check word doc.
1.5 pages answer
Case17.1 on Page 505
Aligning Strategy and Diversity at L’Oreal
Request:
1. Describe how this organization aligned Diversity with Strategy on a Global Basis.
2. How do you believe this will bring value to the organization?
3. What metrics might you suggest to measure progress in this new alignment?
Article on P.505, please check pdf for reference only!
Don’t just answer the questions by using the information from the case on textbook. Each response must reflect the criteria and lessons in the text. Also show the number of the page from which you sourced your answer.
Example: on your answer, if you talk about “The Results for Diversity Interventions” you should put page 503 after the answer.
**again, you can’t just answer those questions from the case information. You must use the chapter information from the whole chapter.
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Workforce Diversity and Wellness
learni
ng
objectives
Examine human resources management interventions related to
workforce diversity.
Understand and evaluate the effectiveness of employee wellness
interventions.
This chapter presents two additional humanresources management interventions in or-ganizations. Increasing workforce diversity
provides an especially challenging environment for
human resources management, and an attractive
opportunity for line managers looking for a source
of innovation. The mix of age, gender, race, sexual
orientation, disabilities, and culture and value
orientations in the modern workforce is increas-
ingly varied. Management’s perspectives, strategic
responses, and implementation approaches can
help address pressures posed by this diversity
and leverage this resource for organization effec-
tiveness. In addition, wellness interventions, such
as stress management programs and employee
assistance programs (EAPs), are addressing several
important social trends, such as the relationship
and interaction between professional and personal
roles and lives, fitness and health consciousness,
and drug and alcohol abuse.
17-1 Workforce Diversity Interventions
Several profound trends are shaping the labor markets of modern organizations.
Researchers suggest and managers confirm that contemporary workforce characteristics
are radically different from what they were just 20 years ago. Employees represent every
ethnic background and color; range from highly educated to illiterate; vary in age from
18 to 80; may appear perfectly healthy or may have a terminal illness; may be single
parents or part of dual-income, divorced, same-sex, or traditional families; and may be
physically or mentally challenged.
Workforce diversity is more than a euphemism for cultural or racial differences.
Such a definition is too narrow and focuses attention away from the broad range of
issues that a diverse workforce poses. Diversity results from people who bring different
resources and perspectives to the workplace and who have distinctive needs, preferences,
expectations, and lifestyles.1 Organizations must design human resources systems that
497
account for these differences if they are to attract and retain a productive workforce and
if they want to turn diversity into a competitive advantage.
17-1a What Are the Goals?
Figure 17.1 presents a general framework for managing diversity in organizations.2
First, the model suggests that an organization’s diversity approach is a function of
internal and external pressures for and against diversity. Social norms and globalization
support the belief that organization performance is enhanced when the workforce’s
diversity is embraced as an opportunity. But diversity is often discouraged by those
who fear that too many perspectives, beliefs, values, and attitudes dilute concerted
action. Second, management’s perspective and priorities with respect to diversity can
range from resistance to active learning and from marginal to strategic. For example,
organizations can resist diversity by implementing only legally mandated policies such
as affirmative action, equal employment opportunity (EEO), or Americans with Dis-
abilities Act requirements. On the other hand, a learning and strategic perspective can
lead management to view diversity as a source of competitive advantage. For example,
a health care organization with a diverse customer base can not only improve percep-
tions of service quality by having a more diverse physician base, but it can also
embrace diversity by tailoring the range of services to that market and building systems
and processes that are flexible. Third, within management’s priorities, the organiza-
tion’s strategic responses can range from reactive to proactive. Diversity efforts at
Texaco and Denny’s had little momentum until a series of embarrassing race-based
FIGURE 17.1
A General Framework for Managing Diversity
SOURCE: P. Dass, and B. Parker, “Strategies for Managing Human Resource Diversity: From Resis-
tance to Learning,” Academy of Management Executive, 13 (1999), p. 69. Permission conveyed via
© Clearance Center.
498
events forced a response. Fourth, the organization’s implementation style can range
from episodic to systemic. A diversity approach will be most effective when the strate-
gic responses and implementation style fit with management’s intent and internal and
external pressures.
Unfortunately, organizations have tended to address workforce diversity pressures
in a piecemeal fashion; only 16% of companies surveyed in 2010 thought their diversity
practices were “very effective.”3 As each trend makes itself felt, the organization reacts
with appropriate but narrow responses. For example, as the percentage of women in
the workforce increased, many organizations simply added maternity leaves to their
benefits packages; as the number of physically challenged workers increased and when
Congress passed the Americans with Disabilities Act in 1990, organizations changed
their physical settings to accommodate wheelchairs. Demographers warn, however,
that these trends are not only powerful by themselves but will likely interact with
each other to force organizational change. Thus, a growing number of organizations,
such as L’Oreal, PepsiCo, Procter & Gamble, American Airlines, and Carrefour, are
taking bolder steps. They are not only adopting learning perspectives with respect to
diversity, but systemically weaving diversity-friendly values and practices into the cul-
tural fabric of the organization.
17-1b Application Stages
Many of the organization development (OD) interventions described in this book can be
applied to the strategic responses and implementation of workforce diversity, as shown
in Table 17.1. It summarizes several of the internal and external pressures facing organi-
zations, including age, gender, race, disability, culture and values, and sexual orienta-
tion.4 For example, the median age of the workforce is increasing, women make up a
larger percentage of the workforce, and globalization is increasing the number of differ-
ent cultural values present in the workplace. The table also reports the major trends
characterizing those dimensions, organizational implications and workforce needs, and
specific OD interventions that can address those implications.
Age To address age diversity, organization development interventions, such as work
design, wellness programs (discussed below), career planning and development, and
reward systems must be adapted to these different age groups and demographic
cohorts.5 For the older employee, work designs can reduce the physical components
or increase the knowledge and experience components of a job. The governments in
Singapore, Japan, and the European Union have implemented formal programs to
encourage organizations to redesign jobs for elderly workers. The adjustments include
more flexible arrangements regarding when and where work is performed, automating
certain tasks, changing roles to allow for mentoring, and altering pay and benefit
options to fit an older workers stage of life. Generation X employees, who are now in
the age range from 32 to 52 years, will likely require more accommodations for work
and life balance and for mid-career plateauing. The youngest workers, often called
Generation Y or millennials, will likely need more challenge and autonomy. Wellness
programs can be used to address the physical and mental health of employees from all
generations. Career-planning and development programs will have to recognize the dif-
ferent career stages of each cohort and offer resources tailored to that stage. Finally,
reward system interventions may offer increased health benefits, time off, and other
perks for the older worker while using promotion, ownership, and pay to attract and
motivate the scarcer, younger workforce.
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 499
Gender Work design, reward systems, and career development are among the more
important interventions for addressing issues arising out of the gender trend. For exam-
ple, jobs can be modified to accommodate the special demands of working mothers.
A number of organizations, such as SAS, Oracle, Booz Allen Hamilton, and Hewlett-
Packard, have instituted job sharing, by which two people perform the tasks associated
with one job. The firms have done this to allow their female employees to pursue both
family and work careers. Reward system interventions, especially fringe benefits, can be
tailored to offer special leaves to mothers and fathers, child-care options, flexible working
hours, and health and wellness benefits. The Container Store offers a family-friendly shift
from 9 A.M. to 2 P.M. so that working mothers can easily drop off and pick up kids from
school. Career development interventions help maintain, develop, and retain a compe-
tent and diverse workforce. Recent research on career development programs suggests
that organizations consider the assumptions embedded in their career development pro-
grams to ensure programs are not biased toward masculine experiences and worldviews,
especially those related to careers.6
TABLE 17.1
Work Diversity Dimensions and Interventions
Workforce
Differences Trends
Implications
and Needs Interventions
Age Median age up
Distribution of ages
changing
Health care
Mobility
Security
Wellness program
Job design
Career planning and
development
Reward system
Gender Percentage of
women increasing
Dual-income families
Child care
Maternity/paternity
leave
Single parents
Job design
Fringe benefit
rewards
Disability The number of people
with disabilities
entering the
workforce is
increasing
Job challenge
Job skills
Physical space
Respect and dignity
Performance
management
Job design
Career planning and
development
Culture and
values
Rising proportion of
immigrant and
minority-group
workers
Shift in rewards
Flexible organizational
policies
Autonomy
Affirmation
Respect
Career planning and
development
Employee
involvement
Reward systems
Sexual
orientation
Number of single-sex
households up
More liberal attitudes
toward sexual
orientation
Discrimination Equal employment
opportunities
Fringe benefits
Education and
training
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500 PART 5 HUMAN RESOURCE INTERVENTIONS
Unfortunately, many programs over the last several years have tended to focus more
on the symptoms, as opposed to sources of gender inequity.7 Recent research suggests
that once an organization recognizes the problem, diagnosis through interviews with
employees is critical to addressing the sources of gender inequity. The research further
suggests that using a strategy of small interventions, “small wins,” or small initiatives
that combine behavior and understanding and that target the organization’s specific
issues are more effective. For example, one European retail company discovered upon
interviewing its employees that a key issue in turnover among female employees was
the company’s lack of discipline regarding time. Last-minute scheduling, meeting over-
runs, and tardiness wreaked havoc for female employees trying to manage work and
home responsibilities. Company leadership began a more disciplined approach to time,
resulting in greater efficiency and effectiveness. Resolving such issues requires careful
and organization-specific diagnosis and intervention.
