The Effects of HR Decisions

Wells Fargo Fake Accounts.jpg
Figure. 1

CASE 1: Wells Fargo

  1. Federal regulators reveal Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts without their customers knowing it. The bank is hit with a $185 million fine. Wells Fargo says it has found 1.4 million additional phony accounts. This brings the total number of fake accounts to 3.5 million. Before lawmakers on Capitol Hill, CEO John Stumpf is accused of running “a criminal enterprise.”
  1. Wells Fargo says 5,300 employees were fired for related reasons. Wells Fargo promises to abandon unrealistic sales goals. Wells Fargo employees blamed their bosses for effectively encouraging fake accounts. “If we didn’t hit our numbers, branch managers would make us stay after work for an hour, with no pay, to cold call customers and try to sell accounts,” Graham Gourley, who worked as a Wells Fargo banker in Charlotte until 2012, told CNNMoney.
  1. Wells Fargo is accused of illegally repossessing service members’ cars. The company agrees to pay $24 million to settle charges. The DOJ claims the bank took 413 cars without a court order, which violates federal law.
  1. Wells Fargo acknowledges it retaliated against workers who tried to blow the whistle on the fake accounts. (Wells Fargo would find ways to fire employees “in retaliation for shining light” on sales issues. It could be as simple as monitoring the employee to find a fault, like showing up a few minutes late on several occasions. “If this person was supposed to be at the branch at 8:30 a.m. and they showed up at 8:32 a.m, they would fire them,” the former human resources official told CNNMoney.)
  1. A new report from independent directors on the Wells Fargo board reveals the bank prepared an internal report in 2004 about practices that may encourage employees to create fake accounts. Former executives are asked for money back. The bank claws back $75 million from two former executives for their roles in the fake accounts scandal, including another $28 million from former CEO John Stumpf.
  1. Wells Fargo is accused of modifying mortgages without authorization from the customers. That means some customers could have ended up paying the bank more than they owed. It’s unclear how many customers were affected. The bank admits it charged at least 570,000 customers for auto insurance they did not need. Wells Fargo says an internal review found about 20,000 customers may have defaulted on their car loans for related reasons.
  1. Wells Fargo is sued for allegedly ripping off small businesses. A lawsuit accuses Wells Fargo of overcharging small businesses for credit card transactions by using a “deceptive” 63-page contract to confuse them.
  1. Wells Fargo says it wrongly fined mortgage clients. Wells Fargo admits that 110,000 mortgage holders were fined for missing a deadline — even though the delays were the company’s fault. The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announce that they are fining fine Wells Fargo $1 billion for the car insurance and mortgage abuses.
  1. Regulators say Wells Fargo sold dangerous investments it didn’t understand. Regulators order the bank to pay back $3.4 million to brokerage customers because advisers recommended products that were “highly likely to lose value over time.”
  1. Wells Fargo admits it illegally repossessed more service members’ cars. The company says it found that it had taken vehicles from another 450 service members. Wells Fargo agrees to pay an additional $5.4 million, according to the Justice Department. The company promises refunds.
  1. The city of Sacramento, California, accuses Wells Fargo of a “long-standing pattern and practice” of illegal lending in minority and low-income communities that reduced home values, limited property tax revenue and drove up foreclosures. The bank says the allegations “do not reflect how we operate in the communities we serve” and says it will “vigorously defend” its lending record. (Wattles, Geier, Egan & Wiener-Bronner. 2016 & 2018)

Case Study:

The ethics code on Wells Fargo’s site displays that they have a responsibility to always act with honesty and integrity, and in doing so they earn the trust of their customers (by behaving ethically, and rewarding open, honest communication, and by holding themselves accountable for their decisions and actions.) (A screenshot from: Wells Fargo 2017.) In this case Wells Fargo went against every principle they claimed to stand by. They violated the rights of their customers as well as the rights of their employees, and this all came from instructions from management. (A new report from independent directors on the Wells Fargo board reveals the bank prepared an internal report in 2004 about practices that may encourage employees to create fake accounts. Wattles, Geier, Egan & Wiener-Bronner. 2018). Staff were harassed and forced to stay late if they failed to make unrealistic sales targets, and even encouraged to create fake accounts in order to keep their jobs. This bank operated in a criminal manner, and above the law. Wells Fargo even acknowledged that it retaliated against workers who tried to blow the whistle on the fake accounts. According to former human resource official, Wells Fargo would find ways to fire employees “in retaliation for shining light” on sales issues. It could be as simple as monitoring the employee to find a fault, like showing up a few minutes late on several occasions. “If this person was supposed to be at the branch at 8:30 a.m. and they showed up at 8:32 a.m, they would fire them.” (Egan. 2016) This is a clear violation of HR policies, and once again the law. Staff who tried to remain ethical we bullied, and only staff willing to behave corruptly in order to keep their jobs were allowed to remain. However, once the scandal hit, then they too were fired. (5,300 employees were fired for related reasons. Egan. 2016). This is grossly unfair, and again violation of HR policies. The company had a toxic work culture using fear and intimidation to motivate employees to break the law. Surprisingly the HR department went ahead with firing whistleblower staff, even though they knew that the company could be sued. This went against the interest of the company and denotes reckless behaviour from HR who should’ve known better.

The list of charges against Wells Fargo continues, such as illegally repossessing service members’ cars, modifying mortgages without authorization from the customers – so that some customers could have ended up paying the bank more than they owed, selling dangerous investments that were highly likely to lose value over time, ripping off small businesses by overcharging their credit card transactions – using a deceptive 63-page contract to confuse them. This brings to light a total lack of accountability, and a clear lack of regulations in the industry that enabled this type of corruption to go on for as long as it did. As a bank, one would have expected them to be kept in check by audits – and their own moral compass, and when all else fails… the HR department. When staff members notified the company of the corruption, the HR department turned a blind eye, and then in actual fact turned on the ethical staff members by firing them. Thereby failing to protect staff from participating in illicit activity, as well as becoming co-conspirators.



Matt Egan. 2016. CNN: I called the Wells Fargo ethics line and was fired. Accessed on 07.04.2019

BBC. 2016 Wells Fargo boss urged to resign over accounts scandal. Accessed on 07.04.2019

Matt Egan. 2016. CNN: Wells Fargo tries to kill fake account lawsuit. Accessed on 07.04.2019

Matt Egan. 2016. CNN: ‘Wells Fargo isn’t the only one’: Other bank workers describe intense sales tactics. Accessed on 07.04.2019

Matt Egan. 2016. CNN: Wells Fargo made me work overtime — without extra pay. Accessed on 07.04.2019

Jackie Wattles, Ben Geier, Matt Egan and Danielle Wiener-Bronner. 2018. Wells Fargo’s 20-month nightmare. Accessed on 07.04.2019

A screenshot from: Wells Fargo 2017. Our Code of Ethics & Business Conduct Living Our Vision & Values. URL: Accessed on 07.04.2019

Source Photo’s:

Figure 1. Paula Dobbyn and Blake Essig. 2016. Alaska customers caught up in Wells Fargo bank scandal. Accessed on 07.04.2019




Exit Management

Employee Exits

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Having a clear process to follow during Employee Exits will ensure you protect your business and its assets, and help the Employee leave with dignity. It is also a great time to get feedback from them about their time at your place. (Jahan. 2019)

People can choose to leave their jobs for a variety of reasons, including job opportunities that can arise, even in tight economic times. Managers must not only develop skills to help an employee who leaves the company voluntarily, but they must also aid employees who have been fired for cause or are being let go for economic reasons. A badly managed ending to the employment relationship can damage a firm´s reputation in its industry or community, and limit its ability to attract scarce, talented employees that may be needed in the future. (Managing HR book 2016.)

