Organizational Justice and Human Resource Management - Case Study Example

Human Resource Management: Analysis of A Case 2009 The Case The issue before George Chapel, the HR Manager of Catastrophe Concepts, is a curious one. It is apparent that the frequent absence of Caleb McGuire has brought about a serious problem in the marketing department. While both the marketing manager, Lilly Zheng, and Chapel recognize that Caleb has been a good performer and has contributed to the company positively in the past, his illness and frequent absence has resulted in dissention in the department since the workload of other employees has increased greatly as a result. In particular, the financial pressures on the company that has brought about the urgency to reduce headcount, Caleb has become an easy target as other employees seem to have taken advantage of the situation. Things have not helped with Caleb being evasive about his illness and rumors floating in the company that he has AIDS. There are various steps that may be taken against Caleb to douse the situation by not only punishing Caleb for absenteeism but also giving in to the other employees’ grievances who feel that they are being overworked because of partiality shown towards Caleb. Disciplinary actions could be either through pay cuts for the number of days of absence in excess of the due leave or asked to quit. However, it is difficult for the HR manager to take a drastic decision to either dismiss Caleb or take some other disciplinary action since that would bring about legal, ethical and strategic HR issues. The Legal Issues The first element in the crisis that Chapel needs to analyze is the legal aspect of any step taken against Caleb. It is possible that Caleb is using the excuse of sickness for unscheduled absenteeism. But, it is also possible that Caleb is genuinely sick and for some reason, is unable to disclose the nature of his sickness. If the company takes disciplinary action against him, there must be sufficient ground for it. The HR department should first clarify that the unscheduled leaves that he has been taking is beyond that is due to him contractually. Otherwise, the company faces possibilities of lawsuits. On the other hand, the company can think of other avenues of providing more flexibility to Caleb’s wok-life balance by allowing him to telecommute, work from home, flexible work days and so on. Such measures, while reducing costs when Caleb’s pay structure is revised under agreement with him, would also smoothen out the unscheduled and haphazard nature of work allocation in the department. The Ethical Issues The ethical issue that Chapel faces in taking action against Caleb is in terms of organization justice, which Moorman (1991) identified as a critical criterion for organizational citizen behavior. The term organizational justice is often used interchangeably with fairness. The outcomes of justice or fairness not only have a social role but also economic impacts on the organization. In the event of perceived injustice, counterproductive behavior on the part employees, like theft, sabotage or lawsuits, may have a great effect on the organization. In this case, it is possible that if Caleb perceives the HR action unjust may file a lawsuit or, being a marketing professional, engage in sabotage by badmouthing the company with the competition, giving away sensitive information of the company and so on. From an ethical perspective, however, our concern is more in terms of organizational justice originated from the related study of social psychology, particularly those on relative deprivation, in the context of industrial organizations. Various dimensions of justice have been researched into to observe the effects on the organization. Organizational justice has four dimensions: distributive justice (that originates from the equity principle), procedural justice, interpersonal justice and information justice. Distributive justice is the typical outcome that affects the employees in terms of hiring decisions, performance appraisals, promotions, downsizing and layoff decisions, etc. In the case of Catastrophe Concepts which is facing pressures of downsizing requirements, Caleb could become a victim of the circumstance. His performance appraisal for the year would definitely be worse than the previous years, when he was a star performer, and he faces the chance of being laid off because of his prolonged absences. Research has found that distributive justice has a direct economic impact on the organization. Greenburg (1990) found through meta analysis of organizational justice that employee pay reduction without an explanation usually resulted in increase in employee theft. However, employees react to distributive justice in different ways. Huseman et al (1987) found that individuals who are equity-sensitive are usually motivated to act on the measure. The benevolent individuals sense equity issues only when they perceive their input/outcome ratio to be higher than the referent point and usually accept whatever measure is meted out to them, continuing to put as much input as they were doing earlier. The entitled persons usually perceive justice only when their outcome surpasses their input. In the last category, individuals are motivated when their rewards are more than their expectations. Dismissing Caleb or giving him a pay cut could be an example to others to abide by the leave rules only for employees who perceive that they work as hard as Caleb used to earlier and yet face