Special Issues in Training and Employee Development

By Noe, R.A.

Edited by Paul Ducham


Table 10.1 shows potential training activities and situations that can make an employer vulnerable to legal actions and harm the company’s reputation. The following sections describe each situation and potential implications for training.

Failing to Provide Training or Providing Inadequate Training

To comply with a wide range of laws and regulations, companies are required to show that employees not only have completed training programs but also are applying their new knowledge on the job. Most companies provide training to reduce the potential for a hostile work environment for employees protected by Title VII of the Civil Rights Act (race, color, gender, religion, nationality, national origin), the Age Discrimination in Employment Act (age), or the Americans with Disabilities Act (disability). For example, the U.S. Supreme Court considers sexual harassment training to be an important factor for companies that wish to avoid punitive damages in sexual harassment cases. Employers must also train employees to comply with practices designed to prevent harassment of any class protected by Title VII.

Federal laws may require a certain number of training hours and types of training for employees in certain industries. For example, initial training for flight attendants must include how to handle passengers, use galley equipment, evacuate the airplane, and use the public address system. The safe landing of US Airways Flight 1549 on the Hudson River was one of the rare moments when a U.S. passenger plane completed a forced landing without loss of life of passengers or crew. As a result, the Federal Aviation Administration is proposing new training regulations and rules for airlines, calling for hands-on drills on the use of emergency equipment and procedures for all flight attendants.

In congressional hearings, the Federal Aviation Administration (FAA) has been accused of providing inadequate training for air traffic controllers, resulting in near collisions between aircraft. As a result, the FAA has upgraded training by purchasing simulators that use voice-recognition technology and allow trainees to instruct simulated aircraft on takeoff and landing procedures in all types of weather conditions. This allows better training of air traffic controllers who otherwise would have to wait for inclement weather to conduct on-the-job training.

Companies in health care are required to comply with the Health Insurance Portability and Accountability Act (HIPPA); companies in finance are required to comply with the Bank Secrecy Act; and companies in the gaming industry (such as casinos) are required to train employees on how to handle money and how to report suspicious activity. In several states, candidates interested in being hired as full-time police officers must complete approved police training. Legislation can also require training that is related to providing a drug-free workplace (e.g., training about drug abuse and making counseling available) and a safe workplace (e.g., training about the handling of hazardous materials and the use of safety equipment as dictated by the Occupational Safety and Health Act).

Due to recent corporate scandals, compliance examiners are now more rigorously reviewing the quality of training by evaluating whether employees understand how regulations apply to their jobs. This has resulted in a change in the methods used for compliance training. Traditionally, compliance training used passive learning methods such as lectures, handouts, or e-mail attachments with PowerPoint slides. Now, companies are using training methods that enhance both learning and transfer of training—such as e-learning, Business Games, and role playing—to ensure that employees not only understand regulations but can also apply them. For example, Tufts Health Plan uses a game-show format for awareness training, and Ho-Chunk Casino uses scenarios to teach casino employees specific behaviors to watch for.

Incurring Employee Injury during a Training Activity

On-the-job training and simulations often involve the use of work tools and equipment (e.g., welding machinery, printing press) that could cause injury if incorrectly used. Workers’ compensation laws in many states make employers responsible for paying employees their salary and/or providing them with a financial settlement for injuries received during any employmentrelated activity such as training. Managers should ensure that (1) employees are warned of potential dangers from incorrectly using equipment and (2) safety equipment is used.

Incurring Injuries to Employees or Others Outside a Training Session

Managers should ensure that trainees have the necessary level of competence in knowledge, skills, and behaviors before they are allowed to operate equipment or interact with customers. Even if a company pays for training to be conducted by a vendor, it is still liable for injuries or damages resulting from the actions of poorly, incorrectly, or incompletely trained employees. A company that contracts out training to a vendor or consultant should ensure that it has liability insurance, be sure that the trainers are competent, and determine if there has been previous litigation against the trainer or the vendor providing the training. Also, trainers should be sure to keep copies of notes, activities, and training manuals that show that training procedures were correct and followed the steps provided by licensing or certification agencies (if appropriate).

Incurring Breach of Confidentiality or Defamation

Managers should ensure that information placed in employees’ files regarding performance in training activities is accurate. Also, before discussing an employee’s performance in training with other employees or using training performance information for promotion or salary decisions, managers should tell employees that training performance will be used in that manner.

Reproducing and Using Copyrighted Material in Training Classes without Permission

Copyrights protect the expression of an idea (e.g., a training manual for a software program) but not the ideas that the material contains (e.g., the use of help windows in the software program). Copyrights also prohibit others from creating a product based on the original work and from copying, broadcasting, or publishing the product without permission.

The use of videotapes, learning aids, manuals, and other copyrighted materials in training classes without obtaining permission from the owner of the material is illegal. Managers should ensure that all training materials are purchased from the vendor or consultant who developed them or that permission to reproduce materials has been obtained. Material on Internet sites is not necessarily free from copyright law. Many Web sites are governed by the fair use doctrine, which means that you can use small amounts of copyrighted material without asking permission or paying a fee as long as the use meets four standards. The standards relate to (1) the purpose for which the copyrighted materials are being used, (2) what the copyrighted work is, (3) the proportion of the copyrighted material you are using, and (4) how much money the copyright owner can lose as a result of the use. Republishing or repackaging under your own name material that you took from the Internet can be a violation of copyright law. For example, the CEO of Crisp Learning frequently finds his small company in court defending copyright issues. Crisp Learning develops and sells video and training courses that deal with skills such as business report writing and time management. The series of courses, known as the Fifty-Minute series, is popular because it is easily applied and can be completed in a short period of time. Crisp Learning has found that copyright violators have actually retyped its books and sold them as their own work. Violating copyright can be expensive. Copyright violators can end up paying expensive legal fees and paying damages that are more expensive than what it would have cost to legally purchase the training materials. To obtain copyright permission, you need to directly contact the owners of the material and explain how the material will be used and how ownership will be cited. Another way to get copyright permission is to seek permission from organizations such as the Copyright Clearance Center (www.copyright.com) or iCopyright.com.

Excluding Women, Minorities, and Older Employees from Training Programs

Two pieces of legislation make it illegal for employers to exclude women, minorities, or older persons from training programs. Title VII of the Civil Rights Act of 1964 (amended in 1991) makes it illegal to deny access to employment or deprive a person employment because of the person’s race, color, religion, gender, or national origin. The Age Discrimination in Employment Act (ADEA) prohibits discrimination against persons who are age 40 or older. The Equal Employment Opportunity Commission (EEOC) is responsible for enforcing both the Civil Rights Act and the ADEA.

Although these two pieces of legislation have existed for several years, a study by the U.S. Department of Labor found that training experiences necessary for promotion are not as available or accessible to women and minorities as they are to white males. Women, minorities, and older employees can be illegally excluded from training programs either by not being made aware of opportunities for training or by purposeful exclusion from enrollment in training programs. Denial of training opportunities and better treatment of younger employees can be used to support claims of age discrimination. Older employees may bring lawsuits against companies based on a denied promotion or discharge. As evidence for age discrimination, the courts will investigate whether older workers were denied training opportunities that were provided to younger workers. To avoid age discrimination in training, managers and trainers need to ensure that the organization’s culture and policies are age-neutral. Decisions about training and development opportunities should not be made on the basis of stereotypes about older workers and should take into account job-relevant factors such as performance. Managers should be held accountable for fair training and development practices and for ensuring that all employees have development plans. Finally, all employees should receive training on the ADEA and on how age stereotypes can affect treatment of older employees. Stereotypes such as “older workers are resistant to change” may result in exclusion of older workers from training and development programs.

The University of Phoenix had to pay over $1 million for demonstrating a religious bias against non-Mormon employees who worked as enrollment counselors in the university’s Online Division. The bias included denying tuition waivers to non-Mormon employees for failing to meet student registration goals while granting similar waivers to Mormon employees. In another example, Coca-Cola settled out of court a discrimination suit in which African American employees were excluded from programs needed to receive promotions in the company. Four current and former Coke employees filed a lawsuit alleging race discrimination in pay, promotions, and performance evaluations within the Coca-Cola company. Rather than face continued legal and public scrutiny and to move forward on initiatives to correct the perceived racial discrimination, Coca-Cola agreed to pay $113 million in cash to the plaintiffs, $3.5 million to adjust salaries of African American employees during the next 10 years, and $36 million to implement various diversity initiatives. The goal of the settlement is to change the company culture. Coke’s employment practices have been reviewed by a task force consisting of experts in civil rights, diversity, labor, employment, and business. The task force also reviews Coke’s human resource practices. The settlement required more oversight of managers’ decisions on promotions, more mentoring programs, and regular diversity training for all employees. Coke has made progress in complying with the requirements of the settlement agreement. Coke’s external recruiting of minorities has increased, and the company has sent all its managers and half its employees to two-day diversity awareness training. However, according to employee surveys, Coke’s African American employees are, on average, less positive about fairness within the company than are white employees, particularly about fairness related to advancement and career opportunities.

Not Ensuring Equal Treatment of All Employees While in Training

Equal treatment of all trainees means that conditions of the learning environment, such as opportunities for practice, feedback, and role playing, are available for all trainees regardless of their background. Also, trainers should avoid jokes, stories, and props that might create a hostile learning environment. For example, because of claims that female employees were being harassed at air traffic control centers, the Federal Aviation Administration (FAA) required employees to attend diversity training. The diversity training required male employees to experience what it felt like to be taunted and jeered at as you walked down the aisle in an air traffic control facility (known as “walking the gauntlet”). One of the male employees found the experience to be distasteful and psychologically stressful, sued the FAA, and won.

Requiring Employees to Attend Programs That Might Be Offensive

Allstate Insurance has been the focus of several religious discrimination lawsuits brought by insurance agents who have found the Scientology principles emphasized in agent training programs offensive and counter to their religious beliefs. For example, the program taught concepts such as the “tone scale” which catalogs emotions and scientologists believe can influence behavior.

Revealing Discriminatory Information during a Training Session

At Lucky Store Foods, a California supermarket chain, notes taken during a diversity training program were used as evidence of discrimination. In the training session, supervisors were asked to verbalize their stereotypes. Some comments (“women cry more,” “black women are aggressive”) were derogatory toward women and minorities. The plaintiff in the case used the notes as evidence that the company conducted the training session to avoid an investigation by the Equal Employment Opportunity Commission. The case was settled out of court.

Not Accommodating Trainees with Disabilities

The Americans with Disabilities Act (ADA) of 1990 prohibits individuals with disabilities from being discriminated against in the workplace. The ADA prohibits discrimination based on disability in employment practices including hiring, firing, compensation, and training. The ADA defines a disability as a physical or mental impairment that substantially limits one or more major life activities, a record of having an impairment, or being regarded as having such an impairment. This includes serious disabilities such as epilepsy, blindness, or paralysis as well as persons who have a history of heart disease, mental illness, or cancer that is currently in remission.

The ADA requires companies to make “reasonable accommodation” to the physical or mental condition of a person with a disability who is otherwise qualified unless it would impose an “Undue Hardship” on the organization’s operations. Determination of undue hardship is made by analyzing the type and cost of the accommodation in relation to the company’s financial resources. Even if the Undue Hardship can be justified, the ADA requires that the person with the disability be provided the option of paying that part of the cost that causes the undue hardship.

In the context of training, reasonable accommodation refers to making training facilities readily accessible to and usable by individuals with disabilities. Reasonable accommodation may also include modifying instructional media, adjusting training policies, and providing trainees with readers or interpreters. Employers are not required to make reasonable accommodation if the person does not request them. Employers are also not required to make reasonable accommodation if persons are not qualified to participate in training programs (e.g., they lack the prerequisite certification or educational requirements).

