Furloughs Theoretically Save Money but Empirically Cost Job Performance

Commentary

by Professor Tony Wheeler
Associate Professor of Human Resource Management

The current government budgetary picture in many states, if not most, and in many localities looks fairly awful. I won't focus on any particular state's budget woes because you can read any newspaper from around the country to get the details. Governments have three broad courses of action to close budget shortfalls: 1) Cut spending, 2) Increase revenues (e.g., taxes), or 3) A combination of choices 1 and 2. National, state, and local politics, obviously, affects the choices that governments will choose. As I discovered while doing research with a colleague, these political pressures even affect the research that nobody academics like myself attempt to conduct.

Especially when you want to understand the impact of furloughs on state employees.

For political reasons I cannot disclose in which state my colleague and I conducted our research, as my colleague, who collected the data, had to agree state anonymity. He also received a phone call from a lawyer in the DOJ of the state where we collected the data telling him to stop data collection and consult a university lawyer (a.k.a., cease and desist). So much for "academic freedom," human subjects approval from a sanctioned institutional review board, and the permission to collect data from 4 agencies within the state government. Luckily, we were allowed to proceed with our study after political pressure was applied from on high.

This little story should tell you about the use of furloughs to help close budget deficits: Politics, not empiricists, make the decisions, and politics and empiricism might be mutually exclusive. Why did this particular state allow us to continue with our research? Because in the midst of a political race, one side wanted to know the results of our study and the other didn't. What could we, nobody academics, possibly find that politicians seeking office would want to highlight in a campaign?

Simply, we found that as a furlough day approaches, employee emotional exhaustion, the key component of burnout, increases while job performance decreases. But it gets worse. The increased exhaustion peaks on the furlough day, remains high for a couple of days, and finally returns to pre-furlough levels a week or so later. All the while, employee job performance decreases until the exhaustion clears.

To further examine what happens during the nearly 3 week period bracketing the furlough (10 days before, 7 after), we also looked at how these exhaustion/performance effects might differ among employees. We measured employee predisposition to ruminate (e.g., constantly think about bad events) and employee positive recovery behaviors (e.g., doing things to get mentally get away from work). Unsurprisingly to us, employees who ruminated more over the impending furlough became more emotionally exhausted and took longer to recover from this exhaustion; consequently, these employees often had the biggest decrease in their job performance. Conversely, employees who reported taking steps to "get away" from work indeed had lower exhaustion, not as large of a decrease in job performance in the run up to the furlough, and faster recovery after the furlough. It's worth noting, however, that even these employees experienced increased exhaustion and decreased performance, too. It just wasn't as bad as those who ruminated.

What do we think happened here? Let's be honest about what a furlough is: a pay cut disguised as a day off. The more someone thought about this, the more upset they became and the less motivated they were to perform their jobs. For those employees who actively sought ways to "get away" from their jobs, the less impact the furlough had on them.

We viewed furloughs as a personal resource drain, and we recommended giving employees choices in this furlough (as some states do but the state we examined did not): Take the pay cut and continue working (after all, deadlines don't take days off and many furloughed employees work from home on their furlough days), choose the day of the furlough akin to a floating holiday, or schedule furloughs around holidays or weekends. Again, some states allow for these choices, but the furlough remains what it remains: a pay cut. And the work doesn't wait.

I excitedly presented these results to my LRS/MBA 573 course on Organizational Staffing, and the discussion quickly devolved into a discussion on the worth(lessness?) of government employees. Aren't government employees depressed anyway? I found this interesting and indicative of the pernicious effects of staffing practices like furloughs. On the one hand, many Americans view government employees as lazy at best and utterly stupid at worst. On the other hand, furloughs achieve exactly the results that confirm these stereotypes. We want better government employees but do things through policy to achieve the exact opposite; yet another example of the Folly of Rewarding A, While Hoping for B.

Is there any wonder politicians might be interested in our research?

(In case you're wondering, I did remind the class that I am a government employee who liked my job and wasn't depressed, but I don't think that stopped them from thinking that government employees were lazy and stupid!)

What we could not examine was how our results might link to financial or productivity outcomes at a more macro level. Unfortunately, governments have fixed budgets and metrics like sales or revenue in a for-profit sense are meaningless. We suspect that the decreases in employee performance affect the economic productivity of government organizations, which makes us question how much money furloughs actually save the government. Furloughs might make the short-term bottom line look better but ultimately do long-term productivity damage. This will have to remain a suspicion until we can find a government that tracks productivity and allows us to collect data. Good luck to us.

“What Happens to ADHD Kids When They Grow Up?” They Go to Work

Commentary

by Professor Tony Wheeler
Associate Professor of Human Resource Management

I’m old enough to remember the days before the phrase ‘ADHD’ (Attention Deficit Hyperactivity Disorder) became a permanent fixture in the consciousness of Americans. Ritalin anyone? Like many of you, I’ve always wondered what happens to kids diagnosed with this disorder when they leave school. To be honest, I do not know if any of my undergraduate or masters’ students suffer from the disorder, and I always assumed that kids either learned to adapt to it or outgrew it. I do, however, hear stories that student pass Ritalin around the dorms to achieve the same thing that us geezers used NoDoze for, which makes me think that students used it recreationally instead of for its intended purpose.

But I digress. Why am I writing about ADHD on the SLRC blog? It turns out that about 50% of ADHD cases persist into adulthood, with about 4% of the US workforce suffering from the adult version of ADHD. Adult version meaning that it’s ADHD just with the word ‘adult’ in front of it. Persistent inattention? Check. Inability to focus? Check. Poor time management and organizing skills? Check. Tendency to procrastinate? Check. That’s ADHD, and researchers estimate that ADHD in the workplace accounts for an average of 35 lost days of employee performance per ADHD employee, costing an estimated $19.5B in annual employee productivity. And, don’t forget that ADHD is covered under the Americans with Disabilities Act. Yes, my technocrat HRM friends, that means reasonable accommodation.

