HRM - Literature 2 Flashcards
Diversity
Diversity as a concept refers to the “difference” between people. Kirton and Greene (2016) differentiate between collective diversity, mostly associated with social groups, and individual or “deeper level” diversity.
The social justice case for equality
The social justice case for equality holds that organisations have a moral and legal obligation, regardless of profit, to recognise diversity and to develop policies and procedures to ensure that people are treated fairly and equitably in all facets of the business.
The diversity management perspective
The diversity management perspective holds that organisations should recognise difference as positive organisational factor and should foster, value and utilise this difference for the benefit of the organisation.
The diversity management perspective evolves around the belief that difference should be recognized as positive. Further, it should be nurtured by cultural transformation of the organisation rather than a reliance on legal regulation.
The social justice perspective
The social justice perspective involves viewing diversity within the broader context of morality and fairness. It is largely associated with the introduction of equality legislation to counter discrimination against those social groups that are recognised as suffering from disadvantage or discrimination in the labour market.
Benefits/drawbacks of a more diverse workforce?
Having a more diverse workforce can have a positive effect on financial performance, innovation, ways of viewing problems, turnover and productivity. The perception of an organisation as welcoming diversity can also generate a more positive public image of the company, which in turn can impact its appeal to the most talented potential employees, as well as enable organisations to stay in tough with what appeals to a broad customer base.
Some challenges of having a diverse workforce include possible increases in training and development costs, the potential for increased conflict between employees, and claims of reverse discrimination.
Equality
In broad terms, equality is the state of being equal, particularly concerning status, rights or opportunities.
Discrimination
Discrimination focuses on treating a person or group differently, or unfairly, based on certain traits or characteristics, such as sexuality, gender, race, religion or disability. Research has shown that unequal treatment in the workplace often stems from discrimination in wider society and can take many forms.
Social inclusion
Social inclusion is a measure of the extent to which a person or group can participate in aspects of society to the same level as (or relative to) the average population. Key measures of social inclusion are access to work, adequate housing, education levels and access to education, healthcare and so on.
Human capital explanations of a person’s competitiveness in the labour market are based on an analysis of the combination of:
- qualifications
- skills
- competencies
- relevant work experience
Human capital factors cannot be considered without taking the social, cultural and institutional context of any labour market into account. Unfairness in the allocation of jobs and promotions occurs as a consequence of the way opportunity has been embedded in societal norms. Thus, inequality is views as socially constructed rather than based on objective criteria.
Institutional barriers
Institutional barriers to employment result from dominant structures, systems and rules that can act to limit access and opportunity for certain people in the workplace. Indeed, the accepted unwritten norm that a committed worker is one for whom temporal barriers do not exist has been shown to disadvantage women in many professions in terms of advancement and pay. It also discourages men from availing themselves of flexible work practices for fear of being overlooked for promotion, or conversly, being selected for redundancy. Other institutional barriers that have been identified are the traditional ways of being business, and making an impression on the boss by association with the “old boys” network.
Three explanations for inequality summary: Human capital factors; Socially constructed factors; Institutionally factors
! The effects of the various factors on equality vary across countries. The three explanations of inequality should not be viewed in isolation, as they are, in fact interrelated and interwoven with cultural norms and the context of any given geography. E.g., In Ireland, there is an absence of state support for childcare in comparison to most other European Countries. Childcare costs in Ireland rank among the highest in Europe, which is insignificant in contrast to many of the Scandinavian countries, which have state-supported childcare and paid leave for parents.
Human capital factors:
- formal qualifications
- acquired skills
- work experience
- formal and informal training and development, e.g., workshops, on-the-job training, coaching, mentoring.
Socially constructed factors:
- Accepted social and cultural norms, e.g., women as careers
- prejudice and attitudes, e.g., racism, ageism;
- self-perception as “inferior”, e.g., a member of a traditionally excluded minority ethnic group may have low expectations;
- Prevailing political ideology.
Institutionally factors:
- Rules and legislation, e.g., prohibiting refugees from work;
- lack of relevant support such as childcare, funded training, transport for disabled people;
- membership of professional associations with restricted entry;
- informal “customs” that facilitate progression, e.g., “old boys” network, golf club outings;
- lack of protective legislation.