One example of how the ADA might influence training activities involves Adventure Learning. Some adventure learning experiences demand a high level of physical fitness. Employees who have a disability cannot be required to attend adventure learning training programs. If it does not cause an undue hardship, employees should be offered an alternative program for developing the learned capabilities emphasized in the adventure learning program.

It is impossible to give specific guidelines regarding the type of accommodations that trainers and managers should make to avoid violating the ADA. It is important to identify if the training is related to “essential” job functions. That is, are the tasks or knowledge, skills, and abilities that are the focus of training fundamental to the position? Task Analysis information can be used to identify essential job functions. For example, tasks that are frequently performed and critical for successful job performance would be considered essential job functions. If training relates to a function that may be performed in the job but does not have to be performed by all persons (a marginal job function), then a disability in relation to that function cannot be used to exclude that person from training. To the extent that the disability makes it difficult for the person to receive the training necessary to complete essential job functions, the trainer must explore whether it is possible to make reasonable accommodations.

Incorrectly Reporting Training as an Expense or Failing to Report Training Reimbursement as Income

The cost of training is covered by Internal Revenue code. Companies can often deduct the cost of training provided to employees as a business expense. The Employer Assistance Program allows an employer to pay an employee up to $5,250 per year for certain educational expenses. This amount can be deducted by the employer as a business expense without adding the payment to the employee’s yearly gross income. In other programs (e.g., the Educational Reimbursement Program), the employer can decide which training is paid for and how it is funded. Reimbursement for training expenses that an employee incurs may be considered part of the employee’s taxable income. Employees may be able to deduct workrelated educational expenses as itemized deductions on their income taxes. To be deductible, the expenses must be for training that maintains or improves skills required in the job or that serves a business purpose of the company and is required by the company, or by law or regulations, in order for employees to keep their present salary, status, or job. See www.irs.org for more information about business and individual reporting of educational expenses.

TABLE 10.1

Situations That May Result in Legal Action

• Failing to provide required training or providing inadequate training

• Incurring employee injury during a training activity

• Incurring injuries to employees or others outside the training session

• Incurring breach of confidentiality or defamation

• Reproducing and using copyrighted material in training classes without permission

• Excluding women, minorities, and older Americans from training programs

• Not ensuring equal treatment while in training

• Requiring employees to attend training programs they may find offensive

• Revealing discriminatory information during a training session

• Not accommodating trainees with disabilities

• Incorrectly reporting training as an expense or failing to report training reimbursement as income


Companies today are challenged to expand globally. Because of the increase in global operations, employees often work outside their country of origin or work with employees from other countries. Top managers who obtain experience through international assignments contribute to their global company’s successful performance. Table 10.2 shows the different types of employees in global companies. Expatriates work in a country other than their country of origin. The most frequently selected locations for expatriate assignments include the United States, China, the United Kingdom, Singapore, Germany, and Japan. Many U.S. companies are using international rotational assignments as a training tool. For example, at Microsoft, 14 divisions use international rotational programs. Companies are also increasing the movement of employees from one global location to another. These relocations involve the movement of management or technical positions from one country to another, such as from India to China or Vietnam. This type of relocation is less expensive than moving a U.S.-based manager (who would have to be paid wages comparable to what he or she would earn in the U.S.) to China. Unfortunately, only about 25 percent of companies make cultural training mandatory for international assignments. This may be because of the mistaken belief that employees who have already been on international assignments or who have traveled internationally will be able to adapt to a new culture.

Because of a growing pool of talented labor around the world, greater use of host-country nationals is occurring. (Host-country nationals are employees with citizenship in the country where the company is located.) A key reason is that a host-country national can more easily understand the values and customs of the work force than an expatriate can. Also, training and transporting U.S. employees and their families to a foreign assignment and housing them there tends to be more expensive than hiring a host-country national.

Cross-cultural preparation involves educating employees (expatriates) and their families who are to be sent to a foreign country. To successfully conduct business in the global marketplace, employees must understand the business practices and the cultural norms of different countries. Table 10.3’s “impression shock” column shows the typical impressions that a Japanese manager may have of the U.S. culture. The “integration shock” column describes the typical American interpretation of Japanese managers’ style. Clearly, for American and Japanese managers to have successful business discussions, they need to be prepared to deal with cultural differences!

Cross-cultural preparation is important for the success of the assignment, which can be very expensive. The annual cost of sending an employee overseas has been estimated to be three to seven times the employee’s salary. Besides salary, expenses include taxation, housing, and education. Most companies offer tax equalization to expatriates. That is, the company will either pay taxes, offer additional salary, or provide other goods and services, depending on tax laws, so that the employee does not incur additional tax expenses by living abroad. For example, expatriates in Germany may have twice the income tax they would have in the United States, and they are taxed on their housing and cost-of-living allowances. Most employees expect to duplicate their U.S. housing arrangements, and expatriates with families may expect that they will be able to send their children to English-speaking schools, which adds considerable expense. Unfortunately, 10 to 50 percent of expatriates return early from their assignments, costing companies between $250,000 and $1 million! Even if they do not return early, expatriates who are not adequately prepared for the assignments can still hurt the company through damaged relations, poor productivity, or lost business opportunities.

Dimensions of Cultural Differences

Many cultural characteristics influence employee behavior. Keep in mind that there are national cultures as well as company cultures. A culture refers to the set of assumptions that group members share about the world and how it works and the ideals worth striving for. Culture is important because it influences the effectiveness of different behaviors and management styles. A management style that seems friendly to some employees might offend others who would rather maintain distance and respect toward their bosses.

In Germany, managers achieve their status by demonstrating technical skills, and employees look to managers to assign tasks and resolve technical problems. In the Netherlands, managers focus on seeking agreement, exchanging views, and balancing the interests of people affected by a decision. Indians may shake hands rather limply and avoid eye contact. This is not a sign of dislike or disrespect. In Indian culture, a soft handshake conveys respect, and lack of eye contact is a sign of deference. Consider how cultural differences affect European managers’ perceptions of American managers. European managers admire the financial results of many American companies. But they also believe that American managers do not know how to eat and drink properly and do not understand European history. One German manager was embarrassed when managers from an Indiana company to whom he was recently introduced called him by his first name. In Germany, such informality occurs only after long-term relationships have been established. Other work style differences include the American emphasis on monthly and quarterly business results versus the European focus on yearly and longerterm profits.

Research conducted by G. Hofstede identified five dimensions of national culture: individualism-collectivism, uncertainty avoidance, masculinity-femininity, power distance, and time orientation. Figure 10.1 shows the locations of selected countries on these dimensions. Awareness of these dimensions can help trainers develop cross-cultural preparation programs that include meaningful information regarding the culture the expatriates will find themselves working in. Awareness of these dimensions can also help trainers adapt their training styles to employees in non-U.S. locations. But note that individuals differ within any culture, so these generalizations describe some members of a culture better than others.

The degree to which people act as individuals rather than as members of a group is the cultural dimension known as individualism-collectivism. In an individualistic culture like the United States, employees expect to be hired, evaluated, and rewarded based on their personal skills and accomplishments. In a collectivist culture, employees are more likely to have a voice in decisions. As you saw in Table 10.3, Japanese managers, who tend to have a collectivist orientation, can be shocked by the apparent self-interest of their American colleagues!

Uncertainty avoidance refers to the degree to which people prefer structured rather than unstructured situations. Cultures with a strong uncertainty avoidance orientation (e.g., Japan, Russia) favor structured situations. Religion, law, or technology in these countries socialize people to seek security through clear rules on how to act. In a culture with weak uncertainty avoidance (e.g., Jamaica, Hong Kong), employees cope by not worrying too much about the future.

Masculinity-femininity refers to the extent to which the culture values behavior considered traditionally masculine (competitiveness) or feminine (helpfulness). Examples of “masculine” cultures include Japan, Germany, and the United States. Here assertiveness and competitiveness are valued. In contrast, in a culture such as the Netherlands, a higher value is likely placed on quality of life, helping others, and preserving the environment.

Power distance refers to expectations for the unequal distribution of power in a hierarchy. India, Mexico, and Russia, for example, have great power distance. This means that people attempt to maintain differences between various levels of the hierarchy. One illustration of differences in power distance is how people talk to one another. In high power distance countries such as Mexico and Japan, people address each other with titles (Señor Smith, Smith-san). At the other extreme, in most situations in the United States people use first names—behavior that would be disrespectful in other countries.

Time orientation refers to the degree to which a culture focuses on the future rather than the past and present. In cultures with a short-term orientation, such as the United States, Russia, and West Africa, the orientation is toward the past and present. These cultures tend to emphasize respect for tradition and social obligations. A culture with a longterm orientation, such as Japan and China, values such traits as thrift and persistence, which pay off in the future rather than the present.

In a Mexican slipper-manufacturing plant (a culture with high power distance), an effort to expand the decision-making authority of production workers was derailed when the workers rebelled at doing what they saw as the manager’s work. Realizing they had moved too quickly, the managers narrowed the scope of the workers’ decision-making authority. On the other hand, Mexico’s high collectivism culture supported worker empowerment. The employees liked discussing team-related information and using the information to benefit the entire team.

Implications for Expatriates and Their Families: Cross-Cultural Training

To prepare employees for cross-cultural assignments, companies need to provide crosscultural training. To be successful in overseas assignments, expatriates (employees on foreign assignments) need to be

1. Competent in their area of expertise.

2. Able to communicate verbally and nonverbally in the host country.

3. Flexible, tolerant of ambiguity, emotionally stable, outgoing and agreeable, and sensitive to cultural differences.

4. Motivated to succeed, able to enjoy the challenge of working in other countries, and willing to learn about the host country’s culture, language, and customs.

5. Supported by their families.

Studies have found that personality characteristics were related to expatriates’ desire to terminate the assignment as well as to their performance in the assignment. Expatriates who were extroverted (outgoing), agreeable (cooperative, tolerant), and conscientious (dependable, achievement-oriented) were more likely to want to stay on the assignment and perform well. This suggests that cross-cultural training may be effective only when an expatriate’s personality predisposes him or her to be successful in assignments in other cultures.

One reason for U.S. expatriates’ high failure rate is that companies place more emphasis on developing employees’ technical skills than on preparing them to work in other cultures. Research suggests that the comfort of an expatriate’s spouse and family is the most important determinant of whether the employee will complete the assignment.

One key to successful foreign assignment appears to be a combination of training and career management for employees and their families. Foreign assignments involve three phases: predeparture, on-site, and repatriation (preparing to return home). Training is necessary in all three phases.

Predeparture Phase In the predeparture phase, employees need to receive language training and an orientation in the new country’s culture and customs. It is critical that the family be included in the Orientation Programs. Expatriates and their families need information about housing, schools, recreation, shopping, and health care facilities in the area where they will live. Expatriates also must discuss with their managers how the foreign assignment fits into employees’ career plans and what type of position expatriates can expect upon return. Although English is the common business language in many countries, failing to speak the native language may keep the expatriate from informal conversations and increase the risk of being misinterpreted. For example, a manager at ABB Ltd. oversees 7,000 employees in China and speaks only basic Mandarin. He is having difficulty conducting business with his Chinese employees because they are reluctant to say no to managers. Because he isn’t fluent in Chinese languages, he tries to read employees’ Body Language but often reaches the wrong conclusions.