The majority of professionals, at 40%, spend an average of three to four years in a role. The most common reason for leaving is no longer feeling challenged, which was cited by 33% of professionals, followed by problems with colleagues or the company culture, which was cited by 27% of professionals. When professionals were asked if they would tell a current employer they’re unhappy before searching for a new role, the split was roughly 50/50, with 52% saying that they would. The main reason for this was out of respect for the company, at 47%, followed by not wanting to burn any bridges, thinking there was a reasonable chance of a subsequent promotion and, lastly, being reluctant to go through the recruitment process.  However, once the search has begun, the majority of professionals, at 34%, only disclose the fact that they are looking when they have signed the new contract. On the employer’s side, the overwhelming majority encourage employees to come to them with a problem before searching for a new role, at 95%. Most also believe they can tell when an employee is about to resign, with 83% stating that there are always signs, such as lateness, increased sick days and negative attitudes towards their work or colleagues. (Walters. 2016)

Once professionals have resigned, the results show that most, 62%, do not receive a counter offer. Of the 38% who had received a counter offer, a quarter agreed to stay. The results from hiring managers again reflected those of the professionals in that most would not present a counter offer. Of the 35% who have presented a counter offer, most were declined. Employers tend to view resignations impartially, with the vast majority, at 92%, believing they present a good opportunity to add new talent to the business. (Walters. 2016)

Most professionals, at 67%, have been asked to give informal feedback, and the majority, at 63%, have also been asked to do a formal exit interview. An overwhelming majority, at 79%, felt they could give honest and constructive feedback, and most also thought the exit process was useful to both themselves and the company. When it came to the responses from hiring managers, most said that they conduct informal or formal exit processes at 89% and 74% respectively. Most also believed the departing employees are usually honest in their feedback, at 88%, and many believed it has been useful to both the departing employees and the company. While 70% of hiring managers use the feedback to make improvements to the business, almost a quarter, a significant minority, just file the feedback away with the candidate’s resignation letter. While critics may question the value of the exit interview, it is clearly evident from the statistics that the exit process can play an important role in an organisation’s overarching recruitment strategy and is vital to successful retention management in the long term. Departing employees have the freedom to speak without fear of losing their jobs, and, as the survey has found, most value the exit interview as an opportunity to give honest and constructive feedback. (Walters. 2016)

Exit Management Process

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Employee separation occur when employees cease to be members of an organisation. Separations and outplacement can be managed effectively. Managers should plan for the outflow of their human resources with thoughtful policies. Employee separations have both cost and benefits. The costs include recruitment costs, selection costs, training costs, and separation costs. The benefits are reduced labour costs, replacement of poor performers, increased innovation, and the opportunity for greater diversity. (Managing HR book 2016.)

Employees may leave either voluntarily or involuntarily. Voluntary separations include quits and retirements. Involuntary separations include discharges and layoffs. When an employee is forced to leave involuntarily, a much greater level of documentation is necessary to show that a manager’s decision to terminate the employee was fair.  When downsizing an organisation, managers may elect to use voluntary early retirements as an alternative to layoffs. Early retirement programs must be managed so that eligible employees do not perceive that they are being forced to retire. Layoffs should be used as a last resort after all other cost-cutting alternatives have been exhausted. Important considerations in developing a layoff policy include notifying employees, developing layoff criteria, communicating to laid-off employees, coordinating media relations, maintaining security, and reassuring survivors of the layoff.  No matter what policy is used to reduce the workforce, it is a good for the organisation to use outplacement services to help separate employees cope with their emotions and minimize the amount of time they are unemployed. (Managing HR book 2016.)

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Figure 2.

Exit Policy

The purpose of an employee exit policy is to have a process in place when an employee is leaving your employment (resignation, retirement, end of contract etc) When an employee resigns from their position, they should submit a written letter of resignation to their immediate supervisor based on what their notice period is. This could be stated in the employee’s letter of engagement or (if no letter exists) be linked to the National Employment Standards notice table…. During the employee’s notice period; they must continue to assume their normal responsibilities and should assist with a handover to the existing team or their replacement if in place. (Jahan. 2019)

Exit Interview

The purpose of exit interviews is to understand the employee’s perceptions and experiences and get feedback about the job the employee held, their work environment, and your place. A good exit interview system can help reduce turnover and increase employee satisfaction and commitment by addressing some of the things that people are leaving because of. (Jahan. 2019)

Exit Checklist 

It is important to have a process in place and a set of steps to follow and ensure the list is completed when each employee finishes. The checklist can include the following (but is not limited to these items below):

  1. Arrange for the employee to do a formal handover to someone within the business or at least document the procedures of their role explaining any complicated/important elements.
    Conduct an exit interview.
  2. Notify other employees that they are leaving.
  3. Collect any company property including their company laptop, Smartphone, company credit card, keys, security passes, parking pass, name badges and business identification, a uniform if the business owns it, any tools, electronic devices or other business property they have.
  4. Ask them to clean out their desk.
  5. Process all outstanding payroll, leave accrued and expenses. If they had a mobile phone account ensure this account is reconciled.
  6. Delete their computer access, have their files in network folders copied to the network, cancel their accounts. Remove them from the company intranet.
  7. Disable their building or property access.
  8. Remind them of confidentiality clauses in their letter of engagement.
  9. Ensure you have their current address and phone number is on file in case the they need to be contacted after they leave.
  10. Make sure they and their supervisor sign off on the checklist when it is done.
    In the end, it is always nice to part on good terms, and you never know the person leaving your employment may become a client or refer business to you in the future. (Jahan. 2019)

Case 1: Nokia closes plant in Germany and relocates in Romania

Without the slightest information or consultation, Nokia announced the abolition of 4,000 jobs. The German government urged Nokia to reconsider closing a plant in Germany, with many job losses and the facility’s relocation to Romania.  In particular, it must be guaranteed that companies cannot ride roughshod over European and national workers’ rights without sanctions. In any case it must be guaranteed that no layoffs or transfers can be carried out without prior thorough information and serious consultations with the workers’ representatives and their trade unions. The ETUC has welcomed the Commission’s introduction of the revision of the EWC directive. It must now come quickly to a conclusion. The EU Commission can thereby make a meaningful sign that it is not only concerned for a better business environment but that it also has the power to strengthen worker’s rights across Europe.

Having a clear process to follow during employee exits will ensure businesses and its assets are protected, and help the employee leave with dignity. In this case Nokia did not give prior warning or consult with the workers’ representatives and their trade unions. Layoffs should be used as a last resort after all other cost-cutting alternatives have been exhausted. Important considerations in developing a layoff policy include notifying employees, developing layoff criteria, communicating to laid-off employees, coordinating media relations, maintaining security, and reassuring survivors of the layoff.  No matter what policy is used to reduce the workforce, it is a good for the organisation to use outplacement services to help separate employees cope with their emotions and minimize the amount of time they are unemployed. This is where Nokia failed abysmally, since no exit policy was put in place and they acted in a callous, ruthless manner to dispose of thousands of jobs instead of assisting the workers and attempting to minimize the damage.

Case 2: Nokia cuts 3500 jobs “to ensure profitability”

Nokia informed employees of new, drastic job cuts on Thursday. A total of 3,500 jobs are to go. The plant in Cluj, Romania, which is just four years old, is to be closed by the end of this year. Nokia also estimates that some 1,300 people will be let go from the unit internationally. Nokia will also continue redundancy talks that it began last April in its sales, marketing and support services.  The company is also making 300 people redundant in Finland. Employees in Salo and Espoo were called in for a meeting on Thursday morning. The agenda of the meeting was not disclosed in advance. Nokia previously announced plans to shed 1,400 jobs in Finland by the end of next year. Savander told YLE the job cuts were intended to ensure the company remains profitable both now and in the future. ”It is impractical to manufacture products in Europe when one has fly all the components to Europe and then fly the readymade phones back to Asia,” he stated. Savander confirmed the company planned to end the assembly of phones at the Salo plant and transfer operations to Asia.