Race and Ethnicity Race continues to be an important issue in diversity interventions,
especially as organizations globalize and endeavor to increase diversity among top lead-
ership and board members. Training can increase the likelihood that effective diversity
management programs are responsive to data (not impressions or perceptions), move
beyond eliminating obvious racism to eradicating more subtle forms as well, eliminate
vague selection and promotion criteria which can let discrimination persist, link diversity
management to individual performance appraisals, and develop and enforce appropriate
rules.8 For example, 20% of Verizon’s board of directors are African American; an
increasing number of organizations are creating chief diversity officer positions reporting
into the C-suite or directly to the CEO, and a more than 40 firms, including Yum!
Brands, Credit Suisse, and General Mills work with nonprofit firm Minority Leadership
Talent to identify, recruit, and retain black and Hispanic candidates. Mentoring
programs can ensure that minorities in the advancement stage get the appropriate coach-
ing and those successful minority managers and executives get the chance to share their
wisdom and experience with others.
Sexual Orientation Diversity in sexual and affectional orientation, including gay,
lesbian, bisexual, and transgender (GLBT) individuals and couples, increasingly is affect-
ing the way that organizations think about human resources. The primary organizational
implication of sexual orientation diversity is discrimination. Members of the GLBT
community may be reticent to discuss how organizational policies can be less discrimi-
natory because they fear their openness will lead to unfair treatment. People can have
strong emotional reactions to sexual orientation. When these feelings interact with the
gender, culture, and values trends described in this section, the likelihood of both overt
and unconscious discrimination is high, especially around the often misperceived rela-
tionship between sexual orientation and AIDS/HIV. The good news is that the Corporate
Equality Index—an annual report that grades U.S. companies on their practices related
to the GLBT employees—is improving. In 2002, a total of 13 businesses achieved the
top ranking of 100%; in its 2010 report, 305 companies made the 100% mark, an
increase of 45 companies over 2009.9
Interventions aimed at this dimension of workforce diversity are relatively new in
OD and are being developed as organizations encounter sexual orientation issues in the
workplace. The most frequent response is education and training. This intervention
increases members’ awareness of the facts and decreases the likelihood of overt dis-
crimination. In 2012, federal legislation and the Equal Employment Opportunity
Council (EEOC) placed sexual orientation into a protected class supporting the many
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 501
cities and states that had already passed such legislation. Human resources practices
having to do with EEO and fringe benefits will help to address sexual orientation par-
ity issues although most organizations have already modified their EEO statements to
address sexual orientation, including 61% of Fortune 500 companies.10 Firms such as
Ben & Jerry’s, Boeing, Northop Grumman, Hilton, and Google have communicated
strongly to members and outsiders that decisions with respect to hiring, promotion,
transfer, and so on cannot (and will not) be made with respect to a person’s sexual
orientation. Similarly, organizations are increasingly offering domestic-partner bene-
fit plans, and now over 33% of firms polled in a 2012 Society of Human Resource
Management survey offer health benefits to same sex domestic partners.11 Compa-
nies, such as Shell Oil, Microsoft, and Apple, as well as governments and universities,
have extended health care and other benefits to the same-sex partners of their
members.
Disability The organizational implications of the disability trend represent both
opportunity and adjustment. The productivity of physically and mentally disabled
workers often surprises managers. Training is required to increase managers’ aware-
ness of this opportunity and to create a climate where accommodation requests can
be made without fear.12 Employing disabled workers, however, also means a need for
more comprehensive health care, new physical workplace layouts, new attitudes
toward working with the disabled, and challenging jobs that use a variety of skills.
OD interventions, including work design, career planning and development, and
performance management, can be used to integrate the disabled into the workforce.
For example, traditional approaches to job design can simplify work to permit phys-
ically handicapped workers to complete an assembly task. Career planning and
development programs need to focus on making disabled workers aware of career
opportunities. Too often these employees do not know that advancement is possible,
and they are left feeling frustrated. Career paths need to be developed for these
workers.
Performance management interventions, including goal setting, monitoring, and
coaching performance, aligned with the workforce’s characteristics are important. At
Blue Cross and Blue Shield of Florida, for example, a supervisor learned sign language
to communicate with a deaf employee whose productivity was low but whose quality of
work was high. Two other deaf employees were transferred to that supervisor’s depart-
ment, and over a two-year period, the performance of the deaf workers improved 1,000%
with no loss in quality.
Culture and Values Cultural diversity has broad organizational implications. Dif-
ferent cultures represent a variety of languages, values, work ethics, and norms of
correct behavior. Not all cultures want the same things from work, and simple,
piecemeal changes in specific organizational practices will be inadequate if the work-
force is culturally diverse. Management practices will have to be designed with
various cultural values in mind and support both career and family orientations.
Take language as an example. Operating in multiple countries with multiple lan-
guages implies that jobs of all types (processing, customer contact, production, and
so on) may need to be adjusted for non-native-speaking customers, but it also repre-
sents opportunity. If there are large non-native-speaking markets, the organization
has an important resource for reaching those markets. Finally, the organization will
be expected to satisfy both extrinsic and monetary needs, as well as intrinsic and
personal growth needs.
502 PART 5 HUMAN RESOURCE INTERVENTIONS
Several planned change interventions, including employee involvement, reward
systems, and career planning and development, can be used to adapt to cultural diver-
sity. Employee involvement practices can be adapted to the needs for participation in
decision making. People from certain cultures, such as Scandinavia, are more likely
to expect and respond to high-involvement policies; other cultures, such as Latin
America, view participation with reservation. Participation in an organization can
take many forms, from suggestion systems and attitude surveys to high-involvement
work designs and performance management systems. Organizations can maximize
worker productivity by basing the amount of power and information workers have on
cultural and value orientations.
Reward systems can focus on increasing flexibility. For example, flexible working
hours enable employees to meet personal obligations without sacrificing organizational
objectives. Many organizations have implemented this innovation, and most report that
the positive benefits outweigh the costs. Work locations also can be varied. Many orga-
nizations, including Capital One, Oracle, and Gap, Inc., allow workers to spend part of
their time telecommuting from home. Other flexible benefits, such as floating holidays,
allow people from different cultures to match important religious and family occasions
with work schedules.
Child-care and dependent-care assistance also support different lifestyles. For exam-
ple, at Stride Rite Corporation (now a part of Collective Brands), the Stride Rite Inter-
generational Day Care Center accommodates 55 children between the ages of 15 months
and 6 years as well as 24 elders over 60 years old. The center was established after an
organizational survey determined that 25% of employees provided some sort of elder
care and that an additional 13% anticipated doing so within 5 years.
Finally, career planning and development programs can help workers identify
advancement opportunities that are in line with their cultural values. Some cultures
value technical skills over hierarchical advancement; others see promotions or titles as a
prime indicator of self-worth and accomplishment. By matching programs with people,
job satisfaction, productivity, and employee retention can be improved.
17-1c The Results for Diversity Interventions
Workforce diversity interventions have been growing rapidly in OD for more than
three decades. Despite this growth, most evaluation efforts are survey oriented and
somewhat cursory. A 2010 survey by the Society of Human Resource Management
found that 68% of firms have diversity practices in place.13 Research suggests that
diversity interventions are especially prevalent in large organizations with diversity-
friendly senior management and human resources policies,14 and an internal evalua-
tion of a diversity training program in a large manufacturing firm showed positive
attitudinal changes over a three-month period with respect to emotional reactions,
making judgments, behavioral reactions, and organizational impacts.15 Although
existing evidence shows that diversity interventions are growing in popularity, there
is still ambiguity about the depth of organizational commitment to such practices
and the contingencies that moderate the relationship between commitment and
performance.16
Recently, however, two more complete evaluations of diversity management pro-
grams revealed positive results.17 First, using data collected by the EEOC and survey
data from organizations, researchers divided diversity programs into three categories:
structures of responsibility, such as affirmative action plans, diversity committees and
task forces, and diversity managers; educational programs, such as diversity training
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 503
and diversity feedback for managers; and networking and mentoring programs. The data
displayed a clear pattern. Structural programs were associated with significant increases
in overall managerial diversity. Education and feedback programs were not followed by
increases in managerial diversity. Finally, programs that attempted to increase the net-
working among different groups were associated with modest increases in management
diversity. Importantly, the presence of structural interventions improved the effect of the
other two interventions. In efforts to reduce inequality in the workplace, the researchers
suggest that the popularity of individually based diversity interventions should be
reviewed carefully. A great deal more research like this is needed to understand these
newer interventions and their outcomes.
Second, a study by the Rand Corporation compared a Fortune “Best Places to Work
for Minorities” company with a similar company from Fortune’s overall “Best Places to
Work For” list. The results suggest that firms recognized as leaders in diversity manage-
ment were much more likely than companies known for their superior HR practices to
have leadership, structures, initiatives, and evaluation practices reflecting best practices in
the diversity literature. These companies favored diversity for a variety of reasons, but
primarily because they believed it would improve their business performance; as a result,
top officials in these firms demonstrated strong support for diversity in word and deed.
Similarly, best diversity companies implemented more diversity-related initiatives and
established at least some means of measuring outcomes. Best HR firms pursued fewer
kinds of diversity initiatives than best diversity firms (preferring to focus on basic
recruiting, retention, and promotion programs) and had fewer means to evaluate
company effectiveness with respect to diversity.