Cross-cultural training methods range from presentational techniques, such as lectures that expatriates and their families attend on the customs and culture of the host country, to actual experiences in the home country in culturally diverse communities. Experiential exercises, such as miniculture experiences, allow expatriates to spend time with a family in the United States that is from the ethnic group of the host country.

Research suggests that the degree of difference between the United States and the host country (cultural novelty), the amount of interaction with host country citizens and host nationals (interaction), and the familiarity with new job tasks and work environment (job novelty) all influence the “rigor” of the cross-cultural training method.

Rigor here refers to the degree to which the training program emphasizes knowledge about the culture as well as behavior and skills needed to effectively live in the culture. Less rigorous training methods such as lectures and briefings focus on communicating factual material about the country and culture to trainees. More rigorous methods not only offer factual material but also help expatriates and their families develop communication skills and behavior needed to interact in another country. Figure 10.2 shows the relationship between training rigor and training focus (characteristics that a training program needs to be effective). Experiential training methods are most effective (and most needed) in assignments with a high level of cultural and job novelty that require a good deal of interpersonal interaction with host nationals. A trainer from India took 20 managers from Advanced Micro Devices on a two-week immersion trip during which the group traveled to New Delhi, Bangalore, and Mumbai, meeting with businesspersons and government officials. The program, which required six months of planning, provided the executives with information on foods to eat, potential security issues, and how to interact in business meetings. For example, Indians prefer to indirectly enter into business discussions, so the managers were advised to first discuss current events and other subjects before talking business.

On-Site Phase On-site training involves continued orientation to the host country and its customs and cultures through formal programs or through a mentoring relationship. Expatriates and their families may be paired with a mentor from the host country who helps them understand the new, unfamiliar work environment and community. Companies are also using the Web to answer questions from employees on expatriate assignments. Expatriates can access a Web site for answers to questions such as, “How do I conduct a meeting here?” or “What religious philosophy might have influenced today’s negotiation behavior?” Knowledge management software allows employees to contribute, organize, and access knowledge specific to their expatriate assignment.

A major reason that employees refuse expatriate assignments is that they can’t afford to lose their spouse’s income or are concerned that their spouse’s career could be derailed by being out of the work force for a few years. Spouses may be unable to work in the host country because of difficulties in obtaining a work permit. Some “trailing” spouses decide to use the time to pursue educational activities that could contribute to their long-term career goals. But it is difficult to find these opportunities in an unfamilar place. Pfizer, the pharmaceutical firm, is taking action to help trailing spouses. It provides a $10,000 allowance that the spouse can use in many different ways. A person at the expatriate location is assigned to help the spouse with professional development and locating educational or other resources. In countries where spouses are allowed to work, Pfizer tries to find them jobs within the company. Pfizer also provides cross-cultural counseling and language assistance. The company tries to connect the family with the expatriate community. Several multinational companies, including Hewlett-Packard, Axalto, and Group Danon, have worked together to develop partnerjob.com, an online employment resource that helps trailing spouses find work by posting job openings at other member companies. However, a major restriction to spouse employment is work permit rules requiring potential employers to demonstrate that the spouse possesses skills that are not locally available.

Research suggests that companies should offer support for expatriates. Services such as career counseling for expatriates are important for reducing stress and anxiety. Support from the foreign facility (either one person or a department) is also important for work and interaction adjustment. Expatriates who have high-quality relationships with their supervisors are more effective in completing job responsibilities.

Repatriation Phase Repatriation prepares expatriates for return to the parent company and country from the foreign assignment. Expatriates and their families are likely to experience high levels of stress and anxiety when they return because of the changes that have occurred since their departure. This shock can be reduced by providing expatriates with company newsletters and community newspapers and by ensuring that they receive personal and workrelated mail from the United States while they are on foreign assignment. It is also not uncommon for employees and their families to have to readjust to a lower standard of living in the United States than they enjoyed in the foreign country, where they may have had maid service, a limousine, private schools, and clubs. Salary and other compensation arrangements should be worked out well before employees return from overseas assignments.

Aside from reentry shock, many expatriates decide to leave the company because the assignment they are given upon returning to the United States has less responsibility, challenge, and status than the foreign assignment. Experts suggest that companies can minimize turnover by offering the expatriates recognition, career support, a choice in the assignment they are given upon return, and opportunities to use their international experience. Career planning discussions need to be held before the employees leave the United States to ensure that they understand the positions they will be eligible for upon repatriation.

Employees should be encouraged to self-manage the repatriation process. Before they go on the assignment, they need to consider what skills they want to develop and the types of jobs that might be available in the company for an employee with those skills. Because the company may undergo changes and because colleagues, peers, and managers may leave while the expatriate is on assignment, he or she needs to maintain contact with key company and industry people. Otherwise, the employee’s reentry shock will be heightened from having to deal with new colleagues, a somewhat changed job, and a company culture that may have shifted.

Royal Dutch Shell, a joint Dutch and United Kingdom oil and gas company, has one of the world’s largest expatriate work forces. To avoid expatriates who feel undervalued and leave the company, Royal Dutch gets involved with expatriates and their careers. Resource planners track workers abroad, helping to identify their next assignment. Most expatriates know their next assignment three to six months before the move, and all begin the next assignment with a clear job description. Expatriates who have the potential to reach toplevel management positions are placed in the home office every third assignment to increase their visibility to company executives. Expatriates are also assigned technical mentors who evaluate their skills and help them improve their skills through training at Royal Dutch’s training center.

Because of the difficulty in getting employees to accept foreign assignments and the low success rate of expatriate assignments, companies are creating “virtual” expatriate positions and using short-time assignments. Virtual expatriates are assigned an operation abroad to manage without being located permanently in that country. The employees periodically travel to the overseas location, return, and later use videoconferencing and communications technology to manage the operation. Virtual expatriates eliminate exposing the family to the culture shock of an overseas move. This setup also allows the employee to manage globally while keeping in close touch with the home office. Virtual expatriates are less expensive than traditional expatriates, who can cost companies over three times as much as a host-country national employee. One major disadvantage of virtual expatriates is that visiting a foreign operation on a sporadic basis may lengthen the time needed to build a local management team, so it will take longer to solve problems because of the lack of a strong personal relationship with local employees.

Because of family issues, poor economic times, and security issues, many companies are reducing the number of expatriates and relying more on short-time assignments, frequent business travel, and international commutes in which an employee lives in one country and works in another. Companies such as Wal-Mart Stores and NCR have reduced the number of expatriate assignments, but they still believe that long-term expatriate assignments are necessary in order to develop key talent possessing global responsibilities and experience. One of the potential difficulties of short-term international assignments is that employees may be perceived as foreigners rather than colleagues because they haven’t had the time to build relationships and develop trust among co-workers in their short-term location. Another is that traveling can take a physical and emotional toll on employees as they try to juggle business responsibilities with maintaining contact with family and friends. Procter & Gamble helps employees on short-term assignments by providing a trip fund that is based on the length of time an employee is on an extended business trip. For example, a U.S.-based employee working in western Europe for six months would get a fund containing the cost of five business-class round-trips. The employee can use money from the fund to take trips home or to cover family visits to the employee’s location.

Implications of Cultural Differences for Training

Table 10.4 presents the implications of each of the cultural dimensions for training. In the United States, interaction between the trainer and the trainees is viewed as a positive characteristic of the learning environment. However, in other cultures, this type of learning environment may not be familiar to the trainee or may violate expected norms of good instruction. For example, consider the cultural differences that exist when conducting training programs in China compared to Brazil. In China, trainers are highly respected. Because education is valued, trainees are most likely motivated to learn. Because China is a culture high on power distance, trainees expect the trainer to lead the class as an expert, lecture is the preferred delivery method, and it is difficult for trainees to question the trainer. Harmony is valued in China because the culture is low on individualism. Therefore, trainers should focus on group performance and not highlight the performance of individual trainees. In Brazil, on the other hand, trainers need to build a personal relationship with trainees, so trainers should share their experiences and background. Power distance in Brazil is accepted and respected. Popular training methods in Brazil include lecture and small group work. Group discussion of issues may be uncomfortable for trainers because the trainees may seem like they are arguing and angry with each other; however, they are engaging in acceptable communication behavior in Brazil.

Expectations regarding the environment in which training is to occur may also differ from U.S. culture. On-the-job training may be viewed skeptically by Russian employees because historically most workers are expected to have been formally trained by attending lectures at an institute or university. Because Russian culture values family relationships (Russian culture is more “feminine” than American culture), the meaningfulness of training materials is likely to be enhanced by using examples from employees’work and life situations.

Besides cultural dimensions, trainers must consider language differences in preparing training materials. If an interpreter is used, it is important to conduct a practice session with the interpreter to evaluate pacing of the session and whether the amount of topics and material is appropriate. Training materials, including videos and exercises, need to be translated well in advance of the training session.

Consider the Deloitte Touche Tohmatsu (DTT) ethics training. DTT must establish, sustain, and communicate high ethical standards to clients worldwide. Nine ethical principles are required by all the member firms: honesty and integrity, professional behavior, competence, objectivity, confidentiality, fair business practices, responsibility to society, respect and fair treatment of colleagues, and Leading by Example. DTT provides Web-based training through a program it calls the Integrity Compass. The company has a chief ethics partner for at least one member firm in each country it operates in. A toll-free telephone hotline is available for employees to report evidence of unethical conduct. The hotline presents a cultural challenge. In some countries, history and values make the hotline unacceptable. For example, in France and Italy, anonymous tips are associated with memories of people collaborating with the enemy during World War II. In parts of the Middle East, employees might accept the idea of making reports to a local office but not to an international headquarters. In addition to addressing the value differences, DTT faces the challenge of providing understandable and accurate ethics materials in several languages. Examples used in training materials also need to be realistic for the different cultures. As a result, although the nine ethical principles are shared globally, DTT has customized various elements of the ethics program to match the culture of each country.

The key to success in a foreign training session is preparation! The needs assessment must include an evaluation of cultural dimensions and the characteristics of the audience (such as language ability, trainees’ company, and cultural status).

TABLE 10.2

Types of Employees in Global Companies

Parent-country national: Employee whose country of origin is where the company has its headquarters

Host-country national: Employee from the host country

Third-country national: Employee who has a country of origin different from both the parent country and host country where he or she works



Despite the efforts of many companies to embrace diversity, women and minorities continue to report many barriers to feeling valued and advancing in their careers. A survey by the Society for Human Resource Management revealed barriers including stereotyping and preconceptions, corporate culture, exclusion from informal networks, and lack of mentors and role models. That is, anyone who is perceived as “different” is likely to have a difficult time contributing to company goals and experiencing personal growth.

What Is Diversity? Why Is It Important?

Diversity can be considered any dimension that differentiates one person from another. For example, at Verizon, diversity means embracing differences and variety, including age, ethnicity, education, sexual orientation, work style, race, gender, and more. The goals of diversity training are (1) to eliminate values, stereotypes, and managerial practices that inhibit employees’ personal development and therefore (2) to allow employees to contribute to organizational goals regardless of their race, age, physical condition, sexual orientation, gender, family status, religious orientation, or cultural background. Because of equal opportunity Employment Law, companies have been forced to ensure that women and minorities are adequately represented in their labor force. That is, companies are focused on ensuring equal access to jobs. Also, the impact of culture on the workplace, and specifically on training and development, has received heightened attention. Cultural factors that companies need to consider include the terrorist attacks of 9/11; employees’ fear of discussing cultural differences; more work being conducted in teams whose members have many different characteristics; the realization that people from diverse cultures represent an important customer market; and, especially for professional and technical jobs, the availability of highly trained employees that has many companies seeking workers from overseas. These new immigrants need diversity training to help them understand such facets of American culture as obsession with time, individualistic attitudes, and capitalistic ideas.