Protected grounds
Protected grounds are grounds identified by national institutions as relating to areas where discrimination has or is likely to occur, such as race, sex, sexual orientation, religion, age and disability, and which are subsequently covered by equality legislation.
A comparator
A comparator is a person or group that someone making a claim of discrimination will compare themselves to, to demonstrate that they have been treated differently/unfairly, using that comparator as a standard.
Direct discrimination
Direct discrimination is discrimination that is obviously contrary to the terms of equality legislation, e.g., explicitly excluding people over 45 from applying for a job.
Indirect discrimination
Indirect discrimination occurs when a seemingly neutral provision attached to a job acts to exclude a person or group protected under equality legislation: e.g., a requirement for people to be over 1.9 tall for a job would effectively exclude more women than men.
Positive discrimination/positive actions debates
Positive discrimination is the preferential discriminatory treatment of a minority group over a majority group to try and counter disadvantages in the labour market.
Positive actions, on the other hand, are measures taken, with the aim of achieving full and effective equality for members of groups that are socially or economically disadvantaged. It differs from positive discrimination in that it does not seek to discriminate in favour of disadvantaged groups at the expense of others, but seeks to enhance the employability and labour market competitiveness of certain groups in particular national contexts.
A reward system
A reward system describes the way an organisation uses a combination of financial and non-financial elements to compensate employees for their time, effort and commitment to work. The reward system is shpaed by the organisation’s philosophy, strategy, competition, ability to pay and legal responsibilities.
The objectives of the reward system are to:
- Support the organisation by designing policies aligned with organisational strategies and goals;
- Attract and retain employees who add value to the organisation by offering an attractive reward package;
- Motivate employees to perform effectively to achieve valued organisational outcomes by applying policies in a fair and consistent way;
- Integrate with other HR policies, including career development and work-life balance
- Comply with legislation.
The reward package
The reward package is the specific financial and non-financial elements that are offed to an employee in return for labour. There is an increasing need for reward packages to both match employee expectations and suit the changing needs of the business because labour costs are a significant part of the total costs for most organisations.
Components and elements of the reward package:
Financial rewards:
1) Direct pay
-base pay; overtime; premium pay
- Performance-related pay - merit pay; piecework; bonuses; commission; team-based bonus; profit-sharing; gainsharing; share options
2) Indirect pay (benefits)
- Statutory (legally required) - Holiday pay; maternity leave; Carers leave; Parental leave
-Organisation specific - health insurance; sickness days; pensions; Employee assistance programmes; Subsidized canteen; Crèche
Nonfinancial rewards:
Job security; Career development; Recognition and awards; Work-life balance
Direct pay
The largest component of the reward package. The main element of direct pay is base pay, which is the hourly, weekly or monthly amount paid to an employee if they conform to the terms of their contract. Employees can also be offered overtime if they work more than the number of legally designated hours, and premium pay, if they work shifts at antisocial hours that cause hardship.
Performance-related pay (PRP)
Another component of direct pay, which is paid when predefined objectives are achieved and is linked to the performance of an individual, team or employee. PRP can also be consolidates into base pay to permanently increase an employee’s salary when objectives are met. PRP is variable as it is only received if the goals are achieved. Base pay recognises past achievements, education and years of service, while PRP motivates future actions.
Advantages of PRP are that it allows the reward package to be responsible for the needs of the organisation, it can focus on the behaviours valued by the organisation and can recognise high performance through pay.
A disadvantage of PRP is that it works well for routine tasks but is less effective for more complex, creative and conceptual tasks. Furthermore, PRP can be argued to work as a bribe and hence have unintended consequences that undermine organisational values and relationships.
Merit pay
Performance-related pay. It is when higher-performing employees are rewarded with additional pay. This is normally linked to a performance appraisal by a supervisor or manager. Generally, merit pay is a permanent addition to the employee’s pay and is consolidated into base pay. Merit pay is regarded as fair if the performance appraisal system is fair.
Piecework
Performance-related pay. It is when employees are given payment for each “piece” produced. Piecework schemes often guarantee a base pay to meet minimum wage legislations and then increase pay with output.