Application 17.1 describes the evolution of a workforce diversity intervention at
L’Oreal, showing how diversity can be aligned with strategy on a global basis.18
17-2 Employee Stress and Wellness Interventions
In the past two decades, organizations have become increasingly aware of the relation-
ship between employee wellness and productivity.19 At the high end, the American Insti-
tue of Stress (AIS, www.stress.org) estimated that job stress costs U.S. business over $300
billion annually due to increased absenteeism, employee turnover, diminished productiv-
ity, medical, legal and insurance expenses, and Workers’ Compensation payments. Stress
management and wellness interventions, including employee assistance programs
(EAPs), have grown because organizations are interested in retaining a skilled workforce
and concerned for the welfare of their employees. Data also suggest that the greater
emphasis on workforce health can vary significantly by region. In Asia, the focus is the
need to compete for top talent, while in the United States, cost containment continues to
be the primary concern. European multinationals are interested in reducing absenteeism
and improving employees’ health and safety.20 Companies such as Johnson & Johnson,
Weyerhaeuser, Federal Express, Quaker Oats, and Abbott Laboratories are sponsoring a
wide range of fitness, wellness, and stress management programs.
17-2a What Are the Goals?
Individual well-being or wellness comprises “the various life/nonwork satisfactions
enjoyed by individuals, work and job-related satisfactions, and general health.”21
Health is a subcomponent of well-being and includes both mental/psychological
and physical/physiological factors. In addition, a person’s work setting, personality
504 PART 5 HUMAN RESOURCE INTERVENTIONS
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1 ALIGNING STRATEGY AND DIVERSITY AT L’ORÉAL
L
’Oréal is the world’s largest beauty pro-
ducts company. It creates cosmetics, per-
fume, and hair and skin care items in more
than 130 countries under 23 brands, includ-
ing L’Oréal Paris, Maybelline, Lancôme, Soft-
SheenCarson, and Redken. L’Oréal also owns
the UK-based natural cosmetics retailer The
Body Shop International, which operates
about 2,550 stores worldwide. In 2006, L’Oréal
had revenues of €15.8 billion and expected
future growth to come more from its emerging
markets rather than its traditionally large U.S.
and European markets. The organization was
highly decentralized with countries having full
profit-and-loss responsibility. Local results
were then rolled up to the group level to pro-
vide a picture of overall effectiveness.
L’Oréal’s strategy was conducive to a
diversity perspective; the very nature of its
business makes diversity vital for success.
With diverse customer from around the
world, innovation must be based on under-
standing and respecting differences. In order
to be global, the organization must be global
from within, and their experience showed
that variety breeds more creativity and innova-
tion. As a mirror of the ever-changing world, a
diverse workforce is better equipped to deal
with change, be in tune with the environment,
and a represent a key to L’Oréal being a “great
place to work.”
The organization’s current efforts are built
on a long history of diversity which began in
1974 with the “Schueller” leave, a maternity
policy named after the company’s founder
that gives women an additional four weeks
leave in addition to the statutory requirements
and which can be taken, in full or in part, until
the child is two years old. In 2000, L’Oréal
adopted an Ethics Charter describing its values
and practices as a global company and it imple-
mented several other initiatives, such as the
adoption of policies concerning diversity prac-
tices, the appointment of specific roles (a U.S.
vice president of diversity was appointed in
2002), the inception of diversity training, and
participation in career fairs.
Momentum for diversity efforts at L’Oréal
increased in 2004 with the signing of the Diver-
sity Charter, along with 35 other large French
organizations, and the appointment of a global
diversity director. The charter represented
a national effort to promote pluralism and di-
versity as strategies for success. It visibly com-
mitted the organization to pursue a variety of
initiatives, including raising awareness, incor-
porating diversity progress metrics in annual
reports, and implementing policies that pro-
moted diversity throughout the corporation.
Diversity within L’Oréal came to be defined
as “a mosaic of visible and invisible differences
… which influence attitudes, behaviors, values,
and ways of working within the professional
environment.”
The new global diversity director assem-
bled a team that developed an explicit diver-
sity strategy. The strategy involved five action
levers, including recruitment and integration,
training, career management interventions,
management and inclusion, and communica-
tion. These five levers were expected to drive
results along six visible and invisible dimen-
sions, including nationality, ethnic and cultural
background, social promotion, gender, disabil-
ity, and age. The team believed the biggest
obstacle to implementation was the cultural
differences between the countries and a
low-level of awareness of the benefits that a
diversity strategy could bring. For example,
many of the workforces in the emerging mar-
ket countries were quite homogenous relative
to the United States and France, their econo-
mies were growing fast, and their leadership
teams had little experience or understanding
of diversity related practices. On the other
hand, the diversity efforts in the United States
were quite advanced. L’Oréal’s U.S. diversity
program was recognized with the 2004 Diver-
sity Best Practices’ Global Leadership Award
for creating an environment of diversity and
inclusion for employees, customers, and sup-
pliers. The U.S. experience thus provided
some important internal benchmarks for the
global team.
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 505
traits, and stress coping skills affect overall well-being. In turn, well-being impacts
personal and organizational outcomes, including absenteeism, productivity, and health
insurance costs.22
Concern has been growing in organizations about managing the dysfunction caused
by stress. According to a national APA survey of Stress in America, 39% said their stress
had increased over the past year and even more said that their stress had increased
over the past five years (44%).23 The problem is not unique to the United States. In a
Towers Watson global survey, 55% of firms responding reported that mental health
and stress issues were a priority in all or most of the countries they were operating.24
Of the six major economies making up 50% of the world’s gross domestic product, the
United Kingdom has the highest level of worker stress (35%), while China and India
have the lowest (17%).25
For example, with respect to the recruiting
strategy, the U.S. vice president of diversity had
introduced the concept of “fishing in different
ponds” to suggest that where the organization
looked for diverse talent was as important as
whom they were looking for. The organization iden-
tified seven different ponds and as a result, more
than 60% of the general managers were women
compared to a L’Oréal international average of
about 33%. In addition, minority representation
had increased from 13.9% in 2001 to 16% in
2004. Eventually, this led to the principle of sourc-
ing diversification to be able to access a broader
range of profiles.
In addition, the international organization began
computerizing the application process in 2004.
Through its website, they deleted request for certain
kinds of information that might contribute to recruit-
ing biases. Since its inception, the organization has
deleted home addresses, a type of information that
French studies believed was among the most dis-
criminatory, as well as information related to gender,
age, and nationality.
In terms of the training strategy, the U.S. vice
president collaborated with the global training orga-
nization to make diversity and inclusion part of the
core curriculum for all major leadership develop-
ment training programs. One of the global diversity
team’s initial activities was a two-day diversity
seminar that involved over 8,000 managers in
32 countries in Europe. The seminar explained
the diversity strategy and created opportunities
for managers to establish goals and action plans
to make diversity practices a reality in their coun-
tries. In line with the global team’s concerns, the
managers’ reactions were mixed, depending on
their organizational role and the country they repre-
sented. Many wondered if this was a “flavor of the
month” issue, believed they were already manag-
ing with diversity in mind, or had more important
business issues to address. However, many of the
managers also realized the potential of diversity
and became aware of some personal biases.
These managers were used to leverage the diver-
sity effort as it rolled out globally.
The U.S. program also led with way in terms of
implementing the strategy of management and
inclusion. Diversity objectives were included as part
of a manager’s responsibilities in annual performance
reviews. That practice was eventually expanded, and
today diversity objectives are included on a worldwide
basis.
To measure the progress of the programs,
L’Oréal benchmarks the company against leading
Fortune 500 companies that are recognized as
“Best in Class” for women and people of color.
A quarterly “State of Diversity Report” measures
results and monitors progress in key areas; it is
shared with senior leaders and human resources
teams. In 2006, L’Oréal was recognized with the
World Diversity Leadership Council’s Diversity
Innovation Award, and in 2007 Ethisphere maga-
zine ranked the organization as one of the “world’s
most ethical companies.”
506 PART 5 HUMAN RESOURCE INTERVENTIONS
A study by O’Toole and Lawler concluded that the price most U.S. workers and
managers have paid to get more interesting and enriched jobs is an increased
amount of stress.26 Stress has been linked to hypertension, heart attacks, diabetes,
asthma, chronic pain, allergies, headache, backache, various skin disorders, cancer,
immune system weakness, and decreases in the number of white blood cells and
changes in their function. It can also lead to alcoholism and drug abuse, two pro-
blems that are reaching epidemic proportions in organizations and society. For orga-
nizations, these personal effects can result in costly health benefits, absenteeism,
turnover, and low performance. One study reported that one in three workers said
they have thought about quitting because of stress; one in two workers said job stress
reduced their productivity; and one in five workers said they took sick leave in the
month preceding the survey because of stress.27 Another study estimates that each
employee who suffers from a stress-related illness loses an average of 16 days of
work per year.28
17-2b Applications Stages
Stress and wellness interventions involve (1) diagnosing stress and being aware of its
causes and (2) alleviating and coping with stress to improve wellness.