Managing Diversity involves creating an environment that allows all employees to contribute to organizational goals and experience personal growth. This environment includes access to jobs as well as fair and positive treatment of all employees. The company must develop employees who are comfortable working with people from a wide variety of ethnic, racial, and religious backgrounds. Managing diversity may require changing the company culture. It includes the company’s standards and norms about how employees are treated, competitiveness, results orientation, innovation, and risk taking. The value placed on diversity is grounded in the company culture.

Table 10.5 shows how managing diversity can help companies gain a competitive advantage. Various customer groups appreciate doing business with employees like themselves.

Also, diverse employees can contribute insights into customers and product markets. For example, Hispanic, African American, and other employee groups at Bausch & Lomb have helped the company better understand employees as well as customers. Bausch & Lomb is now doing more consumer marketing and targeting more advertising at specific groups, such as gays, who are more likely to use new procedures like Lasik eye surgery. Also, the company is looking at the rates of eye diseases in Hispanics and African Americans to see if customer needs match current product offerings. Companies also need creativity and innovation to cope with the rapid pace of change. Research supports the view that these traits are more likely to exist in a company whose employees come from a variety of backgrounds.

Capitalizing on diversity also plays a major role in the success of work teams. Diversity goes beyond differences in race, physical appearance, ethnicity, and sexual orientation to include differences in communication and problem-solving style and professional and functional expertise (e.g., marketing versus engineering). When teams don’t capitalize on differences but instead get caught up in identifying differences, distrust and unproductive teams usually result. Many companies (e.g., IBM, Colgate-Palmolive) have used a strategy that focuses on awareness of differences and on providing the skills that successful team members need. Team mission statements should reflect not only what the team is supposed to accomplish but also how interpersonal conflict should be handled. Some companies even require rotation of responsibilities so each person has a chance to demonstrate his or her abilities (and show that stereotypes based on race or function are not valid).

Diversity can enhance company performance when organizations have an environment that promotes learning from diversity. The link between diversity and company performance is both direct and indirect. The diversity–financial success relationship is not always directly observable. For example, a Hispanic manager at DuPont Merck recommended labeling a drug in Spanish. This significantly improved sales. Harley-Davidson has added more female and minority managers and has created a work environment to retain them. The company believes that more visible female and minority employees will attract more female and minority customers. Currently, women make up 10 percent of Harley- Davidson customers, and people of color account for 7 percent. IBM, by adding more female and minority managers, has increased its amount of business with small and midsize minority-owned companies from $10 million in 1998 to $300 million. For a company to see the success of its diversity efforts, it must make a long-term commitment to managing diversity. Successful diversity requires that it be viewed as an opportunity for employees to (1) learn from each other how to better accomplish their work, (2) be provided with a supportive and cooperative organizational culture, and (3) be taught leadership and process skills that can facilitate effective team functioning. Diversity is a reality in labor and customer markets and is a social expectation and value. Managers should focus on building an organizational environment, human resource practices, and managerial and team skills that all capitalize on diversity. As you will see in the discussion that follows, managing diversity requires difficult cultural change, not just slogans on the wall!

Managing Diversity through Adherence to Legislation

One approach to managing diversity is through affirmative action policies and human resource practices that meet standards of equal employment opportunity laws. This approach rarely results in changes in employees’ values, stereotypes, and behaviors, which can inhibit productivity and personal development. Figure 10.3 shows the cycle of disillusionment that results from managing diversity by relying solely on adherence to employment laws. The cycle begins when the company realizes that it must change policies regarding women and minorities because of legal pressure or a discrepancy between the number or percentage of women and minorities in the company’s work force and the number available in the broader labor market. To address these concerns, a greater number of women and minorities are hired by the company. Managers see little need for additional action because women and minority employment rates reflect their availability in the labor market. However, as women and minorities gain experience in the company, they likely become frustrated. Managers and co-workers may avoid providing coaching or performance feedback to women and minorities because they are uncomfortable interacting with individuals from different gender, ethnic, or racial backgrounds. Co-workers may express the belief that women and minorities are employed only because they have received special treatment (e.g., hiring standards were lowered). As a result of their frustration, women and minorities may form support groups to voice their concerns to management. Because of the work atmosphere, women and minorities may fail to fully utilize their skills and may leave the company.

Managing Diversity through Diversity Training Programs

The preceding discussion is not to suggest that companies should be reluctant to engage in affirmative action or pursue equal opportunity employment practices. However, affirmative action without additional supporting strategies does not deal with issues of assimilating women and minorities into the work force. To successfully manage a diverse work force, companies need to ensure that

• Employees understand how their values and stereotypes influence their behavior toward people of a different gender, ethnicity, race, or religion.

• Employees gain an appreciation of cultural differences among themselves.

• Behaviors that isolate or intimidate minority group members improve.

These goals can be accomplished through diversity training programs. Diversity training refers to training designed to change employee attitudes about diversity and/or to help employees develop the skills needed to work with a diverse work force. Diversity training programs differ according to whether attitude or behavior change is emphasized. Some research suggests that composition of the training group and prior experience with diversity training may affect attitudinal and behavior change. Diversity training programs purchased off the shelf or developed without taking into account the company’s needs, history, and culture will likely be unsuccessful.

Attitude Awareness and Change Programs Attitude awareness and change programs focus on increasing employees’ awareness of differences in cultural and ethnic backgrounds, physical characteristics (e.g., disabilities), and personal characteristics that influence behavior toward others. Awareness training covers questions such as, What is diversity? Who am I? and stereotypes, assumptions and biases regarding different ethnic groups. The assumption underlying these programs is that by increasing their awareness of stereotypes and beliefs, employees will be able to avoid negative stereotypes when interacting with employees of different backgrounds. The programs help employees consider the similarities and differences between cultural groups, examine their attitudes toward affirmative action, or analyze their beliefs about why minority employees are successful or unsuccessful in their jobs. Many of these programs use videotapes and experiential exercises to increase employees’ awareness of the negative emotional and performance effects of stereotypes, values, and behaviors on minority group members. Sodexo serves millions of customers each day in the cafeterias it operates in companies and universities. As a result, Sodexo believes that it is important for its managers to understand the needs of a diverse customer base. The company has mandatory classes that provide managers with an overview of equal opportunity and affirmative action laws. As you will see, these classes are part of the company’s larger effort to manage diversity. The classes relate to other initiatives, which include courses on generational differences and body language that can be offensive. The courses use group dialogues and scenarios. One game requires participants to wear labels such as “hearing impaired” and interact with others based on that description.

The attitude awareness and change approach has been criticized for several reasons. First, by focusing on group differences, the program may communicate that certain stereotypes and attitudes are valid. For example, in diversity training a male manager may learn that female employees prefer to work by building consensus rather than by arguing until others agree with their point. He might conclude that the training has validated his stereotype. As a result, he will continue to fail to give women important job responsibilities that involve “heated” negotiations with customers or clients. Second, encouraging employees to share their attitudes, feelings, and stereotypes toward certain groups may cause employees to feel discriminated against, guilty, angry, and less likely to see the similarities among racial, ethnic, or gender groups and the advantages of working together. (Consider the discussion of Lucky Store Foods.) Third, if diversity training only covers issues such as race, gender, ethnicity, or sexual orientation, some employees may feel that their interests are not represented in the program.

Behavior-Based Programs Behavior-based programs focus on changing the organizational policies and individual behaviors that inhibit employees’ personal growth and productivity.

One approach of these programs is to identify incidents that discourage employees from working up to their potential. Groups of employees are asked to identify specific promotion opportunities, sponsorships, training opportunities, or performance management practices that they believe were handled unfairly. The program may collect employees’ views regarding how well the work environment and management practices value employee differences and provide equal opportunity. Specific training programs may be developed to address the issues presented in the focus groups.

Another approach is to teach managers and employees basic rules of behavior in the workplace. These lessons include behavior toward peers and managers as well as customers. For example, managers and employees should learn that it is inappropriate to use statements and engage in behaviors that have negative racial, sexual, or cultural content. Companies that have focused on teaching rules and behavior have found that employees react less negatively to this type of training than to other diversity training approaches. All 11,000 employees at Saks Fifth Avenue, the New York–based retailer, have received diversity training that focuses on providing customer service to a diverse customer base. The training is video-based and shows actual employees interacting with customers in various situations. Saks Fifth Avenue estimates that every customer interaction is worth about $250, so treating customers inappropriately can cost the company a lot of money.

A third approach is cultural immersion. Cultural immersion refers to the process of sending employees directly into communities where they have to interact with persons from different cultures, races, and/or nationalities. The degree of interaction varies, but it may involve talking with community members, working in community organizations, or learning about religious, cultural, or historically significant events. For example, the United Parcel Service (UPS) Community Internship Program is a management development program designed to help UPS senior managers understand the needs of diverse customers and a diverse work force through exposure to poverty and inequality. UPS is the world’s largest package delivery company and a leading global provider of transportation and logistic services. Since 1968, over 1,200 senior managers have completed the program, an internship that typically lasts four weeks. The internships take the managers to cities throughout the United States, where they work on the problems facing local populations. UPS managers may find themselves serving meals to the homeless, working in AIDS centers, helping migrant farm workers, building temporary housing and schools, and managing children in a Head Start program. These experiences take the managers outside their comfort zones, and the problems that they encounter—from transportation to housing to education to health care—help them better understand the issues that many UPS employees face daily. This enlightenment is a business necessity for UPS because three out of four managers are white, whereas 35 percent of the employees are minorities. UPS has not formally evaluated the program, but the company continues to invest $10,000 per intern. The company has invested more than $13.5 billion in the program since its start in 1968. Despite the lack of hard evaluation data, UPS managers report that the program helps them look for unconventional solutions to problems. One manager who spent a month working at a halfway house in New York was impressed by the creative ideas of uneducated addicts for keeping teens away from drugs. The manager realized that she had failed to capitalize on the creativity of the employees she supervised. As a result, when she returned to her job and faced problems, she started brainstorming with her entire staff, not just senior managers. Other managers report that the experience helped them empathize with employees facing crises at home.

Characteristics of Successful Diversity Efforts

Which is most effective, a behavior-based program or an attitude awareness and change program? Increasing evidence shows that attitude awareness programs are ineffective and that one-time diversity training programs are unlikely to succeed. Effective diversity training programs are part of a broader company strategy to manage diversity and make capitalizing on diversity a business goal.

For example, R. R. Donnelley & Sons suspended its diversity awareness training program even though the company spent more than $3 million on it as a result of a racial discrimination lawsuit. At various R. R. Donnelley training sessions, participants were encouraged to voice their concerns. Many said that they were experiencing difficulty in working effectively because of abuse and harassment. The managers who were attending the training disputed those concerns. Also, after training, an employee who applied for an open position was rejected because, she was told, she was too honest in expressing her concerns during the diversity training session. Although R. R. Donnelley held many diversity training sessions, little progress was made in increasing the employment and promotion rates of women and minorities. Because of the low ratio of black employees to white employees, many black employees were asked to attend multiple training sessions to ensure diverse groups, which they resented. The company declined to release to shareholders data that it provided to the Equal Employment Opportunity Commission regarding female and minority representation in jobs throughout the company. The firm also failed to act on recommendations made by company-approved employee “diversity councils.”

More generally, surveys of diversity training efforts have found that

• The most common area addressed through diversity is the pervasiveness of stereotypes, assumptions, and biases.