A colleague of mine and I just finished a research project that examined how ADHD impacts employee performance. Primarily, we looked at how ADHD interacted with employee engagement to predict job performance. Work engagement is “a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption” (Schaufeli, Salanova, Gonzalez-Roma, & Bakker, 2002, p. 74), and highly engaged employees have abundant emotional, psychological, and physical resources at their disposal to meet the demands of their job. Engagement positively relates to employee job performance and organizational citizenship (extra-role) behaviors. Which brings us to ADHD.

We collected data from 3 samples of full-time employed working adults (several hundred employees working across dozens of occupations and industries), and we found that ADHD is like a broken “resource governor.” That is, when you are engaged in your job and have all of the resources you need to excel at your job, ADHD impedes affected employees from properly allocating their energies to do their jobs as well as they could or should.

We admit it’s a simple finding. But it’s an important finding with simple solutions. First, companies need to know and be aware that ADHD affects a portion of their workforce. Second, employees need to know and be aware, too. There is a social stigma surrounding ADHD, which prevents affected employees from seeking help. This costs employees their dignity and companies their profits. Third, the solutions are simple. Aside from available health insurance to see doctors who can diagnose and treat ADHD, companies can provide simple accommodations to ADHD employees: a quiet and uncluttered workspace, time management seminars or training, and a supportive environment. The relative costs are minimal compared to the substantial benefits.

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Schaufeli, W.B., Salanova, M., Gonzalez-Roma, V., Bakker, A.B. (2002). The measurement of engagement and burnout: a two simple confirmatory factor analytic approach. Journal of Happiness Studies, 3:.71-92.

Workforce Integration

Commentary

Adeyemi Ogunade

SLRC Graduate Student

On April 29, 2010 the United States Navy announced its recent decision to allow female naval officers serve on submarines. The Secretary of Defense, in February officially notified congress of his intent to change the policy regarding the assignment of women to submarines. Prior to now females were precluded from assignments on missile submarines. Following the repeal of the combat exclusion law in 1994, civil and women’s rights groups within the military have pushed for increased representation in key areas of the navy. Rear Adm. Barry Bruner pointed out that “the percentage of women graduating with technically-based degrees in our country has risen to the point that females now make up 51 percent of the total talent pool of young Americans we can recruit to enter our submarine force in the nuclear-trained officer community.” This makes it necessary to establish policies targeted at not only recruiting and selecting the best female candidates, but also ensuring they are properly integrated into a predominantly male work force.

Wives of male sub sailors have vehemently protested against the new policy, raising concerns over the possibility of sexual infidelity, harassment and favoritism. They aver that the cramped spaces within submarines and lengthy tours of duty that span 90 days at a stretch leave their spouses susceptible to infidelity. These concerns may appear trivial on the surface, but have the propensity to seriously hamper productivity and morale of the entire submarine crew.

The Navy’s response to these concerns has been flippant at best. Commander Kevin Byrne of the USS Alaska is of the opinion that “integrating women on board is nothing new to us. Women have been getting under way on submarines for overnight embarks and qualifications, familiarization, and sea trials embarks for week-long periods. So having women permanently established on board is not a major adjustment to the crew.” Is having a woman aboard a ship over night or for a week long period sufficient to determine the effects of the constant presence of females on submarines? Is offering female only accommodation within subs and mounting female signs on shower heads sufficient to prevent harassment in its nuanced forms? Is the existence of policies like “zero tolerance” policy, “red light, green light rule” sufficient to change ingrained attitudes and perception of male officers and non-commissioned crew men who may display antagonism towards change?

The infamous “Tail hook” scandal of 1991 in which 83 service women were assaulted is a poignant reminder of the magnitude of harm that could arise from hasty decisions and slip-shod planning. Failure to consider the strategic effects of this decision and head off possible behavioral problems with clear policies could have a deleterious effect on morale aboard submarines far removed from terrestrial chain of command. Unprofessional behaviors occasioned by lack of training, will not only destroy trust and confidence among shipmates but also erode unit cohesion and combat readiness. Contrary to prevailing belief, providing technical training for female officers aboard submarines is not enough to ensure integration. It is imperative the Navy brass ensures all male sub sailors, from officers to rank and file are retrained in gender sensitivity and harassment policy to ensure seamless integration. Setting up a training program for all male sub sailors that would propagate appropriate conduct is necessary to ensure integration. It is trite to assert that the absence of women over the years would have lead to an atrophy of social and interpersonal skills necessary to navigate a heterosexual work environment. The paucity of such skills, lack of training in appropriate conduct coupled with the sudden inclusion of women in 2012 would produce a conflagration of legal, ethical and behavioral problems that would seriously hamper national security. Failure to retrain male sub sailor in the appropriate conduct and existing navy harassment policies would only leave room for a repeat of egregious abuse. Dictum sapient sat est.

Symposium on Shared Capitalism and Worker Appropriation

Commentary

by Richard McIntyre, Ph.D.
Professor of Economics

The ongoing economic crisis in the U.S. and world economies has called the governance structures of both financial and non-financial enterprises into question. I organized a symposium at the recent International Labor Process Conference at Rutgers School of Labor Management Relations to bring together two strands of research on employee ownership and economic democracy.

Research on "shared capitalism" covers a variety of forms of worker participation and gains sharing that are already quite common in the US. The new research shows just how common these arrangements are – covering between a third and half the workforce – and effectively addresses longstanding concerns that such arrangements might not be competitive because of collective action problems.

The notion of "worker appropriation" grows out of a critique of socialism as central planning and public ownership of the means of production. Worker appropriation means that labor and not capital is the residual owner of the firm's net product. A case can be made that it is collective and democratic control of the surplus, with or without ownership and whatever the role of markets in society, that would most effectively address concerns about justice in the workplace, in the boardroom, and in the distribution of income.

