MGMT2001 Human Resource Management Case Analysis
Case Analysis: 6 Points
Case Name:
Due Date:
Report Length Guidelines: Please refer to each separate section overall approx. 6 pages doublespaced
1. Joel Brockner, Why Its So Hard to be Fair
2. Claudio Fernandez-Arroz, The Definitive Guide to Recruiting in Good Times and Bad
3. Alfie Kohn, Why Incentive Plans Cannot Work
In order to complete each analysis, you will need to read the case; you might also want to consult
additional references such as any HR materials, recent news stories, etc.
1. (30pts) Situation Analysis - Summary of the organizational situation and/or HR concepts presented in the
case in your own words (2p)
Explain the situation and/or concepts presented in the case keeping an HR focus
Major Events and Decisions presented in the case
2. (20pts) SWOT Analysis Strengths, Weaknesses, Opportunities, Threats (bullet format w/brief
explanations: 1p)
Particular focus should be on the situation or concepts that the case is built on
SW: programs within the organization, etc.
OT: explore the external environment
3. (30pts) Application of Strategy Use of the concepts presented (2p)
Provide at least 3 examples of how these concepts are used in real-world examples (yours or other
documented accounts)
4. (20pts) Analyze Your Findings Your thoughts on the information you have collected (1p)
Additional materials outside of the case may be used to support your information or to provide examples, just
be sure to cite these materials both in-text and in the works cited.
Format:
Section headings are required
Responses must include information on each of the points listed above
Be prepared to explain answers further in class
Assignments are to be submitted onto ulearn in the Case Analyses folder
Grading: Scores will be based on clarity and completeness of the information provided
HBR The Magazine March 2006
Why Its So Hard to Be Fair by Joel Brockner
When Company A had to downsize, it spent considerable amounts of money providing a safety net
for its laid-off workers. The severance package consisted of many weeks of pay, extensive
outplacement counseling, and the continuation of health insurance for up to one year. But senior
managers never explained to their staff why these layoffs were necessary or how they chose which
jobs to eliminate. Whats more, the midlevel line managers who delivered the news to terminated
employees did so awkwardly, mumbling a few perfunctory words about not wanting to do this and
then handing them off to the human resources department. Even the people who kept their jobs were
less than thrilled about the way things were handled. Many of them heard the news while driving
home on Friday and had to wait until Monday to learn that their jobs were secure. Nine months later,
the company continued to sputter. Not only did it have to absorb enormous legal costs defending
against wrongful termination suits, but it also had to make another round of layoffs, in large part
because employee productivity and morale plummeted after the first round was mishandled.
When Company B downsized, by contrast, it didnt offer nearly as generous a severance package.
But senior managers there explained the strategic purpose of the layoffs multiple times before they
were implemented, and executives and middle managers alike made themselves available to answer
questions and express regret both to those who lost their jobs and to those who remained. Line
managers worked with HR to tell people that their jobs were being eliminated, and they expressed
genuine concern while doing so. As a result, virtually none of the laid-off employees filed a wrongful
termination lawsuit. Workers took some time to adjust to the loss of their former colleagues, but they
understood why the layoffs had happened. And within nine months, Company Bs performance was
better than it had been before the layoffs occurred.
Although Company A spent much more money during its restructuring, Company B exhibited much
greater process fairness. In other words, employees at Company B believed that they had been
treated justly. From minimizing costs to strengthening performance, process fairness pays enormous
dividends in a wide variety of organizational and people-related challenges. Studies show that when
managers practice process fairness, their employees respond in ways that bolster the organizations
bottom line both directly and indirectly. Process fairness is more likely to generate support for a new
strategy, for instance, and to foster a culture that promotes innovation. Whats more, it costs little
financially to implement. In short, fair process makes great business sense. So why dont more
companies practice it consistently? This article examines that paradox and offers advice on how to
promote greater process fairness in your organization.