• Fewer than one-third of the companies do any kind of long-term evaluation or followup. The most common indicators of success are reduced number of grievances and lawsuits, increased diversity in promotions and hiring, increased self-awareness of biases, and increased consultation of human resource specialists on diversity-related issues.

• Most programs last only one day or less.

• Three-fourths of the survey respondents indicate that they believe the typical employee leaves diversity training with positive attitudes toward diversity. However, over 50 percent report that the programs have no effect over the long term.

• Twenty-nine percent of survey respondents report that no tools are provided to reinforce diversity training and 22 percent report that no development or advancement issues are addressed.

Table 10.6 shows the characteristics associated with the long-term success of diversity programs. It is critical that the diversity program be tied to business objectives. For example, cultural differences affect the type of skin cream consumers believe they need or the fragrance they may be attracted to. Understanding cultural differences is part of understanding the consumer (which is critical to the success of companies such as Avon). Top Management Support can be demonstrated by creating a structure to support the initiative. For example, Pepsi’s president believes that the full potential of diversity cannot be realized unless employees are “comfortable being uncomfortable” so that they are willing to share difficult issues in the workplace. As a result, members of the senior management team have been named as sponsors for specific employee groups, including African Americans, Latinos, Asians, women, women of color, white males, people with disabilities, and people who are gay, lesbian, and transgendered. The managers are expected to understand their group members’ needs, identify talent, and mentor at least three employees in their group. Also, they are expected to provide updates to the president on their progress.

Another important characteristic of diversity programs is that managers are rewarded for progress toward meeting diversity goals. Allstate Insurance Company surveys all 50,000 of its employees four times a year. The survey asks employees to evaluate how well the company is satisfying customers and employees. Several questions are used as a “diversity index.” Employees are asked questions about the extent to which managers’ racial or gender biases affect development opportunities, promotions, and service to customers. Twenty-five percent of a manager’s yearly bonus is determined by how employees evaluate him or her on the diversity index.

Consider Sodexo’s diversity effort. Sodexo is the leading food and facilities management company in the U.S. Canada, and Mexico, serving 10 million customers daily. Diversity is seen as being important for the company to meet its business growth targets. As a result, diversity and inclusion are core elements of Sodexo’s business strategy. The objectives of the company’s efforts to manage diversity are related to the business, its employees, its shareholders, and the community. For example, some of the company’s objectives include understanding and living the business case for diversity and inclusion; increasing awareness of how diversity relates to business challenges; creating and fostering a diverse work environment by developing management practices that drive hiring, promotion, and retention of talent; engaging in relationship management and customer service to attract and retain diverse clients and customers; and partnering with women and minority businesses to deliver food and facility management services.

Sodexo separates equal employment opportunity (EEO) and legal compliance training from diversity education. Every three years, employees are required to take EEO and affirmative action refresher courses. Top management is also involved in and committed to managing diversity. The senior executives’ program includes ongoing classroom training that is reinforced with community involvement, sponsorship of employee groups, and the mentoring of diverse employees. Executives are engaged in learning the business case for diversity and are accountable for the company’s diversity agenda. Every manager takes an eight-hour introductory class (Spirit of Diversity). Other learning opportunities are also available, including three-to four-hour learning labs that include topics such as cross-cultural communications, sexual orientation in the workplace, generations in the workplace, and gender in the workplace. The company’s learning and development team develops customized learning solutions for different functions and work teams. For example, a course related to selling to a diverse client base was developed and offered to the sales force and a cross-cultural communications program was provided for recruiters.

In addition to diversity training activities, Sodexo has six employee network groups, such as the African American Leadership Forum and People Respecting Individuality, Diversity and Equality, that provide a forum for employees’ professional development and the sharing of ideas to support the company’s diversity efforts. Sodexo’s “Champions of Diversity” program rewards and recognizes employees who advance diversity and inclusion.

To emphasize the importance of diversity for the company, at Sodexo each manager has a diversity scorecard which evaluates their success in the recruitment, retention, promotion, and development of all employees. The scorecard includes both quantitative goals as well as an evaluation of specific behaviors such as participating in training, mentoring, and community outreach. A portion of managers’ pay bonuses is determined by success in these areas.

Sodexo has found that its diversity training and efforts to manage diversity are having a positive impact on business results. Its mentoring program has led to the increased productivity, engagement, and retention of women and people of color. There has been an estimated return on investment of $19 for every $1 spent on the program. Sodexo also has been awarded several new business contracts and has retained clients because of its involvement in managing diversity.

Most effective programs to manage diversity, such as Sodexo’s diversity program, include the key components shown in Table 10.7. Other companies, such as Denny’s (in response to a lawsuit) and Weyerhaeuser (in response to a retiring work force and survey results that suggested the need for a more accepting workplace), have established diversity programs that include some of the same features as Sodexo’s program. As should be apparent from this discussion, successful diversity programs involve more than just an effective training program. They require an ongoing process of culture change that includes top management support as well as diversity policies and practices in the areas of recruitment and hiring; training and development; administrative structures, such as conducting diversity surveys and evaluating managers’ progress on diversity goals; and improved relationships with minority customers, vendors, and suppliers.


TABLE 10.6 Characteristics Associated with Diversity Programs’ Long-Term Success

• Top management provides resources, personally intervenes, and publicly advocates diversity.

• The program is structured.

• Capitalizing on a diverse work force is defined as a business objective.

• Capitalizing on a diverse work force is seen as necessary to generate revenue and profits.

• The program is evaluated using metrics such as sales, retention, and promotion rates.

• Manager involvement is mandatory.

• The program is seen as a culture change, not a one-shot program.

• Managers and demographic groups are not blamed for problems.

• Behaviors and skills needed to successfully interact with others are taught.

• Managers are rewarded on progress toward meeting diversity goals.

• Management collects employee feedback and responds to it.

• The company fosters a safe and open culture to which all employees want to belong and in which all employees can discover and appreciate the differences and benefits of diversity.

TABLE 10.7 Key Components of Effective Managing Diversity Programs

Top Management Support

• Make the business case for diversity.

• Include diversity as part of the business strategy and corporate goals.

• Participate in diversity programs and encourage all managers to attend.

• Form an executive management team that mirrors the diversity of the work force.

Recruitment and Hiring

• Ask search firms to identify a wider array of candidates.

• Enhance the interviewing, selection, and hiring skills of managers.

• Expand college recruitment at historically minority colleges.

Identifying and Developing Talent

• Form a partnership with INROADS, a nationwide internship program that targets minority students for management careers.

• Establish a mentoring process.

• Refine the company’s global succession planning system to improve identification of talent.

• Improve the selection and development of managers and leaders to help ensure that they are capable of maximizing team performance.

• Ensure that all employees, especially women and minorities, have access to management development and leadership programs.

Employee Support

• Form resource groups or employee network groups that include employees with common interests (e.g., Asian Pacific employees, women, gays, Native American employees, veterans, Hispanic employees) and use them to help the company develop business goals and understand the issues with which they are concerned.

• Celebrate cultural traditions, festivities, and holidays.

• Make work/life balance initiatives, such as flextime, telecommuting, and eldercare, available to all employees.

Ensuring Fair Treatment

• Conduct extensive diversity training.

• Implement an Alternative Dispute Resolution process.

• Include women and minorities on all human resource committees throughout the company.

Holding Managers Accountable

• Link managers’ compensation to their success in meeting diversity goals and creating openness and inclusion in the workplace.

• Use employee attitude or engagement surveys to track employees’ attitudes regarding inclusion, fairness, opportunities for development, work/life balance, and perceptions of the company’s culture.

Improving Relationships with External Stakeholders

• Increase marketing to diverse communities.

• Provide customer service in different languages.

• Broaden the company’s base of suppliers and vendors to include businesses owned by minorities and women.

• Provide scholarships and educational and neighborhood grants to diverse communities and their members.


Industry and education experts agree that a system is needed for training students who do not attend college directly after high school. School-to-work transition programs combine classroom experiences with work experiences to prepare high school graduates for employment. Many school districts have changed their curriculum to include more work experience as part of the traditional classroom-based educational experience. The federal government, recognizing a need for this type of program, has helped fund local government efforts. The School-to-Work Opportunities Act is designed to assist the states in building school-to-work systems that prepare students for high-skill, high-wage jobs or future education. The act encourages partnerships between educational institutions, employers, and labor unions. The act requires that every school-to-work system include work-based learning, school-based learning, and connecting activities that match students with employers and bring classrooms and workplaces together. For example, a high school in Wisconsin has a program that combines engineering classes at school with paid, onthe- job engineering experience. Wisconsin has one of the most fully developed schoolto- work programs. Apprenticeships are offered in 13 fields ranging from tourism to engineering. Committees of employers and educators developed the skill sets to be covered and identified appropriate classroom and work experiences.

Federal Tool & Engineering, a customized metal stamping company based in Wisconsin, received a $1.5 million order because the company had taken the time and invested the money to get several employees certified in advanced manufacturing skills. Because of grants made by the state of Wisconsin to technical college and work-force development boards, four employees were able to obtain certification by attending a standardized training program that focuses on quality practices and measurement, safety, process and production, and maintenance awareness. The program also helps employees develop math, science, communications, computing, problem-solving, and teamwork skills. Wisconsin’s governor has made a commitment to have 40 percent of the state’s manufacturing work force complete at least one part of the certification by 2016.

Universities and colleges have begun developing or have restarted nuclear-education programs, often working with energy companies concerned about a potential shortage of engineers in anticipation of new plants going online to meet increasing electricity demand. The median age of an employee in the nuclear-energy field is 48, and up to 35 percent of the industry’s workers may be eligible to retire within five years. The energy provider Dominion recently approached Virginia Commonwealth University (VCU) with concerns about its aging work force. In response, the university has added a nuclear track to its master’s of engineering program. The bulk of the program’s 20 students are Dominion employees who are taking courses taught by mechanical- and electrical-engineering professors and Dominion engineers and scientists.

Company-sponsored mentoring programs are also used to link companies to students. Leadership Connections matches mentors with female high school students who are recruited through churches, schools, and juvenile courts. The students come from poor, rural North Carolina. The volunteer mentors are women from more than 40 companies, including Sara Lee and Carolina Power and Light. The only requirement is that the women be willing to commit to improving the mentee’s well-being. The mentoring program gives students an awareness of the expectations of the working world. The mentors help at-risk students develop self-esteem and confidence and stay out of trouble. Most of the students have improved their school grades since joining the program, and many go on to college.


Companies are seeking to hire people from nontraditional sources such as welfare roles and prisons to meet labor needs and give hard-to-employ persons a second chance. Also, the welfare reform act passed by Congress in 1996 (the Personal Responsibility and Work Opportunity Act) increased the pressure on welfare recipients to find jobs, through either public employment agencies or other ways. Under the law, most people have a five-year limit on benefits and must find jobs within two years. The law also gives employers incentives (tax credits) for each welfare recipient they hire. Training plays an important part in helping these employees succeed on the job.

Mark Goldsmith, a former Revlon executive, started his own nonprofit organization called Getting Out and Staying Out (GOSO). GOSO is currently working with over 200 inmates serving prison sentences in New York. GOSO works with young prisoners who are attending school and have been in prison for only a short time. It provides individual job and education counseling and interview preparation, maintains a job bank of openings from employers willing to hire former inmates, provides educational scholarships, and holds seminars. One seminar taught by a retired construction company executive focused on the skills required to become a successful tradesperson. GOSO has been successful. Fewer than 10 percent of the 400 released inmates GOSO has worked with have been arrested again, compared with two-thirds of prisoners nationwide who have been rearrested following their release. Seventy-five percent of the former prisoners in GOSO are employed or attending school. Former inmates stop by to share good news about a job, discuss problems they are having at home or at work, or return for counseling if they lose or don’t get a job, want to change jobs, or decide to go back to school.

