch with employees and
maintaining solid one-to-one relationships with them helps to prevent
disciplinary problems.


Supervisors must be thoroughly familiar with their organization’s policies
and work rules. Thorough familiarity means that they do not have to look
in a book whenever questions or problems arise. Likewise, they must be
completely familiar with the progressive disciplinary process and know
the contacts in HR with whom to coordinate disciplinary actions. To keep
their knowledge current, they take advantage of training in these processes
whenever it is offered within their organization.

Effective supervisors do not delay deserved criticism or disciplinary action
any longer than is necessary. Delay only weakens the impact of actions
taken and lessens their importance. When actions are immediate, they are
more likely to be effective.

Managers must strive for consistent treatment of their employees. Work
rules and policies must be applied consistently regardless of who is in-
volved in a particular problem or infraction. This can be difficult to ac-
complish in situations involving people with other personal issues or
involving friends. Consider the situation of two employees. One has long-
standing health problems; the other routinely abuses sick time. Both must
be treated equally if they are chronically absent.


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Effective supervisors do not allow themselves to be influenced by em-
ployees who try to outsmart or intimidate them. Markets and scarcity of
employees can cause intimidation. Supervisors must react to problems as
they arise without being influenced by other issues such as scarcity of em-
ployees with particular skills. No matter how specialized or valuable they
may think they are, no employees are indispensable. What applies to one
must apply to all. A department or organization cannot maintain a dou-
ble standard of employee conduct. This again raises the issue of consistency,
which is arguably the most important single factor in a department man-
ager’s handling of corrective processes.

Most HR practitioners can relate to the following situation. A department
manager came to HR prepared to discharge a particular employee. The HR
representative heard a ringing indictment of the employee. The individual
is never cooperative, is the department’s worst performer, has the worst
attendance record of anyone in the department, is frequently mouthy and
insubordinate and is constantly making trouble with other employees. The
employee has once again caused a problem. The angry manager demands,
“I want this person discharged, now.” The HR person begins to consider
the manager’s request by pulling the employee’s personnel file and going
through it item by item. The HR representative finds no warnings, no dis-
cussions about performance or behavior issues, and no record of discipli-
nary actions. The file contains middle-of-the pack satisfactory performance
appraisals covering several years of work. The discussion of discipline for
behavioral issues is over at this point. Without supporting documentation
of similar past difficulties, those past problems simply do not exist.

There are lessons in the foregoing story. Instances in which an employee
deserves some form of reprimand or formal disciplinary action must not
be ignored. Every instance of reprimand or disciplinary action must be
properly documented and submitted for inclusion in an employee’s per-
sonnel file. If an employee’s file contains nothing about a particular prob-
lem, then for all practical purposes it never happened. Finally,
less-than-honest performance appraisals are never appropriate. In this in-
stance, the record supports the employee and can be used to challenge al-
most any disciplinary action. Documentation is critical for any disciplinary

Supervisors should never attempt or proceed with a personnel action
without generating the appropriate documentation. Managers must al-
ways remain aware that any employee-related document that is generated

Document, Document 273

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can be made public should an employee become involved in a legal pro-
ceeding against an organization.

Problems related to employees are inevitable in any organization. No em-
ployee is immune to experiencing personal issues. Supervisors must re-
spond to behavior, and personal opinions or predispositions must be set
aside. The rules, procedures and penalties for noncompliance must be
clearly explained to all employees.

The primary objective of disciplinary actions is correction. Performance
problems relate to meeting the expectations or requirements of a job and
difficulty doing the work and producing the minimum level of quality or
output required. Behavior problems involve violations of policies or work
rules. In other words, when an employee is unable to perform, the issue
involves a performance problem. When an individual will not perform,
the issue involves a behavior problem.

Performance and behavior problems should both be addressed in a pro-
gressive manner using a protocol that has been approved in advance. The
steps for each type of issue differ. Discipline should be progressive. All ac-
tions taken by any supervisor or manager must be documented. Employee
assistance programs provide confidentiality for workers.

Separating employees is occasionally required in most organizations.
Dismissal is a no-fault separation. Dismissed employees are usually eligi-
ble for unemployment benefits. Discharge is separation for cause, and dis-
charged employees are usually not eligible for unemployment compensation.
Eligibility for unemployment compensation is ultimately determined by an
external agency. All separations require documentation. Discharges must
never occur immediately, and no one, regardless of circumstances, should
ever be discharged in anger. Suspensions can be immediate for actions in
unusual and well-defined situations. Discharges should only occur after
allowing time for anger to dissipate and thorough investigations to be

Preventive measures can help to avoid some disciplinary actions.
Thorough and ongoing education is important for prevention to occur.
Supervisor availability has the potential to open lines of communication.
Documentation is an absolute requirement for any employee action in-
volving human resources. The importance of documentation cannot be

Returning to the opening case study, Penny Jerome’s damaging error re-
lates to generalizing. When delivering criticism, do not generalize. “Always”
is a dangerous assertion to make; in the sense of being absolute, two of the
most dangerous words in the language are “always” and “never,” because


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rarely is either state provable. Penny was doing fine while talking about
the specific problem Molly had with Dr. Benson. When she generalized,
she greatly reduced the chances of having meaningful communication.

When criticizing an employee or delivering disciplinary action, a su-
pervisor must be specific. Valid criticism must include a constructive ele-
ment. It must indicate or suggest a direction for correction.

If Penny pursues the matter, she must try to have a joint meeting with
Molly and Dr. Benson. Having all concerned parties together is the only
realistic way to resolve this kind of issue. If Penny shuttles between the
parties, she is likely to accomplish little or nothing.

Penny should have already learned that, when interacting with Molly,
she must be clear, specific, and detailed at all times. Furthermore, Penny
must always be prepared to explain the reasoning or logic of any criticism
directed at Molly. Finally, Penny must be absolutely certain that her doc-
umentation concerning Molly is correct and complete.


1. Segal, J. A. (1990). Did the Marquis de Sade design your discipline program?
HR Magazine, 35(9), 90-95.

Discussion Points

1. Comment on the claim that “like it or not, people problems are the
legitimate terrain of a first-line manager.” Why is this often true?

2. Why do experts strongly recommend that regardless of the apparent
severity of an infraction, no employee should be summarily discharged
but rather be placed on indefinite suspension pending an investigation?

3. Why do we stress that an employee’s personal problems are no busi-
ness of the manager? Under what conditions and to what extent can
a department manager be concerned with any facet of an employee’s
personal problems?

4. We repeatedly stress that the primary purpose of disciplinary action
is correction of behavior. If this is so, why have we delineated spe-
cific behavioral problems that call for loss of employment upon a sin-
gle occurrence?

5. Explain why corrective action should be taken as soon as possible and
practical following an infraction.

6. Why do experts strongly recommend that performance problems be
considered separately from conduct or behavior problems?

7. Why is it necessary to have a completely documented history leading
up to an employee’s involuntary termination? With what must this
documented history agree?

Conclusion 275

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8. Why is a department manager’s timely follow-up so important in the
performance improvement process?

9. Why do senior executives require that no significant disciplinary ac-
tion be implemented without the involvement of the HR department?

10. Describe the approach you would take with employees who you feel
are repeatedly coming close to termination because of tardiness or ab-
sences but correcting just enough to avoid discharge?

11. Why is it inadvisable to skip steps in the disciplinary process leading
up to an employee’s involuntary termination?

12. Why is it necessary to create and retain a written record of an oral

13. How would you address the problem of a pleasant, likeable employee
whose normally marginal performance repeatedly becomes substan-
dard a few weeks after corrective action is applied?

14. Describe two hypothetical situations in which it is appropriate for a
department manager to direct an employee into the employee assis-
tance program as a condition of continued employment.

15. Where should a department manager first look for clues to corrective
action when an employee exhibits problems in meeting the job’s min-
imum standards of performance?


Delpo, A. & Guerin, L. (2005). Dealing with Problem Employees: A Legal Guide.

Berkeley, CA: NOLO Publishing.
Hoover, J. & DiSilvestro, P. (2005). The Art of Constructive Confrontation: How

to Achieve More Accountability with Less Conflict. New York: Wiley.
Maiden, R. P. (2005). Accreditation of Employee Assistance Programs. Binghamton,

NY: Haworth Press.
Shepard, G. (2005). How to Manage Problem Employees: A Step-by-Step Guide

for Turning Difficult Employees into High Performers. New York: John Wiley.
Tate, R. & White, J. (2005). People Leave Managers . . . Not Organizations: Action

Based Leadership. Lincoln, NE: iUniverse.

Batt, R. (2002). Managing customer services: Human resource practices, quit rates,

and sales growth. Academy of Management Journal, 45, 587-597.
Brooke, L. (2003). Human resource costs and benefits of maintaining a mature-

age workforce. International Journal of Manpower, 24(3), 260-283.
Brotheridge, C. M. & Grandey, A. A. (2002). Emotional labor and burn-out:

Comparing two perspectives on “people work.” Journal of Vocational Behavior,
60, 17-39.

Cordes, C. & Dougherty, T. (1993). A review and integration of research on job
burnout. Academy of Management Review, 18, 621-656.


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Dodani, S. & LaPorte, R. E. (2005). Brain drain from developing countries: How
can brain drain be converted into wisdom gain? Journal of the Royal Society
of Medicine, 98(11), 487-491.

Ellens, J. H. (2005). Emotional reason, deliberation, motivation, and the nature
of value. Journal of Psychology and Christianity, 24(2), 179-180.

Ito, J. & Brotheridge, C. (2003). Resources, coping strategies, and emotional ex-
haustion: A conservation of resources perspective. Journal of Vocational Behavior,
63, 490-509.

King, S. C. (1998). Creativity and problem solving: The challenge for HRD pro-
fessionals. Human Resource Development Quarterly, 9, 187-191.

Madiar, N. (2005). The contributions of different groups of individuals to em-
ployees’ creativity. Advances in Developing Human Resources, 7(2), 182-206.

Thomas, D. (2005). Manpower problems. British Dental Journal, 199(9), 545-548.

Conclusion 277

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Problems before
Taking Critical

Chapter Overview

After reading this chapter, readers will:

• Appreciate the value and importance of preventing employee
problems whenever possible

• Understand that a manager’s visible attention to chronic
absenteeism and tardiness can usually minimize or prevent both

• Recognize issues concerning employee privacy and confidentiality
that often lead to conflict between individuals and organizations

• Know the legal steps that have been taken to protect the privacy of
individual employees

• Know how to respond to legal orders such as subpoenas,
summonses, and warrants

• Understand an organization’s policies and legal posture
concerning searches of employees’ desks and lockers

• Know the parameters governing access to employee personnel
records, including the special status of employee health records

• Understand the actual and perceived hazards of personal
relationships in the workplace

• Know the causes and possible means to prevent violence in the

• Appreciate the power of employee participation and involvement
in avoiding potential problems




35310_CH14_Final.qxd 1/30/07 4:19 PM Page 279

• Understand the uses of counseling as an essential management skill
for preventing selected circumstances from becoming genuine
problems and for resolving smaller problems before they become

The best time to address a problem is before it occurs. In terms of time,
cost, and aggravation, problem prevention—finding solutions for problems
in their earliest stages or avoiding them altogether—is most effective. A sig-
nificant number of contemporary workplace problems involve issues of pri-
vacy and confidentiality that have been extensively addressed in legislation.
Sexual harassment, workplace violence, and personal relationships create
problems for supervisors and managers. Many difficulties can be avoided
through employee participation and involvement in programs intended to
raise awareness about these issues. Astute managers offer some counsel-
ing to their supervisees or refer them for other assistance when indications
of problems begin to emerge.

Case Study: A Good Employee, Except for—

Supervisor Alice Ross faced a situation that left her feeling uneasy about
the action she might have to take. In discussing the matter with fellow su-
pervisor Ed Wilson she began by saying, “I have no idea what to do about
Jane Lawson. I just don’t recall ever facing one like this before.”

Ed asked, “What’s the problem?”
“Excessive absenteeism. Jane has rapidly used up all of her sick time,

and most of her sick days have been taken immediately before or after
scheduled days off.”

“What’s unusual about that? Unfortunately, we have any number of
people who use their sick time as fast as it accrues. And most get sick on
very convenient days. I should say convenient for them, not us.”

“What’s unusual is the fact that it’s Jane Lawson. She’s been here for
seven years, but the apparent sick time abuse has all been within the re-
cent few months. She’s used up her whole sick time bank in six months,
and most recently she was out for three days without even calling in.”

Ed said, “You can terminate her for that.”
“I know,” said Alice.
“Especially when you take her other absences into account. Have you

warned her about them?”
After a brief hesitation Alice said, “No, not in writing. Just once, face-

“Is there any record of it? Any form she had to sign?”


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“No,” said Alice. “I really hated to make her sign a form. I know I
should have taken some kind of action by now, but I can’t seem to make
myself do it.”

“Why not?”
“Because she’s always been such a good employee. She’s always been

pleasant, always done what she’s told, and always done quality work. She’s
still that way, when she’s here. She’s also a friend. I guess what I’m hung
up on is, um, how do I discipline someone who’s usually a good employee
and do it in a way that doesn’t destroy any of what’s good about her?”

Ed said, “Good performer or not, you should be going by the policy book.
That’s all I can suggest.”

How has Alice’s failure to take action as troubles emerge or do any-
thing about the signs of impending problems hampered her ability to take
effective action now? What has Alice actually done by allowing matters
to proceed as far along as they have? What impact will their friendship have
on the situation?

The best time to address a problem is before it becomes a problem. Managers
cannot accurately anticipate difficulties in specific forms or at particular
times. By developing an awareness of basic behavioral patterns and learn-
ing how to spot signs of trouble, a manager can catch many actual or
would-be problems in their early stages.

It is not necessary to repeat what has already been said about discipline.
However, an example clearly illustrates the value of prevention in a proac-
tive approach to absenteeism. Consider an organizational policy con-
cerning absences that specifies five instances of unexcused absence in a
12-month period or less calls for the start of disciplinary action. A super-
visor learns that a particular employee has just been absent for the fourth
time in eight months. The supervisor has two options. The first is to ig-
nore the problem but prepare to begin disciplinary action as soon as ab-
sence number five occurs. The other is to have a conference to warn the
employee about the requirement of disciplinary action.

Why simply ignore the issue now? Why let it go further if there is a
course of action that can be taken to prevent more serious consequences
in the future? The supervisor should take the employee aside and address
the recent absences before it is necessary to take formal action. Prevention
should be practiced whenever possible. In addition to being less stressful
for both supervisor and employee, it improves morale by showing that the
manager cares enough to pay attention to employees and their circum-
stances and behavior.

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Employee tardiness and absenteeism deserve a department manager’s
visible attention. If employees see their manager visibly attending to these
problem areas, some will be deterred from abusing these issues.
Conscientious and common-sense management can help to minimize or
avoid many problems.

Issues of employee privacy and confidentiality are pervasive in contem-
porary organizations. This is especially true in health care. Human re-
source professionals are familiar with the debate between employee privacy
on one hand and the right to know on the other hand. Putting the controversy
into other terms, the conflict usually amounts to individual rights versus
business needs. The rights of individuals to privacy and confidentiality
have been a growing concern in contemporary American society.

Privacy and the Changing Times
There is an increasingly strong belief in society concerning the right of an
individual to privacy. There is also increasing apprehension about how the
government might use information that it gathers about individuals. This
stems from a number of concerns. Many observers feel that agencies are in-
truding more deeply into peoples’ lives as the government enacts new leg-
islation and increases demands for information. Businesses are widely
perceived as exercising their legal right to review computers and electronic
documents and to monitor telephone conversations as they attempt to know
more about the people they employ. Advancing and expanding computer
technology is simplifying the collection, storage and retrieval of personal
information. Since September 11, 2001, the government has been responding
to a perceived need to monitor individuals and their movements.

Because they are becoming increasingly aware of their rights, employ-
ees are coming to expect that their privacy will be protected. At the same
time, organizations are requesting an increasing amount of information from
people when making decisions about hiring, promotions, benefits and se-
curity. When individuals seek employment, work organizations want in-
formation about past and present employers and other references. Depending
on the details of a particular job, the application process may involve de-
tailed security screening. Employees continue to grow more sensitive to the
issue of privacy rights, but at the same time they perceive that organiza-
tions are delving continually deeper into their personal lives.

Many individuals believe that organizations collecting data about them
ask for more personal information than is legitimately needed. Petrocelli
offers a classic definition of the right to privacy:1


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“It is the right to be free from the unwarranted appropriation of
one’s personality, the publicizing of one’s private affairs with which
the public has no legitimate concern, or the wrongful intrusion into
one’s private activities, in such a manner as to outrage or cause suf-
fering, shame or humiliation to a person of ordinary sensibilities.”