In this case Nokia had to cut 3500 jobs, which is also a clear sign that the company is no longer operating profitably and is considered a reasonable justification. Layoffs should be used as a last resort after all other cost-cutting alternatives have been exhausted. This time Nokia seemed to follow due process and held a meeting in person to notify staff of the mass retrenchments. However, no mention is made as to whether they offered outplacement support. Nokia seemed to handle the exit policy better this time, which can be noted by the mention that they will also continue redundancy talks that it began last April in its sales, marketing and support services.

Case 3: Hundreds of Nokia’s outsourced Symbian developers leaving Accenture

Hundreds of former Nokia employees at the consultancy firm Accenture are reportedly leaving the company and claiming severance packages. Accenture has offered the packages to workers who were only outsourced by Nokia last autumn. According to a shop steward’s survey, up to 400 former Nokia workers have accepted the packages.  Nokia transferred 1,200 Symbian developers to Accenture. They continued to work on the Symbian operating system while contracted to their new employer. Sallmén says that there is now so little work that some Accenture employees are left twiddling their thumbs. The severance packages have been an agreeable offer for many outsourced developers. “Workers have not exactly been pleased with their new employer, and they want to seek new challenges outside the company,” said Sallmén. Sallmén himself is to join the departees, as he says Accenture has been a disappointment. “Sure, at first it was a positive thing,” admitted Sallmén. “There were maybe more different tasks at Accenture than at Nokia. The severance packages are worth up to 15 months’ pay, according to Sallmén. The smallest payouts are a few months’ salary. Unions had criticised the outsourcing arrangement from the start. They had feared that Symbian developers—working on an operating system that was to be replaced by Windows Phone as the main smartphone platform for Nokia—would face a short career with their new employers. The company’s communications department explained by email that the lay-off programme is voluntary. It says that the packages have been offered to those former Nokia employees that have not yet found new responsibilities within Accenture.

The most common reason for leaving is no longer feeling challenged, which was cited by 33% of professionals. In this case study, it comes into effect with most of the former Nokia employees opting to take the severance package instead of remaining, where they were left with too little work. Employee separations have both cost and benefits. The costs include recruitment costs, selection costs, training costs, and separation costs. The benefits are reduced labour costs, replacement of poor performers, increased innovation, and the opportunity for greater diversity. Employees may leave either voluntarily or involuntarily. Voluntary separations include quits and retirements. In this case the separation was handled well, since the former Nokia employees who didn’t have enough work were given the option to leave voluntarily. This is a much better approach since when an employee is forced to leave involuntarily, a much greater level of documentation is necessary to show that a manager’s decision to terminate the employee was fair. Managers should plan for the outflow of their human resources with thoughtful policies, which was shown here in the generous 15 months paid salary severance package.


Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248 • ISBN-13: 9781292097244.

Robert Walters. 2016. Managing the exit process. Accessed on 20.03.2019

Shawkat Jahan. 2019. Processes for Employee Exit. Accessed on 20.03.2019

Case Study 1: Blog Anon. 2008. Nokia closes plant in Germany and relocates in Romania. Accessed on 20.03.2019

Case Study 2: Yle. 2011. Nokia cuts 3500 jobs “to ensure profitability”. Accessed on 20.03.2019

Case study 3: Yle. 2012. Hundreds of Nokia’s outsourced Symbian developers leaving Accenture. Accessed on 20.03.2019

Source Photo’s:

Figure 1. AP Images. Artur. 2019. Accessed on 20.03.2019

Figure 2. Shawkat Jahan. 2019. Processes for Employee Exit. Accessed on 20.03.2019

Figure 3. HRMSAAS. 2018. Accessed on 20.03.2019



HR Strategy and Planning

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Figure 1.

HR Strategy is a firm’s deliberate use of human resources to help it gain or maintain an edge against its competitors in the marketplace. (Managing HR book 2016.)

The major HR challenges facing managers today can be divided into three categories: environmental challenges, organisational challenges, and individual challenges. The environmental challenges are rapid change, the rise of the Internet, workforce diversity, economic globalisation, legislation, evolving work and family roles, skills shortage and the rise of the service sector, and catastrophic events as a result of natural disasters and terrorism. The organisational challenges are choosing a competitive position, decentralisation, downsizing, organisational culture, advances in technology, and the rise of outsourcing. (Managing HR book 2016.)

The individual challenges involve matching people with the organisational, treating employees ethically and engaging in socially responsible behaviour, increasing individual productivity, deciding whether to empower employees, taking steps to avoid brain drain, and dealing with issues of job insecurity. (Managing HR book 2016.)

Planning and Implementing Strategic HR Policies

Strategic HR planning provides many benefits, including the encouragement of proactive (rather than reactive) behaviour, explicit communication of company goals, stimulation of critical thinking and ongoing examination of assumptions, identifications of gaps between the company’s current situation and its future vision, the encouragement of line managers’ participation in the strategic planning process, the identification of HR constraints and opportunities, and the creation of common bonds within the organisation.

In developing an effective HR strategy, an organisation faces several challenges. These include putting in place a strategy that creates and maintains a competitive advantage for the company and reinforces the overall business strategy, avoiding excessive concentration on day-to-day problems, developing strategies suited to unique organisational features, coping with the environment in which the business operates, securing management commitment, translating the strategic plan into action, combining intended and emergent strategies, and accommodating change.

To be effective, HR strategies must fit with overall organisational strategies, the environment in which the firm is operating, unique organisational characteristics, and organisational capabilities. HR strategies should also be mutually consistent and reinforce one another.

The role of HR professionals is to act as internal consultants or experts, assisting managers to do their jobs better. Over the past three decades, the number of HR professionals has increased considerably. (Managing HR book 2016.)

Tools Available to HR departments when Developing their Strategic Plan. 

  1. Competitive salaries
  2. Enviable benefits packages
  3. Promotion opportunities
  4. Continuous staff training and development
  5. Transparent and regular communications
  6. Focus on employee wellbeing
  7. Investment in corporate social responsibility
  8. Employee autonomy
  9. Open-door policy
  10. Freedom to be creative
  11. Enhanced hiring practices (Poppulo. 2018)

In today’s competitive jobs market, attractive salaries and job perks are commonplace. Large technology multinationals arguably set the tone for often eye-watering benefits packages and other organizations were forced to keep up. However, with these types of benefits now de rigueur, employees are looking beyond how much a company can pay them, and what a company stands for has become an important part of the story. (Poppulo. 2018)

HR Strategy Framework 

This framework follows a 10-step approach towards defining strategy and delivering value.

The first phase is about defining human capital value. This happens in two steps:

  1. Understand the business strategy – this is about understanding the market forces and identifying how they impact HR strategy and priorities.
  2. Define HR strategy – in this second step, you create a roadmap about how HR aligns its strategy and how it helps to build a competitive advantage for the organization.

Second, HR products and services need to be aligned.

  1. Segment HR customers – not all HR customers are equal. In the third step, you segment your different (internal) customer groups and identify the most crucial ones. Different customer groups require different policies and approaches.
  2. Prioritize HR investments – your HR budget and other resources are limited. Prioritize the investments that benefit your key customers and that provide the best ROI. A good technique to prioritizing these investments is calculating an ROI through HR costing.

5, Design HR services – in this phase, you will go through all the HR focus areas and analyze and identify all the processes that should be streamlined or re-engineered.