At the Greater Chicago Food Depository, a nonprofit food bank, the primary mission has been to feed the hungry. The Chicago food bank—and others around the country affiliated with America’s Second Harvest––has been offering 30 chef training classes to about 1,000 students. These programs teach low-income students the basics of cooking, such as slicing, dicing, sizing, and fricasseeing, as well as advanced skills—with the goal of getting each student a job. Also, the program teaches the students life skills, such as punctuality, responsibility, teamwork, and commitment. As one of the executive chef instructors told her 17 students on the first day of class, “When you’re out there working and you’re 15 minutes late, I’m already calling someone to do your job.” Seventy percent of program graduates find jobs within one month and more than 65 percent retain their first job for at least six months. For students who succeed, the program helps them escape the cycle of poverty.

There are two methods for training welfare recipients. In the first method, government agencies refer welfare recipients to a company-sponsored training program subsidized with money and tax credits from the government.

The second method is for state and local governments to provide life and skills training directly to welfare recipients. The skills developed are often based on the needs of local employers. For example, in Oregon, the Department of Human Resources’ JOBS training program has helped 19,000 people find work. Participants attend training sessions on basic work habits and learn to interview, write résumés, and manage their personal lives. The welfare-to-work transition is facilitated by a state law that requires welfare recipients to find work or risk losing their benefits. Another program requires the state to reimburse companies for the wages of welfare recipients for six months, while the employers provide meaningful work experiences and training. In one program for clerical workers, 85 percent of those who stayed in the program for four months were hired by the employers and still had jobs even after the state subsidy ended.

One problem facing welfare-to-work programs is that as unemployment rises, welfare recipients face competition against an increased number of job seekers who have greater experience, fewer problems finding child care, and better access to transportation. For example, Cleveland Track Material, which makes railroad track equipment, has 14 Center for Employment Training alumni in its work force of 220 employees. Cleveland Track Material would like to hire more workers from the employment center, but when business dropped, the company reduced all hiring.

The Workforce Investment Act of 1998 created a comprehensive work force investment system. The reformed system is intended to be customer focused, help Americans manage their careers through information and high-quality services, and help U.S. companies find skilled workers. The cornerstone of the new system is One-Stop service delivery, which unifies numerous training, education, and employment programs into a single, customer-friendly system in each community. The underlying notion of One-Stop is the coordination of programs, services, and governance structures so that the customer has access to a seamless system of work force investment services. It is envisioned that a variety of programs could utilize One-Stop’s common intake, case management, and job development services in order to take full advantage of One-Stop’s potential for efficiency and effectiveness. A wide range of services, including training and employment programs, will be available to meet the needs of employers and job seekers. The challenge in helping One- Stop live up to its potential is to make sure that the state and local boards can effectively coordinate and collaborate with the network of other service agencies, including Temporary Assistance for Needy Families agencies, transportation agencies and providers, metropolitan planning organizations, child care agencies, nonprofit and community partners, and the broad range of partners who work with youth.

O*NET, the Occupational Information Network, is a unique, comprehensive database and directory of occupational titles, worker competencies, and job requirements and resources. O*NET, which supports One-Stop service delivery, is the primary source of occupational information in the United States. The O*NET database includes information on skills, abilities, knowledge, work activities, and interests associated with occupations. O*NET information can be used to facilitate career exploration, vocational counseling, and a variety of human resource functions, such as developing job orders, creating position descriptions, and aligning training with current workplace needs. Job seekers can use O*NET to find out which jobs fit with their interests, skills, and experience and to identify the skills, knowledge, and abilities needed for their dream job.


Because employers have not been successful at finding job candidates with appropriate levels of basic skills (a recruiting and selection issue), employers have been forced to develop basic skills training programs. Also, as companies move toward high-performance workplace systems, they may find that current employees lack the skills needed to realize these systems’ benefits. Basic skills include the ability to read instructions, write reports, and do math at a level needed to perform job duties.

Basic skills programs involve several steps. First, the necessary skill level needs to be identified. That is, what level of basic skills do employees need to be successful in their jobs? Second, employees’ current skill levels must be assessed. The training programs that are developed will be based on the gap between current skill level and desired skill level. Training programs need to include an emphasis on basic skills in the context of work problems to increase their meaningfulness to trainees. In 24-hour operations (such as manufacturing plants) that use several shifts of employees, basic skills training needs to be available to employees during their off-shift times. Finally, many employees who lack basic skills do not want their peers to be aware of these deficiencies. Participation in basic skills training needs to be as private as possible. If privacy cannot be guaranteed, those employees who most need basic skills training may not participate.

Consider how Smith & Wesson dealt with its need for qualified workers. Smith & Wesson, the firearms manufacturer, reorganized its production department. The reorganization made jobs more interesting and challenging by requiring employees to interpret process control statistics and operate in work teams. The reorganization revealed that some employees’ basic skills deficiencies kept them from being successful in the new production environment. Smith & Wesson conducted an assessment of the skills that employees needed in the new production environment. This assessment identified three skills: higher math skills for understanding numerical control equipment, better reading and writing skills, and better oral communication skills for working in teams and interacting with other employees. A literacy audit showed that employees needed to have at least an eighth-grade reading level. To determine which employees needed training, Smith & Wesson used tests. To ensure employee confidentiality, the test results were sent to employees’ home addresses. Thirty percent of employees scored below the eighth-grade level in either reading or math. These employees were told that they would not lose their jobs, but they were expected to take basic skills classes on company time, paid for by the company. Management presentations on the business benefits of the classes helped encourage employees who were reluctant to participate.

Evaluations of the first classes were very positive. Seventy percent of employees who attended the classes improved their reading skills to the eighth-grade level or higher. A company survey found that the program helped employees improve their writing and ability to read charts, graphs, and bulletin boards; increased their ability to use fractions and decimals; and improved their self-confidence.

Public Service Enterprise Group (PSEG) was trying to recruit new technicians and linemen to replace retiring employees. However, PSEG found that many new recruits could not pass the math section on pre-Employment Tests. As a result, PSEG joined six New Jersey community colleges and technical high schools to create a new degree program in energy technology. Since starting the new degree program, PSEG has hired almost all of the 85 program graduates. The company has saved money hiring low-level employees since it no longer needs to advertise or spend money and time training new hires in basic skills. Likewise, Bristol-Myers Squibb has started a relationship with a technical school and community college located near its new manufacturing plant. Bristol-Myers is working with the educational institutions to train students in the maintenance and mechanical skills, technical writing, and Food and Drug Administration–approved manufacturing practices they need to work in the new plant.


A Lifelong Learning Account (LiLA) refers to an account for adult education into which both the employee and the company contribute and the employee keeps—even if he or she leaves the company. The money in the LiLA can be used to pay for a range of educational expenses, including tuition, books, fees, supplies, and non-job-specific certification courses. The money in the account can be rolled over from year to year. Maine and Washington were the first states to create LiLAs. The federal Lifelong Learning Accounts Act of 2008 (proposed but not yet voted on) would allow individuals to contribute up to $5,250 to LiLA accounts each year and the contributions would be excluded from their gross incomes for federal tax purposes. Employers could match the contributions and receive tax credits for each dollar matched, up to $500 per year for each employee.

Some companies have taken the initiative to introduce their own type of LiLA to make continuing education a priority. IBM’s Matching Accounts for Learning Initiative program allows employees to contribute up to $1,000 per year into a portable, interest-bearing account with a 50 percent company match. Employees can use the money to gain skills not directly related to their current jobs, such as learning a new language. University of California at San Francisco (UCSF) Medical Center set up a small pilot LiFA program that was so successful it is being expanded. During the pilot phase of the program, employees took training in health care–related skills as well as real estate, finance, and word processing. Managers at UCSF Medical Center believe that, although employees are using the LiLA accounts to learn skills unrelated to their jobs, they are unlikely to leave for other job opportunities because of the investment that UCSF has made in their careers.


A major training and development issue facing companies today is how to move women and minorities into upper-level management positions—how to break the glass ceiling. Although women represent half of all managers and professionals, they hold only approximately 10–15 percent of corporate officer positions. Seventy-four of the top 500 companies have no female corporate officers. The glass ceiling is a barrier to advancement to the higher levels of the organization. This barrier may be due to stereotypes or company systems that adversely affect the development of women or minorities. The glass ceiling is likely caused by lack of access to training programs, by lack of access to appropriate developmental job experiences, by lack of access to developmental relationships such as mentoring and informal social networks, and by an organizational culture that may work against women. Male managers’ development experiences tend to be given to them; female managers have to be more proactive about getting development assignments. Research has found no gender differences in access to job experiences involving transitions such as handling new job responsibilities or creating change such as fixing business problems or making strategic changes in the business. However, male managers received significantly more assignments involving high levels of responsibility (high stakes, international assignments managing business diversity, handling external pressure) than did female managers of similar ability and managerial level. Also, female managers reported experiencing more challenge because of lack of personal support (a type of job demand considered to be an obstacle that has been found to relate to harmful stress). Career encouragement from peers and senior managers does help women advance to the highest management levels. Managers making developmental assignments must carefully consider whether gender biases or stereotypes are influencing the types of assignments given to women versus men.

Consider Safeway’s efforts to melt the glass ceiling. Safeway has 1,775 grocery stores in the U.S. and Canada. To meet the challenges of specialty grocers and big-box, low-price competitors such as Wal-Mart and Target, and recognizing that 70 percent of its customers are women, Safeway has taken steps to help develop women for advancement into management. Safeway’s women’s initiative, “Championing Change for Women: An Integrated Strategy,” includes programs that focus on leadership development, mentoring, and worklife balance. One example is the Retail Leadership Development (RLD) program. Safeway typically promotes from within and has focused on the retail level as a source for potential managers through the RLD program. Ninety percent of Safeway’s 1,800 store managers have moved up through the company’s management ranks through the RLD program and all but one of the company’s 10 division presidents began their career working in one of the stores.

The RLD program is helping women and minorities achieve top level management positions. Those who complete the program are assigned to a store or an assistant manager position that can lead to corporate-level leadership positions. To help support women’s efforts to gain leadership positions, Safeway ensures that women who work part-time and use flexible schedules have similar opportunities for coaching, advancement, and development as those employees who are on traditional work schedules. The company also has realized that frequent relocations don’t work for some employees, especially women. As a result, rejecting a relocation assignment is no longer considered a career-busting decision.

Safeway also provides a women’s leadership network for women interested in advancing into management. The network sponsors events such as presentations at different company locations that highlight the success of Safeway women and provide learning opportunities. Executives who attend these presentations meet with women who have been identified as candidates for management positions and are targeted for development opportunities in stores. These discussions focus on the women’s career interests and the executives suggest job opportunities and encourage them to apply for positions that can help them advance to the next management level. Safeway’s mentoring program emphasizes that a manager’s first protégé should be a woman because of the lack of female mentors. Safeway’s work-life balance program includes flextime and encourages all women, regardless of their family status, to have a healthy balance between work and life. Safeway realizes that its managers are responsible for helping women reach management positions. As a result, all managers attend a Managing Diversity Workshop. Managers are evaluated on their success in meeting diversity goals. Managers who reach their targets can increase their bonus pay by 10 percent.