Examples are useful. Consider the rights of privacy and drug testing.
Individual rights are continually giving way to perceived needs for drug
testing, especially concerning people in occupations having responsibil-
ity for public health and safety. Consider AIDS and testing for the pres-
ence of HIV. This represents a constant collision of individual rights with
the need to know information about people seeking treatment and cowork-
ers. This controversy was largely responsible for adopting universal pre-
cautions under which all bodily fluids are regarded as potentially

Many organizations once routinely used polygraph (lie detector) tests
to screen potential employees and to make random checks of existing em-
ployees. Adverse reactions to that practice led to passage of the Employee
Polygraph Protection Act of 1988. Most controversies over employee in-
formation and management involve business needs compared to employee
expectations of privacy.

Legislation Affecting Privacy
Since 1975, employees have developed stronger voices in the workplace.
Government has responded to those voices. Large amounts of personal
information were formerly requested on job applications and in employ-
ment interviews. Such practices were curtailed when antidiscrimination
laws restricted the information employers could request.

Title VII of the Civil Rights Act of 1964 was the first major law to have
a significant bearing on individual privacy. The next major attack on this
issue resulted in passage of the Privacy Act of 1974. Officially applying only
to agencies of the federal government (but often regarded as a standard
for other employers), this legislation stated that an agency may obtain and
retain only information that is relevant and necessary to accomplish its
official purposes. Furthermore, it requires that as much essential infor-
mation as possible is obtained directly from individual rather than from
secondary sources. The law ensures record confidentiality, guarantees em-
ployees the right to examine their personnel files, and requires that no in-
formation be disclosed without the consent of affected employees.

In addition to providing a useful model for most all employers, the
Privacy Act has served as a model for privacy laws in many states. In the
majority of states, privacy laws allow employees to know that a person-
nel file is maintained and to examine it when desired. Most state statutes

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permit employees to enter information in their files to clarify whatever
they may consider to be inaccurate.

The Polygraph Protection Act of 1988 proclaimed the practice of rou-
tinely administering lie detector tests to be an invasion of privacy. The Act
prohibited the use of lie detectors in most screening situations, stated that
employees cannot be randomly tested during their terms of employment,
permitted polygraph use if there is a reasonable suspicion of involvement
in workplace incidents resulting in economic loss or injury to an organ-
ization, and exempted government employers from the provisions of the
law. The Polygraph Protection Act does allow testing of selected em-
ployees in positions of responsibility for significant dollar value, in-
cluding armored car employees, employees of alarm and security-guard
firms, and current and prospective employees of firms handling con-
trolled substances.

The Fair Credit Reporting Act limited the extent to which an organi-
zation can delve into the personal finances of an individual. This legisla-
tion regulates the conduct of consumer reporting agencies and users of
consumer credit reports, prevents unjust damage from inaccurate or ar-
bitrary information in credit reports and keeps employers from receiving
reports about employees with the exception of specifically defined pur-
poses related to work.

Legal Orders
It is a relatively common practice for agencies to serve subpoenas, sum-
monses, and warrants to employees in the workplace. While many such
orders are served at employees’ homes, officers frequently attempt to serve
them at job sites because no one can be found at an employee’s last known
address. If they enter via administration, they will probably be referred to
HR. In either administration or HR, they will frequently ask directions to
employee’s department. Although the practice may vary, many organiza-
tions prefer to have HR arrange for such an order to be served in private
and avoid unnecessary embarrassment to an employee.

Managers who become aware of an attempt to serve a legal order on an
employee in their department should send the serving officer to HR. Human
resources will arrange for the order to be served in private or may be able
to accept it on behalf of the individual. The latter possibility is usually re-
stricted to an employee being summoned as a witness in a legal proceeding.

Any external request for information about an employee should be re-
ferred to HR. Occasionally human resources will receive a legal order call-
ing for employee information required in legal proceedings. With the
exception of responding to legal orders, HR should not release any infor-
mation to outside persons or parties without first securing a signed release
from the affected employee.


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Employee Searches
It is sometimes necessary to conduct searches of areas within a facility such
as desks and lockers that legitimately contain the personal property of em-
ployees. Organizations should have a published policy governing such
searches. An organization should publicize the policy so that employees
know that searches can occur and the basis for the surveys, specifically
whether they are to occur at random or for reasonable cause or both. Steps
should be taken to ensure that the search policy is justified and that there
are good reasons for random searches. Any search policy must be applied
evenly and consistently to eliminate any perception of discrimination. No
employees should be exempt from a search. Employee consent should be
requested before a search. While it may not be legally required, consent can
often avoid charges that might arise after the fact. Every search should be
conducted discretely and with respect for individual persons and property.

Access to Employee Information
Employee confidentiality always involves questions of access to informa-
tion. Once information is collected, who is entitled to see it? Although ar-
guments can be made about the need to know, legitimate needs can usually
be determined by answering the question: What will be the result if this
information is not made available?

Employees have a legally protected right to examine their personnel
files and add clarifications they believe are necessary. Organizations ordi-
narily have policies governing employee access to records, usually includ-
ing a requirement that files may not leave the HR department. Most such
policies require that files must be reviewed in the presence of an HR em-
ployee to ensure that no material is removed.

Employee personnel files may be made available to managers who are
considering particular persons for transfers. The need to know in such an
instance is a legitimate requirement to review the employment history of
persons being considered for a position in a manager’s own department.

All organizations should have a written policy governing the release of
information concerning both employees and others, such as patients for
whom they provide services. Although department managers often main-
tain files concerning their own employees, this practice should be publi-
cized. Similar information should be kept for all employees with no
exceptions. Supervisors are not advised to maintain secret files on selected

Employee Health Records
Many organizations formerly kept records related to Workers’
Compensation, disability, and the like in employees’ personnel files. Because
they relate to employee health or physical condition, these documents and

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records are now considered to be medical records and are subject to stricter
rules of accessibility. Employee health records are now customarily filed
separately from personnel information, often in a separate office such as
the employee health service. They are commonly retained by the employee
health office and are subject to the same rules of access that govern patient
records in a physician’s office.

Some organizations have rules governing personal relationships, particu-
larly those of a romantic nature. The likelihood of such rules increases as
the size of an organization increases. It is not uncommon to have a pro-
hibition against employees being involved with each other or being in-
volved with employees of direct competitors. Generally, employers can do
nothing regarding the conduct of employees off of the job. They typically
do nothing as long as there is no adverse effect on job performance or on
the organization’s reputation. Employees should be encouraged to disclose
the existence of romantic relationships involving co-workers voluntarily
to their supervisors. Organizations often require employees to disclose the
existence of personal or romantic relationships with individuals employed
by direct competitors.

There are legitimate concerns about the appearance of favoritism and
an increased likelihood of sexual harassment claims and employee unrest
when romantic relationships exist between management and nonman-
agement employees. Such relationships may create conflicts between an em-
ployee’s right to privacy and the organization’s legal responsibility to
prevent sexual harassment. An organization is particularly vulnerable
when a member of management is involved. Courts have held organiza-
tions liable for sexual harassment by a manager even if senior managers
did not know about a relationship. As many organizations have discov-
ered, relationships that begin as consensual can go sour and lead to charges
of sexual harassment.

Many organizations have policies that prohibit having one spouse un-
der the supervision of the other, or even to place both spouses in the same
department or group. Experience has shown that harmful perceptions of-
ten arise in the group when these prohibitions are ignored. Little or no in-
appropriate behavior may occur. However, because the possibility of
discriminatory behavior is present, perceptions arise. To a perceiver, per-
ception is reality.

A rule against having spouses in a superior-subordinate relationship
will ordinarily hold up under scrutiny, but prohibiting spouses in the same
department may be challenged. Generally, a no-spouse rule will prevail if
it can be shown that the rule is designed to avoid aggregation of family mem-


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bers, is applied evenly and consistently, and results in no adverse impact
on either gender. However, inconsistent or uneven enforcement of this and
similar rules can result in discrimination charges. Overall, all rules concerned
with personal relationships are especially vulnerable to challenge under
privacy and antidiscrimination laws.

The risk of sexual harassment charges was mentioned in association with
personal relationships on the job. In reality, this risk extends far beyond
the boundaries of failed consensual personal relationships.

Under the Civil Rights Act, sexual harassment is a form of sex dis-
crimination. Many kinds of acts or actions can result in charges of dis-
crimination against employers. Sexual harassment relates to just one
particular area of troublesome behavior. However, sexual harassment has
become one of the two most frequently charged forms of discrimination
for employers in the United States. The other most frequently charged
form of discrimination is discrimination based on age.

The increasing number of cases and increasingly large monetary settle-
ments involved make sexual harassment a concern of every employer. Thus,
it becomes important for every department manager and supervisor. Without
exception, all employees of any organization must understand sexual ha-
rassment and know about organizational policies relative to it.

Sexual Harassment Defined
Sexual harassment consists of unwelcome sexual advances, demands or re-
quests for sexual favors, or other conduct of a sexual nature. It is harass-
ment if acceptance of or submission to such conduct is either explicitly or
implicitly a term or condition of employment, if acceptance or rejection
of such conduct is used as a basis for making employment-related decisions,
or if the conduct can be viewed as unreasonably interfering with work per-
formance or creating an offensive or intimidating work environment. The
latter condition is often referred to as a hostile environment.

Sexual harassment can be as direct and blatant as offensive touching
or making direct sexual propositions. Alternatively, it can be as indirect
as exhibiting sexually suggestive posters or calendars, or allowing sexu-
ally related humor to be overheard by parties who find it offensive. Both
extremes and any behaviors in between constitute sexual harassment. A
list of concrete examples, specific instances of behavior that could be in-
terpreted as sexual harassment, could easily fill several pages without
covering all of the possibilities. A particular mode of behavior might con-
stitute sexual harassment at one time but not at another time. For exam-
ple, it is ordinarily not considered sexual harassment for an individual to

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ask a co-worker for a date. If the person who is asked declines and the
other party repeatedly asks for a date, this may then be construed as sex-
ual harassment. Often determining whether some mode of conduct is or
is not considered sexual harassment rests with how the conduct is per-
ceived. Much behavior that is judged to be sexual harassment is gener-
ally unwelcome, unwanted, and repeated.

All organizations should have policies that prohibit sexual harassment
and also specifically prohibit retaliation against anyone complaining of
such harassment. Department managers have the responsibility to know
the sexual harassment and anti-retaliation policy in sufficient detail. They
must be able to train employees about the contents of the policy and the
procedures for reporting sexual harassment. Human resources should in-
clude a briefing on sexual harassment in the new-employee orientation.
Organizations should also have printed guidelines in their employee hand-
books and their personnel policy manuals. These documents are often
available on an organizational web-site on the Internet. All employees
should be offered copies of the sexual harassment policy or otherwise have
direct access to this information. It is essential that all employees know the
process for reporting sexual harassment and be aware of the processes by
which any charges of such behavior are investigated. Most organizations
require a complaining employee to report any issues relating to sexual ha-
rassment to the immediate supervisor or manager. Alternative procedures
usually allow employees to make harassment complaints directly to HR
or to another point in the organization should an employee’s immediate
manager or supervisor be the subject of the complaint.

It is difficult to say whether sexual harassment is declining overall or
continuing at its previous levels. Since the passage of antidiscrimination
legislation, sexual harassment has become more visible because people who
once had no recourse to such behavior now have legal channels through which
they are lodging complaints. Sexual harassment has long been prevalent in
business and industry, but before 1964 there was little its victims could do
about it. In other words, before the emergence of legal channels through
which to complain, sexual harassment was entirely “underground,” and for
the most part it was shrugged off or deliberately ignored. Surely anyone who
has been in our mixed-gender work force for a few years can attest to the
continuing presence of significant sexual harassment.

Sexual harassment remains a major concern throughout business and
industry. It must remain a key concern of every department manager or
supervisor in every organization. Sexual harassment cannot be condoned
or tolerated. Every manager in every organization should maintain a zero-
tolerance policy towards sexual harassment; to do otherwise is to leave em-
ployers open to the possibility of huge financial penalties and some of the
most negative publicity an organization can experience.


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Violence in the workplace is often the result of stress. It frequently occurs
when individuals become stressed to an unbearable level. When stress be-
comes unbearable some people become ill, some break down, and some
walk away from the situation. Some become violent. Violence is similar
to other forms of human behavior in that it is action in response to a con-
dition, need, or demand.

Every organizational change that alters expectations held by employees
becomes fertile territory for anger. Over time, chronic anger can lead to di-
minished productivity, reduced quality, increased fatigue, burnout, de-
pression, and violence. The Federal Bureau of Investigation (2002) reported
that on average 12.5 of every 1000 employees are the victims of violence
in the workplace.2 Additional information is provided in Exhibit 14-1.

A department manager’s best approach to workplace violence involves
awareness and prevention, but this advice introduces the manager to an-
other potential source of trouble: there is no consistent profile to describe
persons who commit violent acts in the workplace. Individuals who have
perpetrated workplace violence may be experiencing family problems;
have a history of abuse; have problems stemming from substance abuse
involving alcohol or drugs; have a history of violence; have an aggressive
personality; experience mental conditions such as depression, paranoia or
schizophrenia; or have a poor self-image or low self-esteem.

There are no all-inclusive reasons why people commit violent acts. Reasons
behind workplace violence include an inability to cope with unbearable lev-
els of stress; drug reactions; problems involving job, money, or family; re-
action to the loss of employment; reaction to the loss of a relationship;
frustration with long waits or with what may be perceived as rude or indif-
ferent treatment; confusion or fear; and perceived violations of privacy.

Violence 289

Exhibit 14-1 Workplace Violent Crimes 1993–1999

Average Rate per Percent of
Crime victims per 1000 workplace
category per year workers victimization

All 1,744,300 12.5 100.0
Homicide 900 0.01 0.1
Rape/sexual assault 36,500 0.3 2.1
Robbery 70,100 0.5 4.0
Aggravated assault 325,000 2.3 18.6
Simple assault 1,311,700 9.4 75.2

Source: Federal Bureau of Investigation, 2002.

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Managers, psychologists, or criminal justice professionals cannot reli-
ably identify persons who may resort to violence. However, there are steps
that can be taken to prevent violence. Treat everyone, including employ-
ees, patients, visitors and customers, with respect and consideration.
Managers should keep all objects that could be used as weapons stored out
of easy access. Employees should remain beyond the reach of patients and
visitors in tense situations and should take threats seriously and report
them immediately through proper channels. All supervisors should know
their security procedures, alarms, and warning codes.

Employees and supervisors should be extra alert to the possibility of vi-
olence if a person appears to be under the influence of alcohol or drugs,
appears to have been in a fight, is brought into a healthcare facility by the
police or is already being restrained. Visible indicators of potential vio-
lence include obvious possession of a weapon; nervousness; abrupt move-
ments; extreme restlessness, pacing or obvious agitation; hitting walls or
objects; or breaking things.

When observing an individual who appears to be on the edge of losing
control, supervisors should notify other staff and call the security depart-
ment. They should stay alert but remain calm. All employees should main-
tain a safe distance and give an agitated person plenty of space. People
nearby should not turn their backs. Under no circumstances should an un-
trained employee touch an agitated or upset person. Obstacles between an
upset person and others provide some protection. Untrained employees in
the vicinity of an agitated person should be certain to have a clear way out.
Dead-ends or corners are especially dangerous. Untrained personnel should
listen and never display anger or defensiveness. They should not argue.
Rather, they should speak using voices that are calm, slow, and quiet.

Some departments, such as an emergency room, are more relatively
likely to experience violence. However, violence is possible anywhere in
any facility or organization. Therefore, all employees should be orientated
in how to react to violent behavior. If violence does occur, employees should
protect themselves to the extent necessary. They should sound an alarm
or call the appropriate code or call security. Employees should help re-
move others from the vicinity, if necessary. Employees who lack specific
training should not try to disarm or restrain an agitated person. If possi-
ble, they should give potentially violent persons what they are demanding,
if the demands are within reason.

True employee participation has the potential to positively influence be-
havior and avoid some potential problems. Participative management is
not a program with a beginning and an end. It requires management com-


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mitment. Individual managers and supervisors must be willing to allow em-
ployees to participate in decisions. Employees must know that supervisors
and managers genuinely want their input and that it is valued. Involving
employees requires that management listen to them. Managers should be
both visible and available. Walking around and visiting with employees at
their work stations is valuable. The more employees feel that managers are
interested in what they do and in their thoughts, the more they will feel
respected, challenged, and constructively utilized.

A few employees prefer to just do as they are told, put in their hours, and
go home. The majority of employees, however, usually prefer to be chal-
lenged. They have the potential to become engaged in their jobs. Many peo-
ple are capable of managing their own work if they are provided with a
supportive environment and given the opportunity to perform. Effective
managers remember that nobody knows the inner detailed workings of a
job better than the person who does it every day. This is the source of knowl-
edge that a manager should try to access through honest participation.

