Human Resource Management - Goldman Sachs JB Were Services Pty Ltd v Nikolich - Essay Example

Human Resource Management Essay Introduction: The major issue that emerged through the case of Goldman Sachs JB Were Services Pty Ltd v Nikolich wasthe question of whether the terms laid out in the company policies were equivalent to a contract and whether there had been a breach of contractual terms by the Goldman Sacs company in dealing with a complaint raised by Mr. Nikolich of stress and harassment by a supervisor. Emergence of the issue: Nr. Nikolich’s complaint of stress and harassment by a supervisor arose when during his term of employment as an investment advisor, some of his clients were re-allocated to other advisors. This gave rise to a dispute during which Mr Nikolich alleged that he was intimidated and threatened by his supervisor, which caused him stress. Furthermore, the Company’s HR Manager took a long period of four months to investigate the complaint and determined that the reallocation was quite appropriate and that the supervisor’s conduct had not been intimidating or threatening and had also stepped down from his managerial role. There was no further action taken on Mr. Nikolich’s complaint, as a result of which he developed a depressive disorder and was terminated from his work. The basis of Mr. Nikolich’s complaint of mistreatment by his supervisor and the mishandling of his complaint was the terms of his letter of offer of employment and policy guidelines of the Company, entitled Working With Us. This guideline contained several provisions on workplace health, safety, harassment and grievance redressal procedures which Mr. Nikolich alleged had been breached in his case as a result of which the employers were guilty of a breach of contract. At the lower Court, the findings were in favor of the Plaintiff, Mr. Nikolich and the Court held that sections of the Working With Us policy guidelines were equivalent to explicit promises which were part and parcel of Mr. Nikolich’s employment contract.. On this basis, the Court held that the failure of the HR management to take immediate action to resolve the conflict between Mr. Nikolich and his supervisor was a breach of contract. When the case was appealed however, the appellate judges make a distinction between contractual and aspirational terms. They held that the policies outlined in the Working With us document on the issues of harassment and grievance redressal were not in the nature of contractual terms. On the contrary, they were aspirational in nature, i.e, the language contained in tees provisions was descriptive and informative, intended to be encouraging rather than iron clad promises. While these policies outlined the aspirations of the Company to maintain a conducive working environment, it did not provide a contractual guarantee that none of its employees would ever resort to harassment or humiliation of another employee. The basis of the Appeal court’s findings was the language used in the policies. It found that the statement in the Working With Us Policy guidelines which stated that “JB Were will take every practicable step to provide and maintain a safe and healthy work environment for all people” was not an aspirational statement but expressed a definite intent, which could be equated to a contractual term. When applying this statement to Mr. Nikolich’s grievance and the delay in investigation, coupled with the failure to provide adequate redressal, the Court held that there had been a breach of contract in so far as this aspect was concerned. The issue therefore emerged from Mr. Nikolich’s contention that the HR department had not addressed his grievance. This gave rise to the question of whether statements contained in a Company’s policy guidelines could be equated to contractual terms which the Company was legally obliged to honor. This issue further developed in the Appeals Court into a distinction between aspirational statements visa vis statements where the nature of the language employed was such that a definite intent could be discerned, thereby equating it to a contractual term. In resolving this issue therefore, the Court has held that promissory statements contained in Human resource policies as well as corporate values and mission statements can be included as part and parcel of the terms of an employment contract. If a statement or policy is intended to be purely an aspirational one, it should be stated as such in the Company’s guidelines. Moreover, this case has also established that complaints from employees must be taken seriously and investigated expeditiously by individuals qualified to fill such a role. The decision in this case assumed a great significance for the Human resource and business community. This case has established a precedent that Companies may be held liable for failure to enforce promissory statements that are made in their policy documents. It has also established a precedent whereby companies can be held liable if employee complaints are not expeditiously and fairly investigated by competent officers. In the event an employer does not want the terms outline din policy documents to become equivalent to contractual terms, then the employer should take pains to frame those terms in language that is non declaratory and clearly specifies the aspirational nature of those terms, so that employees clearly understand the distinction. This case is also significant because it establishes that the HR department can be held liable if they fail to attend to employee complaints. Therefore employers must ensure that their Human Resources staff members are properly trained and well equipped to handle employee disputes fairly and expeditiously. Moreover, employers must also take steps to ensure that the policies that they lay out in their guidelines are actually implemented in the workplace and take steps to monitor the progress of such guidelines. Lastly, this case has also established that there are certain duties that may be required of employers, irrespective of what is or is not spelt out in their policy documents or employment contracts. There is a certain degree of fairness and reason required by an employer. An employer must take steps to ensure that it takes reasonable care of the health and safety of its employees and maintains a reasonable and safe working atmosphere. An employer must take due care to ensure health and safety of its employees and to maintain their trust and confidence, so that adverse consequences to its employees are negated or minimized. HR Theory: The theory that will apply the best in this case is the Expectancy Theory. Employees are motivated at the workplace only when their expectations of attaining a desired outcome are reached; however when this is not the case the employee is likely to suffer form low motivation or feelings of inadequacy and depression on the job. The Expectancy Theory of Motivation is based upon the likelihood that a certain action will lead to a particular outcome. Vroom developed this on the basis of two variables: E, which is expectancy and V which is valence, with E X V = Force.