Safeway’s women’s initiative has been successful. Since 2000 the number of female store managers has increased by 42 percent. The number of women who have qualified for and completed the RLD program has increased 31 percent during the past five years. A research report prepared by Lehman Brothers shows that the program has increased the company’s sales and earnings. By enhancing its reputation as an employer of choice for women and minorities, Safeway has received the Catalyst Award, which is presented annually to outstanding companies that promote the career advancement of women and minorities. Table 10.8 provides recommendations for melting the glass ceiling and retaining talented women.

Like Safeway, other companies are also working to melt the glass ceiling. Although most of LeasePlan USA’s 450 employees were women, the majority of the company’s top managers were men. To help promote more women to management positions, LeasePlan USA hired a consultant to develop a program that focused on skill assessment, career guidance, and communication. The program also featured networking events and a panel discussion with female executives from other companies. For every five women participating in the program, one has been promoted. In addition, 6 of the company’s top 14 managers are now women, an increase of our women from two years ago. The program is also improving job satisfaction and engagement among women employees. Survey results show that one year after the program’s implementation, the number of women who feel that management supports their efforts to manage their careers and who think that positions at LeasePlan are fairly awarded has increased by 12 percent.

Women and minorities often have trouble finding mentors because of their lack of access to the “old boy network,” managers’ preference to interact with other managers of similar status rather than with line employees, and intentional exclusion by managers who have negative stereotypes about women’s and minorities’ abilities, motivation, and job preferences. Potential mentors may view minorities and women as a threat to their job security because they believe affirmative action plans give those groups preferential treatment. Wal-Mart’s strong corporate culture—emphasizing leadership, trust, willingness to relocate on short notice, and promotion from within—may have unintentionally created a glass ceiling. Eighty-six percent of store manager positions were held by men. More than two-thirds of Wal-Mart managers start as hourly employees. Hourly job openings are posted at each store, but Wal-Mart never posted openings for management training positions that allowed hourly employees to move up into salaried, management positions. Part of the reason for this practice was that Wal-Mart values efficiency and never saw the need for job postings to fill open management positions. The other reason is that Wal-Mart trusts its managers to promote individuals who deserve promotion. However, women who work at Wal-Mart claimed that it was difficult to find out about manager jobs. Male employees had more access to information about management job openings because they spent more time socializing and talking with management employees (who were primarily male). Wal-Mart’s corporate attitude that managers had to be willing to relocate on short notice resulted in management opportunities that accommodated men more than women. Wal-Mart has taken many steps to ensure that the company remains a good place to work. For example, to give women more opportunities for management positions, Wal-Mart developed a posting system for all management jobs. Through Women in Leadership seminars, Wal-Mart has been able to help its female employees improve those skills required for management positions. The company also provides employees with a database that notifies them of job openings at stores across the country. As a result of its efforts, Wal-Mart’s board of directors now includes three women and more than 40 percent of the company’s officials and managers are women. The company has received a number of arrivals for its development of women (e.g., Working Mother magazine’s 2007 Best Company for Multicultural Women).

Many companies, as part of their approach to managing a diverse work force, are using mentoring programs to ensure that women and minorities gain the skills and visibility needed to move into managerial positions. Procter & Gamble (P&G) has a unique program called Mentoring Up, which asks mid- and junior-level female managers to mentor seniorlevel male managers to raise their awareness of work-related issues affecting women. The goals of the program are to reduce turnover of promising female managers, to give female managers greater exposure to P&G’s top decision makers, and to improve crossgender communications. Mentoring Up was developed because of the turnover of highpotential female employees who in exit interviews cited not feeling valued (rather than money, promotions, or better assignments) as the reason they were leaving the company. Although the program was designed to help upper-level male managers better understand how to work with women, the program also includes five upper-level female managers who participate as protégés.

The Mentoring Up program incorporates many characteristics of effective mentoring programs. All eligible junior-level female managers and senior-level male managers are expected to participate. The female managers must have at least one year of tenure and be good performers. Junior mentors are matched with senior mentors based on their responses to a questionnaire. Both mentors and protégés attend an orientation session that includes a panel discussion by past participants in the program and a series of exercises probing women’s workplace issues and reasons for success at P&G. The mentor-protégé pairs are required to meet at least once every two months. Mentors and protégés receive discussion guides designed to facilitate dialogue. For example, one guide asked the mentor-protégé pairs to explore the keys to success and failure for women and men in company leadership positions. The discussion guides also include questions designed to elicit attitudes about when women feel valued. The mentor and protégé explore differences and similarities in responses to these questions to identify how people like to be recognized. Two issues have frequently been raised in the mentor-protégé relationships: the barriers that women face in achieving a balance between work and life, and differences in managerial and decisionmaking styles between men and women.

One of the biggest benefits of the program has been that mentors and protégés have shared advice and perspectives and feel comfortable using each other to test out new ideas. Junior female managers also get exposure to the top executives who make promotion and succession-planning decisions. The program has reduced the turnover rate of female managers. Turnover of female managers whom the company wanted to retain is down 25 percent and is now at the same rate as male manager turnover.

TABLE 10.8

Recommendations for Melting the Glass Ceiling

Make sure that senior management supports and is involved in the program.

Make a business case for change.

Make the change public.

Using task forces, focus groups, and questionnaires, gather data on problems causing the glass ceiling.

Create awareness of how gender attitudes affect the work environment.

Create accountability through reviews of promotion rates and assignment decisions.

Promote development for all employees.


To be more competitive, U.S. industries that have lost considerable market share to foreign competition (e.g., the auto industry) have developed joint union-management training. Both labor and management have been forced to accept new roles. Employees need to become involved in business planning and strategic decision making, and management needs to learn how to share power and allow worker participation in decision making.

The initial goal of these programs was to help displaced employees find new jobs by providing skill training and outplacement assistance. Currently, joint union-management training programs provide a wide range of services designed to help employees learn skills that are directly related to their job and also develop skills that are “portable”—that is, valuable to employers in other companies or industries. Both employers and unions contribute money to run the programs, and both oversee their operation. Major joint efforts include the United Auto Workers (UAW) with Ford, General Motors, and DaimlerChrysler; and the Communications Workers of America (CWA) with Qwest Communications and Verizon Communications.

The National Coalition for Telecommunications Education and Learning (NACTEL) is a partnership between telecommunications companies, including AT&T, Qwest Communications, and Verizon Communications, and labor unions (CWA and International Brother hood of Electrical workers) that has developed online education programs. NACTEL includes courses that allow employees to work toward associate degrees (e.g., Telecommunications) and certificate programs (e.g., Introduction to Telecommunications). The NACTEL programs are offered by Pace University’s School of Computer Science and Information Systems. The curriculum is based on training programs offered by Qwest and Verizon.

The UAW-Ford joint effort offers a number of programs, including a technical skills program that helps employees gain skills needed to function in the high-performance workplace and including UAW-Ford University, which offers online courses from accredited universities that can be taken by employees for credit toward certificate programs and toward associate, bachelor’s, master’s, and even doctoral degrees. A negotiated central fund and local training funds support the joint training efforts. Program administration is provided by the first national training center ever negotiated in a labor contract in the United States and by a network of local committees at each UAW-Ford location in the United States. At both the national and local levels, the programs address issues in product quality, education and development, team structures, health and safety, and employee assistance (e.g., counseling, help with care of elders). For example, the UAW-Ford “Best in Class” Quality Program established a new certification training for quality representatives, established a review process for quality concerns, and helped employees work together to improve quality.

Union-management partnerships are also providing education and training programs that help less skilled workers advance and increase productivity. The Farmworker Institute for Education and Leadership Development (FIELD) was founded by the United Farm Workers union to help low-income and low-skilled Latino and other workers. One of FIELD’s employer partners is Monterey Mushrooms, a California-based distributor of mushroom products. FIELD designed a training program for Monterey Mushrooms that encouraged collaboration, conflict resolution, and safety. These partnerships help the United States stay competitive in the worldwide agriculture market. Traditionally, U.S. farm workers have relied on a technological advantage to sell and distribute their products. In the current market, productivity and quality can make the difference against foreign competition.

Yes, these programs are costly (General Motors has spent over $1.6 billion jointly with the UAW), and employees may get trained in skills that are not directly related to their current jobs. But both labor and management believe that these programs improve the literacy levels of the work force and contribute to productivity. Both parties want to encourage lifelong learning as a key aspect of a work force that can adapt to new technologies and global competition.


Many companies are losing a sizable number of upper-level managers because of retirement and company restructurings that reduce the number of potential upper-level managers. Companies are finding that their middle managers are not ready to move into upper management positions because of skill weaknesses or lack of experience. One estimate is that less than half of today’s companies have succession plans in place. Succession plans are needed long before there is a need to fill an open position. Otherwise, when managers and executives leave, the company must hire outsiders who likely need time to understand markets and customers, the business strategy, key employees, and the company culture. Also, if companies have to resort to hiring chief executives from the outside, they pay a premium. One study found that CEOs hired from outside the company receive 65 percent more compensation in their first year than internally promoted CEOs. These issues create the need for succession planning.

Succession planning refers to the process of identifying and developing the future leadership of the company. Succession planning is especially important given that the baby boomers are preparing to retire or reduce their participation in organizations, creating vacancies at all management levels. Succession planning helps organizations in several different ways. It requires senior management to systematically conduct a review of leadership talent in the company. It ensures that top-level managerial talent is available. It provides a set of development experiences that managers must complete to be considered for top management positions, which avoids the premature promotion of managers who are not ready for upper-management ranks. Succession planning systems also help attract and retain managerial employees by providing them with development opportunities that they can complete if upper-level management is a career goal for them. For example, at Xerox, Chairman and CEO Anne Mulcahy named Ursula Burns as her successor. Ms. Burns was an engineer who had managed Xerox’s operations and research. To prepare Ms. Burns for the CEO position, Ms. Mulcahy gave her responsibilities for marketing and human resources and invited her to collaborate on solutions to problems facing Xerox as they occurred.

High-potential employees are employees that the company believes are capable of being successful in higher-level managerial positions such as general manager of a strategic business unit, functional director (e.g., director of marketing), or chief executive officer (CEO). Replacements for top-level managers are usually made from the pool of highpotential employees. High-potential employees typically complete an individualized development program that involves education, executive mentoring and coaching, and rotation through job assignments. Job assignments are based on the successful career paths of the managers that the high-potential employees are being prepared to replace. High-potential employees may also receive special assignments, such as making presentations and serving on committees and task forces.

Research suggests that the development of high-potential employees involves three stages. A large pool of employees may initially be identified as high-potential employees, but the numbers are reduced over time because of turnover, poor performance, or a personal choice not to strive for a higher-level position. In Stage 1, high-potential employees are selected. Those who have completed elite academic programs (e.g., an MBA at Stanford) or who have been outstanding performers are identified. Psychological tests— such as those done at assessment center—may also be used.

In Stage 2, high-potential employees receive development experiences. Those who succeed are the ones who continue to demonstrate good performance. A willingness to make sacrifices for the company is also necessary (e.g., accepting new assignments or relocating to a new location). Good oral and written communication skills, ease in interpersonal relationships, and talent for leadership are a must. In what is known as a tournament model of job transitions, high-potential employees who meet the expectations of their senior managers in this stage are given the opportunity to advance into the next stage of the process. Employees who do not meet the expectations are ineligible for higher-level managerial positions in the company.

To reach Stage 3, high-potential employees usually have to be viewed by top management as fitting into the company’s culture and having the personality characteristics needed to successfully represent the company. These employees have the potential to occupy the company’s top positions. In Stage 3, the CEO becomes actively involved in developing the employees, who are exposed to the company’s key personnel and given a greater understanding of the company’s culture. Note that the development of high-potential employees is a slow process. Reaching Stage 3 may take 15 to 20 years.