The Business Case for Fair Process
Ultimately, each employee decides for him or herself whether a decision has been made fairly. But
broadly speaking, there are three drivers of process fairness. One is how much input employees
believe they have in the decision-making process: Are their opinions requested and given serious
consideration? Another is how employees believe decisions are made and implemented: Are they
consistent? Are they based on accurate information? Can mistakes be corrected? Are the personal
biases of the decision maker minimized? Is ample advance notice given? Is the decision process
transparent? The third factor is how managers behave: Do they explain why a decision was made?
Do they treat employees respectfully, actively listening to their concerns and empathizing with their
points of view?
Its worth noting that process fairness is distinct from outcome fairness, which refers to employees
judgments of the bottom-line results of their exchanges with their employers. Process fairness doesnt
ensure that employees will always get what they want; but it does mean that they will have a chance
to be heard. Take the case of an individual who was passed over for a promotion. If he believes that
the chosen candidate was qualified, and if his manager has had a candid discussion with him about
how he can be better prepared for the next opportunity, chances are hell be a lot more productive
and engaged than if he believes the person who got the job was the bosss pet, or if he received no
guidance on how to move forward.
When people feel hurt by their companies, they tend to retaliate. And when they do, it can have grave
consequences. A study of nearly 1,000 people in the mid-1990s, led by Dukes Allan Lind and Ohio
States Jerald Greenberg, found that a major determinant of whether employees sue for wrongful
termination is their perception of how fairly the termination process was carried out. Only 1% of exemployees who felt that they were treated with a high degree of process fairness filed a wrongful
termination lawsuit versus 17% of those who believed they were treated with a low degree of process
fairness. To put that in monetary terms, the expected cost savings of practicing process fairness is
$1.28 million for every 100 employees dismissed. That figurewhich was calculated using the 1988
rate of $80,000 as the cost of legal defenseis a conservative estimate, since inflation alone has
caused legal fees to swell to more than $120,000 today. So, although we cant calculate the precise
financial cost of practicing fair process, its safe to say that expressing genuine concern and treating
dismissed employees with dignity is a good deal more affordable than not doing so.
Customers, too, are less likely to file suit against a service provider if they believe theyve been
treated with process fairness. In 1997, medical researcher Wendy Levinson and her colleagues found
that patients typically do not sue their doctors for malpractice simply because they believe that they
received poor medical care. A more telling factor is whether the doctor took the time to explain the
treatment plan and to answer the patients questions with considerationin short, to treat patients
with process fairness. Doctors who fail to do so are far more likely to be slapped with malpractice
suits when problems arise.
In addition to reducing legal costs, fair process cuts down on employee theft and turnover. A study by
management and human resources professor Greenberg examined how pay cuts were handled at
two manufacturing plants. At one, a vice president called a meeting at the end of the workweek and
announced that the company would implement a 15% pay cut, across the board, for ten weeks. He
very briefly explained why, thanked employees, and answered a few questionsthe whole thing was
over in 15 minutes. The other plant implemented an identical pay cut, but the company president
made the announcement to the employees. He told them that other cost-saving options, like layoffs,
had been considered but that the pay cuts seemed to be the least unpalatable choice. The president
took an hour and a half to address employees questions and concerns, and he repeatedly expressed
regret about having to take this step. Greenberg found that during the ten-week period, employee
theft was nearly 80% lower at the second plant than at the first, and employees were 15 times less
likely to resign.
Many executives turn to money first to solve problems. But my research shows that companies can
reduce expenses by routinely practicing process fairness. Think about it: Asking employees for their
opinions on a new initiative or explaining to someone why youre giving a choice assignment to her
colleague doesnt cost much money. Of course, companies should continue to offer tangible
assistance to employees as well. Using process fairness, however, companies could spend a lot less
money and still have more satisfied employees.
Consider the financial fallout that occurs when expatriates leave their overseas assignments
prematurely. Conventional wisdom says that expats are more likely to leave early when they or their
family members dont adjust well to their new living conditions. So companies often go to great
expense to facilitate their adjustmentpicking up the tab for housing costs, childrens schooling, and
the like. In a 2000 study of 128 expatriates, human resources consultant Ron Garonzik, Rutgers
Business School professor Phyllis Siegel, and I found that the expats adjustment to various aspects
of their lives outside work had no effect on their intentions to depart prematurely if they believed that
their bosses generally treated them fairly. In other words, high process fairness induced expats to
stick with an overseas assignment even when they were not particularly enthralled with living abroad.