Third, HR practices need to deliver value. This is the right side of the standard causal model for HRM.

  1. Ensure the right HR service delivery model – in this step, you will assess the current HR service delivery model and assess how effectively it helps to meet the organization’s goals. You should also analyze the key HR enablers such as HR systems, processes, and infrastructure. Optimizing these will help in delivering HR services that add value to the organizational strategy.
  2. Establish the right HR capabilities – another HR enabler that requires special attention are the HR capabilities. By identifying the current skills and competencies and the ones required to deliver HR strategy, a skill gap can be identified and filled.
  3. Improve HR operational excellence continuously – this step is about the optimization of what we do in HR. By assessing the efficiency of our HR processes, we can continuously improve them.
  4. Build an HR brand – establish the HR department in the wider organization and obtain information on how HR is and should be performing.
  5. Measure the impact of HR products and services – in step 8 we looked at the efficiency of HR processes. In the end, we want HR processes to be effective. Measuring the impact of our products and services on the relevant business outcomes through analytics helps to adapt and improve what we do in HR. This is done through HR analytics. (Van Vulpen. 2018)

8 Steps to Define a HR Strategy 

  1. Summarise the strategy of your organisation

Talk to your boss and other management team members. The strategy on paper is one; it becomes a lot livelier if people express their most burning business issues related to the strategy.

  1. Determine required capabilities and culture

Using the results of 1, try to capture the capabilities that need to be strengthened and the culture that is required to implement the strategy. Do not define capabilities too narrow. It can be leadership, commercial, technical or organizational capabilities.

When you have your list ready, circle back to your stakeholders and colleagues. Do they agree? Do they have additional thoughts?

  1. Make a (quick-and-dirty) gap analysis

Looking at the determined capabilities and culture, where are the biggest gaps? You can use data you have available out of your employee surveys, the assessment centers and other sources, and you can also talk to people who know your organization well (partners. suppliers). When you are finished, make a list with priorities. Which gap is most urgent to close, and where can you reach the biggest impact with, preferably, the least effort?

  1. Refresh your insight in the global and regional trends in the domain of people and organisation

What is happening outside? What are opportunities and threats? What are other companies doing? Can you try to extrapolate the trends covering the timeframe of the strategic plan?

  1. Talk to you colleagues in other staff departments

Most issues need to be tackled in a multidisciplinary approach. IT and Communications are almost always involved. Also, Legal, Finance, the Strategy team and what have you will be able to contribute. Gather their views and see where it makes sense to team up.

  1. Utilise your knowledge of HR

What are the most effective interventions to close the high priority capability- and culture gaps? As HR professional you have a broad array of HR interventions at your disposal. Recruitment. Training. Development. Compensation and Benefits. Organizational Design. Talent Management. Performance Management. And so on. It might be as simple as a matrix with the gaps on one axe and the intervention possibilities on the other axe. If you tick all the boxes in the matrix, you do not have a plan. Again, prioritize. What are the interventions where you expect the biggest impact?

  1. Make a planning and cost calculation

This is a clear step that does not need further explanation. Do not forget to clearly assign responsibilities per project. Also decide how you are going to track progress.

  1. Communicate and discuss your plan

Discuss your draft plan with your management team, your HR team, your external partners and other stakeholders. Check if you are able to tell a sound story. Make adaptations where necessary. (Haak. 2014)

Case Study

Case 1: Child refugees in Turkey making clothes for UK shops

Many clothes are now made in Turkey because it is close to Europe and used to dealing with last-minute orders. This allows retailers to get new designs into shops more quickly than if they are made elsewhere. But Turkey is a challenging place to do business. Concerns are rising about the exploitation of workers after the arrival of almost three million Syrian refugees. Syrian refugee children have been making clothes for British shoppers, an undercover BBC investigation has found. A spokesperson for Marks and Spencer said the programme’s findings were “extremely serious” and “unacceptable to M&S”. It is offering permanent legal employment to any Syrians who were employed in the factory. “Ethical trading is fundamental to M&S. All of our suppliers are contractually required to comply with our Global Sourcing Principles, which cover what we expect and require of them and their treatment of workers.

“We do not tolerate such breaches of these principles and we will do all we can to ensure that this does not happen again.” But critics say the retailers are not doing enough to stop the problems highlighted by Panorama. Danielle McMullan, from the Business & Human Rights Resource Centre, says the brands need to understand that they are responsible: “It’s not enough to say we didn’t know about this, it’s not our fault. “They have a responsibility to monitor and to understand where their clothes are being made and what conditions they are being made in.”

This case study reflects the HR Strategy of company’s deliberate use of human resources to help it gain and maintain an edge against its competitors in the marketplace. Here two out of three of the main challenges HR managers face are put in practice. In the organisational challenges economic globalisation has resulted in these companies (Marks and Spencer and Asos) outsourcing their clothes manufacturing in order to remain competitive. In handing over the contracting of the clothes manufacturing, they have failed in the individual challenges, by not ensuring that employees are treated ethically, and by not engaging in socially responsible behaviour such as allowing employees to be paid below minimum wage and exploiting child refugees.

This is where strategic HR planning could have provided many benefits, including the encouragement of proactive (rather than reactive) behaviour, explicit communication of company goals, identifications of gaps between the company’s current situation and its future vision, identification of HR constraints and opportunities, and the creation of common bonds within the organisation. If these companies had gotten actively involved in the HR planning and extended their policy to that of their contractors, this exploitation could have been prevented. They have shown a lack of accountability through this process.


Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248 • ISBN-13: 9781292097244.

Erik van Vulpen. 2018. How to Create a Human Resource Strategy. Accessed on 20.03.2019

Tom Haak. 2014. 8 simple steps to define a sound HR strategy. Accessed on 20.03.2019

Poppulo. 2018. HR strategy examples – What makes a successful HR strategy? Accessed on 20.03.2019

Case Study: BBC News. 2016. Child refugees in Turkey making clothes for UK shops. Accessed on 20.03.2019

Source Photo’s:

Figure 1. Tom Haak. 2014. 8 simple steps to define a sound HR strategy. Accessed on 20.03.2019



Employee Wellbeing and Health and Safety at Work

Figure. 1

Workplace wellbeing relates to all aspects of working life, from the quality and safety of the physical environment, to how workers feel about their work, their working environment, the climate at work and work organization. The aim of measures for workplace well-being is to complement OSH measures to make sure workers are safe, healthy, satisfied and engaged at work. (ILO. 2019)

Workers well-being is a key factor in determining an organisation’s long-term effectiveness. Many studies show a direct link between productivity levels and the general health and well-being of the workforce. (ILO. 2019) Comprehensive safety programs are well-planned efforts in which management involves employees. Employee assistance program (EAPs) are designed to help employees cope with physical, mental, or emotional problems (including stress) that are undermining their job performance. Wellness programs are preventative efforts designed to help employees identify potential health risks and deal with them before they become problems. (Managing HR book)

It is the employer’s legal responsibility to ensure that staff receive appropriate workplace health and safety training, as well as job-specific training in order to manage the health and safety in the workplace and to help prevent workplace accidents, ill health and sickness absence. All work equipment has the potential to cause problems in the workplace, so the employer needs to ensure that it remains safe to use and that they are not putting employees at risk. Work equipment should only be used by employees who have received adequate training on the correct use of the equipment and the risks that may arise from its use. (Fit for Work. 2017)

Two sets of workplace safety laws:

Workers’ compensation – an employer funded insurance system that operates at the government level. It consists of total disability, impairment, survivor, medical expense, and rehabilitation benefits. It is intended to ensure prompt and reasonable medical care to employees injured on the job, as well as income for them and their dependents or survivors. It also encourages employers to invest in workplace safety by requiring higher insurance premiums from employers with numerous workplace accidents and injuries.