The primary factor in the eventual success of employee involvement is
supportive managerial behavior. Managers must be able to empower their
employees. They will not necessarily always get to make the decisions or
develop the solutions but employees must understand how they can in-
fluence processes and who they will help decide. Decisions that relate to
individual jobs are usually best made by the people who perform the jobs.
The more levels of supervision that separate a decision maker and the per-
son affected by it, the worse will be the outcome.

Effective employee involvement requires a gradual transition as mutual
trust develops between managers and employees and each becomes more
willing to help the other succeed. An organization or department that can
achieve effective employee participation will usually experience signifi-
cant increases in productivity and noticeable decreases in employee prob-
lems. Interested, stimulated and challenged employees constitute the best
possible means of preventing problems.

Counseling is appropriate for addressing problems and potential prob-
lems at their early stages to keep them from becoming larger problems.
Sometimes counseling is informal guidance and work-related advice that
is provided by a supervisor. Overall, counseling may be employed to iden-
tify problems in their early stages and attempt to resolve them before they
become overwhelming. Counseling can be used to strengthen weaknesses
in employee performance and provide ongoing guidance. Counseling may
enable a manager to recommend developmental activities for an employee
or improve communication between supervisor and employee.

Counseling 291

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Supervisors should try to counsel employees when problems appear to
be developing rather than letting them continue to grow until disciplinary
action or other corrective action is required. A need for counseling may
be signaled by a noticeable decline in an individual’s performance or a per-
son’s failure to continue meeting job standards. A decline in performance,
especially in an employee who has performed well for an extended period,
often indicates the presence of a personal problem. A counseling session
can afford employees the opportunity to talk. This provides a manager
the opportunity to make an appropriate referral. Employees should not be
allowed to continue on a path toward disciplinary action when a friendly
one-to-one counseling session may be able to head off further trouble.
Changes in individuals relative to their jobs are indicators to make a coun-
seling referral. Changes in interpersonal relationships are another indica-
tor of trouble. Complaints about an employee from other people, especially
those that reflect rude or inappropriate behavior often reflect personal

Discussing a need for counseling with a subordinate is not easy for all
managers. Managers should remember that they are primarily conduits
to trained professionals. Effective counseling requires training. However,
managers can provide basic advice and guidance to their employees. A
first rule is to understand the boundaries. Supervisory counseling encom-
passes coaching on job-related topics or on behavior relative to policies or
work rules. Counseling must never become personal, that is, involve in-
trusions into private lives.

Many common obstacles to counseling success may be overcome. Practice
and experience should overcome uneasiness and a lack of experience. Lack
of time can be addressed by making an appointment and clearing a cal-
endar for 30 to 60 minutes. Friendships are more difficult. Counseling
friends is not much easier than disciplining friends, so many managers
avoid both activities. Counseling a person with more seniority than the coun-
selor is often awkward. If this is not overcome with practice, it will likely
not disappear with the passage of time. A reasonable fear of making mis-
takes is healthy and helps managers respect appropriate boundaries and
guidelines. Fear of a lawsuit should reinforce the directive to refer people
with problems to qualified professionals.

To provide effective advice in appropriate settings, managers must be
knowledgeable and credible. Managers must know what they are talking
about and avoid trying to bluff their way through unfamiliar situations.
Managers should keep their advice consistent from person to person.
Effective counselors stick to known facts and avoid generalizations.
Timeliness is appreciated by all concerned. As with delaying disciplinary
action, delaying counseling until a later time dilutes the message and di-
minishes its impact.


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Effective managers are alert for employee defensiveness and do not ar-
gue. Some employees will interpret any effort at counseling as direct crit-
icism and will immediately become defensive. Should this occur, hear an
employee out and avoid contradicting the person. Successful counselors
are as positive as possible. Counseling may indeed contain elements of
criticism, but a positive direction to a discussion is always helpful. Effective
counselors listen, really listen. When an employee is speaking, they pro-
vide their undivided attention and focus on what is really being said.

At all times, department managers must remember that their primary
goal should be focusing on the results of behavior, not the causes. In talk-
ing with subordinates, managers should not attempt to infer the cause of
behavior and should not attempt to look for it. Focusing on the results of
behavior and correcting inappropriate behavior helps managers to avoid
entering an employee’s personal life.

Wise managers should document each counseling session briefly and in-
formally, making note of employee name, date, and the nature of the dis-
cussion. The aim of such informal and personal notes is to capture the
essence of the discussion objectively and using anecdotes. These notes are
not considered to be permanent records but should be for one to two years
in the event that the problem recurs. These personal notes should be de-
stroyed if the problem has not recurred in two years.

Many employee-related problems can be prevented by timely and appro-
priate interventions by supervisors and managers. Employee confiden-
tiality and privacy must be respected and protected. Recent legislation has
reinforced this need.

Personal relationships involving colleagues or supervisors present sig-
nificant problems. Most organizations have established policies to address
such situations in an attempt to protect all concerned. Sexual harassment
is one of the most serious problems facing workers in contemporary or-
ganizations. All employees must understand and follow organizational
policies and procedures that relate to sexual harassment. Zero tolerance
for such activities is the only defensible position that an organization can

Violence has become more common in the workplace. All employees
must be instructed about how to respond to threats of violence because
violence is possible anywhere in a facility or organization. Employee in-
volvement can facilitate and improve organizational operations. Supervisors
should be able to provide advice or limited counseling to their employees.

Returning to the initial case study, Alice Ross has made additional
work for herself by allowing the situation with Jane to continue without

Conclusion 293

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intervention. Alice faces a sticky problem because she did not use early
opportunities to head off the worst before it could develop. She has made
a classic error by avoiding a confrontation. Alice does not wish to an-
tagonize an employee who is otherwise doing a decent job. Maintaining
a personal friendship with a subordinate complicates the situation.

It is likely that there is a reason behind Jane’s behavior. She may be ex-
periencing a personal problem. If so, privacy issues must be considered.
An element in Jane’s personal life could be causing her frequent absences,
but as a supervisor Alice cannot ask about personal issues; she could per-
haps ask about personal issues as a friend, but her supervisory responsi-
bilities take precedence. Alternatively, the pattern of Jane’s absences might
suggest that she is simply playing the system for time off, possibly having
lost interest in her job. Alice should offer to listen to anything Jane wishes
to talk about and then refer Jane to sources of help such as an employee
assistance program.

Because she has not taken any formal action on the apparent problem,
Alice has little choice but to start over with Jane and to apply the organi-
zation’s disciplinary policy. However, Alice should first tell Jane exactly where
she stands and explain the consequences of continued absenteeism.

Alice’s colleague Ed pointed out that the practical response to three
days of unexplained absences is grounds for discharge. Alice must watch
the breaks she gives to any individual. Policies must be applied consis-
tently, and Alice cannot be allowing someone to slide by without conse-
quences for doing something that for which others are discharged. The
fact that their friendship interferes with operations is the basis for orga-
nizational policies restricting personal involvement with co-workers.

Alice should have recognized signs of a developing problem before Jane
hit the threshold for an initial warning under the progressive discipline
policy. An ideal course of action would have been counseling at this early
stage in an effort to avoid a more serious problem.

Some managers will allow an employee to wander deeply enough into
trouble for disciplinary action to apply before starting to deliver warn-
ings. However, thoughtful managers will take reasonable steps at the ear-
liest signs of trouble to prevent small concerns from becoming full-scale


1. Petrocelli, William. (1981). How to avoid the privacy invaders. New York: McGraw-
Hill, 112.

2. Federal Bureau of Investigation. (2002). Workplace violence. Available at http://
www.fbi.gov/publications/violence.pdf. Accessed March 21, 2006.


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Discussion Points

1. Why should supervisors and managers be most interested in the results
of employee behavior? Why should they not try to eliminate the causes
of such behavior?

2. How do the needs of an organization and the privacy rights of an in-
dividual differ? When do these needs conflict?

3. How could a department manager prevent excessive absenteeism
among employees?

4. Under what circumstances is polygraph testing of employees legal?
5. Why is it advisable to maintain documentation having a bearing on

employee health issues separately from regular personnel files?
6. When may a department manager be granted access to the personnel

files of employees of other departments?
7. Why is employee involvement frequently recommended as a strategy

for preventing problems?
8. Why should supervisors take time to counsel employees when a dis-

ciplinary problem appears to be developing? Why should they not
wait until definitive disciplinary action is permissible under an orga-
nization’s policies?

9. How should managers prepare their employees to react to violence in
the workplace? Why is the preparation necessary?

10. Why must an organization obtain an employee’s written permission
before releasing any information concerning that employee? When
may such information be released without employee permission?


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Conclusion 295

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Chapter Overview

After reading this chapter, readers will:

• Be able to differentiate between the formal documentation that is
required and the informal documentation that is optional but

• Appreciate the legal implications of employment documentation
• Understand the role of human resources in maintaining and

safeguarding personnel files
• Appreciate an individual manager’s responsibilities relating to

employment documentation
• Know how and when to create, maintain, and purge anecdotal

note files concerning employees
• Appreciate the importance of complete, properly executed, and

appropriately retained documentation

Paper records are essential. The human resources (HR) department has
an important role concerning employee personnel files. Department man-
agers and supervisors share in documentation responsibilities. Relevant
documents include personnel files, job descriptions, employee handbooks,
and policy and procedure manuals. Departmental files are important but
temporary. Human resources has the job of maintaining long-term files.
Paperwork is necessary and should be completed in a timely fashion.
Without proper and complete records, an important matter, issue, or
event is considered never to have occurred.

While this chapter emphasizes several forms of documentation, medical
records are excluded. Two general classes of employment documents are
included. The first of these encompasses formal documentation that re-
sults primarily from adhering to laws or regulatory requirements. This in-
cludes the majority of items found in an employee’s personnel file. The




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second class is informal documentation. These papers are not required by
law or regulations but are deemed to be helpful when running an organiza-
tion. Examples include internal reports, statistics, meeting minutes, anec-
dotal notes, and personal reminders.

Case Study: “Relax, It’s Only a Little Paperwork”

Middle manager Kathy Mason was talking to a colleague. “I have a great
supervisor in charge of the evening shift housekeeping crew, Julius Newton.
He’s probably better at keeping a diverse crew happy and productive than
any other first-line manager we’ve got. But he drives me absolutely nuts
with his casual attitude toward documentation.” Kathy slapped the file in
front of her and added, “Honestly, Julius is a good person and a strict but
fair supervisor. Still, a lot of my time and attention are needed to keep him
out of trouble.”

Employee relations manager Dan Howland asked, “How can he be so
good if he causes you so much aggravation?”

“Because everything else is great. He has a tough group to run. They’re
all entry-level personnel, and he has plenty of employee changes. Despite
these challenges, he’s successful. The problem is that I’m always getting stung
by a lack of critical documentation when it’s needed.”

“Can you give me an example?”
“Sure,” Kathy said, slapping a file folder on Dan’s desk. “He submit-

ted a discharge notice for an employee. The reason was excessive absen-
teeism. For months, he worked with the guy, counseling, offering assistance,
you name it. Eventually he gave up, decided he’d spent enough time and
discharged the employee.”

Kathy tapped the folder and continued, “Now I’ve got a legal com-
plaint claiming unjust discharge. The guy says he never knew his absences
were a problem until he got fired.”

Dan said, “But he did know? And where is the proof?”
“Right. Where we should have Julius’s counseling notes and a record

of three or four warnings under the progressive discipline policy, all we have
is the dismissal-discharge notice. Julius had to provide the discharge no-
tice to let the guy receive his final check and get him out the door.”

Kathy went on. “This isn’t the first time this sort of thing has occurred.
And don’t even mention performance evaluations. If Julius gets them done
at all, they’re months late and consist of a few generalizations dashed off
in a hurry.”

Dan asked, “Have you talked about this with Julius?”
“Yes. Multiple times.”
“Then why not replace him?”
“I’d rather salvage him. When it comes to guiding people one-on-one,

he’s a natural manager. But he worries me. Whenever I bring up the sub-


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ject of documentation, he brushes me off. Just yesterday I tried, and his
reaction was, ‘Relax, it’s only a little paperwork.’ I’m afraid we will be
really stuck if anything involving him goes to court and we find the per-
sonnel files practically empty.”

Dan nodded. “Agreed. You know the attitude of the courts and the ad-
vocacy agencies. Their approach is that if it’s not on paper, it never happened.”

What advice would you offer to Kathy Mason? If you were in her po-
sition, what actions would you undertake or recommend for supervisor
Julius? What options does Kathy Mason have regarding required employee

Although computers and electronic records have become increasingly im-
portant in recent decades, paper has not been totally replaced. More to the
point, paper still dominates in many respects. It is required in many legal
settings. Computer output is often converted to printed form.

Many documents are intended for simple record-keeping. Indexes and
other records ensure that particular documents are available for reference
of other ordinary business purposes if needed. However, in recent decades,
an increasing amount of documentation has been created and maintained
largely as protection against legal challenges.

Documentation can be troublesome for a department manager in two
ways. The first is when it is not available and appears never to have ex-
isted. The other is when documents do exist but are weak, inaccurate, or


The Legal Importance of Paper
Every piece of paper ever generated concerning an employee is a potential
key in resolving a legal complaint involving an organization or manager.
Evidence of discrimination or its absence is often inferred from the con-
tent of documentation relating to employees. The most common kind of
discrimination charge involves disparate treatment. These are allegations
regarding violations of the Civil Rights Act. This legislation requires all in-
dividuals to be treated equally concerning terms and conditions of em-
ployment. Another common basis for a charge of discrimination involves
allegations of disparate impact. These result from job requirements or ac-
tions taken by an employer that have a discriminatory effect on members
of a protected group. When either type of charge is reviewed, documen-
tation concerning all affected employees may be requested.

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Employment documentation is always important when responding to
charges of discrimination. If requested documentation cannot be produced,
the worst is often assumed.

Documents related to employment in any way can be requested in a le-
gal action. Under a legal order known as a notice to produce, an organi-
zation can be required to produce, for copying and inspection, any documents
that may be possibly or remotely related to the charge. A notice to pro-
duce can ask for a considerable variety of material, including the person-
nel files of persons involved in an action. This can be extensive and can
encompass many personnel files. For example, in an action involving three
employees alleging a history of discriminatory behavior that followed them
from their former departments to their present situation, the personnel
files of all employees in all affected departments were requested. When
completed, the files of more than 100 people were involved.

An organization’s personnel policy and procedure manual including all
policies applicable to the complaining employees’ employment may be re-
quested. While this may seem straightforward, changes and revisions to
the document complicate the request. Two comments are in order. First,
every page of every document should have a unique page number and an
identifying title. All documents should be dated with a time that they be-
come effective or a time that they will expire. Second, HR should retain
complete copies of all versions or revisions of all organizational documents
that affect employees. These provide a document trail for future use.
Prudent organizations retain copies of additional documents, including
work rules, job postings, and employment advertisements. Any informa-
tion that cannot legally be used as the basis for a personnel decision should
never enter an employee’s personnel file and should never be retained in a
manager’s anecdotal or personal files.

Record Retention
Some records are retained on the basis of common sense. There may be
legitimate needs to retrieve the information they contain at some time in
the future. Other records are retained because of external or legal re-
quirements. All federal laws that address aspects of employment include
requirements for record retention. In most organizations, retaining records
is a continuing responsibility of HR.

Regulatory agencies that administer employment legislation specify the
minimum length of time that pertinent records must be retained. The
lengths of retention time differ. For example, under the Fair Labor Standards
Act, payroll records and supporting information such as time cards and
time sheets must be retained for three years. Other related information
such as job evaluations, merit system descriptions and records, and pay-
roll deduction records, must only be kept for two years.


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Under the Age Discrimination in Employment Act, all employment re-
lated records must be retained for a single year. This is consistent with the
provision that a charge of age discrimination must be filed within one year
after the alleged act occurred. The Occupational Safety and Health Act re-
quires that all records related to employee injuries or illnesses be retained
for five years. The Civil Rights Act requires that all records of personnel
transactions must be retained for at least six months unless charges are filed.
In that case, the records must be retained until the final disposition of all

The Joint Commission on the Accreditation of Healthcare Organizations
(JCAHO) requires that a number of types of documents be retained so
they can be reviewed during periodic accreditation surveys. The affected
papers include all documents that demonstrate compliance with federal laws,
all licenses held by the organization and its individual employees, records
related to employee training, detailed records of safety practices, copies of
organizational policies and procedures, job descriptions, and employee
performance appraisals. The Joint Commission is a voluntary member-
ship organization, not a government agency.