Building on cases studies and statistical analysis of survey data these research programs tell us quite a bit about the potential economic and political benefits and costs of providing workers both more voice in management, as well as greater dependence on the financial health of their enterprises. They come out of different traditions in political economy and social theory, and while there were no tensions on our panel over this there were such tensions in the conference as a whole, which I will recount at the end.

According to Doug Kruse (Rutgers University) almost half of American private-sector employees participate in employee ownership, profit sharing, gain sharing, and/or broad-based stock options. He refers to these plans that directly tie worker pay or wealth to workplace performance as "shared capitalism." Such plans are often associated with greater employee participation in decision-making and information sharing, and may help increase worker pay, wealth, and quality of work life. More broadly, they have attracted interest for their potential to affect economic performance and societal income and wealth distribution. They can also, however, present serious issues of financial risk for employees, particularly if they substitute for other pay or wealth, and have the potential to worsen workplace relations.

Kruse's presentation was based on the National Bureau of Economic Research (NBER)'s Shared Capitalism Research Project. For an extensive view of shared capitalism, he put questions on the 2002 and 2006 General Social Surveys, containing representative samples of American workers. For an intensive view he conducted detailed surveys of over 40,000 employees in 14 companies with different combinations of shared capitalism plans, analyzing a wide variety of measures affecting workplace performance (e.g., turnover, loyalty, response to shirkers) and worker outcomes (e.g., pay, supervision, training, job security), with special attention to how shared capitalism may interact with other workplace policies. Shared capitalism is generally linked to positive outcomes for both workers and firms, with more positive outcomes when it is combined with employee involvement, training, job security, and above-market wages, and less positive outcomes when it is combined with close supervision. The results indicate that there may be significant potential for broad expansion of shared capitalism.

Erik Olsen (University of Missouri-Kansas City) discussed his research on the growth of majority employee-owned (MEO) enterprises in the U.S. Overall employee ownership in the U.S. has grown to the point where more than one in six workers currently own some equity in the company for which they work. The number of U.S. workers employed in firms where the employees of that firm own the majority of the equity has also grown rapidly. These enterprises add an additional dimension to shared capitalism because the employees have an enhanced degree of control over of the firm. These MEO firms range from worker cooperatives, which typically combine employee ownership with egalitarian principles and participatory management, to firms that are majority employee-owned but operate in ways that are not substantially different from conventional capitalist enterprises. In the U.S. there are currently several hundred worker cooperatives employing only a few thousand workers, but there are several thousand MEO firms with close to one million employees. Thus majority employee-ownership is no longer an ephemeral or utopian endeavor, but rather has become a viable, and increasingly common, way to organize an enterprise in the U.S.

MEO firms could conceivably support a different kind of industrial policy in the United States, to replace the war of the tax cutting states that only seems to impoverish everyone. It is plausible that MEO firms are less likely to outsource or offshore jobs, but no one has investigated this. Olsen recently received a Beyster Fellowship from Rutgers to conduct the first national survey of majority employee owned firms, so as to answer these and other questions

Daphne Berry (Doctoral candidate, Isenberg School of Management, UMass-Amherst)
and Stu Schneider (Cooperative Home Care Associates) examined the decision-making processes for allocating the net profit earned by one business that utilizes shared-ownership and participatory decision-making practices. Cooperative Home Care Associates (CHCA), currently the nation's largest worker-cooperative by employment, has developed an innovative process for determining the allocation of its annual net profit as: a) retained earnings; b) dividends; c) 401(k) plan contributions; and d) bonuses. While structured as a worker-cooperative, CHCA is actually a hybrid, also embodying some characteristics of a shared-capitalist enterprise. Because the work is dispersed across many sites and also because of the low levels of education of most of CHCA's 1,600 employees, some non-owner involvement is sensible in their opinion. However, worker-owners make final determinations regarding this surplus. Berry is a recent recipient of a Beyster Graduate Fellowship for this work and Schneider was able to give real insight into the practices used by CHCA to help its 1,600 home care workers learn about the company's finances so they can make informed decisions with respect to the annual vote on a proposed allocation of net profit.

Using her case study of Broadway musicians, Cathy Mulder (CUNY) argues that worker or collective "ownership" of the means of production may be sufficient but is not necessary for a democratic workplace. She gave concrete suggestions on how workers through their union might become the residual claimants to the firm's surplus with or without employee ownership.

Taken together these papers suggest the U.S. has a wide range of work organizations and that the possibilities for workplace transformation are much greater than is commonly believed. Worker ownership and cooperative production may be effective answers to the inefficiencies of traditional socialism as well as the inequality and social disintegration associated with market driven neo-liberalism. Whereas the standard political script seems to be a debate between those favoring more and those favoring less government, proponents of shared capitalism and worker appropriation say neither of these is the answer. Worker ownership in particular finds political support on both the left and the right of the political spectrum.

Our symposium came at the end of a long second day of conferencing and stood apart from the conference stream on "alternative work organizations" of which I had hoped it would be a part. This was especially unfortunate in that there was real tension in that stream between those interested primarily in worker cooperatives as socialist experiments in countries like Venezuela and Argentina, and those more interested in a variety of ways to increase worker voice in the very different political context of the United States. And while "shared capitalism" and "worker appropriation" share an emphasis on increasing worker voice they differ in their normative goals. Though we were not able to fully explore these tensions in the symposium, I intend to do so in a forthcoming paper in Employee Rights and Responsibilities Journal.

Central Falls Teachers: Lessons from Behavioral Science

Commentary

by Richard W. Scholl, Ph.D.
Director & Professor

The attempts at transforming the educational system at Central Falls High School have now made national news. In order to qualify for federal grant money, the high school administrators had to select from among four improvement options. The options were school closure, charter school takeover, transformation, and turnaround. The final decision became a choice between the last two. Initially the transformation model was chosen, but when discussions between the superintendent and the union president broke down as to how to implement the transformation, the district adopted the turnaround model which requires termination of the entire high school staff with no more than 50% of the staff rehired.