The Occupational Safety and Health Act (OSHA) – a government law that mandates safety standards in the workplace. The Act compels employers to provide a safe and healthy work environment, to comply with specific occupational safety and health standards, and to keep records of occupational injuries and illnesses. Its safety standards are enforced through a system of inspection, citations, fines, and criminal penalties.

Hazards in the Workplace

  1. Violence in the workplace
  2. AIDS
  3. Cumulative trauma disorders
  4. Foetal protection
  5. Hazardous chemicals
  6. Genetic testing

Providing employees with health and safety training, as well as clear instructions, information and advice, helps to:

  1. Reduce work-related illnesses and absence;
  2. Avoid the financial costs of accidents and occupational ill health;
  3. Develop a positive health and safety culture;
  4. Ensure that your employees know how to work safely and without risks to their health. (Fit for Work. 2017)
Figure. 2

11 Key Factors for Increasing Emotional Wellbeing

  1. Where employees have a degree of autonomy over how they do their job – this does not mean that people should ignore set processes but could mean that staff have a level of discretion about how they undertake their work. Involvement in organisational decision-making can also be beneficial. Good communication and consultation are an element of this, as is having a ‘voice’ at work, whether through unions or more direct forms of involvement.
  2. Variety in the work employees undertake, which could be addressed through job design.
  3. Staff respond positively to a sense that their job has significance within the workplace, as well as the perceived value of the job to society.
  4. Being clear about what is expected of staff, including feedback on performance, which could be addressed through a combination of effective induction, clear terms and conditions and a regular appraisal process
  5. Supportive supervision, which may be addressed through ensuring that line-managers are adequately trained; and an environment in which co-workers offer support can also be positive.
  6. Staff also benefit from positive interpersonal contact with other people. This includes contact with managers and co-workers, as well as with customers or the general public (where the job requires it).
  7. Opportunities for employees to use and develop their skills, which could be through training on and off the job, and/or by increasing the variety of work they undertake.
  8. A sense of physical security is important for employees, including the safety of work practices (see Health and Safety Executive (HSE) for guidance), the adequacy of equipment and the pleasantness of the work environment.
  9. A sense of job security and clear career prospects both help increases wellbeing.
  10. Staff respond well to the perception of fairness in the workplace, both in terms of how the employee is treated but also how they see their co-workers being treated. Negative behaviour such as bullying can be damaging to wellbeing – be it from co-workers, customers or managers. Effective use of procedures for responding to bullying coupled with disciplinary and grievance procedures where needed would be one way for employers to address this.
  11. Higher pay was also registered as a strong positive motivator. However, this relationship depends not only on the absolute level of pay but how this compares with pay of other workers. (ACAS. 2019)
Figure. 3

Case Study

Case 1: Exhausted’ Merrill Lynch intern died!

In this case a 21-year-old intern died of an epileptic fit that may have been triggered by fatigue after working ‘exceptional’ hours at a top investment bank. The intern hid his epileptic illness from his employer as he was most likely afraid of being discriminated against. This case is a clear example of a toxic work culture. In many countries around the world, the maximum weekly working hours are restricted to prevent this type of exploitation. According to the coroner Mary Hassell, Mr Erhardt died after an epileptic seizure, despite regularly taking medication, which may have been brought on by fatigue. The workplace had a duty to protect their staff, including interns from this type of abuse (restricting sleep for many days even though there was no urgent project- all in the hopes of keeping a job is considered exploitation.) and in this case failed. I also feel that the UK government is also responsible for not protecting interns from this type of mistreatment, by not having the correct laws in place. Mr Erhardt also never complained, even though he obviously felt discomfort from the sleep fatigue. This is another sign of a toxic work culture. Employees should be able to voice their health concerns without fear of losing their jobs, no matter how competitive the industry. Also, the workplace seemed to be encouraging long hours in the office by providing transportation and a medical service on site. This clearly shows that the employees did not have a clear work-life balance, and instead were encouraged to dedicate their lives to their job.

Case 2: Do Corporate Wellness Programs Really Work?

In this case the author questions the return on investment of corporate wellness programs, both on employee health and the company culture. It is defined as “a program intended to improve and promote health and fitness that’s usually offered through the work place, although insurance plans can offer them directly to their enrolees.”  The results vary.

On the one hand, sterling examples like the one provided by Johnson & Johnson seem to indicate that wellness programs can be highly successful—the company estimates that it has saved $250 million on health care costs over the last decade, and even offered $500-dollar credits toward the annual premiums of employees who completed a health assessment.

However, not every wellness program outcome seems to paint such a nice picture. The research on the subject indicates that the average cost savings are negligible. “According to the American Journal of Managed Care, “no corporate weight control program has ever reported savings or even sustained weight loss using valid metrics across a sizable population for two years or more, accounting for dropouts and nonparticipants.”  That is a clear indication that most of these programs don’t work.” Since wellness is more about health than weight, the approach should be that healthy weight loss is a positive side effect, rather than the main goal. “Wellness is so much more than just the physical. Unfortunately, many wellness programs seem focused on physical health alone. Mental health challenges, like depression and stress have huge effects on the overall wellness of employees, and can hurt productivity and employee output as well, costing a business money.”

Also, wellness initiatives that are more focused on penalizing noncompliance are generally less successful overall, as employees prefer programs that work with them, rather than against them.

Another interesting observation was that quite often employees aren’t even aware of these programs. “A recent RAND Corporation study found that while 85 percent of U.S. employers with 1,000 employees or more offered some form of wellness program, only 60 percent of employees at these companies were even aware that the program existed. “

The most successful corporate wellness programs follow the following guidelines, they avoid making it about weight, they emphasize rewards for healthy eating and exercise, and they also partner with local athletic clubs/gyms, or even team up with some healthy local restaurants to encourage employees to be active and eat healthier



Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248 • ISBN-13: 9781292097244.

International Labour Organization (ILO). 2019. Workplace well-being.–en/index.htm/ Accessed on 20.02.2019

ACAS. 2019. Wellbeing and workplace performance. Accessed on 20.02.2019

Fit for Work. 2017. Health and safety in the workplace. Accessed on 20.02.2019

Case 1: Emmas Thomas. 2013. Exhausted’ Merrill Lynch intern died from epileptic fit in shower after he ‘pulled three all-nighters at bank where employees compete to work the longest hours. Accessed on 20.02.2019

Case 2: Briana Morgaine. 2018. Accessed on 20.02.2019

Source Photo’s:

Figure 1. Nurlita. 2017. Employee Wellbeing Policies to Support High-Performing Workforce. Accessed on 20.02.2019

Figure 2. Sarah Short. 2017. What is employee wellbeing? Accessed on 20.02.2019

Figure 3. Queen’s University Belfast. 2014. Accessed on 20.02.2019


Employee Engagement

Figure 1.

Employee engagement is the level of commitment, passion, and loyalty a worker has toward their work and company. The more engaged an employee is, the more work they’ll put forth. (Kappel. 2018)  This emotional commitment means that engaged employees actually care about their work and their company. They don’t work just for a paycheck, or just for the next promotion, but work on behalf of the organization’s goals. (Kruse. 2012)

A large component of maintaining satisfied and engaged employees is understanding and acting on their needs. According to the study, however 50 percent of the respondents said there’s no clear growth path in place for them, 30 percent indicated their opinions don’t count at work, and 27 percent said they feel there’s a general lack of concern and care for their wellbeing. (Jayaram. 2016)

Companies with stronger financial performances and better customer experience have employees who are considerably more engaged than their peers. Additionally, companies with 501 to 1,000 employees have the highest percentage of engaged employees, and companies with 10,000 or more employees have the lowest level of engagement. On an individual level, research shows that employees who are highly educated, high-income earners, executives, male, and have very good bosses tend to be the most highly engaged. (Temkin Group. 2016)

Figure 2.