(www.web.dcp.ufl.edu). Expectancy is the belief in the likelihood of a particular outcome that will follow an action. Valence is the expected reward that accrues as a result of this action. According to the expectancy model, both expectancy and valence must be present and their combination will lead to the force that is produced in motivating a person. In the case of Mr. Nikolich, his expectancy was that his action in framing a complaint against the supervisor who has harassed him would result in an outcome where the HR department would promptly investigate his complaint and arrive at a fair outcome of the dispute. His level of motivation at the job would have already been lowered, because an outcome had resulted which he had not expected, i.e, his clients were taken away from him and reallocated to another investment advisor. This is followed by an inadequate redressal of his complaint, which would have contributed further to the lowering of his motivation on the job. The underlying core belief about motivation contained in the expectancy Model is that the effort people put into their work will be directed towards those kinds of behavior which they believe will produce a favorable outcome. The major variable in the expectancy theory is effort, or the actual level of energy that an individual expends upon his or her work. This can be of three types, as detailed below: (a) E-to-P Expectancy, or the effort to performance expectancy – this is the individual’s perception that a particular level of effort will result in a certain level of performance. If an individual feels that no amount of his or her effort is likely to elicit the desired level of performance, then the E to P expectancy will be low and this will lead to a corresponding low motivation. Based on this factor, if Mr. Nikolich has been expending effort on his clients and was unable to understand why they were being re-allocated to other investment advisors, then the failure of the HR department to address the dispute would have further contributed to his belief that no amount of performance on his part towards his clients is likely to elicit the desired levels of performance that the Company appears to require to retain the clients with him rather than re-allocating them to other advisors. (b) P-to-O Expectancy, or the Performance to Outcome expectancy - this is the individual’s perception that a particular behavior or task will lead to a particular outcome. Such expectations are generally based upon experience, so that an employee feels that a particular behavior on his or her part is definitely likely to lead to a particular outcome or they may believe that such an outcome will have no effect on their performance. Therefore, motivation to perform a task will be conditioned by other outcomes that may be of interest to an employee at a particular time, i.e, the hope of a promotion or the likelihood that leave may be granted. Applying this in Mr. Nikolich’s case, it may be noted that his act in approaching the HR department would have been condition by the perception that such a complaint would lead to fair and equitable resolution to the dispute. However, by the HR department’s failure to adequately address the dispute and to take no action in the matter after a prolonged investigation period of four months is likely to have led Mr. Nikolich to believe that there will be no redressal remedy available to him, which in turn affected his performance and led to depressive symptoms. (c) outcome valences – The valence of an outcome is the extent of satisfaction or dissatisfaction that an individual feels towards a particular outcome. Such a valance could be negative or positive. A positive valence will be consistent with the individual’s values and satisfy his or her needs, while a negative valence will not. An individual who solitude and finds it stressful to interact with others will therefore be less motivated in a task where he or she must work with others and interact extensively with them. In Mr. Nikolich’s case, the outcome of his action in taking his complaint to the HR department has been negative and has contributed to the dissatisfaction he feels towards that particular outcome. Hence the outcome valence is negative and has contributed to Mr. Nikolich lack of motivation to continue on in his job in a productive manner. On this basis therefore, the Expectancy theory suggests that individuals, acting on the basis of their own self interest, will adopt those courses of action at work which are likely to maximize the probability of desirable outcomes for themselves.(Pitt, 2001:1). Mr. Nikolich has taken his dispute to HR in the anticipation of a desirable outcome for himself, but on the contrary has suffered a negative outcome which has impacted on his health by causing him stress. As a result of the application of the above theory, it may be noted that the HR department at Goldman Sachs has failed to motivate its employees by ensuring a safe and healthy working environment for its employees. It has failed to adequately address employee concerns and has therefore failed to live up to the outcomes expected by the employees. By re-allocating Mr. Nikolich’s customers, it may not have rewarded him in a manner that may have been conducive to his effort, as a result of which his performance was affected, since according to the Theory, the individual’s effort towards performance on the job is motivated by the expectation of a favorable outcome to himself. In this case, the favorable outcome that would have been expected by Mr. Nikolich would have been an equitable and expeditious resolution of his dispute. But this expectation has not been satisfied, as a result of which Mr. Nikolich has been faced with an outcome that has led to dissatisfaction and caused him stress and depression. The performance of employees is directly related to the productivity of the Company. By setting out certain terms in its policies, the Company has contributed to the employee’s expectations that certain codes of behavior and work environment will be maintained at the firm. This is the factor that may have motivated many employees to join the firm, in the expectation that their effort in performance would lead to desirable outcomes for themselves. However, the HR department’s failure to adequately deal with the dispute of the employees is likely to contribute to negative valences and outcomes on their expectancies and therefore fail to motivate the employees and ensure productivity of the firm. The court’s finding of liability on the part of the Company in terms of breach of contract in its basic duties of care towards the employees therefore reflects the need for employees to ensure a safe and healthy working environment and to adequately motivate their employees through providing fair and equitable outcomes at the workplace. References: * Expectancy. Retrieved October 23, 2007 from: http://web.dcp.ufl.edu/hinze/Expectancy.htm * Pitt, Douglas C, 2001. “Leadership and Motivation: The effective application of Expectancy Theory.” Journal of Managerial issues, retrieved October 23, 2007 from: http://www.allbusiness.com/human-resources/employee-development-leadership/801576-1.html Read More