As a response to the termination of the entire teaching staff, the union filed three unfair labor practice charges. Recently, representatives of the teachers' union presented a proposal that appears to have turned the discussion back to the transformational model. The legal issues regarding this case are unlikely to be resolved any time soon. Now that the naming of heroes and courage award nominees has pasted, at least for the time being, I want to offer some thoughts from the perspective of a behavioral scientist. Let's pretend we are really interested in improving learning. What can we learn about organizational change from the experience of organizations that have implemented change successfully?

In teaching and doing research on organizational behavior, leadership, motivation, performance management and human resource strategies, I have uncovered a number of well established principles. My students in the master's program in Labor Relations and Human Resources are taught continually that the most effective organizations have human resource strategies that are both strategic and integrated. When human resource systems are aligned with an organization's strategies, our behavioral science knowledge is put to use in developing methods of employee selection, recruitment, performance management, compensation, employee development and conflict resolution that work to motivate and direct employee behavior towards building a strong competitive advantage. Integrated human resource systems exist when all of these functions work together in developing and maintaining an organizational culture that supports the mission of the organization.

Let's look at the Central Falls High School change effort from this perspective.

Models for Change

There are two things we know about all organizational changes. The first is that an organizational change is someone's solution to a perceived organizational problem. The second is that no matter how grandiose the change, it must manifest in the behavioral change of employees of the organization, that is, some people in the organization have to do some things differently. In the Central Falls case, the stated problems are low student test scores and low graduation rates. While there has been disagreement as to the cause of these problems, I have read of no disagreement that these are problems. The real issue here is what is the most effective way to change teacher and student behavior? While many organizations can use power and force to remove resistance to a proposed change, years of research and experience has taught us that when those required to make the most dramatic change in behavior participate in the problem solving process and eventual development of solutions, the result is generally not only a better solution, but one that is accepted rather than resisted. We all know of situations where employees actually impede the implementation of new methods that are forced on them, and situations where people commit themselves to the success of plans they have helped to develop.

While we have read about the four models of change, we do not know who developed these choices. Why is there only one method, the transformation method, which involves actual change in educational methods? Are the six conditions demanded by the superintendent¹ the only way to improve learning in a school and is there any evidence that these methods work in all schools? While the superintendent did attempt to negotiate the implementation of transformational plan with its 6 demands, there did not appear to be any real participation on the part of teachers (not union officials) in the development of an improvement plan.

Change is rarely achieved through force, fiat, and fear

Negotiation and Bargaining

Throughout our master's program, our students learn about the differences between positional and interest-based bargaining (IBB). A related concept involves the difference between adversarial and cooperative labor relations strategies. In positional bargaining each party presents is position (alternative) and then attempts to get the other party to accept its position, generally through demonstrating its relative power. When one party does not have a decided power advantage, the parties generally move to a compromise. The compromise position lies on a continuum somewhere between the two positions. Interest-based bargaining uses a different framework. Rather than presenting positions, which are a party's means to one their goals, the parties identify their interests. Interests are the party's goals or outcomes they which to achieve through negotiation. In the CFHS case, we are told that negotiations² broke down over an irresolvable conflict between paying teachers $30/hour or $90/hour for additional time spent implementing the six elements of the transformational model. This is a clear case of positional bargaining in an adversarial relationship. What are the actual interests of the two parties? Were the teachers only concerned about income or was there some disagreement about the ability of the six new actions to actually improve learning and resultant test scores. Asking someone to devote more time to an activity that will actually bring about improvement in something that you value for no additional pay is one, while asking the same for increased effort with little chance of success is quite another. What were the interests of the commissioner and superintendent? If improved learning is the primary interest, is there no other way it could be achieved? I cannot answer these specific questions, but I am confident that is this situation was approached in a collaborative, interest-based approach; the changes for school improvement would increase.

Human Resource Strategy

The successful management of human resources involves developing integrated approaches to recruiting, selecting, evaluating and developing skilled people. In addition, highly effective human resource strategies seek to develop and maintain high levels of commitment in employees rather than develop intricate external control systems. One of the recurring arguments made by those opposed to teachers' unions is that union hamstring administrators' ability to get rid of bad teacher and must use seniority as a basis for hiring. Additionally, one of the parts of the transformational model is that teachers must accept a more rigorous evaluation.

Here is a model for a successful human resource system. Selection processes are developed that discriminate between individuals in the job pool that have the ability and will to perform. These processes have proven ability to predict employee job performance based on data. Likewise performance evaluation methods are developed that are proven to measure actual job behavior and performance. They are based on behaviors and outcomes over which employees have control. The behaviors and outcomes expected of employees is clearly communicated to new recruits. Employees are evaluated on the performance dimensions of this system by collected information from multiple sources and this data is fed back to employees. An employee improvement plan is developed to improve areas of weakness. When these communication and development efforts fail and employees consistently are rating below acceptable levels, termination results.

At this point that all of the teachers at CFHS have been terminated and some might be asked to return in the fall. The superintendent has recently stated "But even in the "transformation model," every person there has to be rigorously evaluated, and an explicit decision has to be made about whether they come back or not." I am sure that there are teachers at CFHS that represent all points on a performance continuum from excellent teachers to poorly performing teachers.

While this sounds great in principle, how can a rigorous evaluation method that has yet to be developed, the elements of which have not been communicated to faculty members be used as a basis for deciding who will be asked back? What is going to be the real basis for the re-hiring decision? If the educational methods used at CFHS have not worked in the past, does it make sense to evaluate teachers on some failed educational model?

Most successful organizations have cultures that reinforce effective employee behavior. Organizational culture affects employee behavior through peer support and reinforcement, rather than through administrative structures. Cultures are the most effective when members value acceptance from other group members and there is a high level of cohesiveness among members. While culture and structure represent two different mechanisms to control group behavior, cultures work best when there is consistency between culture and structure, rather than conflict between satisfying peers and satisfying administrators. A strong culture of excellence can be a much more powerful force than any administrative control system a district can develop through incentives and evaluation.