Engaged Employees lead to:

  1. Higher service, quality, and productivity, which leads to…
  2. Higher customer satisfaction, which leads to…
  3. Increased sales (repeat business and referrals), which leads to…
  4. Higher levels of profit, which leads to…
  5. Higher shareholder returns i.e., stock price. (Kruse. 2012.)

Benefits of Engaged Employee

  1. Improved productivity. Companies often assume that if they pay employees enough, they’ll be more productive. But there’s more to it than that. Recent research suggests it isn’t money that drives productivity but happiness. In fact, happiness can boost productivity by as much as 12 percent. And engaged employees tend to fall into that camp.
  2. Lower turnover. There’s no denying that the grass will always be greener at another employer, as most of us have inflated expectations of the unknown. But engaged workers are 87 percent less likely to leave a company when compared to disengaged staff. If you want to minimize turnover, which will cost you an average of $15,000 per person, take another look at your engagement strategies.
  3. Fewer absences. People get sick — that’s just a fact of life. And yes, there will always be those staffers who suffer from mysterious “ailments” only between the hours of nine and five, but not engaged employees. They only take an average 3.9 sick days per year, while disengaged workers rack up nearly 11 missed days.
  4. Better reputation. One of the inevitable realities is that people talk — and technology has made it that much easier for people to talk to more than just their network. They can quite literally talk to everyone. What your employees say about your company will have a direct impact on your reputation. If they’re engaged and like where they’re working, it only stands to reason that they’ll only have good things to say.
  5. Greater customer satisfaction. It goes without saying that engaged employees are much more satisfied with their jobs. But did you know the correlation between engagement and satisfaction branches out into other business areas? Namely when it comes to customer service. Companies that excel in this area have nearly twice as many engaged workers.
  6. More money. Businesses with more engaged workers tend to see more profits. According to a study by Towers Perrin, companies with engaged staffers saw a 19-percent increase in operating income within just one year, while those with disengaged workers experienced a 33 percent decrease. If you want a profitable business, engage your workers. (Lane. 2018)
Figure 3.

5 Ways To Encourage Employee Engagement

  1. Don’t Skip Onboarding and Training – Employees who can master their workload have a better chance at taking pride in what they do. With a successful onboarding and training program, employees will learn how to effectively do their job.
  2. Set Company Goals – To run a successful business, you need a business plan with a list of goals you want to accomplish. To engage employees, you need to involve them in reaching business goals.
  3. Acknowledge Employees – Your employee engagement management should emphasize acknowledging employees for their hard work.
  4. Focus On Employee Development – Employees want to develop their skills and continue challenging themselves. (They don’t want to do monotonous tasks that require minimal effort.) Engaged employees constantly use their mind and enhance their skills. You can focus on employee development in a few different ways. You might add new duties to the employee’s position to prevent boredom, allow room for growth in the position, or offer a job rotation program so employees do different tasks every so often. Another way you can emphasize employee development is by offering educational assistance. This is a great perk that lets employees further their education. It shows employees that you value their career growth, and it also allows you to add new skills to your business.
  5. Don’t Micromanage – Employees can’t be engaged if they don’t have freedom in how to do their jobs. Let each employee make decisions about how to accomplish their work. This leads to higher levels of engagement. (Kappel. 2018)

The Future of Engagement

As economies rebound from the global financial crisis, millions of employees are now thinking about their next career move. Improving job markets mean more scope for talented employees to choose where they work. To succeed, businesses must rethink how they engage and enable their people and earn the loyalty of their employees. This is a critical time to reshape employee engagement strategy and develop an innovative new talent management approach that responds to the changes happening around. (HAY Group)

Figure 4.


Megatrends are lasting, deep-seated developments with far-reaching effects on societies, economies and organizations. The megatrends are fundamentally changing how we work, what we care about in the workplace and what we need from our employers. (HAY Group)

6 powerful ‘megatrends’ that are transforming societies and the global business environment as we know it:

  1. Globalization 2.0

Economic power is shifting from West to East, giving rise to a new global middle class. Under globalization 2.0 the talent market has gone global, with established corporations now having to battle with new competitors for valuable skills. This will force organizations to think creatively about how to attract, engage and retain talent across the world. Engagement strategies and plans must have the flexibility for local teams to adapt them to local cultures, priorities and talent markets.

  1. The Environmental Crisis

The environment is becoming more and more important to people, as climate change gathers pace and natural resources grow scarce. Businesses must respond to the demand for sustainability to maintain their workforces’ engagement and commitment. Failure to do so will put them at a disadvantage.

  1. Demographic Change

Aging populations are reshaping the global workforce and exacerbating the war for talent. For businesses, an ageing population means a growing skills shortage. With the baby-boom generation hitting retirement age, experienced talent will be at a premium. This will put pressure on younger workers to quickly become mature and skilled leaders. The skills shortage will make attracting and retaining talent more critical than ever. Organizations will need to foster a culture and conditions that motivates and enables staff of all ages and cultures to perform. Younger employees (Gen Y’ers and Millennials) focus on the future. They want opportunities to progress, to build and test their skills in as many areas as possible and regular and constructive feedback on performance.

  1. Individualism

Growing freedom of choice is eroding loyalty and transforming workplace motivation. Globalization 2.0 will boost the wealth of consumers in emerging markets, and consequently their freedom to choose. This will transform our motives as consumers and employees. Money will no longer be the main influence on life and career decisions. Other priorities will come into play, such as fulfilment, meaning, self-development, recognition and work-life balance. A single message to the workforce will no longer cut it. People will demand to be treated as individuals. Engagement will need to be more personal, tapping into each employee’s needs, drivers, outlook and expectations. Job descriptions, appraisals, development plans, career paths and reward systems will need to be more tailored.

  1. Digitization

Work and the workplace are going remote, and the boundaries between professional and personal life are blurring, as people are increasingly operating online. Digital technology is reversing the balance of power between employers and employees. Sustaining engagement through a culture of trust and ethical standards is essential. It will help discourage employees from exposing sensitive information, and from moving to competitor firms. Digital technology can boost productivity and engagement. It enables organizations to understand far more about employees’ attitudes, needs and preferences, and to tailor their practices to boost engagement. Rapid changes in technology can also quickly leave people’s skills out of date. Continuous learning will be essential to sustain engagement and productivity.

  1. Technological Convergence

Powerful shifts in technology are transforming everyday life and creating new product markets. Life is about to get considerably more advanced. A combination of NBIC (nano, bio, information and cognitive) sciences will lead to a wave of technological breakthroughs. This will transform many areas of our everyday lives, giving rise to new product markets and leaving others behind. Employees can be nervous about change and feel insecure or demotivated when the goalposts are continuously moving. Their need for information outstrips what management can provide, damaging confidence in the leadership and direction of the firm. And as convergence gathers pace, it will be harder than ever to stay ahead of the innovation curve and to make long term investment decisions. Communicating ‘what’s next’ will become increasingly difficult. Companies will need to establish the right climate, processes and platforms for collaboration to succeed, and equip people with the right skills and attributes. (HAY Group)



Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248 • ISBN-13: 9781292097244.