Diagnosing Stress and Becoming Aware of Its Causes Stress refers to the reac-
tion of people to their environments. It involves both physiological and psychological
responses to environmental conditions, causing people to change or adjust their beha-
viors. Stress is generally viewed in terms of the fit of people’s needs, abilities, and
expectations with environmental demands, changes, and opportunities.29 A good
person–environment fit results in positive reactions to stress; a poor fit leads to the
negative consequences already described. Stress is generally positive when it occurs at
moderate levels and contributes to effective motivation, innovation, and learning. For
example, a promotion is a stressful event that is experienced positively by most
employees. On the other hand, stress can be dysfunctional when it is excessively high
(or low) or persists over a long period of time. It can overpower a person’s coping abil-
ities and cause physical and emotional exhaustion. For example, a boss who is exces-
sively demanding and unsupportive can cause subordinates undue tension, anxiety, and
dissatisfaction. Those factors, in turn, can lead to withdrawal behaviors, such as absen-
teeism and turnover; to ailments, such as headaches and high blood pressure; and to
lowered performance. Situations in which there is a poor fit between employees and
the organization produce negative stress consequences.
A tremendous amount of research has been conducted on the causes and conse-
quences of work stress. Figure 17.2 identifies specific occupational stressors, potential
dysfunctional consequences, and interventions to address stress. People’s individual dif-
ferences determine the extent to which the stressors are perceived negatively. For exam-
ple, people with strong social support experience the stressors as less stressful than those
who do not have such support. This greater perceived stress can lead to such negative
consequences as anxiety, poor decision making, increased blood pressure, and low
productivity.
The stress model shows that almost any dimension of the organization, includ-
ing the physical environment, structure, roles, or relationships, can cause negative
stress. This suggests that much of the material covered so far in this book provides
knowledge about work-related stressors, and implies that virtually all of the OD
interventions included in the book can play a role in stress management. Team
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 507
building, employee involvement, reward systems, and career planning and develop-
ment all can help alleviate stressful working conditions. Thus, to some degree stress
management has been under discussion throughout this book. Here, the focus is on
those occupational stressors and stress management techniques that are unique to
the stress field and that have received the most systematic attention from stress
researchers.
Workplace Stressors. Figure 17.2 identifies several organizational sources of stress,
including the physical environment, individual situations, group pressures, and organiza-
tional conditions. Extensive research has been done on three key individual sources of
stress: the individual items related to work overload, role conflict, and role ambiguity.
Research relating workload to stress outcomes reveals that both too much and too
little work can have negative consequences. Apparently, when the amount of work is
FIGURE 17.2
Stress Management: Diagnosis and Intervention
SOURCE: Adapted from J. Gibson, J. Ivancevich, and J. Donnelly Jr., Organizations: Behaviors, Structure, Processes, 8th ed.
(Plano, Texas: Business Publications, 1994): 266. Reproduced with permission of The McGraw-Hill Companies.
508 PART 5 HUMAN RESOURCE INTERVENTIONS
in balance with people’s abilities and knowledge, stress has a positive impact on per-
formance and satisfaction, but when workload either exceeds employees’ abilities
(overload) or fails to challenge them (underload), people experience stress negatively.
This negative experience can lead to lowered self-esteem and job dissatisfaction, ner-
vous symptoms, increased absenteeism, and reduced participation in organizational
activities.30
People’s roles at work also can be a source of stress. A role can be defined as the
sum total of expectations that the individual and significant others have about how the
person should perform a specific job. Problems arise when there is role ambiguity and
the person does not clearly understand what others expect of him or her, or when
there is role conflict and the employee receives contradictory expectations that cannot
be satisfied at the same time.31 Extensive studies of role ambiguity and conflict suggest
that both conditions are prevalent in organizations, especially among managerial jobs
where clarity often is lacking and job demands often are contradictory.32 For example,
managerial job descriptions typically are so general that it is difficult to know precisely
what is expected on the job. Similarly, managers spend most of their time interacting
with people from other departments, and opportunities for conflicting demands
abound in these lateral relationships. Role ambiguity and conflict can cause severe
stress, resulting in increased tension, dissatisfaction, and withdrawal, and reduced com-
mitment and trust in others.
Individual Differences. Figure 17.2 identifies two classes of individual differences that
can affect how people respond to workplace stressors: cognitive/affective characteristics
and biological/demographic characteristics. Much research has been devoted to the
cognitive/affective category, especially the Type A behavior pattern, which is characterized
by impatience, competitiveness, and hostility. Type A personalities (in contrast to Type
B’s) invest long hours working under tight deadlines, and put themselves under extreme
time pressure by trying to do more and more work in less and less time. Type A people
are especially prone to stress. For example, a longitudinal study of 3,500 men found that
Type A’s had twice as much heart disease, five times as many second heart attacks, and
twice as many fatal heart attacks as did Type B’s.33
Stress management is directed at preventing negative stress outcomes either by
changing the organizational conditions causing the stress or by enhancing employees’
abilities to cope with them. This preventive approach starts from a diagnosis of the cur-
rent situation, including employees’ self-awareness of their own stress and its sources.
This diagnosis provides the information needed to develop an appropriate stress man-
agement program. There are two methods for diagnosing stress.
Charting stressors involves identifying organizational and personal stressors operat-
ing in a particular situation. Guided by a conceptual model like that shown in
Figure 17.2, data can be collected through questionnaires and interviews about environ-
mental and personal stressors. For example, researchers at the University of Michigan’s
Institute for Social Research have developed standardized instruments for measuring
most of the stressors shown in Figure 17.2. Similarly, there are specific instruments for
measuring the individual differences, such as hardiness, social support, and Type A or B
behavior pattern. In addition to perceptions of stressors, it is necessary to measure stress
consequences, such as subjective moods, performance, job satisfaction, absenteeism,
blood pressure, and cholesterol level. Various instruments and checklists have been
developed for obtaining people’s perceptions of negative consequences, and these can
be supplemented with hard measures taken from company records, medical reports,
and physical examinations.
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 509
Once measures of the stressors and consequences are obtained, the two sets of data
must be related to reveal which stressors contribute most to negative stress in the situ-
ation under study. For example, an analysis might show that qualitative overload and
role ambiguity are highly related to employee fatigue, absenteeism, and poor perfor-
mance, especially for Type A employees. This kind of information points to specific
organizational conditions that must be improved to reduce stress. Moreover, it identi-
fies the kinds of employees who may need special counseling and training in stress
management.
Health profiling is aimed at identifying stress symptoms so that corrective action
can be taken. Many firms contract with local health care facilities to provide the ser-
vice. It starts with a questionnaire asking people for their medical history; personal
habits; current health; and vital signs, such as blood pressure and cholesterol levels. It
also may include a physical examination if some of the information is not readily avail-
able. Information from the questionnaire and physical examination is then analyzed,
usually by a computer that calculates the individual’s health profile. This profile com-
pares the individual’s characteristics with those of an average person of the same gen-
der, age, and race. The profile identifies the person’s future health prospect, typically
by placing him or her in a health-risk category with a known probability of fatal dis-
ease, such as cardiovascular risk. The health profile also indicates how the health risks
can be reduced by making personal and environmental changes such as dieting,
exercising, or traveling.
Alleviating and Coping with Stress to Improve Wellness After diagnosing the
presence and causes of stress, the next step in stress management is to do something
about it. OD interventions for reducing negative stress tend to fall into two groups:
those aimed at changing the organizational conditions causing stress and those directed
at helping people to cope better with stress. Because stress results from the interaction
between people and the environment, both strategies are needed for effective stress man-
agement. Five such interventions are described below.
Role Clarification. This involves helping employees better understand the demands
of their work roles. A manager’s role is embedded in a network of relationships with
other managers, each of whom has specific expectations about how the manager should
perform the role. Role clarification is a systematic process for revealing others’ expecta-
tions and arriving at a consensus about the activities constituting a particular role.
There are several role clarification methods that follow a similar strategy.34 First, the
people relevant to defining a particular role are identified (e.g., members of a manage-
rial team, a boss and subordinate, and members of other departments relating to the
role holder) and brought together at a meeting, usually in a location away from the
organization.
Second, the role holder discusses his or her perceived job duties and responsibilities
and the other participants are encouraged to comment on and to agree or disagree with
the role holder’s perceptions. An OD practitioner may act as a process consultant to
facilitate interaction and reduce defensiveness. Third, when everyone has reached con-
sensus on defining the role, the role holder is responsible for writing a description of
the activities that are seen now as constituting the role. A copy of the role description
is distributed to all participants to ensure that they fully understand and agree with the
role definition. Fourth, the participants periodically check to see whether the role is
being performed as intended and make modifications if necessary.
510 PART 5 HUMAN RESOURCE INTERVENTIONS
Supportive Relationships. Building supportive relationships is aimed at helping
employees cope with stress rather than at changing the stressors themselves. It
involves establishing trusting and genuinely positive relationships among employees,
including bosses, subordinates, and peers. Supportive relations have been a hallmark
of organization development and are a major part of such interventions as team
building, intergroup relations, employee involvement, work design, goal setting, and
career planning and development. Considerable research shows that supportive rela-
tionships can buffer people from stress.35 When people feel that relevant others really
care about what happens to them and are willing to help, they can cope with stressful
conditions.