Let's assume the administrators of CFHS follow through and bring a portion of the faculty back and hire a substantial number of new teachers. What do you think the relationship between the veterans and the replacements will be? Does anybody think they will form a cohesive and mutually reinforcing team of educators? We also have to consider the role of leadership in the development of strong culture. CFHS has had quite a few different principals over the last couple of years and we do not know if the current principal will return. Consistent and supportive leadership is a must for strong cultural development.

There has been a lot of rhetoric regarding the fact that students are, or should be, the most important stakeholder in this case which various stakeholders laying claim the group that values student learning the most. How can anyone disagree with that? However, it is one thing to say that your value learning and our kids and another thing to make this so. How will the current CFHS seniors benefit from the current approach? Do the proposed changes have any chance of improving learning? For example, will 20 minutes more a day of doing what has not worked improve learning? Is it learning we are after or is this all a way to winning grant money?

If one really cares about students and their futures, I don't see how advancing a political agenda furthers that. Find a way to involve those that work with students every day and have to actually implement any new system work collaboratively with leaders to create a way to improve learning at CFHS.

__________________

For my graduating master's students, here are some practice comprehensive examination questions.

Question 1: You are the superintendent or the principle of the CFHS. You are committed to improving learning and graduation rates in your school. What problem-solving and change approach would you use that has the greatest chance to develop a solution that works and that will be accepted by those who are required to implement it?

Question 2: How would you approach negotiation with the union leadership using an interest-based bargaining approach? Contrast the expected outcomes from a positional versus interest-based approach.

Question 3: Design a performance management system that has the high probability to creating a faculty of effective teachers.

__________________

1. The six conditions that teacher were told they must accept are: (1) school day increased by 25 minutes, (2) formalized tutoring schedule for before and after school assistance, (3) agree to eat lunch with students at least one a week, (4) Attend two week of professional development in the summer; (5) Stay after school once a week for 90 minutes to work with colleagues to analyze student work and test data, (6) accept more rigorous evaluations starting March 1^st.

2. It is not clear what the nature of the discussions between the superintendent and the union president were. Since the contract was not expiring, they did not seem to contract talks. Was this a contract re-opener or just a discussion of the principles of the plan between two individuals? It is clear that the teachers did not vote on any proposal.

Health Care Reform: After the Summit Meeting, February 25, 2010

Commentary

by Dr. Suzanne S. Taylor

Adjunct Professor

The question remains will the Democrats be able to pass a health care reform bill without Republican support. The Republicans made it clear they wanted to start anew and in increments even though there were some issues of agreement discussed. The Democrats appeared convinced that time is of the essence and reform is essential. The kind of reform desired became clearer after the 7 hours of debate. The New York Times Editorial of Friday, February 26, 2010 is an excellent statement of where the impetus for reform is now and concurs that the Senate and House must act on a complete bill not just some minor improvements. The White House issued an 11 page summary of their proposal the day before the debate. It is possible there will be some further changes as Obama made it clear that the special interest aspects of the original Senate bill will be withdrawn in a response to John McCain's criticism. Medical malpractice limits may also be included, along with measures that will reduce medical errors, improve communication, provide transparency, and allow prevention with wellness programs. Nonetheless Obama indicated he wanted the bill by spring break or at least by June.

In the end some will pay more but premiums for all will become less than they would have become with the status quo. More government expenditures do have to be paid for somehow and yet much of the bill's reforms will be cost effective. The proposed Democratic provisions will cover over 30 million uninsured now as opposed to the Republicans coverage of only 3 million uninsured. Clearly reform is politics. Almost 20 years after the Clinton reform proposals the Democrats are again in position to effect positive change. Hopefully, the American public will no longer be scared by the false rhetoric about government control. After all as Sen. Harkin pointed out the government controls food, drugs, many motor vehicle laws and numerous other aspects of our lives. Why isn't every American entitled to health care as almost every other citizen of other countries is? Having the best care only for those who can afford it should not be the American form of democracy.

The issue of health care has now become Obama's Bill and his mastery of moderating the debate demonstrated his superb understanding of the extreme complexity of reform. Praise from the liberal news media has been extensive in support of the need for health care reform. But I am sure there are more negative news stories in the Republican forums of those likely to be taxed more. It is likely that the succeeding deliberations of congress will not only be tense this spring, but extremely difficult. It will be helpful to continue transparency such as became evident on C-Span and CNN.

The struggle for universal health care continues. Those of us who can should speak up to their legislators and colleagues. Doing nothing is not acceptable or helpful. As it is coverage for employee health care is primarily through employment and is strongest in the government sector. In Rhode Island state employees have lost future retiree health care coverage and this also is happening to new hires in other state and local government jobs. Instead of eliminating coverage it is often being reduced and made more expensive. In both the private and public sector employers have switched to high deductible insurance or what covers catastrophic expenses only. The employee may, if they have the money, self insure in a tax deductible way, with a Health Savings Account or if lucky a Health Reserve Account, partially funded by the employer. Employees are dependent on the will of their employer, while the old, the young, the disabled, unemployed, and self employed are dependent on the largess of the government for Medicare, Medicaid, and Children's Health Insurance (CHIP) among other programs.

Rep. Nancy Pelosi has vowed to work with the Senate to achieve Health Care Reform that will be in her words: "Affordable, Acceptable and Accessible."

Newsflash: Treating Employees Well Is Good

Commentary

by Professor Tony Wheeler
Assistant Professor of Human Resource Management 

My standard “go to” set of videos to show in my HRM courses come from The Office, but I will now add Undercover Boss to my video library.  In the event you haven’t seen the show, the title conveys its purpose.  A CEO from a large corporation sheds his corporate suit to go undercover as a prospective frontline employee.  Once undercover, the CEO gets firsthand experience of doing these jobs and also seeing how corporate dictates impact frontline employees. So far Waste Management, Hooters, and 7-11 have participated, and White Castle is on deck for this week (mmmm, White Castle).