In its periodic surveys, the health department of the state in which an
organization is located may elect to review much of the same documen-
tation. States having right-to-know laws concerning toxic substances are
interested in related records.

Hazardous materials and toxic substances present some of the most
rigid record retention requirements. Under the rules of the Occupational
Safety and Health Administration (OSHA), records of any personal or en-
vironmental monitoring of exposure to hazardous materials must be re-
tained for 30 years. The same requirements apply to records retained when
complying with the Toxic Substances Control Act. In New York State,
records of exposure associated with the New York State Right-to-Know
Law must be kept for 40 years.

The threshold for retaining most employment documentation is six
years. This is the statutory limit for filing most employment related charges
arising from violations of the Civil Rights Act.

Many organizations simply assume that all personnel files must be per-
manently retained. Employees come and go, in the process generating files
that become inactive. Employees that remain for many years often gener-
ate thick files over the course of their employment. The net result is that
HR has a considerable records retention challenge.

Personnel files of former employees must be accessed when responding
to reference requests and other legitimate external requests for informa-
tion. Occasionally, former employees return, requiring the retrieval of
stored records. For these reasons, files of recent former employees must
be accessible. Because it is generally true that older files are less likely to
be needed, many HR departments develop systems for document storage

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and retrieval. Old files are often stored on microfilm. Newer systems save
documents in electronic form; paper files are scanned and then stored as
electronic images. While this approach saves space, it requires that records
be periodically re-saved on different media to maintain accessibility.

The responsibility for employee documentation resides primarily in the
HR department. This department must ensure that all required documents
in each personnel file are in fact there and complete. A department man-
ager’s role in supporting personnel files consists primarily of ensuring that
departmental inputs to each personnel file get to HR properly completed
and in timely fashion. Foremost among the documents coming from a de-
partment manager are performance appraisals and disciplinary actions.
Other information that is provided includes routine employee informa-
tion such as changes of address for employees.

A department manager may expect to hear from HR when documen-
tation is not forthcoming. Performance appraisals and disciplinary actions
are most likely to require additional input or actions. Depending on or-
ganizational policy, licensure information may be an HR responsibility.
Department managers may have the responsibility to ensure that care-
givers renew their licenses in a timely fashion and submit copies for their
personnel files. Organizations occasionally maintain a separate central li-
cense repository.

Regarding disciplinary actions, organizational personnel policies may
include guidelines governing disciplinary actions. Written warnings in em-
ployee files are often considered to expire after a period of time if subse-
quent related infractions do not occur. To comply with such a policy, HR
must monitor written warnings and invalidate them as needed. Human
resources staff may not purposively review all personnel files to remove
expired warnings. However, when expired warnings are encountered, they
should be removed and placed in a separate file. The objective of a warn-
ing is to correct behavior. The point of invalidating and removing older
warnings is to prevent an infraction from permanently harming an em-
ployee. Documents that are removed should not be destroyed in case they
are needed in a future legal action. Documents removed from employee
files should be re-filed in a separate, central location.

The HR department must control access to personnel files. Internal ac-
cess to personnel files is ordinarily limited to designated HR staff who
must have access to files to complete their work. An employee’s immedi-
ate supervisor and department manager often have limited access to em-
ployee files. An organization’s legal counsel has access to pertinent files as
required when addressing legal matters. Potential managers may have lim-


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ited access to specific qualified employees’ files when considering them for
promotion or transfer. All employees have the right to review their own
personnel files, although this is permitted only under HR supervision and
a prohibition against removing any documents.

Access to personnel files by interests external to an organization is
strictly limited. Such requests are typically limited to having copies of doc-
uments furnished only upon receipt of a written release signed by the af-
fected employee giving permission to release specific information. Documents
specifically requested via subpoena or other court order must be furnished
as requested, without employee permission. Exhibit 15-1 contains guide-
lines related to the confidentiality of employee records. These guidelines
are based on principles developed by a governmental task force.


Job Descriptions
Job descriptions have several uses in an organization. They provide day-
to-day guidance for workers. Supervisors use them when evaluating their
subordinates. Human resources uses them when recruiting. They are oc-
casionally non-existent and are more commonly ignored until needed.
Thus organizations have a vested interest in creating accurate job de-
scriptions and maintaining their currency.

Department managers and HR staff are often required to work together
on job descriptions. Ordinarily, the content comes from managers while

The Department Manager’s Responsibilities 303

Exhibit 15-1 Guidelines for Confidentiality of Employee Information

• Employees must know of the existence of all systems that retain
personal information; no such systems should be kept secret from

• A procedure must be established for individuals to determine what
information exists about them and how it is to be used.

• Personal information obtained for one purpose cannot be used for
another purpose without the consent of the individual to whom
the information pertains.

• A process must allow individuals to correct or amend records of
personal information pertaining to them.

• Any organization that creates, maintains, and uses or disseminates
identifiable personal information must ensure that the information
is reliable for the intended use and must take steps to prevent
misuse of the information.

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HR provides the format, arrangement, and items that are contained in
every position description in an organization. Employees should partici-
pate in revisions of existing job descriptions. Workers should be involved
in an annual review and update of their own job descriptions.

Different versions of job descriptions contain different information.
This can create confusion. An easy way to avoid problems is to date each
job description when it is modified in any way. A message to destroy all
previous versions should accompany the distribution of any revised job de-
scription. Human resources must issue all revisions and retain a copy of
every description in a master job description file. This reduces confusion
and provides a resource to determine that the most current document is
being used.

Employee Handbook
Every organization should have an employee handbook, and all depart-
ment managers and supervisors should be familiar with its contents. Two
reasons support this suggestion. The first is for personal knowledge and
use, because managers are employees as well as supervisors. The second
is to answer employee questions. Managers must be able to handle gen-
eral questions about the handbook’s contents and must know how and
where to secure clarification of any of the book’s contents.

Supervisors must ensure that all employees in their departments have
copies of the handbook or have ready access to the current handbook.
Employee handbooks are not revised as often as policy and procedure
manuals, but new editions are periodically issued. When the handbook is
re-issued and circulated or made available to all employees, supervisors must
ensure that all employees not only receive one but also that they sign and
submit the receipt acknowledging that they have received and read the
handbook. Handbooks include work rules as well as general information
about an organization. They often include information concerning key
personnel policies.

A signed handbook receipt is retained as evidence that the employee
has received and reviewed the handbook. The receipt is kept in an em-
ployee’s personnel file. This can be extremely important to an organiza-
tion should an employee attempt to deny knowledge of a particular rule
or policy as an excuse for a rule violation or similar problem. Also, many
handbooks carry a prominently displayed disclaimer to the effect that the
employee handbook is not a contract of employment. However, on nu-
merous occasions, at times even when a disclaimer has been present, courts
have ruled a handbook to be a contract of employment. Therefore, em-
ployee handbooks must be carefully written to avoid conveying the im-
pression of promises or guarantees. For example, it is best to refer to one
who has passed a probationary period as a “regular” employee, because


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past references to one who has passed probation as a “permanent” em-
ployee have been interpreted as rendering the employee immune from

Policy and Procedure Manuals
An organization’s personnel policy and procedure manual is ordinarily is-
sued by HR. Most policies are prepared by HR directly or by using input
from other organizational units and distributed by HR. In most organi-
zations, every department has a copy of the manual. Larger departments
may have multiple copies.

Department managers or the person delegated to maintain a policy and
procedure manual should file updates as soon as they are received with-
out allowing them to accumulate. Rapid references to specific policy in-
formation are often required. If a manual has not been kept up to date,
then it is not possible to know whether or not a given policy is current. A
manual that has been allowed to go out of date has the potential to be
damaging if a wrong reference is taken as applicable.

A departmental policy and procedure manual is not the exclusive prop-
erty of a manager and it should not be kept in a manager’s office. A pol-
icy and procedure manual should be stored where employees can access
it and make reference to it as needed, without having to ask for it. When
the manual is retained in an office and cannot be readily accessed, em-
ployees are left feeling that it is being kept from them and that it contains
secrets. Because personnel policies exist for every worker, all employees de-
serve equal access to the manual.

Releasing Employee Information
Sometimes department managers directly receive requests for information
about particular employees, requests from outsiders who have—usually
deliberately—bypassed human resources or other channels such as ad-
ministration. Requests for employee information from outside of the or-
ganization should not be honored. The people requesting the information
should be referred to the appropriate person or department, usually HR.
The HR policy governing external release of employee information should
be the entire organization’s policy on this matter. No information should
be released to an outside party without a signed consent from the affected
employee or a subpoena or other court order.

Requests from within an organization should be honored on a need-to-
know basis. When responding, opinions and subjective assessments should
never be offered. Organizations should provide only objective informa-
tion that can be supported or verified by an official record such as a per-
formance appraisal, attendance record, or other documentation.

The Department Manager’s Responsibilities 305

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A department manager will have occasion to keep particular records, both
formal and informal, concerning each employee. Employee records main-
tained in a department are not considered to be permanent. Only one per-
manent record of employment exists—the personnel file maintained by
HR. The files maintained by a manager should not be approached or main-
tained in a careless or casual manner. Employee files that are maintained
by managers are not the managers’ personal property. Like all other files,
employee information must be appropriately maintained. In some cir-
cumstances, they can be made public.

Regardless of the amount of information contained, supervisors should
always maintain a separate file folder for each employee. This avoids any
charge of favoritism or discrimination by denying any employees the op-
portunity to claim that files were kept selectively or that some employees
were watched while others were allowed to go their own way. A few items
can be retained for every employee.

Supervisors’ files for each employee ordinarily include copies of the
most recent one or two performance appraisals. Permanent records of
older performance appraisals are available in HR files. Notes regarding both
positive and negative items to include in the next performance appraisal
are useful. Copies of warnings, reprimands or other disciplinary infor-
mation concerning an employee should be retained. Depending on the dis-
ciplinary system guidelines, records of oral warnings may remain with a
manager instead of going to HR. These should be forwarded to HR along
with any subsequent written warnings for similar offenses if they occur.

First-line managers are busy people, and they often tend to skimp on
informal documentation. Negative comments seem to get written up
more often than positive comments; these are supposedly “important”
in that they may lead eventually to larger problems or necessary coun-
seling or disciplinary action. Positive comments often do not get entered
for employees who do something commendable. However, positives can
be just as important as negatives—even more important to the employ-
ees themselves—to capture in a manager’s anecdotal note file.

Accurate records of any performance improvement activities that are
undertaken, including all remainders for follow-up and notes indicating
that problems are being resolved, should be retained. Copies of complaints
or compliments received concerning an employee should be discussed with
the employee at the time they are received and retained. Notes of coun-
seling sessions held with an employee should be kept. Any other infor-
mation relevant to an individual’s employment or performance in the
department that is not customarily included in the formal documentation
required of a personnel file should be retained. Everything that managers
write for employee files must be expressed in accurate, objective language


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without name-calling or insupportable opinions. Avoid writing anything
that can be personally or organizationally embarrassing.

Employee files should be periodically reviewed and cleaned. Notes that
have been incorporated into formal appraisals are no longer needed. Old
counseling notes can be discarded if the problems prompting the inter-
vention have not recurred. With a single exception, personal files related
to employees can be purged at any time. Once a legal action is started and
notice served upon an organization, files pertaining to the legal issue can-
not be destroyed; to do so is a violation of federal law. Restating this in a
different way, routinely discarding files is permissible as long as no legal
action is being threatened or underway. Should a discarded document be
requested at some time in the future, it cannot be produced if it does not

Attending to necessary documentation is a task that is frequently put aside
until spare time becomes available. Typically, documentation that is left
until time becomes available is not completed thoroughly if it is completed
at all. Documentation should be completed on a timely basis. Even in the
immediate presence of pressures on a manager, it is best to address docu-
mentation right away. This is the time that facts and data are freshest and
when the most accurate recording of information is made.

Many problems occur after the fact because of documentation that is
missing or incomplete. Instances of incomplete documentation are com-
mon in every organization. These include forms that are not completely
filled out, papers that are not signed, and information that is illegible or
incomplete. An ongoing and recurring problem is documents that lack
dates. Enter a date on any paper before adding any words. This simple act
can prevent many problems associated with documentation.

The importance of complete and accurate documentation cannot be ex-
aggerated or overstated. Records should be completed in a timely manner.
They must be retained in compliance with applicable rules. Electronic stor-
age formats have eased the burden of retaining large volumes of paper.
Although not the most popular task of a manager, record-keeping is an ab-
solute organizational necessity.

Returning to the initial case situation, a reasonable question is Julius
Newton’s overall use to his employer. Is he an asset to his employer when
he neglects a significant part of the job? By ignoring a component of his
job description, he is guilty of insubordination and of potentially placing

Conclusion 307

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the entire organization in legal jeopardy. Julius must be made to appreci-
ate the importance of employee documentation. While he deserves praise
for his successful one-on-one supervisory style, he must be reprimanded
for neglecting to complete and file documents. Any lawsuit has the po-
tential to harm his employer. His reprimand should be written rather than
verbal, and it should specify what he is to do and when his expected com-
pliance will be reviewed. In any event, the warning or reprimand must be
noted in writing and included in his personnel file. There is no such thing
as “only a little paperwork.”

Discussion Points

1. Describe several implications of the statement, “If it isn’t in the per-
sonnel file, it never happened or does not exist.”

2. Why have many organizations adopted the practice of permanently
retaining the personnel files of past employees? What events have led
to the creation of such a policy?

3. Why should an organization retain all documentation that is required
by law but periodically clean out and dispose of unneeded records?

4. Under what circumstances are employees permitted to add items to their
personnel files? Under what circumstances are employees permitted
to remove items?

5. What problems most frequently occur when organizations create and
retain working documents? How can these be addressed?

6. Why should a department manager make an organizational person-
nel policy and procedure manual readily available to employees?

7. How do you handle a written request for reference information con-
cerning a past employee addressed to you personally, and includes the
former employee’s written permission to release information? Why?

8. Why should a manager always remain objective, factual, and non-
judgmental in private anecdotal notes concerning employees when no
other persons are intended to see them?

9. Why should a manager’s anecdotal note files be periodically purged
of all but currently essential information?

10. How and why can some documentation be more damaging to an or-
ganization in a legal matter by being missing and unattainable rather
than readily available?


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Conclusion 309

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Chapter Overview

After reading this chapter, readers will:

• Understand the roles of human resources and department
managers in terminating employees whether discharged for cause,
dismissed for performance reasons, or laid off as a result of
reductions in force

• Be able to explain the concept of constructive discharge
• Be prepared to discuss conditions that contribute to mass

terminations or layoffs
• Know the sequence of steps to consider before deciding to

lay off personnel
• Be familiar with a means for determining who is discharged and

who remains in a layoff
• Understand related dimensions of termination, including

unemployment compensation and employee privacy
• Be able to discuss the potential effects of a reduction on the

survivors and suggest how management can address these issues

Terminations of employment are inevitable. These include positive termi-
nations such as retirements and resignations as well as negative experiences
such as firings and layoffs. Involuntary termination involves the end of
employment at the request of management. There are two types of such ter-
minations. Dismissals occur either when individuals fail to meet the stan-
dards of their job or as part of a layoff. Discharges occur when employees
are released for reasons of conduct or behavior usually involving violations
of policies or work rules. Discharges are an ongoing concern because they




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may be necessary at any time. Most dismissals, other than a relative few
related to job performance, are layoffs for reasons such as reengineering or
downsizing, mergers, other affiliations or economic forces. Layoffs are trau-
matic occurrences that sever some personnel from their employment and
adversely affect the morale and motivation of survivors. Properly handled,
layoffs require the guidance of human resources (HR) and the active partic-
ipation of supervisors at all levels of management.

Case Study: The Case of Joan von Willebrand

Joan von Willebrand was a phlebotomist at City Hospital. Her supervisor,
George Parker, worked as a member of the phlebotomy team. George
reported to Gloria Garcia, a unit manager of the laboratory.

Joan had been employed at City Hospital for five months when she was
discharged for chronic tardiness. Gloria initiated the discharge with the con-
currence of George. When the matter was turned over to HR, Gloria told
HR that Joan had been given written warnings for clocking in more than
30 minutes late on three prior occasions. Gloria also said, “There were
numerous other occurrences that had been overlooked or that had resulted
in undocumented oral warnings.”

Joan complained that the 6:30 A.M. starting time for the morning blood-
collecting rounds was too early for her. She stated that as a single mother,
she had the responsibility of looking after one child. Even though she lived
with relatives, she had difficulty getting to the hospital on time. She also
stated that when she was hired, George had led her to believe that the
blood-collecting job was temporary and that a regular opening in the lab,
starting at 8:00 A.M. would be available in two or three months.