a chance of being laid off like him. Greenburg (1987) categorized two streams of thought regarding research on distributive justice - the reactive theories and the proactive theories. The reactive theories focused on employees’ attempt to avoid unfair situations while the proactive theories focused on promotion of justice in the organization so that unfair situations do not arise. Greenburg postulated that over-paid employees would feel guilty if their outcomes exceeded their inputs and under-paid employees would be angry if they found their outcomes falling short of their perceived inputs. In this case, employees who perceive that they are over-paid would not protest to take over Caleb’s jobs but those who perceive to be under-paid do so. Employees like Lucett Dubois, who has been the top performer and hence has been in close competition to Caleb, is one of those who perceive herself to be under paid hence do not consider the input/output ratio in her favor. Hence, with Caleb’s absence, she deliberately works slowly, refuses to take over Caleb’s work and even threatens to quit. Procedural justice, stemming from legal research, differentiates between the verdict and the way that the verdict is arrived at (Greenburg, 1987). Thibaut and Walker (1975) and Levanthal (1976) researched on procedural justice as part of the allocation process. Employees perceive procedural justice as an indication of predicting future states on the basis of the current state. A fair procedural system in the organization allows the employee to feel that he would be valued and rewarded. Muchinsky (2000) defined a procedure just if it is enacted “without personal bias, with as much accurate information as possible, and with an outcome that could be modified”. Thibaut and Walker (1975) proposed the concept of the ‘voice’ by which individuals have the option of voicing their opinion in the organization. The voice may be ‘instrumental’, when they can influence decisions or ‘noninstrumental’, when outcomes cannot be changed by the opinion. Levanthal (1976) categorized the attributes of fairness as consistency (across time and employees), suppression of bias by decision-makers, perception of accuracy of the procedures, correctability of decisions on appeals, adherence to prevailing ethical standards. Leventhal, Karuza, and Fry (1980) concluded that employees perceived procedures to be fair if "they are implemented (a) consistently, (b) without self- interest, (c) on the basis of accurate information, (d) with opportunities to correct the decision, (e) with the interests of all concerned parties represented, and (f) following moral and ethical standards" (quoted in Anderson et al 2003). In this case, Caleb would be provided with procedural justice, in the perception of the other employees, if the situation is transparent so that it is known what sort of illness Caleb has, what would be the frequency of his absence from work and at what length. Informational justice relates to issues free flow of information that might critically affect the employees’ well-being, for example downsizing, lay-offs, etc. This is the social method of achieving procedural justice so that the people affected by organizational decisions are provided with as much information that those who impart the decisions have. There would be informational justice at Catastrophe Concepts if the exact situation of the company’s HR strategies and the downsizing plans were known and employees were not as stressed out as they were. Bies and Moag (1986) and Tyler and Bies (1990), both cited in Ortiz (1999), developed the dimension of interpersonal justice in organizations in the manner that employees are treated as well as the way that decisions are enacted. Use of abusive language and deception about important managerial decisions are typical cases of interpersonal injustice that employees face at the workplace. In this case, employees perceive that the management is being partial towards Caleb by being lenient towards his absence. Colquitt (2001) postulated that informational justice and interpersonal justice are in fact two aspects of interactionist justice. While the informational aspect determines the fairness in communication, the interpersonal aspect determines how one is treated in the organization. Research has demonstrated that employees perform better when they perceive their supervisors to act in a fair manner. The HR Issues In today’s knowledge-driven business world, employees are the most valuable resource or asset that adds value to the company. Yet, unlike physical assets that are measurable in terms of physical or monetary units, people assets difficult to value and enhance. As a result, people assets, or human resources, are usually under-valued, under-trained, under-utilized, poorly motivated and able to perform less than their capability. To begin with, Chapel needs to identify the human resource assets, or what may be termed as “human capital assets” in terms of their work contribution as well as the tacit and explicit knowledge about the industry. Human capital assets are able to enhance value by the ability to create, gather and retain knowledge, form social relationships and utilize the knowledge and relationships to grow, evolve, learn, develop and educate others. The HR department should concentrate on improving the quality of the processes of work so that the stages of knowledge management and utilization, relationship building and the processes of creation and value addition. For this, the