A couple of notes before I get to the main point of this post.  First, the executive teams of the 3 companies shown look like stereotypical executive teams: almost exclusively white males.  If anyone is paying attention, it sure looks like the glass ceiling exists.  Second, the prevalence of on-the-job training in these companies disturbs me to no end.  Maybe this is for another post, but I’ll just state it simply here: on-the-job training is the least effective method of transferring knowledge from training to work settings. There are better, less expensive ways to train.

But I digress.  The great thing about Undercover Boss, aside from how much my wife laughs at me as I get all worked up watching the show, is that in a mere 60 minutes the show demonstrates a simple point: Treating your employees well is good business.  The CEOs are aghast to learn that managers who disrespect employees are in fact bad managers.  The CEOs can’t believe that when employees don’t have the resources to effectively perform their jobs, they in fact can’t perform their jobs.  The CEOs express shock that the pure outcome-based goals (productivity, financial) they set in lieu of learning or mastery goals lead employees to simply focus on hitting their numbers at the expense of focusing on quality.  The CEOs nearly weep upon hearing the personal hardships faced by many of their employees, from inadequate healthcare to the effects of stress and burnout from role overload to the family sacrifices that many employees experience.

If nothing else, Undercover Boss shows everyone that profit and treating employees well are not mutually exclusive.  In HRM, we’ve known for decades that treating employees well has a pretty healthy return on investment.  I know you’re thinking “Yeah, no duh treating employees well is good for business.” Too bad so many companies don’t know how “no duh” it really is.

I’m a Bully, He’s a Bully, She’s a Bully; Wouldn’t You Like to Be a Bully, too?

Commentary

by Professor Tony Wheeler
Assistant Professor of Human Resource Management

Reflexively, you’re saying to yourself, “No!” But have you ever experienced the following. You work on a team tasked with redesigning a long existing process. Your team spends months collecting data about the process, and the team comes to a radical decision about changing that process. Knowing that any recommended change will be met with resistance, the team extensively prepares a well thought, well researched presentation to make to other members of the organization. While making the presentation, a single coworker hijacks the presentation, interrupting you with questions and complaints before you can even explain your recommendation. As other coworkers, including you, plead with this coworker to let the presentation conclude before raising questions, the coworker continues to escalate his or her complaints to the point of yelling at you in front of everyone. You feel humiliated and belittled. How do you respond to this coworker in future meetings when he or she unloads on you or another coworker?

I recently experienced this situation when a colleague, who has a reputation for doing so, let loose on me. I’ve seen this type of behavior happen at almost every organization for which I have worked, and the only word to describe this type of behavior is ‘bully’. How do I respond to workplace bullies?The same way about 33% of employees who have been the target of bullying or even just been a bystander: I bully the bully. And no one feels good about it.

So let me explain some conclusions I’ve drawn from the findings of some theoretical research I recently completed on workplace bullying. (I’m collecting data this spring)

First, the basics. While we think that bullies have certain personality traits (aggressive, egocentric, and just plain old mean) that predispose them to bully, workplace bullying research suggests that environmental factors play a stronger role in who will become a bully and who will not. If you work in an organization that has an unsupportive, competitive, and stressed environment, where you feel overloaded in and have unclear expectations about your job, and have a laizzes faire ) supervisor, you will likely see bullying occur in your workplace. Bullies emerge in resource scarce environments, and bullying becomes a behavioral means to an end. That end is the acquisition and protection of personal resources that any employee feels they need to complete their jobs

When you don’t feel like you can meet the demands of your job and when you think you have no support from your boss, coworkers, or HRM department, even you might engage in bullying. If you don’t, surely someone in your workplace will. Workplace bullying data suggests that up to 25% of you currently experience or witness bullying in your organization, and almost 50% of you will experience or witness bullying over your career.

The organizational and personal costs of workplace bullying are staggering. In Great Britain, it is estimated that bullying costs Great Britain’s GDP more than $3B a year and costs employers an estimated 19 million employee absentee days. The targets and bystanders of bullying report decreased job satisfaction, commitment, and performance as well as increased turnover rates, depression levels, suicidal tendencies, and heart attack rates.

Once bullying occurs in any organization, it has a corrosive effect on targets and bystanders of bullying. It introduces more stress into an already stressful and unsupportive environment, and there is a 33% chance that non-bullies will see that the best defense of bullying is to become one. Because the organization allows bullying to occur in the first place, employees quickly realize that the organization tacitly encourages it happen. So employees learn that bullying in their organization might be the best way to get ahead or at the very least survive. Interestingly, heretofore bullies will stop when they change jobs into a more supportive environment.

I need to emphatically stress that becoming a bully to cope with bullying isn’t the most effective coping strategy. To the contrary, research suggests that everyone involved, including the bullies, dislike themselves for allowing the bullying to take place. Unless you are a sociopath, most employees know that bullying is wrong. And all of those bad health outcomes remain.

I do want, however, to emphasize that you can easily identify the climate in which bullying emerges. You can take a “resource temperature” of your workforce. Lower levels of support equal higher chances of bullying. Higher levels of stress equal higher chances of bullying. To stop bullying before it occurs, your organization should implement a zero tolerance bullying policy. And enforce it. Although Robert Sutton of Stanford University famously wrote that organizations should terminate problem employees, the mere presence of a bullying is corrosive. Organizations need to prevent bullying before it occurs, and I argue that resource support is the way to do it.

When my research gets published (hopefully!), I’ll be happy to forward to anyone who wants to read it. In the meantime, I’m here to discuss any questions you might have.

Teacher Evaluation and Performance Management

Commentary

by Professor Tony Wheeler
Professor Richard W. Scholl

What is at stake for your company when measuring performance? For the state, measuring teacher performance could be worth an additional $100M to a K-12 budget already approaching $700M, but it appears that the teacher unions have gotten in the way again (Projo, 1/15/09). In one corner, we have the state wanting to measure teacher effectiveness via student test scores. In the other corner, we have at least one teachers' union wanting a more comprehensive assessment of teaching effectiveness.