Gloria had criticized George for being too lenient and for not following
organizational policies. He had delivered an initial oral warning as required.
However, on subsequent occasions, he repeated the oral warning and never
issued written warnings. She said that George was inconsistent in his
behavior, often not reprimanding her for behavior that did not comply
with organization policy. George started delivering written warnings after
Gloria prompted him to do so. According to hospital policy, four written
warnings for tardiness constituted grounds for discharge. George gave this
information to Joan each time she received a written warning. After receiving
the fourth written warning, Joan was fired.

Although George and Gloria both admitted to the possibility of men-
tioning a regular technician job in the future, they were both convinced
that there had been no promises. The HR recruiter supported these facts
and said that he had also mentioned to Joan the possibility of moving into
a different job should one become available but had made no promises.

Joan took her complaint to the State, claiming that her firing was unwar-
ranted and unfair. Although she had been late a few times, she said, she


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never failed to stay and make up the time and that she had always performed
her assigned duties. However, George cast some doubt on this claim. He
said that on days when Joan was late, he and another technician had to
cover extra territory to make up for the missing employee.

Joan charged that the written policy meant very little because early in
her employment she had been late several times, but on these occasions she
had not received warnings. She charged management in general, and Gloria
in particular, with using the tardiness policy as an excuse to get rid of her.

What procedural errors were made in the handling of Joan von
Willebrand’s case? How would you rule on Joan’s claim? On what basis
would you base your decision?

This chapter addresses involuntary terminations. These include discharges
for cause, such as violations of policies or work rules and dismissal for
reasons of performance. These latter terminations include layoffs and
reductions in the work force. Questions occasionally arise in relation to
supposedly voluntary terminations, such as resignations and retirements.
With these exceptions, voluntary terminations are not included.


Discharge: Termination for Cause
Discharge and dismissal are different. Discharge is commonly referred to
as being fired. Discharge usually occurs after employees break organiza-
tional rules or violate organizational policies. Dismissal typically occurs
for reasons related to performance such as failure to pass the probationary
period or failure to meet the minimum standards of a job.

Most managers dread having to fire someone, even if the employee com-
pletely deserves the termination. Dismissal is also a managerial task that
is not easy, and it rarely becomes easier. Before a termination is under-
taken, the manager must work with HR and must be in agreement with
HR concerning the details of the termination and agree that all required
information is available.

From an employer’s perspective, terminations that involve the least risk
to an organization are those for which good cause is evident. Managers
must ensure that their organization closely followed its own policies, and
that the organization can demonstrate that the discharged employee was
given every reasonable opportunity to correct the offending behavior. This
question is often pertinent.

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The supervisor or HR must ensure that organizational policies have
been followed. Adherence to the progressive disciplinary policy is critical.
It is essential to ensure that all required documentation is complete and in
place. The most critical dimension of termination for cause is ensuring
that management and HR observe all necessary policies and processes.
Despite the best efforts of department managers and HR, unexpected cir-
cumstances can surprise an organization. For example, a written passage
in an employee handbook stating that an employee who passes probation
becomes permanent has been interpreted as constituting an employment
contract. Such an interpretation has been used to protest discharge. When
such problems are encountered, they are corrected. Using this example, a
formerly permanent employee is given “regular” status.

A department manager must prepare for the possibility that a member
of a protected class may claim discrimination when being discharged. A
wrongful termination lawsuit is usually frustrating, costly, and time-con-
suming. An organization’s best protection against wrongful termination
policies are fair personnel policies that are consistently applied. Performance
appraisal systems must be fair. All documentation must be complete and
available. Above all, organizations must have clear evidence of employee

Dismissal: Inability to Meet Job Standards
An individual is not at fault in a dismissal. This is an essential difference
between dismissal and discharge. Dismissal relates to performance. Because
no rule is broken or policy is violated, dismissal for inability to meet the
standards of the job or for failure to pass the probationary period is treated
as a layoff. The distinction becomes important when dismissed employees
apply for unemployment compensation. A discharged employee is ineli-
gible for unemployment compensation. A dismissed employee is eligible
for unemployment compensation.

The majority of employees who are involuntarily separated apply for
unemployment benefits regardless of the circumstances under which they
were let go. They do so because they feel they have nothing to lose.
Discharged employees are frequently granted unemployment compensa-
tion contrary to the fact that they were discharged for cause. States have
the legal responsibility to determine when individuals should receive unem-
ployment compensation.

Constructive Discharge
Occasionally some managers will behave as though they believe that the
most effective way of getting rid of an under-producing or uncooperative
employee is simply to keep piling on work, or otherwise making life mis-
erable, until the person finally quits. Such managers reason that persons


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who voluntarily resign are not eligible for unemployment compensation.
They incorrectly conclude that they have solved a problem without cost
to their employer. To the contrary, there is a significant risk in using this
approach to getting rid of an employee.

The concept of constructive discharge becomes an issue when a former
employee registers a legal complaint alleging that the organization, as rep-
resented by one of its managers, made life so difficult and unbearable that
the individual had to resign. The alternative of remaining usually involves
experiencing physical illness or emotional damage. A resignation that is
forced by extreme or intolerable conditions or treatment may be consid-
ered a constructive discharge. A resignation tendered under such condi-
tions is not considered strictly voluntary.

Another potential constructive discharge situation occurs when an indi-
vidual who is approaching termination for cause is allowed to resign in lieu
of discharge. Well-intended managers may suggest that an individual resign
for the record in lieu of discharge. They think that it is better for individ-
uals to avoid having an involuntary termination in their personnel records.
Such behavior exposes an organization to a claim of constructive discharge.
It is far more prudent for an organization to conduct a well-documented
discharge in accordance with organizational policy.

There are several reasons that compel organizations to alter the numbers
of their employees. Growth supports increases in employee counts. Other
forces cause organizations to reduce the numbers of their employees. These
include downsizing, reengineering, mergers, acquisitions and other com-
binations. Organizations use several methods to reduce the number of
employees, including layoffs and terminations.

Healthcare organizations entered into reengineering a few years after it
peaked in manufacturing. Reengineering is the systematic redesign of a
business’s core processes, starting with desired outcomes and establishing
the most efficient possible processes to achieve those outcomes. Reengineering
is often referred to by other names including downsizing, rightsizing, reor-
ganizing, repositioning, revitalizing, and modernizing, although reengi-
neering is in fact a considerably more complex undertaking than these other
named processes. Nevertheless, to most employees, reengineering has a
single significant result: job loss. Mentioning the term alerts employees to
the likelihood of layoffs. In hospitals, 81% have reduced their employee staffs
through layoffs or attrition, and nearly half have laid off managers.1

Reductions in Force 315

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Employee morale is likely the most severe HR problem in the health-
care sector, and layoffs are the main cause of morale problems. There is
apparently no way to avoid the conclusion that reengineering is synony-
mous with eliminating jobs.

Mergers, Acquisitions, and Other Affiliations
Mergers, acquisitions, and other forms of affiliation have become common
in contemporary health care. Because these recombinations usually are
made in response to financial pressures, they usually mean the loss of jobs.

Systems often promote diversification and breadth of services. Not-for-
profit systems usually are more diversified than for-profit systems. For-
profit systems are more likely to be specialized. They are far less likely to
maintain a service that is not profitable. Not-for-profit systems are more
likely to carry unprofitable services for the sake of remaining full-service
to the communities they serve. Little evidence exists to suggest that hos-
pitals belonging to multi-organizational systems are any more efficient
than are freestanding hospitals. In some parts of the country, systems and
other alliances have been the salvation of endangered rural hospitals but
usually at the cost of job loss in the rural communities.

Mergers frequently lead to the reduction of management jobs as well
as staff positions. Consider the merger of two small-town hospitals located
not far from each other. The merger involved combining parallel depart-
ments from both institutions under a single management structure. For
example, where two clinical laboratories with two managers once existed,
they were combined into a two-location laboratory department with a
single manager. Because of this merger, twelve managers were eliminated,
and each of the managers who remained was left with a greatly enlarged
span of control.

The process of consummating a merger is usually considerably more dif-
ficult and more expensive than what was originally anticipated. Employees
of one organization usually fear absorption by the other organization and
the loss of their identity. This happens even in a merger of so-called equals;
one organization absorbs the other.

Consolidation expenses can be high. Organizations can require an
extremely long time to recover their merger expenses through lower oper-
ating costs and improved efficiency. Organizational recombinations can
be highly disruptive to staff in a number of ways as conflicting organiza-
tional cultures are forced to mix. The human side of merger or acquisition
is rarely given sufficient attention. Emotional issues that can make or break
a merger usually take a distant second place to the financial issues.

When organizations explore the possibility of merger or affiliation, little
information is likely to be available. However, once the possibility of a
merger becomes known, employees will become uneasy. Successful super-


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visors maintain a dialogue with their employees. They listen to their con-
cerns and keep them informed. They keep lines of communication open
and provide the best information that is available. Honesty is an absolute
requirement for maintaining personal credibility.


Other Considerations First
Department managers and HR staff experience considerable stress when they
are ordered to implement mass layoffs. When a layoff is impending, an organ-
ization should plan to take other steps that frequently precede a layoff. All
realistic steps that do not involve layoffs should be taken. An early step should
be eliminating the use of all temporary employees. Another early step is
imposing a hiring freeze. By stopping the influx of all but essential staff, such
an action provides time to consider internal reallocation of personnel.

Following a hiring freeze, closing open positions can reduce the total
number of employees without releasing people. If the reduction in staff is
to be extensive and likely to be permanent, executive management should
consider offering a voluntary termination incentive. Organizations might
also consider offering an early retirement incentive. Early retirement incen-
tive plans are helpful but can be risky. Specific individuals or groups cannot
be targeted. To do so is discriminatory. An additional risk is that key
employees may actually leave.

Who Goes and Who Stays?
A department manager is usually involved in determining which employees
leave and which ones stay. Personal preferences must be subordinate to estab-
lished organizational guidelines. All organizational guidelines are estab-
lished with the guidance of legal counsel. Selection for layoff is most often
accomplished by seniority, although this is not an absolute requirement unless
a contract governs selection for layoff. Seniority may not be the sole factor.
For example, assessment mechanisms may consider a combination of fac-
tors that may include performance as reflected by appraisals, attendance,
conduct as reflected by disciplinary actions, and seniority.

Many organizations have determined that seniority is the fairest and safest
means of determining who leaves and who remains. Using seniority alone,
questions remain about how it is determined. Seniority can be determined
by time in the organization, time in a specific department, time within a
particular task or job class, or time within a department.

Related to the degree of seniority is the process of bumping or dis-
placement. Bumping occurs when the job of an individual is eliminated.
Persons of greater seniority are allowed to displace or bump persons having

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lesser seniority from their positions. This process continues until the person
having the least seniority is laid off. Bumping can be simple or extremely
complex, depending on the rules that are in place.

In addition to utilizing temporary employees, healthcare organizations
actively use many part-time employees. An official approach taken to
selecting employees for layoff may include guidelines governing the order
of reduction based on work status. For example, temporary employees
are discharged first, followed by regular part-time employees. Their status
typically puts them ahead of regular full-time employees when determining
who will be released.

Whatever combination of factors is used by an organization, consistency
in how the guidelines are applied is critically important. Ideally, an organ-
ization should have a personnel policy to govern staff reductions. Such a
policy should be in place well before reductions ever become necessary.
However, in many organizations, no policy is created until the need for
reductions becomes apparent. Exhibit 16-1 contains a sample reduction-
in-force policy illustrating how one organization has addressed most of the
foregoing concerns. If employees are represented by a union, a collectively
bargained agreement between employer and union will delineate how
employees are chosen for layoff.

Once a layoff plan has been created, personnel from administration
and HR and legal counsel must assess the proposal to ensure that it is not
biased. Charges of discrimination are likely if patterns based on age, gender,
or race emerge among those slated for layoff. For example, organizations
wanting to reduce personnel costs have laid off higher paid employees. As
these people tend to be older, the resulting process can be considered dis-
criminatory. All scenarios must be examined before a layoff plan can be
considered to be workable and non-discriminatory.

The goal of an ideal layoff will be an organization that has reduced its
personnel costs but retained its best employees. Rarely is such an ideal
outcome achieved. Compromises must be accepted as a consequence of being
fair to all employees. Older employees tend to earn higher salaries, and they
are often protected by seniority. Younger employees may earn lower salaries
and possess critical skills. While these traits are desirable to an organiza-
tion, younger employees lack seniority. Layoffs should not be undertaken
without considerable deliberation.

The Timing of Layoffs
The timing of reductions is an issue for which there are no easy or unam-
biguous solutions. From the perspective of employees, timing is irrelevant
because layoffs contain no positive benefits. Consultants and HR profes-
sionals who develop reduction plans and policies disagree on whether it
is best to phase in reductions over a period of time or accomplish all lay-
offs at once. Both approaches have shortcomings.


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Layoffs 319

Exhibit 16-1 Model Policy and Procedure: Reduction in Force:

Policy and Practice


The relative security of the organization’s employees is best served
by continuous employment. However, occasions may arise when
reducing staffing levels is necessary because of changing financial or
operational circumstances. The objective of this policy is to provide
a rational basis for reducing staffing levels in the event such adjust-
ments are necessary.


Department A cost center or a set of cost centers having
common positions, tasks, functions or
duties that report to the same manager.

Organizational seniority An individual’s uninterrupted service
time as a full-time or part-time employee,
adjusted for approved leaves of absence.

Department seniority An individual’s uninterrupted service
time as a full-time or part-time employee
of the present department or unit,
adjusted for approved leaves of absence.

Incumbent employee An employee currently occupying an
approved full-time or part-time position.

Qualified employee An individual who possesses the stated
qualifications for a specific position by
virtue of education, experience, or
both, and can either presently perform
in that position or achieve standard
performance within the normal intro-
ductory period.

Determining Staff Reductions:

A. Work Force Composition

1. Establishing the size, composition, and distribution of the work
force remains a prerogative of management.

2. Before deciding that staff reductions are necessary, manage-
ment will investigate alternative processes that can avoid a
reduction or lessen its impact. Staff reductions will proceed only
after all reasonable alternatives have been either implemented
or eliminated from consideration.

3. When circumstances necessitate staff reductions, manage-
ment shall determine the numbers and kinds of positions to
be eliminated. (continues)

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Exhibit 16-1 Model Policy and Procedure: Reduction in Force:

Policy and Practice (cont.)

B. Guidelines Affecting Incumbent Employees
1. Nonexempt employees, excluding those in designated essen-

tial positions that may be designated by management, shall be
subject to layoff generally by job assignment and by depart-
ment according to staffing needs.

2. Employees working within a specific job assignment and depart-
ment will be ranked using the following criteria:
• Appropriateness of individual qualifications and experience

in meeting the hospital’s needs
• Past personal performance (average of the three most recent

performance appraisals)
• Disciplinary counseling or warnings within the past twelve months

C. Organizational Seniority
1. Each of the foregoing criteria may account for up to 25% of the

ranking decision for an employee. From time to time, depending
on circumstances and need, management may devise rating
scales to facilitate employee ranking.

2. After all employees within a department or job assignment are
placed in rank order, selection for layoff will proceed in reverse
order of the list.

3. Employees remaining in a department following a staff reduc-
tion may be subject to changes in hours and shift schedules
and work assignments as necessary.

4. Management may exercise the right to displace less senior
nonexempt employees in one department with qualified nonex-
empt employees from another department who have greater
organizational seniority, providing that this is accomplished
within similar job assignments and without significant disrup-
tion of departmental operations.

5. Management, physicians, and other exempt positions, and par-
ticular technical and professional nonexempt positions that may
be designated, are subject to position-specific reductions without
regard to seniority or other factors. The principal criterion for
determining the status of such positions will be their appropri-
ateness in meeting the needs of the organization.

6. Any employee identified for layoff will be considered for other
possibilities such as transfer or demotion to a position in an
area of need. Whenever possible, employees will be allowed
to choose from available alternatives. Employee requests for
reassignment to alternative positions shall be honored solely

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Layoffs 321

Exhibit 16-1 Model Policy and Procedure: Reduction in Force:

Policy and Practice (cont.)

at management’s discretion. Displaced employees who decline an
alternative position will be dismissed.

D. Administration of Reduction
1. Department managers will identify the positions to be elimi-

nated and will furnish administration with a list of those posi-
tions and incumbent employees.

2. Administration and HR will review potentially affected employees
proposed for possible transfer or reassignment to areas of need,
if any, and will make recommendations as appropriate.

3. Human resources will submit departmental lists of employees
recommended for layoff to the appropriate Vice President and
the President.

4. Following executive approval of layoff, HR will coordinate with
department managers to arrange for providing employees with
proper notification of termination date and information con-
cerning terminal benefits.