Piece-work schemes are appropriate for an organisation when:
-work is repetitive and unskilled;
- workers can influence the pace of production without risking quality standards;
- workers are easy to operate and monitor.
Commission
Performance-related pay. It refers to when employees are given payments as a percentage of their sale in addition the base wage. This is usual for sales representatives or sales staff in retail stores. The percentage may vary and increase with volume to reward those who perform above an agreed threshold. Commission works best when employees are mainly motivated by financial rewards and can work with minimal supervision.
Bonuses
Performance-related pay. These can be paid to individuals, teams or division for achieving predetermined performance targets. Usually, bonuses are a form of variable pay and must be re-earned each year. It is difficult to develop bonus schemes that are affordable, understandable and motivational.
Team-based pay
Performance-related pay. Occurs when employees in a formally established team are given payment that is linked to their performance. It is usually in the form of a bonus. Team-based pay intends to motivate members to cooperate and improve team performance. Team-based pay is suitable when the team is clearly defined, the goals are explicitly established and performance can be measured.
Profit-sharing schemes
Performance-related pay. Occurs when a proportion of the company’s profits is paid to employees in the form of a bonus payment. This occurs when profits exceed a threshold and is, therefore, a variable form of PRP. Profit-sharing can also allow employees to buy shares in the company at preferential rates instead of receiving cash.
Employee share ownership plans (ESOPs)
Performance-related pay. These allow companies to distribute shares to employees. Bu turning employees into shareholders, their behaviour will be aligned to shareholders’ interests, particularly improving business profitability. ESOPs are a long-term incentive because it takes several years for employees to gain the full benefits of their investments. ESOPs can vary due to company practices and national legislations.
Gain sharing schemes
Performance-related pay. These are when a company attempts to accrue savings by changing work practices. The schemes are “bottom-up” initiatives and hence require participation to generate ideas and determine implementation. Schemes usually involve all employees at a single location. Schemes work best under collaborative working conditions.
A few measures that are important to the business are chosen. Operational measures are preferred over financial measures, as employees have greater influence. Improvement from a baseline operational measure is a gain that is shared between employees. Each employee usually receives an equal share, regardless of position.
Indirect pay (benefits)
Performance-related pay. These are provided using a social insurance fund (funded by both employees and employers) to people in employment. For example, paying employees on maternity leave, paying disability benefits in the case of injury, paying redundancy benefits in the case of lay-offs and paying for a minimum number of holidays. Employers can increase statutory entitlements. There are differences between countries concerning statutory benefits.
Organisation-specific benefits
Performance-related pay. These vary between organisations, for example, flexible benefit plans, discounts for services like gym memberships, private health insurance and paid sick days. Employers are legally required to contribute to occupational pensions, but some contribute more than required. An employee assistance programmes (EAP) is for employees experiencing problems in their professional and personal lives and is an important benefit. Subsidised canteens and on-site crèche facilities are additional benefits.
Non-financial rewards
Non-financial rewards are various HR policies and practices designed to support employees in both their lives and careers. The “total rewards” perspective promotes reward systems that include both non-financial rewards and direct and indirect pay. Some examples of non-financial rewards are job security, career development, work-life balance and recognition policies (either formal or informal).
Pay secrecy
There is more transparency amongst colleagues regarding their financial reward packages in the public sector than in the private sector because public sector salaries and pay scales are published and available to citizens. Many private sector organisations have to pay secrecy policies to prevent workers from discussing wages and salaries. They are common in the USA despite being illegal.
The negative repercussions of pay secrecy are that it contributes to gender and ethnicity pay gabs, inhibits dealing with pay discrimination and leads to employee questioning the fairness of wage and salary decisions.
The positive repercussions of removing pay secrecy and developing pay transparency are greater innovation, higher performance and help in addressing gender and ethnicity pay gaps.
The gender pay gap
The gender pay gap is the difference in pay and reward packages between male and female employees. The gender pay gap remains despite legislation in many countries. Reasons for the gender pay gap include breaks in career or part-time work due to childbearing, favouring family life and gender differences in the ability to negotiate pay. Policies are being introduced at the national government level to address gender pay gaps.