For many years, the topic of teacher evaluations has surfaced in discussions of educational improvement. On the surface, it stands to reason that the performance of teachers is an important determinate of student learning. Most recently, the use of student standardized tests scores as a measure of teacher performance has been a sticking point in obtaining union support for the state's grant proposal for federal Race to the Top funds. One aspect of the state's Race to the Top application, is that 51% of a teacher's evaluation will be based on test scores. While we are not fully aware of all the specific issues regarding this specific use of student test scores as teacher effectiveness evaluations, we believe that there a basic principles of performance management that bear directly on the issue of how teachers should be evaluated and for what purpose evaluations should be used.

Performance Management is More Than a Set of Evaluation Metrics

Typically, performance management constitutes a process whereby employers observe, document, and improve employee performance. Effective performance management involves the integration of appraisal, feedback, development, and behavioral change processes working in concert to improve employee performance. While in any performance management process there comes a point when it is appropriate to terminate ineffective employees, given the cost of replacing employees, effective companies attempt to first diagnose the causes of low performance and make efforts to improve performance. The use of student test scores as the foundation for a strategic performance management process appears to solely focus on "getting rid" of "teachers that can't cut the mustard." Like any type of employee performance, teaching effectiveness is a complex set of behaviors stemming from a combination of knowledge, skills, abilities, motivation, role expectations, and available resources. Before jumping into a plan of evaluation and action, we recommend a fuller understanding of the causes of ineffective teacher performance and student learning gaps. 

Outcome versus Process Measures of Performance

A fundamental issue in performance appraisal is whether to measure employee performance using process/behavioral measures or to use outcome/results measures. Each type of appraisal outcomes has issues to consider. For example, when using process measures, there is the danger of reducing creativity and forcing all employees to use a single method which may not fit all situations. In using outcome measures, we run the risk that employees lack control over the factors that lead to the desired outcomes.

Based on the current issue at hand, let's focus on the use of outcome measures. First, is the student achievement test a valid and reliable measure of student knowledge? Notice, knowledge not learning. You must document changes in student scores to determine student learning. Second, you then have to make the link that those changes in student learning directly result from teacher influence and not from things like parental involvement, socio-economic status, and the like over which teachers have no control. Third, what cut-off will the state establish for student performance that then suggests some "objective" evidence of teacher performance? Is it a certain amount of year-over-year performance from each student that is then aggregated (to school, grade, or teacher level)? Or is it some arbitrary number, like each student must pass a certain percent of the test? In either case, how can the state factor out teacher effectiveness from those numbers? Fourth, in their book Freakonomics, Steven Levitt and Stephen Dubner note how test scores can be manipulated and teachers feel pressure to "teach toward the test." In our opinion, the state's desire to use student test scores to account for 51% of a teacher's performance simply increases teachers' motivation to do whatever they can do to improve test scores. That's not student learning. Proceed at your own peril, State of Rhode Island.

Educational Improvement versus Teacher Evaluation
Whether or not test scores or other objective measures of learning have a place in teacher evaluation, we believe that it is imperative for schools to be able to assess student learning. In commenting on the use of test scores to evaluate teachers, Debra Gist, the state's education commissioner is quoted "We don't take this lightly. We will develop a very clear plan, based on very solid evidence. We need a consistent measure that is objective and reliable … that has some ability to reconcile what a fourth grader in Westerly is learning with what a fourth grader in Woonsocket is learning."

We could not agree more, but there is a big difference between using outcome-based assessments of learning as a part of an educational continuous improvement process and using these metrics to evaluate the effectiveness of an individual teacher. In many years of studying and working with performance management practices, we have learned that there is often a conflict over whether the same metrics are used for teacher development or for decisions about employee pay, promotion, or termination. When teachers' careers are at stake, they will naturally feel pressure to deemphasize student learning issues and instead concentrate on simply increasing student test scores by any means. In essence, the state wants student learning but implements a system designed to boost test scores. The focus on outcomes leads to teachers ignoring the very learning that the state wants students to experience.

Potential Changes in Health Insurance and Pensions for 2010

Commentary

by Dr. Suzanne Taylor

Adjunct Professor

Just how the new health care bill will affect human resource management and labor negotiations is not certain, but what is certain is it will affect just about every aspect of health insurance as we have come to know it. Here is a summary of some of the major issues remaining to be resolved.

Retiree health insurance benefits will most likely become more expensive for employers. The Medicare Modernization Act provides subsidies to employers offering prescription drug coverage. The subsides will become taxable and the employer's liability under FASB 106 will increase as will the need to put aside more funding or to eliminate prescription drug coverage altogether. Reliance on the newly revised Medicare prescription program should reduce or drop the donut hole. It may be that legislation will prevent employers from changing benefits offered to employees and their beneficiaries once a person has retired. This could cause employers to cap their contributions to the cost, eliminate retiree health insurance as is already happening in both the private and public sectors, or even cut the benefits of active workers.

The cost of providing retiree insurance for early retirees under 65 will not be a part of Medicare.

On the other end of the age continuum, the youngest generation is in trouble as the House Bill would end the CHIP, Children's Health Insurance Program, and redirect the millions of uninsured children to Medicaid or to the new health insurance exchanges where moderate income Americans can buy subsidized insurance. In the Senate bill, CHIP is preserved until 2015, two years past its current expiration date, but two Senators: Rockefeller (W. Virginia) and Casey (Pennsylvania) are hoping for more.

As to the exchanges and how they will work; little has been determined. The expansion of Medicaid and how far it will go and in what direction is yet to be determined. Medicaid pays doctors and hospitals far lower reimbursement rates than private insurance. This is due in part to the fact that the states pick up some of the added costs. Both House and Senate versions will pay the states' additional shares in the first two years and 95% after that. California has indicated its additional costs, not paid by the federal government, will amount to an additional $3 billion a year.