5. Each affected employee will be offered an exit interview intended
to cover:
• Method and timing of payment for accrued vacation time
• Status and conversion of insurance coverage
• Pension plan vesting, if appropriate
• Unemployment compensation procedures
• Reinstatement rights, if any
• Recommendations or referrals for external placement, if any

E. Other Considerations
1. Every effort should be made to eliminate the use of all temporary

employees before regular employees are considered for layoff.
2. An employee who is still in the introductory period (the first six

months of employment) does not need to be re-ranked with
others according to B.2. If such an employee’s job is eliminated
the individual is to be considered dismissed due to lack of work.

3. In the displacement of an employee as described in B.4, a full-
time employee may displace another full-time employee or a
part-time employee, but a part-time employee may only dis-
place another part-time employee with equal or lesser hours.

4. For employees about whom a recommendation for layoff
depends in part on performance or disciplinary issues, appro-
priate supporting documentation must be in the personnel files.

Attachment: Employee Ranking Scale (continues)

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When layoffs are phased in over a period of time, morale and produc-
tivity decrease as everyone waits and wonders who will be next. Teamwork
becomes a distant second to individual survival. The effect spreads across
an entire organization. If the reduction is expected to include managers,
then it will permeate all levels of an organization. As morale is lost, it tends
to be replaced with anger. Over time, organizational chaos will occur.

Even when a layoff is significant, far more people usually remain working
than were released. Prolonged layoffs take their toll on the morale and
attitudes of those who remain. Time is required for healing. The time is
proportional to the magnitude of a staff reduction. Layoffs that are pro-
longed and that inflict pain require more time for recovery. Phased-in
layoffs are easier to administer. Operating managers have more time to


Employee Ranking Scale

(a) Qualifications/Experience
Still learning the job 0
Fully trained but limited experience 2
Fully trained and experienced 4
Fully trained in multiple areas, cross-functional capability 6

(b) Past Performance
Average of 3 most recent evaluations < 3.5 (standard) 0
Average of 3 most recent evaluations 3.5 to 4.25 2
Average of 3 most recent evaluations 4.26 to 4.70 4
Average of 3 most recent evaluations > 4.70 6

(c) Disciplinary Counseling/Warnings (Recent 12 Months)
Multiple problems; suspended one or more times 0
More than 2 counseling, or no more than 2 warnings 2
1 or 2 counseling, or 1 warning 4
No counseling, no warnings 6

(d) Seniority (Organizational)
Less than 1 year 0
1 to 2 years 2
2 to 5 years 4
More than 5 years 6

NOTE: This ranking scale is applied to groups of employees who
work within the same job description and are engaged in the same
general activities. Employees in the group should be arrayed from
highest (possible 24) to lowest, with the lowest rankings receiving
first consideration for reduction.

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adjust layoff schedules. However, from an employee perspective, they pro-
duce more stress and anxiety than a single mass layoff.

Other Layoff Considerations
Most organizations employ some form of severance policy in conjunction
with layoffs that are considered permanent. These are reductions in which
employees do not have a realistic possibility of being recalled to work within
a reasonable period. Severance pay is ordinarily based on an individual’s final
salary in combination with length of service. It is usually capped at a stated
maximum number of years. A common example of severance pay determi-
nation is one or two week’s pay for every year of service. An alternative is to
provide two week’s pay per year of service to a maximum of, for example,
15 years. On average, health care organizations tend to offer less generous
severance pay than can be found in other industries such as manufacturing.

In exchange for a severance pay arrangement, and possible outplacement
assistance, an organization may ask a departing employee to sign a waiver
of the right to sue. In doing so, an employee agrees not to bring charges
related to the termination in trade for what is likely to be a more generous
severance arrangement than would otherwise be obtainable. However,
employees often successfully challenge such waivers after the fact. In reality,
they provide no guarantee that legal complications will be avoided.

When a layoff is coming, all employees should be given the reasons for
the action. The approach should be as straightforward as possible and
accompanied by as much detail as is available and should be readily under-
stood. Economic issues are the basis for most layoffs. While some employees
will choose not to believe the reasons they are given, if no explanations are
provided, employees will feel that they are being treated in an unfair manner.
Ideally, employees should be kept advised of an organization’s financial health
on a regular basis. Reminders that layoffs are possible may be useful.
Surprises should be avoided. The reality of a layoff is sufficiently shocking
when it is announced even if employees expect one.

No Easy Time
From the perspective of management and HR, nothing is easy about imple-
menting a reduction in force. However, managers and HR have a far easier
time than do the employees who are being laid off. The initial impact is
invariably stressful for both laid-off employees and those who remain.

Feelings of anger and betrayal are normal among employees who are
laid off. Terminated employees face psychological stress and economic
hardship. Personal routines are disrupted, as are relationships that may have
existed for years. For all practical purposes lives are turned inside out as
individuals are thrown into a mode that some of them may never have
experienced. Those who have experienced employment displacement do
not look forward to repeating the experience.

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For many individuals, the loss of a job is as traumatic as a death in the
family. The grieving process is proportional to the degree of loss. Employee
assistance programs and other resources may be used to help ease the tran-
sition for both laid-off staff and stressed-out survivors. The overall impact
of a reduction in force is eventually healed with the passage of time. This
occurs more rapidly if a measure of employment stability returns to an


Unemployment Compensation
An employee who is discharged for cause is technically not eligible for
unemployment compensation. One who is dismissed for reasons related
to performance or laid off for lack of work or economic reasons is con-
sidered eligible for unemployment. However, regardless of the reasons
behind any particular termination, any discharged employee is free to
apply for unemployment. It costs only the time to complete an application.
Many claims are given favorable determinations even though an organi-
zation considered them ineligible.

Consider an example. An organization following its own procedures for
progressive discipline provides counseling sessions and warnings before dis-
charging an individual for chronic tardiness. As long as policy is followed and
applied in a consistent manner, an organization has every right to release such
an employee for not meeting the expectation of being on the job when needed.
This individual is technically not eligible for unemployment. This person
applies for unemployment compensation and pleads hardship due to an
inability to get to work on time. The stated reason may involve a supposedly
regular ride that has been erratic, a constantly changing bus schedule, child
care arrangements that are in a state of flux, or some other issue why the
starting-time expectation has not been met. If the unemployment office deter-
mines that the discharged employee is eligible for benefits, the former employer
will be notified. If the employer protests the determination and the employee
chooses not to accept the employer’s decision, then a hearing is held. An admin-
istrative law judge renders a decision. Discharged employees claiming hard-
ship are frequently granted unemployment compensation benefits.

Human resources, acting on the organization’s behalf, initially responds
to every claim for unemployment compensation, making an initial deter-
mination as to which claims to contest and which to concede. Some HR
departments have taken the authoritarian stance of automatically con-
testing every unemployment claim. This practice accomplishes little more
than consuming time and energy while generating ill will. The HR assess-
ment of each unemployment claim should involve an honest judgment of

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the merits and validity of the claim. Only those claims that appear invalid
or questionable should be contested.

When a contested claim results in a hearing before an administrative law
judge, the department manager and an HR representative usually attend
the session. The former employee typically attends. The information that
they provide will be used to make the determination. An unemployment
hearing can consume several hours when travel and waiting time are
included. A conscientious HR manager will be mindful of the impact on
managers and will contest only those claims that honestly appear to be

Employee Privacy
Any termination, regardless of the reasons behind it, should be accom-
plished in private and in a place where the conversation is not visible or
audible to other employees. Terminations should be accomplished near
the end of the workday so that an individual who has just been let go can
leave the premises without being forced to give an explanation or answer
employee questions about what has happened.

Terminated employees should be allowed as much dignity as possible.
Managers must weigh considerations of trust and caution. Many organiza-
tions have policies that require dismissed employees to be accompanied when
they return to their workstations or offices. This precaution is taken to ensure
that computer files or other property is not damaged. Human resources com-
monly has the responsibility to recover keys, employee identification cards
and other organizational property. Security generally has the responsibility
to delete any electronic access codes given to former employees.

Discharged employees should be escorted out of the building. However,
not all experts agree on this suggestion. Angry former employees may
commit acts of vandalism or sabotage. In contrast, employees who were
terminated and then escorted out have sued because of the humiliation
experienced in the manner of departure. Juries are frequently sympathetic
to allegations that defamation can result from actions as well as from
words. Terminations occasionally require the presence of security per-
sonnel. A security officer’s presence should be discrete, not especially vis-
ible but readily available.

When significant numbers of employees are being released during the same
reduction, organizations often provide access to some form of outplace-
ment service. Individual outplacement services are often extended as part
of the severance arrangement made with a manager or professional employee.
These are individualized services intended to assist the person in preparing
a resume, initiating a job search and securing future employment. Group

Related Dimensions of Termination 325

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outplacement activities are often provided for rank-and-file employees.
Direct contact with organizations that are known to be recruiting may be
arranged. Any assistance toward new employment that can be provided
will lessen the feelings of betrayal or abandonment that employees experi-
ence when they are laid off.

Human Resources Follow-Up
For all terminations, HR representatives should discuss issues related to
benefits with departing employees. An important topic is continuation of
insurance coverage under the Consolidated Omnibus Budget Reconciliation
Act (COBRA). Options should be discussed and employees should be
shown how to apply for coverage. Other options should be explained.
Unemployment compensation benefits, if applicable, should be discussed.
Human resources should secure a signed release to give out reference infor-
mation. Human resources will ordinarily explain how remaining vacation
or sick time and applicable severance will be paid and whom the departing
employee should contact with questions.

Before, during, and immediately after a reduction in force, people who
have been laid off receive a great deal of attention. Those who have been
terminated receive so much attention that individuals who remain often
feel forgotten. However, employees that remain must not only keep the
organization running but also pick up the slack created by the loss of those
who were discharged. They often think of themselves as survivors rather
than as regular employees.

Survivors commonly feel overworked, if not overwhelmed. This is most
acute in the days immediately following the reduction when the shortfall
created by the absence of some staff is most pronounced. Survivors expe-
rience guilt over having avoided the reduction while so many others lost
their employment. They distrust management for terminating so many of
their coworkers and wonder about the security of their own employment,
fearing that they will be next to depart. Survivors experience an overall
decrease in morale, productivity and employee loyalty. They feel less com-
pelled to be at work on time or at all. This contributes to a general increase
in absenteeism and tardiness. In some extreme instances, they may carry
out acts of sabotage, violence or other disruptive behavior against their
former employer or employees.

Inevitably, some survivors of a reduction react by looking for new
employment. In this way, critically needed staff may be lost due to the inse-
curity of the environment. Skilled technical and professional employees
often feel more loyalty to their occupations than to an organization.


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Organizational loyalty has eroded with the reduction in force and employees
are ripe for offers of more secure employment. A job market favorable to
highly skilled professionals can cause an organization to lose staff mem-
bers that they worked so hard to recruit or protect.

The attitude among the survivors of a reduction can be particularly
grim if their organization had implemented a total quality management
or other motivational program during recent years. These programs,
launched and pursued with much promotional activity and a strong
emphasis on the value of employee participation, delivered a single mes-
sage. All employees are told that they are important, that their contribu-
tions are essential for the organization’s continued success and that they
are needed. When layoffs follow, the message is changed. The organiza-
tion says that employees have become less important. When a significant
reduction in force follows a motivational program, the cumulative effect
is more demoralizing than if employees had never heard about the orig-
inal program.

Following a significant layoff, top management must be openly sup-
portive of those who remain and must be visibly active in efforts to help
all survivors adjust to changes and return to normal operations.
Reassurance about continuing employment without additional layoffs is
helpful. However, it is only useful if true. A second round of layoffs made
after a message of employment assurance is often catastrophic to the
morale or remaining employees. Decreased morale is often followed by
decreases in productivity. This cycle is vicious and highly detrimental to
an organization.

Human resources and management at all levels can provide valuable sup-
port to the survivors of a reduction in force by stressing training and edu-
cation as people attempt to adjust to new or altered roles. Specifically, this
is an appropriate time to provide training in time management, coping
with change or managing stress. Any action that promotes a sense of busi-
ness as usual or allays fear among workers has value. The overarching
goal is to allay fear and change the focus of employees from survival and
security to service and productivity.

During the recovery period following a reduction in force, supervisors
must maintain close communications with their employees. Employees will
have questions. Many of them cannot be answered. Employees will be stressed
out, worried and demoralized. As employees, supervisors are subject to the
same negative influences as their subordinates. However, as managers, they
must keep their employees upbeat and willing to produce in spite of what is
occurring around them. This often requires great effort in the face of poten-
tial discouragement. It also requires support from organizational executives.
The outlook, morale and productivity of an entire group of people often
hinges on the attitude of a single person, a departmental supervisor.

The Survivors of Reduction 327

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Involuntary terminations include layoffs and firing. The former are usu-
ally triggered by economic considerations while the latter are due to prob-
lems meeting organizational expectations or conforming to policies. Allowing
a person to resign instead of being fired has great potential for creating
future organizational problems. Persons who are involuntarily terminated
may be eligible for unemployment compensation benefits. Human resources
provides essential services whenever an employee leaves an organization.
Survivors of any reduction in force have special needs. Ignoring these has
the potential to cause great losses in employee morale and productivity.

The case of Joan von Willebrand demonstrates the importance of fol-
lowing policies and procedures faithfully and consistently applying all
rules during an involuntary termination.

Joan should be discharged. However, unnecessary information will have
to be collected and reviewed. Extra time and unnecessary aggravation will
result from George’s off-and-on, lax application of the tardiness policy.
At present, enough information is available to document the fact that Joan
was given an opportunity to correct her offending behavior but did not do
so. All of the provisions in the organization’s progressive disciplinary policy
must be followed. George should be reprimanded for inconsistent appli-
cation of his supervisory responsibilities. Repeating, in all involuntary ter-
minations, it is essential that an organization has clear, comprehensive
policies and procedures and that these are applied consistently and in a strict,
non-discriminatory fashion.


1. Serb, C. (1998). “Is Remaking the Hospital Making Money?” Hospitals and
Health Networks, 72(14), 32–35.

Discussion Points

1. What are the differences between dismissal and discharge?
2. In your opinion, should a general layoff be implemented at one time

or over a period of weeks or months? Why?
3. What steps would you recommend that a department supervisor take

before laying off employees? Why?
4. What are the principal advantages and disadvantages to an organiza-

tion in implementing a voluntary early retirement program?
5. What is a constructive discharge? Provide an example of a construc-

tive discharge.


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6. Why should some form of seniority be used as a criterion in identifying
employees for layoff?

7. Why is it necessary to pay particular attention to the employees that
are retained following a reduction-in-force? What is the basis for con-
cern, recognizing that these survivors still have their jobs?

8. When should employees who are laid off be expected to leave? Why?
What are the advantages and disadvantages of leaving at the time that
they are notified? What are the advantages and disadvantages of being
allowed to work out a reasonable period of notice?

9. Why do mergers and other affiliations often lead to the consolidation
of positions and reduction of the work force?

10. Should a manager be able to use a reduction-in-force to rid the depart-
ment of its less effective employees? Why or why not?

11. Once all employees have been designated for layoff, what should HR
do before the layoff is implemented? Why?

12. What steps can an employer take to minimize the possibility of ter-
minations being overturned by legal action? Why?

13. Assuming that a significant number of skilled employees are desig-
nated for layoff, how can an organization assist these workers fol-
lowing dismissal? Can an organization protect selected skilled workers
in a layoff? Why or why not?

14. Why is it advisable that human resources provide individual meetings
with each employee that is terminated in a workforce reduction?

15. Should an employee who is about to be discharged for cause be allowed
to resign? Why or why not?


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Management. (8th ed.). New York: John Wiley.
Fleischer, C. H. (2004). The Complete Hiring and Firing Handbook: Every Manager’s

Guide to Working with Employees—Legally. Naperville, IL: Sourcebooks, Inc.
MacKay, I. (2005). 35 Checklists for Human Resource Management. London:

Ashgate Publishing.
Riccucci, N. (2005). Public Personnel Management: Current Concerns, Future

Challenges. New York: Longman.

Arthur, J. (1994). Effects of human resource systems on manufacturing perform-

ance and turnover. Academy of Management Journal, 37, 670–687.

Conclusion 329

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Blackman, M. C., & Funder, D. C. (2002). Effective interview practices for accu-
rately assessing counterproductive traits. International Journal of Selection and
Assessment, 10, 109–116.

Galle, W. R., & Koen, C. M. (2001). Reducing post-termination disputes: A
national survey of contract clauses used in employment contracts. Journal of
Individual Employment Rights, 9, 227–241.

Lansbury, R., & Baird, M. (2004). Broadening the horizons of HRM: Lessons for
Australia from experience of the United States. Asia Pacific Journal of Human
Resources, 42(2), 147–155.