Work Leaves. In the United States, employees work more hours and take less time off
than in most other developed countries. For example, Americans worked an average of
1,878 hours per year while workers in the United Kingdom averaged 1,711, France aver-
aged 1,532, and German workers averaged 1,467. Only Korean employees worked more
than Americans. Similarly, other countries offer longer and more flexible work leave
arrangements, with vacation minimums often subject to government mandate. The
United States and Japan average ten days annual vacation, and the United Kingdom,
France, and Germany average 22, 25, and 24 days, respectively.36 While some differences
can be explained by cultural values or government policies, the potential to affect well-
ness through work leaves should not be ignored.
As organizations struggle to minimize the effects of work stress, paid and unpaid
work leaves are receiving increasing attention. Paid leaves include vacation, holidays,
personal days, as well as maternity and paternity leaves. The comparative statistics sug-
gest that globalization may increase pressure on vacation allowances. As with vacation
time, the United States lags behind other countries in regards to maternity and paternity
leave. Although the Family Medical Leave Act (FMLA) guarantees parents 12 weeks
unpaid leave (and more people are taking advantage of FMLA unpaid leave), many
employees cannot afford to take it, and firms at the top of Fortune’s “Best Companies
to Work For” list have responded with paid maternity and paternity leave.37 Another
key work leave intervention is paid sabbaticals, typically received after a specified tenure
of service. For example, Perkins Coie, a Seattle law firm with approximately 1,400
employees, offers eight-week paid sabbaticals. In another survey, 19% of companies,
including Deloitte and Touche, Microsoft and Intel, offered sabbaticals, but only 5%
with pay.38 Sabbaticals are a way of avoiding burnout and renewing employee creativity
and commitment.
Unpaid leaves, or leaves of absence, also offer employees a chance to renew and to
bring new experiences to the organization, while guaranteeing a job for them upon their
return. For example, personal growth leaves or social service leaves may allow an
employee to explore an individual interest or cause. Such a leave is an exchange, offering
the employee a chance for time off, renewal, and pursuit of a given interest, while retain-
ing a valued employee for the organization.
Health Facilities. A growing number of organizations are providing facilities for helping
employees cope with stress. Elaborate exercise facilities are maintained by such firms as
Qualcomm, Xerox, Weyerhaeuser, Google, and PepsiCo, and a majority of the Fortune 500
operate corporate cardiovascular fitness programs. Employees at Aetna can earn a financial
incentive for their involvement in weight management and fitness programs. Before starting
such programs, employees must take an exercise tolerance test and have the approval of
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 511
either a private or a company doctor. Each participant is then assigned a safe level of heart
response to the various parts of the fitness program.
In addition to exercise facilities, some companies, such as McDonald’s and Equitable
Life Assurance Society, provide biofeedback facilities in which managers take relaxation
breaks using biofeedback devices to monitor respiration and heart rate. Feedback of such
data helps managers lower their respiration and heart rates. Some companies provide
time for employees to meditate, and other firms have stay-well programs that encourage
healthy diets and lifestyles.
Employee Assistance Programs. This final stress and wellness intervention is an
organizational intervention and a method for helping individuals directly. EAPs
help identify, refer, and treat workers whose personal problems affect their perfor-
mance.39 While some large companies still provide an in-house EAP, most outsource
their EAPs. Initially started in the 1940s to combat alcoholism, these programs have
expanded to deal with emotional, family, marital, and financial problems, and, more
recently, drug abuse. For example, 2008 data from the federal Substance Abuse and
Mental Health Services Administration, suggest that 10.2% of full-time employed
adults and 11% of part-time working adults are substance-dependent. Of these,
about 85% are dependent on alcohol alone or on alcohol and drugs; 15% abuse
drugs only.40
Alcohol and drug use costs U.S. business an estimated $102 billion per year in lost
productivity, accidents, and turnover.41 Britain’s Royal College of Psychiatrists sug-
gested that up to 30% of employees in British companies would experience mental
health problems and that 115 million workdays were lost each year as a result of
depression.42 Other factors, too, have contributed to increased problems: altered family
structures, the growth of single-parent households, the increase in divorce, greater
mobility, and changing modes of child rearing are all fairly recent phenomena that
have added to the stress experienced by employees. These trends indicate that an
increasing number of employees need assistance with personal problems, and the
research suggests that EAP use increases during downsizing and restructuring.43
When other stress management interventions are not effective or when employ-
ees have particular types of wellness and or health issues, EAPs provide a means of
responding to employee wellness problems including extreme or chronic stress, drug
and alcohol abuse, problems with child and elder care, grief, and financial pro-
blems.44 Central to the philosophy underlying EAPs is the belief that although the
organization has no right to interfere in the private lives of its employees, it does
have a right to impose certain standards of work performance and to establish sanc-
tions when these are not met. Anyone whose work performance is impaired because
of a personal problem is eligible for admission into an EAP. Successful EAPs have
been implemented at Kimpton Hotels and Restaurants, Telemundo Network, Alcoa,
Sprint-Nextel, Wells Fargo Bank, and Johnson & Johnson. Numerous websites,
including that of the Employee Assistance Professionals Association, share or pro-
vide at minimal cost detailed guidelines on establishing an EAP. These steps include
developing an appropriate EAP policy, deciding to insource or outsource the pro-
gram, communicating the program to organization members, and providing training
on EAP use. Recent changes in health care privacy as a result of the Health Insur-
ance Portability and Privacy Act (HIPAA) impact EAPs, related health insurance
benefits, data requirements, and how such data and information can be used and
shared.45
512 PART 5 HUMAN RESOURCE INTERVENTIONS
17-2c The Results of Stress Management and
Wellness Interventions
The variety of stress management and wellness interventions makes it difficult to
provide overall conclusions, but the numerous studies about stress and any particular
intervention do add up to a positive recommendation. For example, the research on
role clarification supports this intervention. One study found that it reduced stress
and role ambiguity and increased job satisfaction.46 Another study reported that it
improved interpersonal relationships among group members and contributed to
improved production and quality.47 Like many of the other studies in this area, the
findings should be interpreted carefully because of weak research designs and per-
ceptual measures.
The research on supportive relationships suggests that organizations must
become more aware of their value in helping employees cope with stress. They may
need to build supportive, cohesive work groups in situations that are particularly
stressful, such as introducing new products, solving emergency problems, and han-
dling customer complaints. For example, firms such as Procter & Gamble and the
Hartford Financial Services Group have recognized that internal OD consultants
bear a lot of the stress of organization change, and so they encouraged internal OD
practitioners to form support teams to help each other cope with the demands of the
role. Equally important, organizations need to direct more attention to ensuring that
managers provide the support and encouragement necessary to help subordinates
cope with stress. For example, Pepperdine University’s executive programs often
include a module on helping subordinates cope with stress, and firms are training
managers to be more sensitive to stress and more supportive and helpful to
subordinates.
Preliminary evidence suggests that fitness programs can reduce absenteeism and
coronary risk factors, such as high blood pressure, body weight, percentage of body
fat, and cholesterol levels.48 A review of the research, however, suggests that fitness
programs primarily result in better mental health and resistance to stress and that
such organizational improvements as reduced absenteeism and turnover and improved
performance are more uncertain.49
The amount of research on EAP-related issues is quite large, as a look through
dedicated journals, such as the Journal for Workplace Behavioral Health or Employee
Assistance Quarterly, will attest. Two studies reviewed the multinational EAP evalua-
tion research for 39 studies between 1990 and 1999 and 42 studies between 2000 and
2009.50 The research explored several aspects of EAP implementation including
assessments of program success. For example, one study reported on a four-year,
quasi-experimental design of Fairview Health Services’ EAP and reported average
per-employee savings of $230 in lost work days, $340 in medical costs, and $188 in
workers compensation claims for a combined cost savings of $758 per employee
accessing the EAP. Application 17.2 provides additional data regarding the benefit of
EAP-related programs.51 Johnson and Johnson’s “Live for Life” program, among one
of the most regarded in the world, has been studied extensively and demonstrates the
long-term value of this approach. The author concludes: “To state it as simply as
possible, EAPs are effective. They save organizations money. EAPs also increase the
well-being of the majority of employees who actively participate in counseling
offered through the auspices of the programs and as a result enhance the wellness
of our communities.”
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 513
a
p
p
lica
tio
n
1
7
2
JOHNSON & JOHNSON’S HEALTH AND
WELLNESS PROGRAM
J
ohnson & Johnson (J&J) is the most diver-
sified health care corporation in the world.
It grosses more than $65 billion a year and
employs approximately 117,900 people
at 190 companies in 51 countries. The J&J
companies are decentralized and directly
responsible for their own operations. Corporate
management is committed to this structure
because of the many proven advantages to
the businesses and people involved, such as
the development of general managers, faster
product development, and a closer connection
with the customer. Its philosophy is embodied
in a document called “Our Credo,” a section of
which makes a commitment to the welfare of
its employees.
J&J has a long history of commitment to
health, wellness, and stress management pro-
grams. For example, based on a successful
pilot project in its Ethicon division during the
1970s, J&J top management decided to imple-
ment EAPs throughout the rest of the com-
pany. The J&J EAPs were in-house treatment
programs that offered employees and family
members confidential, professional assistance
for problems related to alcohol and drug abuse,
as well as marital, family, emotional, and men-
tal health difficulties. The major goal was to
help clients assume responsibility for their
own behavior and, if it was destructive to
themselves or others, to modify it. Employees
could enter an EAP by self-referral or by
counseling from their supervisor. The program
emphasized the necessity of maintaining com-
plete confidentiality when counseling the
employee or family member to protect both
the client’s dignity and job.