Furthermore, one of the least understood aspects of the bill is just how the new insurance will be sold on the open market. The Senate bill requires states to create new insurance market places. The House bill would establish a national exchange, but the states could opt out if they had the capacity to run their own exchange.

Another problem is who will oversee the new federal regulations? Will it be the states, that are understaffed now, or a new federal regulatory commission?

What of the Cadillac tax proposed to be placed on plans, whose premiums exceed $8,000 for single and $23,000 for family plans, and how much it will rise in the future? As of January 15, 2010, there appears to be a compromise reached which increases the threshold to $8900 for individuals and $24,000 for family coverage. For people in certain high risk jobs, the threshold would be higher, up to $27,000 for family coverage. Moreover, state and local government workers and benefits from collectively bargained plans would be exempted until 2018. And in 2015, the cost of dental and vision coverage would also be deducted from the plan limit. It is still believed that the tax would slow the growth of health spending. The proposed tax is still subject to further modifications as it has not been fully agreed upon by all. It is thought, however, that the thresholds would probably rise less than health insurance premiums as the bill states the rise would be in correlation with the CPI plus one percentage point. The 40% tax on the excess to be paid by the insurer is expected to begin in 2013. Some still remain who want no excise tax at all. The House bill suggestion was to tax very high wage earners, but that proposal appears to be given up for now.

It is predicted that there will be no mandate for employers to insure their workers; rather it will be a mandate for individuals to carry insurance. Moreover, insurers will be able to charge older people two and a half times as much as younger ones. As of now the House bill has a two to one ratio and the Senate a three to one ratio.

What role, if any, will Health Savings Accounts play in the new designs?

Each of the bills is over 2,000 pages and both contain many recommendations for a variety of review commissions, some within the IRS and others within Health and Human Services.

Of course, not the least concern is how the package can ultimately be put together in the next month or so to pass both the Senate and House and gain the President's approval. Overall, Tom Daschle predicts that the starting date for the new bill would be "somewhere around 2014."

Just this concern of what health care is going to look like would be more than enough for one summer course, but we must also take some time to look at the growth of defined contribution plans and how money can be safely invested in these hard economic times. The big question is will defined benefit plans survive and how can we save for the costs of retirement by planning ahead to have sufficient assets for living and affording health insurance.

What Is the Worth of the Person Tasked to Fix RI’s Economy?

Commentary

by Professor Tony Wheeler
Assistant Professor of Human Resource Management

Apparently not $250,000. Ioanna Morfessis withdrew from her appointment to head RI's Economic Development Corporation (EDC). For those who don't know the purpose of this Governor-appointed group, the EDC (http://www.riedc.com/) basically assists the state in developing economic policies and strategies to enable the state to economically prosper. You could joke, as I often do, that the EDC has failed and miserably at that.

But its past failures that have contributed to the state's lackluster (to put it nicely) economic conditions should highlight the need to step outside of the state to find fresh ideas. Instead, the media focuses on Morfessis's proposed salary instead of her qualifications or worth to the state. The focus on her salary, in my estimation, misses the larger picture.

First, is she or anyone else who might head the EDC worth that salary? Some of you might say no. I disagree. Given the troubles the state faces, what will it take to attract, motivate, and retain the most qualified, best performing head of the EDC? That is the purpose of compensation: to attract, motivate, and retain. Compensation also signifies what a job is worth, both to the company and to the market. Yes, $250,000 is a lot of money, especially compared to what most people in the state earn, even the President of URI or the Governor himself. Do other states pay similar amounts to their respective EDC heads? I'd say that given the problems this state faces, maybe $250,000 isn't enough.

Now the Governor appoints Keith Stokes, the Executive Director of Newport County's Chamber of Commerce, to head the EDC for a temporary 1 year term. Why did the Governor seek an out of state replacement for this position only to find a replacement in the state? And why is his contract offer only $185,000?

Second, with the focus on salary, what signal does the state send to future directors, especially given that the state will need to hire a permanent replacement next year? The state faces serious economic adversity, and the head of the EDC holds a serious position. The state should ask itself again: What is this job worth?

Handling the performance management of this job is for a different post altogether.

Much Ado about Nothing (Job Satisfaction)

Commentary

by Professor Tony Wheeler
Assistant Professor of Human Resource Management

Okay, maybe the title of this entry understates the importance of job satisfaction, but the recently released national job satisfaction report and subsequent media stir over the report overstate and simplify the power of job satisfaction. Or worse.

Before we start, can we agree that the next time you say "A happy worker is a productive worker," lightening will strike me down. I have two young kids and prefer to live to see them into adulthood. Is a happy worker a productive worker? Yes…just the same as a productive worker is a happy worker. What's that, you say?

You heard me right. Employees who feel under-employed (not using their knowledge, skills, and abilities) often report very low job satisfaction. In a state like Rhode Island, where unemployment is near 12% with another 5-10% added on for under-employment, you can see how employees doing work beneath them might feel pretty dissatisfied. The generally lousy economic conditions also make people less satisfied with their jobs, even if they're lucky to have them.

But let's continue to discuss the job satisfaction-performance relationship. Empirically speaking, that relationship has a very weak, almost zero, positive relationship. Job satisfaction explains less than 1% of job performance. That's it (although it does explain quite a bit more turnover). So you are probably more likely to find a very satisfied unproductive employee than you are to find an unsatisfied, unproductive employee. Think about someone who has just experienced a traumatic personal event (parent passes away, spouse loses job, divorce, etc). How productive will that employee be over the next couple of days? Does that have anything to do with their job satisfaction?

Sometimes job satisfaction is a canary in a coal mine. It tells you that something is wrong, but you don't know what's causing the problem. It could be something out of a company's control. Job satisfaction is also capricious. It can change from day to day. How satisfied are you with your job after returning from a wonderful Caribbean vacation? That's why job satisfaction can be much ado about nothing.