Kevin Kruse. 2012. What Is Employee Engagement. Accessed on 20.02.2019

Mike Kappel. 2018. How To Establish A Culture Of Employee Engagement. Accessed on 20.02.2019

HAY Group. New Rules of Engagement. Accessed on 20.02.2019

Savita V Jayaram. 2016. Employee Engagement Tactics to Empower and Motivate Talented Workforce. Accessed on 20.02.2019

Temkin Group. 2016. Employee Engagement Benchmark Study. Accessed on 20.02.2019

Source Photo’s:

Figure 1. Stacey Lane. 2018. What Is Employee Engagement? And Why It Matters to Business. Accessed on 20.02.2019

Figure 2. Savita V Jayaram. 2016. Employee Engagement Tactics to Empower and Motivate Talented Workforce. Accessed on 20.02.2019

Figure 3. Sarah K. White. 2016. 5 hard truths about employee engagement. Accessed on 20.02.2019

Figure 4. ETS. 2019. Beyond employee engagement: Time to focus on the employee experience. Accessed on 20.02.2019



Total Rewards

Total Rewards

Most managers use a reward-punishment system, providing incentives for success and reprimanding failure. This method relies on external stimuli. The problem? External incentives like salary or punishment aren’t the only sources of motivation—or even the most effective ones. According to a Gallup poll, only 30% of people making less than $36,000 are emotionally engaged at work. It sounds logical that low pay equals low engagement, but employee engagement actually drops to 28% for those making between $36,000 and $90,000. Even the highest paid workers—earning $90,000 or more—only report 30% engagement. (Gendelman. 2016)

Figure 1.


Total compensation is the package of quantifiable rewards an employee receives for their labours. An effective compensation plan enables the company to achieve its strategic objectives and is suited to the firm’s unique characteristics as well as to its environment.  In all situations, the best choices depend on how well they ‘fit with business objectives and the individual organisation. (Managing HR. 2016)

The pay options managers need to consider in designing a compensation system are:

  • Internal vs external equity
  • Fixed versus variable pay
  • Performance versus membership
  • Job vs individual pay
  • Egalitarianism vs elitism
  • Below-market vs above market-compensation
  • Monetary vs nonmonetary rewards
  • Open vs secret pay
  • Centralisation vs decentralisation of pay decisions (Managing HR. 2016)

Three components:

  • The base compensation: The fixed pay received on a regular basis
  • The pay incentives: Programs designed to reward good performance
  • Benefits or indirect compensation: Includes health insurance, vacations and perquisites.

Compensation Tools

Two types of Compensation Tools:  (Managing HR. 2016)

  • Job-based approaches:

  1. To achieve internal equity, company’s use job evaluation to assess the relative value of jobs throughout the firm.
  2. To achieve external equity, they use salary data on benchmark or key jobs obtained from market surveys to set a pay policy.
  3. To achieve individual equity, they use a combination of experience, seniority, and performance to establish an individual’s position within the pay range for their job.
  • Skill-based compensation:

Skill-based compensation is costlier, and more limited in use. Skill-based pay rewards employees for:

  1. Acquiring depth skills – Learning more about a specialised area.
  2. horizontal or breadth skills – Learning about more areas.
  3. Vertical skills – Self management.


Employees are a company’s most asset but motivating them to perform their best can be challenging. Pay-for-performance is a method in which employees are rewarded for completing their various tasks within a certain amount of time and quality level. The key point with employee incentives is to align the incentive for the employee with the goals of the company and be careful of unintended consequences.  If you incentivize solely for productivity, a consequence may be that the quality suffers, or bottlenecks develop in production. If designed properly, performance-based incentives can dramatically transform an organization’s productivity.  (Easy Metrics. 2019)

So, pay-for-performance incentive programs can improve productivity, but managers need to consider several challenges in their design and implementation. Employees may be tempted to do only what they get paid for, ignoring those intangible aspects of the job that are not explicitly rewarded. Cooperation and teamwork may be damaged if individual merit pay is too strongly emphasized. Individual merit systems assume that the employee is in control of the primary factors affecting his or her work output, an assumption that may not be true. Individual performance is difficult to measure and tying pay to inaccurate performance measures is likely to create problems. Pay incentive systems can be perceived as an employee right and can be difficult to adapt to the organisation’s changing needs. Many employees don’t believe that good performance is rewarded (the credibility gap). Emphasizing merit pay can place employees under a great deal of stress and lead to job dissatisfaction. Merit pay can also decrease employees’ intrinsic motivation. Employee participation in the design of the plan can enhance its credibility and long-term success. (Managing HR. 2016)

Short-term annual bonuses, long-term incentives, and perks may be used to motivate executives to make decisions that help the firm meet its long-term strategic goals. (Managing HR. 2016)

Small firms face special challenges when designing pay-for-performance systems because they are less likely to have the necessary professional support to develop and administer these plans. Real or perceived mistakes in allocating incentives can have a large impact on these firms. (Managing HR. 2016)

In order to avoid problems: (Managing HR. 2016)

  • Managers should link pay and performance appropriately
  • Use pay for performance as part of a broader HRM system
  • Build employee trust
  • Promote the belief that performance makes a difference
  • Use multiple layers of rewards
  • Increase employee involvement
  • Consider using non-financial incentives

Four Types of Incentive Programs: 

At the level of individual employees – merit pay (which becomes part of base salary) and bonuses and awards (given on a one-time basis) determined via supervisory appraisals.

Team-based plans – Team-based plans reward the performance of groups of employees who work together on joint projects, or tasks, usually with bonuses and noncash awards.

At the level of the plant or business unit – gainsharing is the program of choice. Gainsharing rewards workers based on cost savings, usually in the form of a lump-sum bonus.

At the fourth and highest level of the organisation – the entire corporation – profit sharing and employee stock option plans (ESOPs) are used to link the firm’s performance with employees’ financial rewards. Both plans are commonly used to fund retirement programs. (Managing HR. 2016)

A successful incentive program meets the following criteria: (Easy Metrics. 2019)

  1. Employee Engagement
  2. Accurate and fair performance targets

Types of Motivation (Gendelman. 2016)

Figure 2.

Intrinsic motivation encompasses employees’ attitudes toward their work. If you’ve ever loved a job so much you’d do it for free, you were intrinsically motivated.

Extrinsic motivation is the tactic most managers use, where employees work to achieve positive results or avoid negative ones. Working on a weekend to earn overtime pay is positive extrinsic motivation; trying not to get demoted for a mistake is negative extrinsic motivation.

Personal motivation reveals how employees value time and people outside the office. One person may stay late on a Friday to avoid working on Saturday. Another may work extra hours to earn time off for a family event. Personal motivation varies between individuals.

Peer motivation uses social influence to encourage or discourage behavior. Competing with a coworker for a promotion is a type of peer motivation.

Ways to Motivate Employees (Ilya Pozin. 2015, Gendelman. 2016 & Root. 2016)

  1. Set Smaller Weekly Goals
  2. Give Your Employees Purpose
  3. Radiate Positivity
  4. Motivate Individuals Rather Than the Team
  5. Learn What Makes Each Employee Tick
  6. Reward Based on Feedback
  7. Prioritize Work-Life Balance
  8. Have an Open-Door Policy when it comes to suggestions and ideas
  9. Let Them Lead/ Allow them to take ownership
  10. Create Recognition Rituals
  11. Trust them with challenges
  12. Give good feedback
  13. Help them learn new skills
  14. Play to their interests
  15. Give them job security
  16. Let them have their space
  17. Stock Options
  18. Pay Bonuses
  19. Time Off
  20. Education Investment



Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248 • ISBN-13: 9781292097244.