Table 10.9 shows the steps that a company takes to develop a succession planning system. The first step is to identify what positions are included in the succession plan, such as all management positions or only certain levels of management. The second step is to identify which employees are part of the succession planning system. For example, in some companies only high-potential employees are included in the succession plan. Third, the company needs to identify how positions will be evaluated. For example, will the emphasis be on competencies needed for each position or on the experiences an individual needs to have before moving into the position? Fourth, the company should identify how employee potential will be measured. That is, will employees’ performance in their current jobs as well as ratings of potential be used? Will employees’ position interests and career goals be considered? Fifth, the succession planning review process needs to be developed. Typically, succession planning reviews first involve employees’ managers and human resources. A talent review could also include an overall assessment of leadership talent in the company, an identification of high-potential employees, and a discussion of plans to keep key managers from leaving the company. Sixth, succession planning is dependent on other human resource systems, including compensation, training and development, and staffing. Incentives and bonuses may be linked to completion of development opportunities. Activities such as training courses, job experiences, mentors, and 360-degree feedback can be used to meet development needs. Companies need to make such decisions as whether to fill an open management position internally with a less-experienced employee who will improve in the role over time or to hire a manager from outside the company who can immediately deliver results. Seventh, employees need to be provided with feedback on future moves, expected career paths, and development goals and experiences. Finally, the succession planning process needs to be evaluated. This includes identifying and measuring appropriate results outcomes (such as reduced time to fill manager positions, increased use of internal promotions) as well as collecting measures of satisfaction with the process (Reaction Outcomes) from employees and managers. Also, modifications that will be made to the succession planning process need to be identified, discussed, and implemented.

Software or Web-based solutions that allow companies to manage large amounts of data regarding the requirements of various positions and the strengths and weaknesses of employees are critical for the success of succession planning systems. The software also gets employees involved in succession planning by giving them responsibility for updating information about their education, experience, and interests. With succession planning software, companies can quickly view information on the strengths, weaknesses, and development plans for individual employees and can obtain analyses of succession gaps and strengths in departments, work groups, or level hierarchies. For example, Pep Boys, an auto parts and service company, needed a system that could track all 20,000 of its employees. The system chosen by Pep Boys eliminated the previous multiple databases for performance information and succession plans that had made it difficult to Analyze Data for different parts of the company. The new system automatically provides performance and potential evaluations for every employee, and it can create an organizational chart that shows each employee’s performance level, his or her risk of turnover, the impact of turnover, whether that person has a successor, and the time frame for when that successor can take over the position. Pep Boys’s new system has allowed for better managerial talent discussions and individual career discussions with employees.

Another example of an effective succession planning system is the system at Well- Point, a health care company headquartered in Thousand Oaks, California. WellPoint has a Web-based corporate database that identifies employees for management jobs throughout the company and tracks the development of employee talent. WellPoint has operations across the United States, including locations in California and Georgia. The succession planning system includes 600 managers and executives across five levels of the company. The Human Resource Planning System (HRPS) has detailed information on possible candidates, including performance evaluations, summaries of the candidates’ accomplishments at the company, self-evaluations, information about career goals, and personal data such as the candidates’ willingness to relocate to another part of the company. Part of the development of HRPS involved identifying the company’s strengths and weaknesses at each position. Senior management team members developed standards, or benchmarks, to use to identify the best candidates for promotion. The HRPS system allows managers and the human resource team to identify and evaluate candidates for every management position in the company. It helps identify and track the development of promising internal candidates and also identifies areas where internal candidates are weak, so that (1) external candidates can be recruited, (2) a special development program can be initiated to develop employee talent, and (3) the company can place more emphasis on developing the missing skills and competencies in internal candidates. For example, because WellPoint lacked candidates for two levels of management, the company created a special training program that used business case simulations for 24 managers and executives who had been identified as high-potential candidates for upper-level management positions.

WellPoint’s process of succession planning includes several steps. Each employee who is eligible for succession planning is asked to enter into the HRPS such information as educational background and preferences in types of jobs and company locations. That employee’s manager adds a performance appraisal, a rating on the employee’s core competencies, and a promotion assessment, that is, an assessment of the employee’s potential for promotion. The promotion assessment includes the manager’s opinion regarding what positions the employee might be ready for and when the employee should be moved. It also includes the manager’s view on who might fill the open position if the employee is promoted. The information from the employee and the manager is used to create an online résumé for each eligible employee. The company holds “talent calibration” meetings that provide preparation for departures as well as development of leaders. The system has benefited the company’s bottom line. WellPoint has realized an 86 percent internal promotion rate, which exceeds its goal of filling 75 percent of management positions from within. By improving employees’ opportunities for promotion, WellPoint has reduced its turnover rate by 6 percent since 1997 and has saved $21 million on recruitment and training expenses. The time to fill open management positions has been reduced from 60 days to 35 days.

TABLE 10.9

The Succession Planning Process

1. Identify what positions are included in the plan.

2. Identify the employees who are included in the plan.

3. Develop standards to evaluate positions (e.g., competencies, desired experiences, desired knowledge, developmental value).

4. Determine how employee potential will be measured (e.g., current performance and potential performance).

5. Develop the succession planning review.

6. Link the succession planning system with other human resource data and systems, including training and development, compensation, and staffing systems.

7. Determine what feedback is provided to employees.

8. Measure the effectiveness of the succession planning process.


A number of studies have identified managerial behaviors that can cause an otherwise competent manager to be a “toxic” or ineffective manager. These behaviors include insensitivity to others, inability to be a team player, arrogance, poor conflict-management skills, inability to meet business objectives, and inability to change or adapt during a transition. For example, a skilled manager who is interpersonally abrasive, aggressive, and autocratic may find it difficult to motivate subordinates, may alienate internal and external customers, and may have trouble getting ideas accepted by superiors. These managers are in jeopardy of losing their jobs and have little chance of future advancement because of their dysfunctional behaviors. Typically, a combination of assessment, training, and counseling is used to help managers change dysfunctional behavior. For example, a chief technical officer at TaylorMade-addidas Golf (TMaG), a golf equipment company and U.S.-based subsidiary of adidas Group, had decades of experience, and his education and technical abilities were sufficient to effectively manage the more than 100 engineers and other staff who reported to him. However, his people-skills needed improvement. In meetings he made cynical comments and quickly reviewed technical information with his staff, not taking time to answer their questions. His lack of people-skills caused a high turnover rate in his department. To improve his people-skills, the manager began working with a coach to help him identify his strengths and weaknesses. Now he meets his coach twice a month to develop his people-skills based on a set of clearly defined improvement objectives which they developed together. As a result of the coaching, employees now come to him first with their issues and problems because he is a good listener.

One example of a program designed specifically to help managers with dysfunctional behavior is the Individual Coaching for Effectiveness (ICE) program. Although the effectiveness of these types of programs needs to be further investigated, initial research suggests that managers’ participation in these programs results in skill improvement and reduced likelihood of termination. The ICE program includes diagnosis, coaching, and support activities. The program is tailored to the manager’s needs. Clinical, counseling, or industrial/organizational psychologists are involved in all phases of the ICE program. They conduct the diagnosis, coach and counsel the manager, and develop action plans for implementing new skills on the job.

The first step in the ICE program, diagnosis, involves collecting information about the manager’s personality, skills, and interests. Interviews with the manager and the manager’s supervisor and colleagues plus psychological tests are used to determine whether the manager can actually change the dysfunctional behavior. For example, personality traits such as extreme defensiveness may make it difficult for the manager to change the problem behavior. If it is determined that the manager can benefit from the program, then typically the manager and the manager’s supervisor set specific developmental objectives tailored to the manager’s needs.

In the coaching phase of the program, the manager is first presented with information about the targeted skills or behavior. This information may be about principles of effective communication or teamwork, tolerance of individual differences in the workplace, or methods for conducting effective meetings. The second step is for the manager to participate in behavior-modeling training. The manager also receives psychological counseling to overcome beliefs that may inhibit learning the desired behavior.

The support phase of the program involves creating conditions to ensure that on the job the manager is able to use the new behaviors and skills acquired in the ICE program. The supervisor provides feedback to the manager and the psychologist about progress the manager has made in using the new skills and behavior. The psychologist and manager identify situations in which the manager may tend to rely on dysfunctional behavior. The coach and manager also develop action plans that outline how the manager should try to use new behavior in daily work activities.


Compensation refers to pay and benefits that companies give to employees in exchange for performing their jobs. Companies use compensation systems to achieve many objectives, including attracting talented employees to join the company, motivating employees, and retaining employees by paying wages and benefits that meet or exceed those the employee might receive from other companies in the labor market (local as well as national or even international companies). To remain competitive, companies need employees who possess a wide range of skills and are willing and able to learn new skills to meet changing customer service and product requirements.

Training is increasingly linked to employees’ compensation through the use of skillbased pay systems. In skill-based or knowledge-based pay systems, employees’ pay is based primarily on the knowledge and skills they possess rather than the knowledge or skills necessary to successfully perform their current job. The basic idea is that to motivate employees to learn, pay is based on the skills that employees possess. Why would a company do this? The rationale is that this type of system ensures that employees are learning and gives the company additional flexibility in using employees to provide products and services. Skill-based pay has been found to be related to an increase in employees’ skills and their maintenance of skill proficiency over time. Skill-based pay systems are often used to facilitate cross-training. Cross-training involves training employees to learn the skills of one or several jobs. This system is especially critical for work teams in which employees need to be able to rotate between jobs or substitute for employees who are absent.

The skill-based pay approach contributes to better use of employees’ skills and ideas. It also provides the opportunity for leaner staffing levels because employee turnover or absenteeism can be covered by employees who are multiskilled. Multiskilled employees are important where different products require different manufacturing processes or where supply shortages call for adaptive or flexible responses. These are characteristics typical of many so-called advanced manufacturing environments (e.g., flexible manufacturing or just-in-time systems).

Table 10.10 shows a skill-based pay system. In this example, skills are grouped into skill blocks. Employees’ compensation increases as they master each skill block. Entrylevel employees begin at $15 per hour and can progress to $25 per hour by mastering other skill blocks.

Skill-based pay systems have implications for needs assessment, delivery method, and evaluation of training. Since pay is directly tied to the amount of knowledge or skill employees have obtained, employees will be motivated to attend training programs. This means that the volume of training conducted as well as training costs will increase. Although employee motivation to attend training may be high, it is important to conduct a thorough needs assessment (e.g., using testing) to ensure that employees have the prerequisite knowledge needed to master the new skills.

Training must also be accessible to all employees. For example, if the company manufactures products and provides services on a 24-hour basis, training must be available for employees working all shifts. Computer-assisted instruction or intranet-based training are ideal for skill-based pay systems. Training can be easily offered at all hours on an asneeded basis—employees only need access to a computer! Also, computer-based instruction can automatically track an employee’s progress in training.

In skill-based pay systems, managers and/or peers usually serve as trainers. Training involves a combination of on-the-job training and use of presentation techniques such as lectures or videos. As a result, employees need to be trained in how to be trainers.

Finally, a key issue in skill-based pay systems is skill perishability—ensuring that employees have not forgotten the skills when it comes time to use them. Skill-based pay systems require periodic evaluation of employees’ skills and knowledge using behavior and Learning outcomes. Although employees may be certified that they have mastered skills, many skill-based pay programs require them to attend refresher sessions on a periodic basis to remain certified (and receive the higher wage).