MacDuffie, J. (1995). Human resource bundles and manufacturing performance:
Organizational logic and flexible production systems in the world auto industry.
Industrial and Labor Relations Review, 48, 197–221.

Rhoades, L., & Eisenberger, R. (2002). Perceived organizational support: A review
of the literature. Journal of Applied Psychology, 87, 698–714.

Roberts, R., & Hirsch, P. (2005). Evolution and revolution in the twenty-first cen-
tury: Rules for organizations and managing human resources. Human Resources
Management, 44(2), 171–176.

Santora, J., Clemens, R., & Sarros, J. (1997). Views from the top: Foundation
CEOs look at leadership succession. Leadership and Organisation Development
Journal, 18(2), 108–115.

Saxton, M.J., Phillips, J. S., & Blakeney, R.N. (1991). Antecedents and conse-
quences of emotional exhaustion in the airline reservations service sector. Human
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Journal of Human Resource Management, 13(1), 1–18.


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Case Study:
Balancing Needs

Chapter Overview

After reading this chapter, readers will:

• Understand the importance of following established procedures
when hiring new employees

• Know how procedures protect an organization
• Appreciate the importance of protecting individual employees

during the hiring process
• Comprehend the ethical and moral aspects of human resource

guidelines and decisions
• Understand how activities and decisions of a human resources

nature can affect all employees and managers in an organization
• Appreciate that all managers and supervisors must be familiar

with HR policies as well as the reasons why they exist

Human resources (HR) personnel make decisions daily that affect the
lives of many individuals. They typically follow established policies and
procedures of an organization. Human resources personnel infrequently
consider the ethical and moral dimensions of their decisions. The activ-
ities described in this chapter concentrate on the ethical and moral com-
ponents of a situation involving HR aspects of an organization.

Case Study: Balancing Needs

This chapter is different. The entire chapter is devoted to a case study that
explores the events related to hiring an employee. The organization is of
modest size, and it has never employed more than 25 employees.




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Appropriate procedures were not followed. Ignoring these set into motion
a long series of events. After the dust finally settled, all of the parties in the
situation agreed that a lot of time was wasted. Legal expenses were in-
curred. Organizational cohesion and morale were damaged. Experts who
have reviewed this case agree that most of these expenses could have been
avoided and much wasted time could have been saved.

The case study emphasizes moral and ethical principles. These are of-
ten overlooked or relegated to a secondary position when HR rules and
regulations are being applied. However, morality and ethics underlie most
HR regulations. The Civil Rights Act was passed to correct serious ethi-
cal inequalities in American society. Similar moral imperatives can be found
in most other pieces of legislation that have impacted HR.

Ethics are important in any situation involving management. Because
HR involves people and their means of earning a living, the importance
of ethics increases. Ethical behavior is taught to students throughout their
schooling. Reminders of the importance of conducting lives in an ethical
manner are important.

The case is related from the perspective of the organization’s chief ex-
ecutive officer. Because of this structure, an initial case study vignette has
been eliminated. Errors were made. Try to identify these as they appear.
More importantly, try to understand the different forces that allowed the
errors to occur. What could have been done to avoid making the proce-
dural errors? Could you have balanced the needs of the board, staff, and
organization? Although hindsight is very clear, could you have success-
fully resisted the pressures applied to the chief executive officer? How?

One of the primary responsibilities of a leader is the effective and efficient
use of resources to support and further the mission of an organization.
This case scenario takes place in a nonprofit organization where the pri-
mary resources consist of its employees. A board of directors is responsi-
ble for oversight and policy making for an organization. A chief executive
officer (CEO) is responsible for policy implementation and day-to-day op-
erations including all personnel matters. The staff is small in number (fewer
than 25 employees) and all work out of a central office.

At the time this case study started, the CEO had been recently promoted
into the position. The previous CEO had been removed by the board. Prior
to being promoted, the new CEO had served in the same position on an
interim basis. In both the interim and then the permanent position, the
CEO worked to rebuild board and staff relations and to rectify problems
occurring during the tenure of the previous CEO. A renewed team spirit
was reemerging with both board and staff members working together on


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objectives that supported the mission of the organization. The organiza-
tion’s membership was growing, grant support was increasing, and cohe-
sive relationships were emerging.

The growth of membership and funding provided an opportunity for
an increase in staff to support these activities. A new position of mem-
bership manager was proposed by a board member and accepted by the
full board. Once approved, the board member who suggested the new po-
sition went on to propose that a past board member be contacted to fill
this position. This past board member was from out-of-state and had
served on the board prior to the present CEO’s tenure. He was strongly
recommended for the position and the board supported the suggestion of
contacting him to fill the position.

The current CEO, being relatively new and knowing that the previous
CEO had been removed by the board after a brief tenure, felt compelled
to follow the board’s recommendation. The CEO had never worked with
the past board member, but had spoken to him over the telephone. The pro-
posed candidate was extremely enthusiastic about both the job opportu-
nity and the mission of the organization, had an impressive resume, and
had an established relationship with the organization that would reduce
training time and speed the relationship-building effort critical to the re-
sponsibilities of this position. Hiring this person for the job would avoid
the investment of both time and money involved in a full job search effort.
It would get someone in the position sooner, and it would support the
board’s recommendation.

According to organization policies and procedures, the board only
had responsibility for the hiring, evaluating, and firing of the CEO. The
CEO had sole and full responsibility for filling and maintaining all other
positions. After considering the governing policies and the board’s rec-
ommendation, the CEO felt efforts to search and recommend an un-
known for this position would result in discord among the board members
and deteriorate the relationship-building efforts he had worked so hard
over the past year to improve. He decided to trust the board member’s
opinion and recommendation, offering the position to the past board

The offer was accepted, the past board member relocated from a dis-
tant state and employment commenced. This position reported directly to
the CEO. The first six months (probationary period) went by with only
minor adjustment difficulties noted. During the second six-month period,
however, more severe job difficulties surfaced including insubordination,
lack of team participation, inability or unwillingness to perform job re-
sponsibilities, and failure to follow established policies and procedures. These
actions, or in-actions, resulted in the deterioration of the team atmosphere
in the office (the community), a growing lack of trust among employees,
and a growing threat to the CEO’s integrity.

Defining the Problem 333

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Documentation of offenses and meetings to reconcile differences were
recorded and filed. Offenses included direct violations of the CEO’s re-
quests and of organization policies, including using space that did not be-
long to the organization even after being told not to, not calling in when
reporting late or absent, not performing job duties, not respecting the chain
of command, not working as a member of the team, removing organiza-
tion property from the premises even when told not to, and reports inac-
curate and incomplete statements about the CEO and his management of
the day-to-day operations to the board member who recommended him.
Being such a small office, the other members of the team were negatively
affected by the disruptive actions of this new employee.

The CEO was soon faced with resolving a deteriorating condition that
involved several moral and ethical dilemmas. The CEO had to respond
professionally and convincingly to the board of directors who had a
distant and fictionalized view of the situation, about both the past board
member who was now an employee, and the board member who pro-
posed him, and their motivations. The board was composed of fifteen
members located in various states throughout the country. The board
met by conference call monthly and face-to-face twice a year. In be-
tween calls, the board member who proposed the position and past
board member/employee actively called board members behind the
scenes to garner support for their positions. During the board meetings,
the board member was a force with which to be reckoned. She was a
rogue board member in every sense of the word with a personal agenda
that only became clear at a later point in time. Her personality over-
powered some board members and caused dissension among the oth-
ers. She had strategically placed this past board member, who turned
out to have a personal relationship with her, internally to sabotage the
current operations of the organization and CEO. She then planned to
promote herself into the CEO position and replace the job from which
she was about to retire.

Conversely, the CEO had a responsibility to the staff to maintain the
cohesiveness of the team, and a responsibility to the organization to use
resources effectively and efficiently to further the mission and vision of
the organization. The moral issue was lying by the newly hired employee
and the board member who proposed his employment. The new employee
would lie to the CEO as well as to other staff members and then usurp the
chain of command by reporting lies to the board member who supported
him. The board member would further fictionalize these lies to personally
attack the CEO and split the board with false information.


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There were two clear conflicts of interest that required resolution. One
conflict was the interests of the organization versus the personal hidden
agenda of one board member and the new employee. The other conflict in-
volved acting in the best interest of an individual, including the CEO’s per-
sonal code of ethics. The CEO believed in treating others as he would like
to be treated and that it was his responsibility to assist employees in suc-
ceeding in their positions. He weighed these personal values against doing
what was best for the organizational team and the organization as a whole.
The CEO’s responsibility, as stated in the organization’s policies and pro-
cedures, included managing the day-to-day operations and being respon-
sible for the human resources assets of the organization. This became a
delicate balance of trying to salvage a deteriorating employee situation
while working to reestablish the entire team atmosphere of the office. As a
backdrop to these concerns, the board of directors was in disarray.

Working toward resolution involved the CEO making decisions that
involved a potential conflict of confidentiality. He had to share enough in-
formation with employees to help them understand but not violate an in-
dividual’s privacy. Restated, he had to help employees understand enough
about the situation to keep them focused on the mission of the organiza-
tion yet not become so frustrated that he risked losing the employees who
were performing well because of one that was not. This had to be bal-
anced with the documented fact of a long-term personal relationship be-
tween the new employee and the rogue board member.

Employees should respect the board and the board should be setting the
strategic direction of the organization. The CEO had to keep the employ-
ees focused on moving the organization forward during a time when the
board was pre-occupied and unable to fulfill its responsibilities. The situ-
ation involved the CEO making decisions to keep stakeholders (the board,
the staff, and himself) focused on the facts and the long-term best inter-
ests of the organization without making the issue personal. It was impor-
tant for the CEO to remain professional and not reply on a personal basis
when that is how he was being attacked. The CEO’s goal was to keep fo-
cused on the truth and not on emotions. An optimal resolution would not
be easy, but would allow the majority of the stakeholders to walk away
stronger and more knowledgeable and feeling that the issue was resolved
through an ethical recourse. Resolution, healing and lessons learned were
the end products of a very painful process.

Applying three foundational ethical themes of critique, justice and caring,
provides useful guidance when analyzing the conflicting moral and ethi-
cal principles in this case. The Ethic of Critique continually questions the

Acceptable Moral and Ethical Principles 335

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situation and the decision making process. Some questions to be addressed
included the following. How did the organization get to its present situa-
tion? How did the components combine to reach the present situation? What
is the motivator? What is the history? Who holds the official and unoffi-
cial power? These questions and others helped the CEO weigh the outcome
of choosing to fulfill his role of mentoring and growing a new employee
against a utilitarian choice that would produce the greatest good for the
greatest number.

The core of the moral atmosphere of an institution or environment is
held in its justice structure. The Ethic of Justice is the second of the three
foundational ethical themes. It raises a question about the nature of self-
governance. The organization had invested resources, time, and money
into establishing and implementing policies and procedures to guide and
grow the organization. When guidelines are ignored, a price must be paid.
The organization’s non-adherence to its own guidelines had created a dif-
ficult situation. In addition to the immediate crisis or price, some agent had
to look ahead and address problems that would occur if the situation were
not resolved, if it were repeated or if it were ignored. What steps would
successfully resolve the present problem? What sanctions were appropri-
ate for acting in violation of what has been implemented as acceptable
business behavior? Was ignoring the problem an option?

The last functional ethical theme is the Ethic of Caring. This focuses on
the demands of relationships from a standpoint of actual regard. It pos-
tulates a level of caring that honors the dignity of each person and the de-
sire to see that person actualize a fully human life. Many relationships
must be considered in this case. These included the relationship of the CEO
and the new employee, the relationship between the CEO and the other
staff members and the relationship between the CEO and organization
members. The CEO also had relationships with the organization, mem-
bers of the board and with himself.

Consideration of the CEO’s personal code of ethics was a major factor
in the choices that were made. The Principle of Equal Respect and treat-
ing others as a person would like to be treated did not provide consistent
responses when looked at from the perspective of each relationship group.
The Principle of Equal Respect conflicted with the Principle of Benefit
Maximization. The latter required trading the welfare of some for the wel-
fare of others. The CEO faced the challenge of finding an acceptable bal-
ance for these conflicting rights and interests.

In addition to the internal operating challenges, the CEO had to resolve
the problem of unethical behavior displayed by an unofficial leader of the
board. This unethical leader was using her charisma and influence to en-
hance her personal power over other board members to achieve
self-serving goals and objectives. Her actions represent four corrupting in-
fluences of power affecting a power holder and those in relationship with


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her.1 Power is the desired end and is sought at virtually any cost. Holding
power tempts an unethical leader to use an organization’s resources for self-
benefit. The basis for false feedback and an exalted sense of self-worth are
created. There is a corresponding devaluation of other’s worth and an
avoidance of close contact with them.

A board of directors is responsible for board member actions and sanc-
tions. A CEO is responsible for supporting the president of the board and
the executive committee by providing factual and timely information. As
a member of the board, a CEO is responsible for providing data to board
members so that they can make decisions that are in the best interest of
the organization.

In a managerial position, a CEO’s duty to individual employees involves
caring and helping subordinates to grow and actualize themselves.
Established policies and procedures provide guidance for performance
evaluations, disciplinary actions and, when necessary, termination. A CEO
can choose to work with a problem employee by identifying and discussing
problem areas, providing and encouraging additional training, commu-
nicating on a regular basis and recognizing progress as well as areas that
still need attention. These must be in accordance with established policies
and provide a course of action such as discipline or termination if unsuc-
cessful. These must also support the CEO’s personal code of ethics in-
cluding the Principle of Equal Respect. The true cost of such a course of
action would be prolonged continuation of unsatisfactory job perform-
ance and a destructive and disruptive force being perpetuated on the board
of directors and in the office. The benefit would be a salvaged employee
who could function as part of a team in supporting the goals of the or-
ganization and the job responsibilities of team members.

The opposite alternative would compel the CEO to support actions that
produced the greatest good for the greatest number of individuals. Still
following the established policies and procedures, the CEO could move
quickly through the documentation of deficiencies to disciplinary actions
and finally to termination without much thought about the effect on the
disruptive employee. This action conflicted with the CEO’s personal code
of ethics and might lead to even more disarray on the board of directors
by terminating one of their own without extraordinary interventions be-
ing exhausted. Such a rapid resolution might salvage some of the team at-
mosphere and allow a competent replacement to start addressing the
workload that was accumulating.

The CEO was partly responsible for this situation by not following estab-
lished policies and procedures for a new hire. If references had been solicited

Analysis: Ethical Decision Making 337

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and checked, the resulting information would have, at the very least, led to
questions. The board must also bear responsibility, initially for not sharing their
knowledge that the past director being proposed for hire was removed from
the board for not fulfilling his responsibilities and in the end, for allowing a
fellow board member to micro-manage the operations of the organization. The
need for resolution and its subsequent implementation had to be a joint effort
shared by the board of directors and the CEO.

A more immediate problem resided with the CEO in reestablishing a func-
tional team effort in the main office. The lies that were the basis of the em-
ployment of the past board member constituted a grave breach of trust. When
establishing a caring relationship, trust is paramount. In addition to trust, a
caring relationship is a reciprocal interaction that must include some meas-
ure of commitment. The responses and interactions of a recipient (problem
employee) are as critical to the process as are the actions of a giver (the CEO).
Achieving teamwork demands a concern for maintaining responsibility, ac-
countability, authenticity, and integrity in the leader-follower relationship. If
an employee has no desire to be a part of the team or a part of the improve-
ment process or a part of the caring relationships, all efforts will be fruitless.

This leads to the decision to make a response that yields the greatest good
for the greatest number of individuals. In this case, the CEO chose to ter-
minate an employee who was unable or unwilling to perform his job re-
sponsibilities as quickly as possible, in strict accordance with the organization’s
policies and procedures. Such an action caused harm to one person but ben-
efited other staff members and the organization. It allowed the organization
to minimize its losses and move on to hire a qualified employee able to per-
form the required job responsibilities. Documentation of performance reviews,
corrective action steps, and disciplinary actions protected the organization
from legal liabilities and provided the board of directors with unquestion-
able reasons to support the CEO’s actions. This decision required the board
to clearly separate the responsibilities of the CEO and those of the board of
directors. The board had to sanction and eventually remove a board mem-
ber who refused to abide by the organization’s policies and procedures and
who had stopped acting in the best interest of the organization. In follow-
ing this course of action, the CEO and the board of directors upheld their
duty to themselves, to the staff, to the organization, and to its members.

Ignoring the problem employee was never considered as an option. To
do so would have simply perpetuated a difficult situation. The ethical prin-
ciples of the CEO would have been compromised. Such an action had the
possibility of causing him to resign. The effect on the organization can
only be surmised. However, given the motives of the rogue board mem-
ber, predicting her effect on the organization becomes risky. However, sev-
eral organization experts familiar with the situation have privately thanked
the CEO for not resigning and, in their opinion, sparing the organization
extraordinary pain and the possibility of permanent damage.