HR department needs to understand the motives of the employees and the ways that they may be inspired as well as their capacity to improve their capabilities, competencies, performances and knowledge. It is a common practice to undertake and publish capital and financial accounts of the company but in a knowledge-driven economy, there is also the need to calculate the human resource accounting. The HR department needs to measure and report the cost and value of the organizational resources, that is, the liabilities and assets in terms of human resources. This involves accounting for investment in people, replacement costs and the economic value of people like both Caleb and Lucette in the organization. Increased communication and career management have grown critical for both employees and employers. In these times of changing business environment, where downsizing, cost reductions, performance related incentives and employment sustainability are crucial, employees need to be constantly communicated about the changes. The HR manager as well as the organization leaders needs to communicate with the employees so that the latter may realign their goals and capabilities with the business needs of the hour. Left to themselves, employees may be prone to find themselves misfit in the changing atmosphere, resulting in low self-esteem, frustration and stress, which in turn affect their work output harming the companies’ business performance. Much of the frustration in Catastrophe Concepts seems to be the result of inadequate communication between the top management and rest of the organization. In Catastrophe Concepts, there also seems to be inadequate succession planning at each level. Skill development of employees depends on both the organization and the individuals. The HR department and the marketing manager need to assess the skills and competencies of the employees on a regular basis and communicate their strengths and deficiencies. Many companies are taking succession planning seriously. It is no longer the case that the next in line will necessarily take over the mantle of succession. But someone from lower the line may be found to be more capable as a successor. Meticulous succession planning and communication within the department would automatically enable the next person to take charge when one employee is absent for some reason or the other (Career Management Guide). Liautaud and Hammond (2000) prescribes companies to be “faster, more agile, and crucially, more intelligent” in matters of organizing knowledge so that it is not inordinately dependent on one or a few persons (quoted in Jimes and Lucardie (2003). Most companies around the world have turned to technology to enable knowledge management. Yet, knowledge scholars like Johanessen et al (2001) and Dunford (2000) notes that technology have been unable to codify tacit or explicit knowledge in organizations. Such arguments draw on Polanyi’s (1966) claim that the elimination of the ‘tacit dimension’ of knowledge reduces its objectivity since the perception and mental models are unable to capture all dimensions of such knowledge. Scholars have subsequently defined organizational tacit knowledge as employment skills, mental models and problem-solving capabilities while explicit knowledge are in terms of instruction manuals, mathematical models, product blueprints and so on (Nonaka and Takeuchi, 1995). These scholars propose a KM process that integrates the tacit and the explicit knowledge of an organization. Catastrophe Concepts needs to create an knowledge mechanism that would store the tacit and explicit knowledge and does not create a disharmony in the absence of an employee. Conclusion Thus, in the case, the HR manager needs to be extremely careful in ascertaining the fallout of alternative measures that are taken in the situation of crisis. To begin with, the legal issues should be clarified so that there are no repurcussions in the form of lawsuits, sabotage and so on. The ethical issues include giving Caleb a fair hearing so that he can clarify his problems. The HR manager needs to give out the signal of organizational justice so that no employee has any perception of injustice either in the nature of distribution, interpersonal or informational. From the strategic HR aspect, there should be sufficient communication between the top management and the employees and among employees within the departments so that there is minimum feeling of insecurity among them. Also, there needs to be effective succession planning so that the organization moves smoothly in case of absence of one employee. Works Cited Anderson, et al (2003) Gender equity in the context of organizational justice: A closer look at a reoccurring issue in the field. Journal of Leisure Research, Second Quarter. Bies, R. J., & Moag, J. F. (1986). Interactional justice: Communication criteria of fairness. In R. J. Lewicki, B. H. Sheppard, & M. H. Bazerman (Eds.), Research on negotiations in organizations (Vol. 1, pp. 43-55). Greenwich, CT: JAI Press. Byrne, Z. S., & Cropanzano, R. (2001). The history of organizational justice: The founder speak. In R. Cropanzano (Ed.), Justice in the workplace: From theory to practice (Vol. 2 pp. 3-26). Mahwah, NJ: Lawrence Erlbaum Associates. Colquitt, J. A. (2001). On the dimensionality of organizational justice: A construct validation of a measure. Journal of Applied Psychology, 86, 386-400. Folger, R., & Cropanzano, R. (1998). 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