The EAPs were implemented between
1980 and 1985 in three phases. The first
phase consisted of contacting the managers
and directors of personnel for each of the
decentralized divisions and assessing their
divisions’ EAP needs. An educational process
was initiated to inform managers and
directors about the EAP. This EAP training
then was conducted in each of the personnel
departments of the divisions. The second
phase included a formal presentation to the
management board of each division. It included
information about the EAP and about an alco-
hol and drug component for executives. In the
third phase, cost estimates were developed
for EAP use and for employment of an EAP
administrator to implement the program in
each division. In addition, the corporate direc-
tor of assistance programs established a qual-
ity assurance program to review all EAP
activities biennially.
Eventually, more than 90% of all domestic
employees had direct access to an EAP, and
the remaining employees had telephone
access. There were EAPs at all major J&J loca-
tions throughout the United States, Puerto
Rico, and Canada. Programs also operated in
Brazil and England. A study of J&J’s EAP in
the New Jersey area showed that clients
with drug abuse, emotional, or mental health
problems who availed themselves of EAP ser-
vices were treated at substantial savings to the
company.
The EAPs were ultimately integrated with
J&J’s original wellness program known as Live
for Life. This program was initiated by the
chairman of the board in 1979, when he
committed to provide all employees and their
families with the opportunity to become the
healthiest employees of any corporation in
the world. The program brought together
experts in health care education, behavior
change, and disease management to create a
program to improve the health and productivity
of workers. The Live for Life program offered
classes in nutrition, weight reduction, and
smoking cessation. In addition, small gymnasi-
ums with workout equipment, aerobics rooms,
and swimming pools were made available. In
the late 1980s and 1990s the combined
programs became known as Live for Life
514 PART 5 HUMAN RESOURCE INTERVENTIONS
Assistance programs. Health, safety, benefits,
wellness, and EAPs worked together to promote
employee well-being in the workplace.
The current Johnson & Johnson Health and
Wellness Program is an outgrowth of those early
programs. It has undergone several transforma-
tions in the past three decades to respond to
shifting business requirements and changing
employee health needs. The Johnson & Johnson
Health and Wellness Program includes disability
management, occupational health, employee
assistance, work–life programs, and wellness
and fitness programs. The program is often stud-
ied by other corporations because of its integrated
service deliveries.
In 1995, Johnson & Johnson’s health and fit-
ness group took a simple step that catapulted par-
ticipation in the company’s wellness program from
26% to 90%. Patricia Flynn, vice president of John-
son & Johnson’s health care system, described
how J&J offered every employee a $500 health-
benefits credit in exchange for completing an
annual health-risk assessment before enrolling in
the plan. Although the company had offered the
assessment optionally for years as part of its well-
ness program, it was not until the incentive was
attached that employees flocked to it. “People
think they are fit and might not want to bother
with an assessment,” Flynn says. “This incentive
got them to do it.”
In the past, organization members were given
incentives for participating in various wellness pro-
grams, but the company’s focus has shifted all of
its incentive dollars toward risk assessment. “We
are confident that once employees know what
their risks are, then we can make a positive impact
on their health,” says Jennifer Bruno, director of
business planning. Early studies conducted at the
company showed that even those employees who
took the assessment but had no follow-up support
through wellness programs showed improve-
ments in their health.
But for Johnson & Johnson, the assessment is
just the beginning. The aggregate data helps the
health care group choose the right wellness
programs for the exact needs of the population,
Bruno says. The program developers aren’t gues-
sing at employees’ health interests or expecting
them to know what programs they will benefit
from, she says. They use the hard data to guide
their wellness program choices. “We are making
better use of our health care dollars, thanks to
the assessment information.”
For example, the initial assessment showed
that the employees had three areas of risk: high
cholesterol, high blood pressure, and inactivity.
The company now regularly offers exercise and
counseling programs to help employees reduce
cholesterol and blood pressure and manage
weight. Bruno says there are also subtle additions
to the workplace environment that contribute to a
healthy culture, such as nutritious choices in the
cafeteria, scales in all of the bathrooms, and a non-
smoking environment.
Johnson & Johnson’s Live for Life program is
one of the most emulated and evaluated pro-
grams of its kind. The most recent evaluation,
which compared J&J’s program against 16 other
programs over time, found that their average
annual growth in medical costs were 3.7% lower.
That is, after accounting for inflation, J&J’s average
medical and drug costs increased 1% per year
between 2002 and 2008 compared to the average
increase of 4.8% in 16 other companies with EAPs.
That translates to an average annual savings of
$565 per employee, and a return on investment
estimate of between $1.88 and $3.92 for every
dollar spent. Further tests suggested that J&J
employees were significantly less likely to be at
risk for high blood pressure, high cholesterol,
poor nutrition, obesity, physical inactivity, and
tobacco use. The researchers conclude that the
benefits from health promotion programs, espe-
cially those as comprehensive as J&Js, may be
long lasting. Johnson & Johnson’s Health and
Wellness program demonstrates a long-term
commitment to its strategy, its industry, and its
people. The execution and coordination of the dif-
ferent wellness components has paid off hand-
somely for many stakeholders.
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 515
SUMMARY
This chapter presented two important human
resources interventions: workforce diversity interven-
tions and employee stress and wellness interventions.
Like coaching, career planning and development, and
leadership development presented in Chapter 18, these
change programs generally are carried out by human
resources specialists but have become an important
part of OD’s practice.
Workforce diversity interventions are designed to
adapt human resources practices to an increasingly
diverse workforce. Age, gender, race, sexual orienta-
tion, disability, and culture and values trends point to a
more complex set of human resources demands. Within
such a context, OD interventions (e.g., job design, perfor-
mance management, and employee involvement prac-
tices) have to be adapted to a diverse set of personal
preferences, needs, and lifestyles.
Employee stress and wellness interventions, such as
work leaves and EAPs, recognize the important link
between worker health and organizational productivity.
A model for understanding work-related stress
includes occupational stressors; individual differ-
ences, which affect how people respond to the stres-
sors; stress outcomes; and interventions to increase
wellness or decrease stress. The two main steps in
stress management are diagnosing stress and its
causes, and alleviating stressors and helping people
to cope with stress. Two methods for diagnosing
stress are charting stressors and health profiling.
Techniques for alleviating stressful conditions include
role clarification and supportive relationships. Means
for helping workers cope with stress are developing
supportive relationships and participation in activi-
ties at health and fitness facilities. Finally, EAPs iden-
tify, refer, and treat employees and their families for
such problems as marital difficulties, drug and alcohol
abuse, emotional disturbances, and financial crises.
EAPs preserve the dignity of the individual but also
recognize the organization’s right to expect certain
work behaviors.
NOTES
1. F. Miller and J. Katz, The Inclusion Breakthrough
(San Francisco: Berrett-Koehler, 2002); R. Thomas, Build-
ing on the Promise of Diversity (New York: AMACOM
Books, 2005); M. Bell, Diversity in Organizations, 2nd ed.
(Mason, OH: South-Western College Publishing, 2011).
2. P. Dass and B. Parker, “Strategies for Managing Human
Resource Diversity: From Resistance to Learning,” Acad-
emy of Management Executive 13 (1999): 68–80.
3. Society for Human Resource Management, “Workplace
Diversity Practices Poll” (Alexandria, VA: SHRM,
2010), accessed from http://www.shrm.org/Research
/SurveyFindings/Articles/Pages/WorkplaceDiversityPractices
.aspx on August 12, 2012.
4. This section has benefited greatly from the advice and
assistance of Pat Pope, president of Pope and Associates,
Cincinnati, OH. Much of the data and many examples
cited in support of each trend can be found in the fol-
lowing references and websites: M. Galen, “Equal
Opportunity Diversity: Beyond the Numbers Game,”
BusinessWeek, August 14, 1995, 60–61; K. Hammon
and A. Palmer, “The Daddy Trap,” BusinessWeek,
September 21, 1998, 56–64; H. Kahan and D. Mulryan,
“Out of the Closet,” American Demographics (May 1995):
40–47; http://stats.bls.gov; http://nces.ed.gov; http://census
.gov; http://cdc.gov.
5. “How to Prepare for the Coming Older Workforce,”
IOMA’s Safety Director’s Report 1, no. 3 (April 2001).
See also World Health Organization information on
aging of the workforce.
6. E. Cook, M. Heppner, and K. O’Brien, “Career Develop-
ment of Women of Color and White Women: Assump-
tions, Conceptualizations, and Interventions from an
Ecological Perspective,” Career Development Quarterly
50 (2002): 291–305.
7. D. Meyerson and J. Fletcher, “A Modest Manifesto for
Breaking the Glass Ceiling,” Harvard Business Review
(January-February 2000): 127–35.
8. A. Brief, R. Buttram, R. Reizenstein, D. Pugh, J. Callahan,
R. McCline, and J. Vaslow, “Beyond Good Intentions: The
Next Steps Toward Racial Equality in the American Work-
place,” Academy of Management Executive 11 (1997): 59–72.
9. H. Ernst, “Promoting Diversity and Equality,” Fortune,
June 14, 2010, 142.
10. “More Employers Cover Domestic Partners,” Employee
Benefit News 17, no. 8 (June 15, 2003): 30.