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Morality moves people beyond self-interest by requiring that they take the
rights and interests of others into account when acting on behalf of oth-
ers or an organization. Self-interests and codes of conduct are relevant
considerations when making moral and ethical decisions. When self-
interest violates the rights and interests of others, any resulting actions
become selfish and wrong. The board member who proposed the new
position and the person to fill it may have had good intentions but they
were marred by deceit and self-interest. She may have honestly felt that she
was the best person for the CEO position. However, when she proceeded
to do whatever she needed to do to ensure that outcome, her good inten-
tions became irrevocably flawed. In this instance, her love and passion for
the organization became distorted by her obsession for power and control.

The CEO’s reputation for integrity and honesty increased his chances
of eventual victory. When faced with decisions that affect the rights and
interests of others, sound and ethical reasoning must be the basis for mak-
ing those decisions. The CEO was honest in communicating with the board
and all staff members and was able to support the actions taken by dis-
cussing the advantages and disadvantages of various options and making
a recommendation that was in the best interest of the organization.

The ultimate decision to terminate an employee was difficult but nec-
essary. A clear obstacle existed when trying to work with a new employee
who was unwilling or unable to accept the possibility of changing his be-
havior. An attempt was made to overcome this seemingly irreconcilable ob-
stacle and to seek a resolution involving a creative proposal. The
organization’s policies and procedures could not be compromised, but a
different job was offered with a more structured atmosphere in which the
problem employee could try to achieve success. Had this option proved suc-
cessful, benefits would have been achieved for the CEO, the individual, the
team and the organization as a whole. Unfortunately, this was not the case.
The problem employee declined the offer of an alternate position.

The CEO was not willing to sacrifice the staff team, the board team or
the organization he had worked so hard to build for what he viewed as un-
ethical practices and outcomes that were not in the best interest of the or-
ganization. More importantly, the CEO was not willing to relinquish a
position that he loved without a fight. After a reasonable effort to recover
and rehabilitate the employee who was not performing his job, the CEO
undertook actions that he considered to be both organizationally correct
and ethically just. He decided to stand strong for what he believed in, do
what he felt was right and hoped that truth would prevail. Without regard
for the eventual outcome, there would be no regrets because ethical and moral
decisions were made with a duty to self and to the organization.

Conclusion 339

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A leader, in this case the CEO, must maintain responsibility, account-
ability, authenticity and integrity to achieve and sustain a team atmos-
phere. The decision to terminate the problem employee and face the
consequences of the rogue board member was more than balanced by the
respect (and relief) of other staff members, the satisfaction of abiding by
the organization’s policies and procedures, and the strength that was even-
tually achieved by the board and CEO through reflection and the passage
of time. Learning from the outcomes of this situation, loss of an employee
and a board member, although painful, has strengthened all ethical as-
pects of the organization: critique, justice, and caring.


1. Kipnis, D. (1976). The Powerholders. Chicago: University of Chicago Press.

Discussion Points

1. What are the human resource responsibilities of a board of directors?
2. What conflicts of interest had to be resolved?
3. What was the potential conflict of confidentiality? Why was it a problem?
4. Describe the Ethic of Critique. Why was it important in this situation?
5. Describe the Ethic of Justice. Why was it important in this situation?
6. Describe the Ethic of Caring. Why was it important in this situation?
7. Describe the Principle of Equal Respect. Why was it important in this

8. Describe the Principle of Benefit Maximization. Why was it important

in this situation?
9. Was ignoring the problem an option? Why?

10. What was the first HR error to be made?
11. When did the situation become unable to be resolved? Why?


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Chapter Overview

After reading this chapter, readers will:

• Understand the goals of succession planning
• Appreciate the importance of creating a succession plan for an

organization’s CEO
• Know about the factors that have motivated healthcare

organizations to create succession plans
• Understand the process of effective succession planning
• Recognize the importance of grooming a successor to take over as

the next CEO
• Understand why many healthcare organizations have not created

succession plans

Some chief executive officers (CEOs) abruptly depart their organiza-
tions. They may leave by their own choice through retirement or res-
ignation. They may be asked to leave by their boards of directors or
other governing bodies. They may die unexpectedly or become inca-
pacitated due to an injury or disabling illness. Fortunately the major-
ity of organizational CEOs provide notice of their intention to leave,
often doing so years in advance. However, a loss of an organization’s
CEO can create an urgent, unanticipated need for succession. Sooner
or later, all organizations’ governing boards are faced with the task of
replacing their CEOs. Unfortunately, succession planning is not yet a
routine part of the long-term planning process for most organizations.
This is especially true for non-profit and smaller organizations. Having




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and implementing a succession plan can help to ease the leadership tran-
sition. Grooming a successor is a viable alternative. This chapter addresses
the problem of organizations preparing for the eventual task of replac-
ing their CEOs.

Case Study: Crash

A private jet chartered to fly from New York City to Orlando, Florida
crashed in the ocean, killing all aboard. Among the passengers were the
Memorial Hospital CEO, his three top managers, and the chair of the gov-
erning board. They were flying to Orlando to attend a national health care
conference. The manager of human resources (HR) at Memorial Hospital
was summoned to the phone to receive the devastating news. She gasped,
turned pale, looked expressionlessly at her assistant and uttered four words,
“Now who’s in charge?”

How would you handle the situation? How could this lack of continu-
ity in leadership have been avoided?

Succession planning is an important issue for any organization. For this
chapter we have chosen to concentrate on the health care industry, but the
points made are applicable to all organizations in any setting. We have
also elected to focus on succession planning for the most senior executive
position, a chief executive officer (CEO). Succession planning is useful for
other managerial positions. Organizations should create succession plans
for their CEOs before moving on to other senior managers. Succession
plans for middle managers are often more accurately described by the term
career planning. A key difference between succession and career planning
is the focus. Succession planning involves preparing a single, designated
successor. In contrast, career planning involves preparing several candidates
for a single position.

In the context of the health care industry, succession planning is a struc-
tured human resources process that sets the stage for a strong leadership
transition. It involves identifying and preparing a successor for the CEO.
The process is conducted while a CEO is in that position. Succession plan-
ning is a proactive approach to ensuring continuity of leadership at the high-
est and most critical level of administration in an organization.1

Succession planning should not be limited solely to the CEO. Succession
planning can be used in a broader sense and involve other positions and
go deeper than just reserving it for the CEO role. A more comprehensive
succession planning effort should include other key management positions
and other critical positions in an organization.


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Demographics reveal that the population of the United States is aging. This
fact is likely to result in many retirements in the near future. The health
care industry is not immune to these changing demographics. A sub-
stantial cohort of senior health care leaders is expected to retire over the
next 5 to 10 years. For continuity of leadership to be maintained, it is im-
perative to ensure that the next generation of senior leaders is adequately
prepared to assume their roles. Changes in leadership at the top of any
organization will inevitably cause great stress and uncertainty among em-
ployees and members of their governing boards. In cases where a suc-
cessor is not immediately apparent, uneasiness is intensified and may
negatively affect organizational performance. Conversely, organizations
with top-level succession plans are more likely to experience smoother lead-
ership transitions. Given the pressure of impending retirements coupled
with the potential loss of specific knowledge related to organizational ex-
perience (often referred to as institutional memories), organizations must
take appropriate steps to ensure leadership continuity by creating suc-
cession plans.

Organizations without succession plans are essentially leaving the de-
velopment of their future leaders to chance instead of systematically iden-
tifying and preparing a high-potential person to carry on and provide the
necessary leadership. Health care organizations in particular may benefit
more from effective succession planning than other types of businesses.
They are unusually complex and known to foster highly political envi-
ronments. As a result, considerable time and effort may be required for out-
side persons to understand and learn how to navigate and lead them. Many
individuals have been drawn to the healthcare field because of its tradi-
tionally stable work environment, and a smooth transition of a CEO can
help to maintain both the look and feel of stability.1


In most cases, it is a CEO’s responsibility to set succession plan devel-
opment in motion and to direct the governing body or board until the
plan is operational. A recent survey of more than 100 health care exec-
utives identified three factors that motivated or triggered their organi-
zations to pursuing succession planning. The first was either a governing
board member or the CEO having had previous succession planning ex-
perience. The second related to having a person within the organization
initiate and coordinate the effort. Third, they recognized the benefits to
their organization.2

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Many health care organizations are not fortunate enough to have a key
person such as a CEO or board chair with previous succession planning
experience. If they have had this experience, either with their current or-
ganizations or with others, they are more likely to sponsor a succession
plan. Similarly, governing board members who come from organizations
that have succession plans in place are more likely to suggest or embrace
such a plan. Furthermore, if governing board members have previously
experienced the unexpected departure of a CEO, they are likely to recog-
nize the value in having a succession plan. Gaining knowledge from first-
hand experience at replacing a CEO often comes sooner than most boards
expect. The current reality is that many hospital CEOs remain in their po-
sitions for no longer than five years. Experts recommend that succession
planning should begin four years before a CEO is expected to step down,
so most hospitals should begin succession planning within a year of hir-
ing a new CEO.

Human resources departments can and sometimes must step in and
serve as the catalyst for effective succession planning. Ultimately, the HR
department will have responsibility for managing the succession plan-
ning process. It is vital for a human resources director to earn and main-
tain the trust of the governing board and CEO. In some cases, an HR
director or manager may have to broach the subject of succession plan-
ning with the CEO and hope that it is accepted. As with most projects,
at least one person in an organization is needed to support and cham-
pion an initiative for it to become a reality. Succession planning is no
different in this respect. The idea for creating a succession plan will usu-
ally receive more attention and have a better chance for acceptance if it
is enthusiastically introduced and supported by the CEO or chair of the
governing body.

Motivating the governing board by promoting the benefits of succes-
sion planning to an organization should not be difficult. Over the long
term, succession planning will save organizations money. Executive search
fees are eliminated when succession planning is practiced. The cost is high
when an executive search firm is used to find an outside CEO. Fees for such
are 30% or more of a new CEO’s first year’s salary.2 An organization main-
tains leadership continuity when an inside person is groomed for the po-
sition and promoted.

Grooming an internal person to take over has traditionally been considered
a key element of for-profit sector succession planning.3 For-profit organi-
zations that have hired external people to replace their CEOs have found
maintaining financial stability more difficult than those for-profits that have
groomed internal persons to take over.4 More specifically, those who hire
a CEO from the outside usually require 6 to 12 months before financial per-
formance regains the level that existed prior to the replacement.


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Each organization that develops a CEO succession plan will employ an ap-
proach unique to its particular organization. Key principles for succession
planning have evolved among organizations that have gone through the
succession planning process. Five key principles have emerged. Organizations
should follow them when involved in CEO succession planning. It is im-
portant to remember that the governing board, the current CEO, the in-
coming successor, and an organization’s human resources department all
have important roles and are critical for ensuring that any succession plan
will be successful.

1. CEO succession planning should be a board-driven, collaborative
process. Furthermore, it should be one of the governing board’s two
or three most important tasks as it seeks to ensure a strong and viable
organization. Selecting a successor must be a collaborative effort that
includes the current CEO, but it is essential that the governing board
have final accountability. The governing board and CEO should com-
municate openly about the process. Any agreements or promises the
board makes must be communicated to the succeeding board leader-
ship. If promises or agreements are needed or made, the current and
succeeding board should adhere to them.5

2. CEO succession planning must be a continuous process. A CEO can
depart unexpectedly at any time. The untimely departure of the CEO
from an organization without a succession plan creates an emergency
with no short-term remedy. Up to nine months may be required to re-
cruit an outside successor. At all times, a successor should be available,
being groomed and ready to step in if needed.

3. Key leadership criteria and competencies must be identified for any po-
tential successor. Potential successors with the appropriate skill sets
and talents should be identified as early as possible in their careers. By
identifying a specific successor for the CEO role, significant develop-
ment assignments can be arranged to ensure that appropriate experi-
ences are encountered. Building feedback loops into assignments will
ensure that the successor is receiving the experiences necessary for
professional developmental growth. Feedback can involve several ap-
proaches, including 360-degree feedback, standard reviews, informal
discussions, and post-assignment debriefings. This feedback should
improve the governing board and current CEO’s understanding of the
successor’s talents, aptitudes, and interests. It also increases the like-
lihood that the transition will be successful.1

4. The goal of CEO succession planning is to bring the right leader in at
the right time. Specific goals and succession timelines should be created

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and monitored. Human resources departments play an important role
in paying attention to ensure that planning is thorough and the as-
signment process is complete. It is important for the transition to oc-
cur as planned. For example, current CEOs should not delay the
succession process in the interest of maintaining their current positions.
A clear exit strategy should be developed for the outgoing CEO. It is
important for organizations to construct and adhere to clearly written
transition contracts.6

5. Once the transition has taken place, a post-succession assessment
should be conducted to evaluate the results of the process. The hu-
man resources department should review the overall effectiveness of
the program to help understand what worked and what did not work.

When creating and implementing a succession plan, it is important to in-
clude a process that promotes diversity and multiculturalism. This helps to
ensure that all potential individuals are considered. A best successor rather
than a clone of the past is more likely to be identified using this approach.3

By following the foregoing principles, organizations are able to avoid
some common mistakes and avert failure. One avoidable mistake is think-
ing that succession planning is a single event rather than a process. In other
words, some organizations look at succession planning as a big bang the-
ory of transition planning. They select an inside person as the heir appar-
ent for a CEO. Without any work, five years later, suddenly a new CEO
comes into being. Succession planning is much more than a series of men-
toring talks or handing off responsibilities in one sweeping motion.7

Another common succession planning mistake is the failure of an or-
ganization to anticipate the concerns of key employees who may have been
overlooked or feel like they have been overlooked as potential successors.
It is best if only one specific inside successor is identified. Having multi-
ple inside successors can lead to a contest that can be destructive to po-
tential successors as well as the organization. In such situations, competing
successors no longer act as supportive team members. All are competitors
in an environment that only selects one winner at the end. It is imperative
that the selection process be conducted in a fair manner and that the ac-
tual selection of a new CEO is made by the governing body or board with
input and assistance from the outgoing CEO and the HR department.6

Ideally, the succession planning process should begin to identify a succes-
sor at an early point in the potential successor’s career to allow opportu-
nities for orchestrating significant developmental assignments. An
organization must ensure that the successor is provided with the types of
developmental opportunities that foster insights and allow needed skills


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to be acquired and honed. The reward for such an undertaking is a
new CEO who confidently and capably accepts new responsibilities.
Developmental tasks should be sufficiently diverse to expose the succes-
sor to the entire organization and its departments and operations.1 Grooming
an inside person for the CEO position helps an organization ensure that
institutional memories will be preserved. With inside successors, there is
greater likelihood for the CEO to succeed and for the organization to main-
tain its current strategic vision and competitive position.3

CEOs who have personally experienced being groomed for their cur-
rent positions continue to be major supporters of this process. Testimonials
from these individuals consistently attest to the benefit of having been
groomed, reporting that existing relationships within their organizations
had allowed them to “hit the ground running.”2

There are potential pitfalls involved in grooming an inside candidate as
an heir apparent. Inside candidates may have connections to social networks
and psychological ties within an organization that can complicate efforts
to change organizational culture if changes are needed. Some individuals
being groomed for CEO positions may not have had appropriate experi-
ences or been tested in relevant ways. Persons from specific departmental
areas within an organization may not be up to the task of leading the en-
tire business. A significant shift in the nature of the industry or market
could render the carefully groomed skills of some individuals as irrelevant.
There is always the possibility that the credibility of an outgoing CEO and
management team is so sullied that only bringing in an entire new regime
can sweep an organization clean.8

When contemplating grooming a successor to a CEO, organizations
may inventory their potential employees. This is often referred to as the
process of assessing their inside bench strength. Those conducting the as-
sessment may conclude that no suitable candidates have the necessary
knowledge, skills, and abilities. Such organizations should consider hir-
ing an outside person at least 18 months and up to 5 years in advance of
their CEO leaving. This is where succession planning can become an eco-
nomic issue because of the expense of maintaining two individuals with
high salaries over an extended period of time, one for the current CEO
and one for the replacement.


Succession planning should be considered a key goal of the governing
board of every organization. Developing a succession plan requires time
and thought but is not a daunting task. Surveys have reported that few
healthcare organizations have developed succession plans. The reason

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given for this finding is that the task is overridden by more immediate and
pressing issues. Paradoxically, if a CEO departs unexpectedly, the most
pressing issue for the governing board becomes the planning for the next
CEO.7 Another reason that governing boards give for not focusing on suc-
cession planning is their lack of experience with t