In a similar vein, some companies have devised expensive solutions to help employees cope with the
stress of modern work. Theyve set up on-site day care centers and sponsored stress management
workshops to help reduce absenteeism and burnout. Those efforts are laudable, but process fairness
is also an effective strategy. When Phyllis Siegel and I surveyed nearly 300 employees from dozens
of organizations, we found that work/life conflict had no measurable effect on employees commitment
as long as they felt that senior executives provided good reasons for their decisions and treated
them with dignity and respect.
Of course, executives should not simply emphasize process fairness over tangible support.
Determining exactly how much tangible support to provide is perhaps best captured by the law of
diminishing returns. Beyond a moderate level of financial assistance, practicing process fairness
proves much more cost effective because, although money does talk, it doesnt say it all.
Fair Process as a Performance Booster
Process fairness can not only minimize costs but can also help to increase value, inspiring
operational managers to carry out a well-founded strategic plan eagerly or embrace, rather than
sabotage, an organizational change. This form of value is less tangible than direct reduction of
expenses, but it affects the bottom line nonetheless.
The fact is, most strategic and organizational change initiatives fail in their implementation, not in their
conception. Several years ago, I worked with the CEO of a financial services institution that needed a
major restructuring. The banks operational managers, however, were showing signs of resistance
that threatened to stop the process dead in its tracks. I advised the CEO and his senior management
team to conduct several town halltype meetings and to hold informal focus groups with the
operational managers. During those talks, it became clear that the managers felt that the CEO and
senior executives failed to appreciate the magnitude of the change they were asking for. Interestingly,
the managers didnt request additional resources; they simply wanted those at the top to recognize
their difficult plight. By expressing authentic interest, senior executives created a trusting environment
in which managers felt they could safely voice their true objections to the change effort. That enabled
senior managers to respond to the root problem. Moreover, since the operational managers felt
respected, they showed a similar level of process fairness with their direct reports during the actual
restructuring, making the change go more smoothly.
Michael Beer, of Harvard Business School, and Russell Eisenstat, president of the Center for
Organizational Fitness, recently provided evidence of how systematically practiced process fairness
(embedded in an action-learning methodology known as the strategic fitness process, or SFP) has
helped numerous organizations capture value by getting employees to buy in to strategies. A critical
element of SFP is the appointment of a task force consisting of eight well-respected managers from
one or two levels below senior management. Their job is to interview roughly 100 employees from
different parts of the company to learn about the organizational strengths that are apt to facilitate
strategy implementation as well as the shortcomings that could hinder it. Task force members distill
the information they gain from these interviews into major themes and feed them back to senior
management. Then they discuss how the strategy could be rolled out most effectively. SFP is a
model for process fairness: More than 25 companiesincluding Becton, Dickinson; Honeywell;
JPMorgan Chase; Hewlett-Packard; and Merckhave used it with great success to hone the
substance of their strategic initiatives and, probably more important, to gain employees commitment
to making those initiatives happen.
Most companies say that they want to promote creativity and innovation, but few use process fairness
to achieve those ends. Theyre missing out on a great opportunity to create value. Harvard Business
School professor Teresa Amabile has conducted extensive research on employees working in
creative endeavors in order to understand how work environments foster or impede creativity and
innovation. She has consistently found that work environments in which employees have a high
degree of operational autonomy lead to the highest degree of creativity and innovation. Operational
autonomy, of course, can be seen as the extreme version of process fairness.
The nature of organizations, though, means that few (if any) employees can have complete
operational autonomyjust about everyone has a boss. Creativity and innovation tend to suffer in
work environments characterized by low levels of process fairness, such as when employees believe
that the organization is strictly controlled by upper management or when they believe that their ideas
will be summarily dismissed. When employees believe that their supervisor is open to new ideas and
that he or she values their contributions to projects, however, creativity and innovation are more likely
to flourish. Two examples illustrate how process fairness creates value by attracting innovative
employees or additional customers.