516 PART 5 HUMAN RESOURCE INTERVENTIONS
11. Society for Human Resource Management, “2012
Employee Benefits: The Employee Benefits Landscape
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ResearchReport.aspx on August 14, 2012.
12. D. Baldrige and J. Veiga, “Toward a Greater Understand-
ing of the Willingness to Request an Accommodation:
Can Requesters’ Beliefs Disable the Americans with
Disabilities Act?” Academy of Management Review 26
(2001): 85–99.
13. Society for Human Resource Management, “Workplace
Diversity Practices Poll” (Alexandria, VA: SHRM,
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veyFindings/Articles/Pages/WorkplaceDiversityPractices
.aspx on August 12, 2012.
14. S. Rynes and B. Rosen, “A Field Survey of Factors Affect-
ing the Adoption and Perceived Success of Diversity
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K. Labich, “Making Diversity Pay,” Fortune, September 9,
1996, 177–80.
15. K. De Meuse, T. Hostager, and K. O’Neill, “A Longitudi-
nal Evaluation of Senior Managers’ Perceptions and Atti-
tudes of a Workplace Diversity Training Program,”
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16. M. Kwak, “The Paradox of Effects of Diversity,” Sloan
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and M. Buckly, “Diversity Goals: Reframing the Debate
and Enabling a Fair Evaluation,” Business Horizons 54
(2011): 33–40.
17. A. Kalev, F. Dobbin, and E. Kelly, “Best Practices or Best
Guesses? Assessing the Efficacy of Corporate Affirma-
tive Action and Diversity Policies,” American Sociologi-
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L. Scott, M. Harrell, and J. Kavanagh, “Managing Diver-
sity in Corporate America” (Santa Monica, CA: RAND
Corporation, 2008), accessed from http://www.rand.org
/pubs/occasional_papers/OP206 on August 13, 2012.
18. This application was adapted from the following sources:
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try 173 (February 2005): 80; K. Mark, “L’Oréal S.A.: Roll-
ing Out the Global Diversity Strategy” (London, Ontario,
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#910C26; http://www.loreal.com.
19. L. Berry, A. Mirabito, and W. Baun, “What’s the Hard
Return on Employee Wellness Programs?” Harvard
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Runs Smoothly Under Pressure; Wellness Program
Keeps IT Project on Track,” Human Resource Manage-
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“Health Risk Management: Well-Being for the
Employee and the Bottom Line,” Benefits Quarterly 21
(2005): 7–10; M. O’Rourke and L. Sullivan, “Corporate
Wellness: A Healthy Return on Employee Investment,”
Risk Management 50 (2003): 34–36.
20. Towers Watson, “Multinational Workforce Health:
Building a Sustainable Global Strategy” (New York: Towers
Watson, 2012), accessed from http://www.towerswatson
.com/en-ZA/Insights/IC-Types/Survey-Research-Results
/2011/05/Multinational-Workforce-Health-Building-a-
Sustainable-Global-Strategy-1 on June 3, 2013.
21. K. Danna and R. Griffin, “Health and Well-Being in the
Workplace: A Review and Synthesis of the Literature,”
Journal of Management 25 (1999): 357–84.
22. These data were accessed from http://www.successunlimited
.co.uk/costs.htm on January 14, 2000. The results have since
been moved to http://www.bullyonline.org /workbully/costs
.htm, accessed October 1, 2003.
23. American Psychological Association, “Stress in America”
(Washington, DC, 2012), report accessed from http://
www.apa.org/news/press/releases/stress/index.aspx on
August 13, 2012.
24. Towers Watson, “Multinational Workforce Health:
Building a Sustainable Global Strategy.”
25. S. D’Mello, “Stress: The Global Economic Downturn Has
Taken Its Toll on Employees. What’s the Impact for
Organizations?” Kenexa High Performance Institute,
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WorkTrends-Report-Stress on August 13, 2012.
26. J. O’Toole and E. Lawler, The New American Workplace
(New York: Palgrave Macmillan, 2007).
27. T. O’Boyle, “Fear and Stress in the Office Take Toll,”
Wall Street Journal, November 6, 1990, B1, B3; A. Riecher,
“Job Stress: What It Can Do to You,” Bryan-College
Station Eagle, August 15, 1993, D1.
28. D. Allen, “Less Stress, Less Litigation,” Personnel (January
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29. T. Cummings and C. Cooper, “A Cybernetic Framework
for Studying Occupational Stress,” Human Relations 32
(1979): 395–418.
30. J. French and R. Caplan, “Organization Stress and Indi-
vidual Strain,” in The Failure of Success, ed. A. Morrow
(New York: AMACOM, 1972).
31. C. Cooper and R. Payne, Stress at Work (New York: John
Wiley & Sons, 1978).
32. C. Cooper and J. Marshall, “Occupational Sources of
Stress: A Review of the Literature Relating to Coronary
Heart Disease and Mental Ill Health,” Journal of Occupa-
tional Psychology 49 (1976): 11–28; Cooper and Payne,
Stress at Work.
33. R. Rosenman and M. Friedman, “The Central Nervous
System and Coronary Heart Disease,” Hospital Practice
6 (1971): 87–97.
CHAPTER 17 WORKFORCE DIVERSITY AND WELLNESS 517
34. E. Huse and C. Barebo, “Beyond the T-Group: Increasing
Organizational Effectiveness,” California Management
Review 23 (1980): 104–17; I. Dayal and J. Thomas,
“Operation KPE: Developing a New Organization,” Jour-
nal of Applied Behavioral Science 4 (1968): 473–506.
35. J. House, Work Stress and Social Support (Reading, MA:
Addison-Wesley, 1982).
36. M. Peak, “I Think I’ll Go to Work in France,” Manage-
ment Review 84 (1995): 7; U.S. Department of Labor,
“Annual Hours Worked per Employed Person 1990 and
2001,” Chart 19.
37. R. Levering and M. Moskowitz, “100 Best Companies to
Work For,” Fortune, January 20, 2003, 127–52.
38. T. Gunter, “The Pause That Refreshes,” BusinessWeek,
November 19, 2001, 138.
39. G. Bohlander and S. Snell, Managing Human Resources
(Cincinnati, OH: South-Western College Publishing,
2004).
40. R. Grossman, “What to Do About Substance Abuse?” HR
Magazine 55 (2010): 32–38.
41. S. Savitz, “Mental Health Plans Help Employees, Reduce
Costs,” Best’s Review 96, no. 3 (1995): 60–62.
42. C. Hodges, “Growing Problem of Stress at Work Alarms
Business,” People Management 1 (1995): 14–15.
43. W. Lissy and M. Morgenstern, “Employees Turn to EAPs
During Downsizing,” Compensation and Benefits Review
27, no. 3 (1995): 16.
44. K. Blassingame, “Providers Offer Bereaved Employees
Counseling Options,” BenefitNews.com, September 1,
2003, 51.
45. K. Bakich and K. Pestaina, “HIPAA Mean Changes for
Human Resources,” Employee Relations Law Journal 28
(2002): 29–54; K. Bakich and K. Pestaina, “HIPAA
Mean Changes for Human Resources—Part II: Addres-
sing the Most Challenging HR Issues,” Employee Rela-
tions Law Journal 28 (2003): 47–64.
46. Huse and Barebo, “Beyond the T-Group.”
47. Dayal and Thomas, “Operation KPE.”
48. J. Zuckerman, “Keeping Managers in Good Health,”
International Management 34 (January 1979): 40.
49. L. Falkenberg, “Employee Fitness Programs: Their Impact
on the Employee and the Organization,” Academy of
Management Review 12 (1987): 511–22.
50. R. Csiernik, “A Review of EAP Evaluation in the 1990s,”
Employee Assistance Quarterly 19 (2004): 21–37;
R. Csiernik, “The Glass Is Filling: An Examination of
Employee Assistance Program Evaluations in the First
Decade of the New Millennium,” Journal of Workplace
Behavioral Health 26 (2011): 334–55.
51. Adapted from T. Desmond, “An Internal Broadbrush
Program: J & J’s Live for Life Assistance Program,” in
The EAP Solution, ed. J. Spicer (Center City, MN: Hazel-
den, 1987), 148–56; L. Paetsch, “Wellness Program Saves
Johnson and Johnson $8.5 Million in Health Care Costs,”
Employee Benefit Plan Review 56 (2002): 31–32; S. Gale,
“Selling Health to High-Risk Workers,” Workforce 81
(2002): 74–76; R. Henke, R. Goetzel, J. McHugh, and
F. Isaac, “Recent Experience in Health Promotion at
Johnson & Johnson: Lower Health Spending, Strong
Return on Investment,” Health Affairs 30 (2011): 490–99;
the company’s website http://www.jnj.com.
518 PART 5 HUMAN RESOURCE INTERVENTIONS
S
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s EMPLOYEE BENEFITS AT HEALTHCO*
Scenario #1
“Pat, I just can’t do it. I know you want me to
go to New York tonight, but I can’t make a trip
like this at the last minute.”
“Chris, you are the best attorney we have
for these negotiations—we need you.”
“I appreciate the compliment, but I can’t
arrange the care for my mother and my daugh-
ter on four hours notice. I told you during my
performance appraisal about the demands I am
under—in terms of carrying my own workload
and part of Sidney’s [a coworker] during this
parental leave time. In addition, like I said, I
have two elderly parents, one needing daily
care, my toddler daughter, and I am moving
next week. I know you want me to progress
and I appreciate it, but you know I work
hard—I work overtime every week—but I can’t
do what you want this time. I’m sorry. I’ll talk to
you later.”