Dan Pink. 2009. The Puzzle of Motivation. Accessed on 20.02.2019

Easy Metrics. 2019. Pay for Performance. Accessed on 20.02.2019

George N. Root. 2016. Incentive Pay for Job Performance. Accessed on 20.02.2019

Ilya Pozin. 2015. Highly Effective Ways to Motivate Employees. Accessed on 20.02.2019


Vladimir Gendelman. 2016. 33 Easy Ways to Motivate Your Creative Employees. 2018. Career Development. Accessed on 28.01.2019

Source Photo’s

Figure 1. Vladimir Gendelman. 2016. 33 Easy Ways to Motivate Your Creative Employees. 2018. Career Development. Accessed on 28.01.2019

Figure 2. Vladimir Gendelman. 2016. 33 Easy Ways to Motivate Your Creative Employees. 2018. Career Development. Accessed on 28.01.2019




Legal Compliance

Legal compliance and discipline and grievance

From employee wages to privacy regulations, businesses face a dizzying number of potential legal issues these days. And while it may never be a company’s intention to break the law, without taking necessary precautions, things can easily slip through the cracks. (Forbes Legal Council. 2016)

Organisations need to take a proactive approach to compliance. Human resources should be brought to the forefront of the strategy rather than left separate from compliance issues within the company. They are the only part of the business which can lead the compliance agenda from the most important perspective: its people. (Safety Solutions. 2017)

Employee Rights

In the employment relationship, both employees and employers have rights. Employees rights fall into three categories: statutory rights (protection from discrimination, safe work conditions, the right to form unions), contractual rights (as provided by employment contracts, union contracts, and employment policies), and other rights (the rights to ethical treatment, privacy, and free speech. (Managing HR book. 2016)

Management Rights

Employees have the right to run their business and make a profit. These rights are supported by property laws, common law, and the values of a society that accepts the concepts of private enterprise and the profit motive. Management rights include the right to manage the workforce and to hire, promote, assign, discipline, and discharge employees. (Managing HR book. 2016)

Disciplining Employees

Managers rely on discipline procedures to communicate to employees the need to change a behaviour. There are two approaches to discipline. The progressive discipline procedure relies on increasing levels of punishment leading to discharge. The positive discipline procedure uses counselling sessions between supervisor and subordinate to encourage the employee to monitor his or her own behaviour. Both procedures are designed to deal with forms of misconduct that are correctable. (Managing HR book. 2016)

Administering and Managing Discipline

To avoid conflict and lawsuits, managers must administer discipline properly. This entails ensuring that disciplined employees receive due process. Managers need to be aware of the standards used to determine whether an employee was treated fairly and whether the employee has a right to appeal a disciplinary action. For a disciplinary system to be effective, an appeal mechanism must be in place. (Managing HR book. 2016)

Preventing the Need for Discipline with HR management

A company can avoid discipline by recruiting and selecting the right employees for current positions as well as future opportunities, by training and developing workers, by designing jobs and career paths that best utilize people’s talents, by designing effective performance appraisal systems, and by compensating employees for their contributions. (Managing HR book. 2016)

Labour Relations and the Legal Environment

Employees usually seek representation from a union because they are dissatisfied with certain aspects of their job, and lack influence with management to make the needed changes, they believe that their pay and benefits are non-competitive, and see the union as a solution to their problems. Managers strongly affect how employees perceive the work, environment and thus whether they will be susceptible to unionisation. Managers must possess enough knowledge of basic labour laws to avoid creating legal liability for the company, implement the terms of labour agreements fairly and impartially, and hear and resolve employee grievances. (Managing HR book. 2016)

Three phases of the labour relations process

  1. Union organising
  2. Collective bargaining
  3. Contract administration.

The impact of a union on the way a company manages its human resources is significant. Management can expect that the union will affect almost every major area of HRM. In a unionised workplace, staffing decisions will be heavily influenced by seniority rather than by merit. Individually focused performance appraisals are severely curtailed, while training programs are emphasized. Unionised employees tend to receive larger compensation and benefit packages. Finally, employee relations in a union shop are highly structured. (Managing HR book. 2016)

Importance of Legal Environment

Understanding and complying with human resource law is important because morally, it is the right thing to do, and because it helps you realise the limitations of your firm’s HR and legal departments, and it helps you minimize your firm’s potential liability.

HR law is challenging for four reasons. Law, regulations, and court decisions are all part of a dynamic legal landscape. The laws and regulations are complex. The strategies for fair employment required by the laws and regulations sometime compete with, rather than reinforce, one another. And laws often have unanticipated or unintended consequences. (Managing HR book. 2016)

Avoiding Pitfalls

Employers can avoid many pitfalls associated with HR laws by engaging in sound management practices. Among the most important of these practices are training, establishing an employee complaint resolution system, documenting decisions, communicating honestly with employees, and asking job applicants only for information the employee needs to know. (Managing HR book. 2016).

  1. Distinguishing Contractors Versus Employees

In today’s environment, businesses need to be nimble with their labour force. Uber and Lyft are excellent examples. The line between a contractor and an independent employee is an amorphous one, and the penalties for incorrectly classifying labour add up. Attorneys who specialize in this can save you a lot of time and money if you speak with them early on and properly classify your workforce.

  1. Determining Where Risk Lies

Attorneys can help businesses focus on risk management. For compliance, there are federal and state laws and litigation-based risk. An attorney can help a business determine what areas pose the most risk and what should be addressed first.

  1. Complying with Wage and Hour Laws

Many businesses need legal guidance in wage and hour matters, especially for overtime pay requirements. Oftentimes, businesses don’t know which employees need to be paid overtime wages and which workers are exempt, especially when it comes to managers and assistant managers. The failure to pay required overtime pay can be very costly if not done in accordance with state and federal laws.

  1. Issuing Equity

When issuing equity, many states have security filing requirements. It can be very difficult to make sure these filing requirements are met, so it’s best to collaborate with a business attorney to make sure that all the legal boxes are checked.

  1. Reviewing A Franchise Agreement

If the business is a franchise, it’s common practice for attorneys to help the owner(s) comply with a franchise agreement. The franchise agreement contains numerous requirements that the owner is accountable for. Both parties should review the franchise’s business operations to make sure the business is compliant.

  1. Protecting Consumer Data

Any business that stores or uses consumers’ private information needs to be mindful of the large influx of litigation regarding data breaches that give rise to privacy concerns. While larger institutions are the obvious targets for class-action attorneys, it’s ideal for an emerging start-up to ensure compliance from the outset. (Forbes Legal Council. 2016)

The importance for business owners to remain compliant

The likelihood of a brand-damaging workplace breach is a real risk to business. There are complex rules, regulations, awards and agreements to grapple with as well as the fact decisions are often being made outside of the HR arena or without an HR team to consult. When businesses are found non-compliant it can not only result in legal action but, if the issue is picked up by the media, the business can suffer lasting reputational damage.

Failing to comply can also affect the wellbeing of employees and can even have flow-on impacts on customers. Workers who’re fatigued can put themselves in danger and those without current qualifications and training to undertake the job at hand can leave a business exposed to large fines.

Organisations should take a vested interest in employee mental and physical health and in creating work/life balance to protect their employees. The benefits of this go beyond complying with workplace regulations but can increase engagement and productivity, lead to greater job satisfaction and build stronger retention rates. (Safety Solutions. 2017)

Case Study:

Case 1: New York Police Inspector Is Charged with Sexually Abusing Female Officer

In this case inspector, Keith Walton was charged with sexual abuse. It is a difficult case since there were no witnesses, only her word against his. In this case it became a criminal case and therefore outside the jurisdiction of the HR department, and instead up to the courts to decide who the guilty party is. Being under criminal review, he was no longer allowed to handle a gun. Although he was still allowed to work on modified duty since he is considered innocent until proven guilty in court.


Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248 • ISBN-13: 9781292097244.

Forbes Legal Council. 2016. Six Compliance Issues Your Business Could Face. Accessed on 11.02.2019

Safety Solutions. 2017. The importance of compliance in the workplace.