Pat hangs up the phone and thinks, “Okay,
I know I am asking a lot, but how do I resolve
these issues? It’s frustrating that Sidney is out
on 12 weeks leave—geez!!!—and it’s only
going to get worse. Chris is my best person …
why isn’t Chris more committed? And doesn’t
Sidney know that 12 weeks off creates hard-
ships for everyone else? How can I get them
to do more?”
Chris walks to the parking lot thinking,
“Boy, I thought I made a good move in coming
here. But Pat is worse than the partners I used
to work for. What am I going to do? Oh well, at
least the job market for attorneys is good.”
Scenario #2
“Francis, I appreciate your help these last few
weeks. I never could have exceeded all my
goals or facilitated my team exceeding its
goal if you hadn’t connected me with Kyle’s
Elder Care Referral Service. I feel like I would
have had to take at least five to seven days off
to gather the same information that Kyle had
immediately available. And then I would have
spent another week or two—not two days—
getting my dad settled. I don’t know why he
decided to retire to Ireland, but he is delighted
with the arrangements, and is doing well.”
“That’s okay, Blair, I’m happy to help.
Thank you for the excellent job you’ve been
doing. I really appreciate it. Let’s talk about
next month’s key goals.”
Blair had been the project lead during the
implementation of a new quality process in
the laboratory, and despite an above-average
workload the last month, had successfully
met the project’s objectives. Francis thought,
“It was touch and go when Blair’s dad sud-
denly wanted to retire to Ireland, and wanted
to move immediately. Thank heaven I remem-
bered reading about Kyle and the Elder Care
Referral Service.”
Blair left Francis’ office with a smile, think-
ing, “Francis is great to work for … I can’t even
consider any of the calls I’m getting from other
hospitals or headhunters. It’s just great to work
for someone who understands that work is just
one part of life.”
Scenario #3
Robin, department head for pediatrics at
HealthCo’s second largest hospital, had asked
to meet with Mercer, the director of pediatrics
for HealthCo.
“Mercer, thanks for your time. As you
know I’m 56 this year, and I want to talk to
you about my retirement. I have many interests
beyond my medical practice, and also want
more time with my family and community.
What I would like to do is begin working part-
time after this first year. What I’m thinking is
that I would work 30 hours a week for two
years, still holding clinic hours two days
week. Then the next three to five years I
would like to transition to full-time retirement.
What I would like is to work 20 or so hours per
week for those years, working with medical
school students and on research projects.”
“Well, Robin, as you know, we don’t have
any formal retirement policy except to fully
*This case was prepared by Professor Karen Whelan-Berry
of Utah Valley State College for classroom discussion. It is
published with permission of the author.
SELECTED CASES 519
retire. I’m going to have to talk to HR about this.
You have extensive experience and expertise, and
I don’t want to lose that. I’m just not sure what HR
or the Physicians’ Council will say.”
“I understand. My first choice is to remain
with HealthCo, but I know there are organizations
that would be interested in my working part-time.
When can you get back to me?”
“Give me a couple of weeks, Robin.”
“Okay.”
Mercer began to think about Robin’s request,
already hearing HR raise issues like benefits, ongo-
ing participation in retirement funding, and prece-
dents being set. But Mercer didn’t want to lose
Robin’s expertise. And Robin’s idea of working
with the medical students might let HealthCo cre-
ate a unique internship and residency experience,
which would let HealthCo attract the top students.
BACKGROUND
The people in these three scenarios work for
HealthCo, a fully integrated, nonprofit health care
organization with nine major medical centers and
36 affiliated clinics, rehabilitation units, therapy
facilities, hospice and geriatric units, and other
highly specialized centers. Located in the eastern
United States, HealthCo has about 6,700 employ-
ees. Like other health care companies, it employs
a disproportionate number of women, especially in
nursing and patient care, allied health services, and
support staff. The backgrounds of Pat, Francis, and
Mercer, all managers at HealthCo, are provided
below.
Pat is the chief counsel of HealthCo’s internal
legal department. Pat has worked for HealthCo for
five years, after 15 years in a major law firm in
Washington, D.C. It has been a difficult transition
from the “do-anything, 24/7” pace of the firm to
the “slower, less professional” pace of HealthCo.
Pat is married and has three kids. Pat’s spouse is
also an attorney. Pat’s staff is primarily full-time
and works “nine to five.” The department is very
busy, often with a workload that significantly
exceeds the day-to-day capacity of the staff.
Francis serves as the director of laboratory ser-
vices for the largest hospital. The laboratory is
staffed around the clock and can be called on to
perform routine and emergency procedures at
any time. The new quality process that Blair helped
to implement was critical to the lab supporting the
hospital’s status as the primary emergency and
critical-care facility in the region. Francis, who had
started in a research lab prior to joining HealthCo,
felt the pressure of staffing a 24/7 lab. Having
never married, Francis could not imagine juggling
marriage and children in addition to the demands of
having two parents and five siblings and their fami-
lies living nearby. Francis tried to help the lab’s
employees with family or life demands, but did
so on a personal basis, and not because the hospi-
tal had many such benefits available.
Mercer is a nationally known pediatrician with
15 years experience, and was recently hired to
head HealthCo’s pediatrics organization. Mercer’s
expertise and management capabilities were
stretched in a positive way by the demands of
such a large and comprehensive pediatric practice.
Thriving on that challenge, Mercer had been very
successful since taking over the organization. Mar-
rying after medical school to another physician,
Mercer felt grateful for being able to work the
hours required to fully learn and understand this
new position. Mercer knew a number of people
on the pediatric staff, including a number of the
pediatricians. Many of them felt Mercer worked
way too much, and moreover, worried Mercer
expected the same of them. Mercer knew that
younger physicians weren’t as keen on the 24/7
doctor lifestyle that Mercer’s father had lived.
RECENT EVENTS
A couple of weeks after Pat’s conversation with
Chris, Francis’ with Blair, and Mercer’s with
Robin, a senior staff meeting was called to discuss
current issues and the coming year’s strategic
initiatives. The CEO, Dr. Palmer, recently had
become focused on employee retention, after
Human Resources reported that HealthCo’s turn-
over was 1.5 times the industry average. While
HealthCo was competitive about salary, benefits
seemed to be an area needing improvement. Fur-
ther, the recent issue of Fortune, which identified
the “Best Companies to Work For,” raised Dr. Pal-
mer’s awareness of the growing importance of
work–life programs and policies.
Dr. Palmer realized that HealthCo did not pro-
vide many of the benefits offered by these “best
companies.” In fact, very few health care
520 PART 5 HUMAN RESOURCE INTERVENTIONS
companies made the list. Palmer conceded that
the 24/7 nature of health care organizations proba-
bly complicated the provision of work–life benefits.
However, Palmer also saw a potential competitive
advantage in being a leader in providing such ben-
efits, especially when combined with the competi-
tive salary and merit structure HealthCo offered.
Dr. Palmer remembered that a survey had been
done of HealthCo female employees by an outside
research team, and that one area of the survey
was work–life issues. A review of the data
revealed a number of benefits seen as important
to the female employees of HealthCo (see
Table 1). The research also had suggested that
the immediate supervisor played a vital role in the
employee’s ability to successfully balance work
and life, and the employee’s satisfaction with her
work–life balance. An immediate supervisor’s
TABLE 1
Rank-Order Importance of Work–Life Benefits for Female Employees at HealthCo
Benefit Rank Currently Offered by Healthco
Maternity/Paternity and Family Leave
Includes paid maternity and paternity leave,
extended paid leave for family issues, and
unpaid leave for family issues with the
ability to return to work.
1 HealthCo pays six weeks maternity and
paternity leave, after the employees has
been with the company for one year.
Employees can take another six weeks
unpaid. No extended leave.
Sabbatical/Extended Leave
Paid extended leave after working for a
specified time with the company.
2 Not offered by HealthCo.
Fitness
Includes on-site fitness facilities, and/or paid
health club memberships.
3 Not offered by HealthCo.
Flextime
Includes part-time work schedules, flextime,
and telecommuting.
4 Flextime, with two-hour flex offered in
some departments.
Work–Life Task Force
Employee committee that oversees
work–life issues.
5 Currently overseen by HR.
Concierge Services
Includes services such as on-site takeout,
dry cleaning, auto service, and other simi-
lar services.
6 Not offered except at corporate
headquarters.
Child Care
Includes on-site child care, vacation pro-
grams, and before and after school care.
7 Sick-child care offered at some of the
medical centers.
Referral Services
Includes child care, elder care, and other
referral services.
8 Not offered by HealthCo.
Paid Health Insurance Premiums * HealthCo pays the employee’s premium.
*Payment of health insurance premium not rank-ordered, but included in survey information.
©
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15
SELECTED CASES 521
direct support of work–life balance was signifi-
cantly linked to other important outcomes, such
as job satisfaction, organizational commitment,
and intent to leave the organization.
Dr. Palmer raised the question of offering
work–life benefits at the senior staff meeting. Dr.
Palmer noted that while funding was not unlimited,
of course, HealthCo’s recent financial performance
would permit budget allocations to such benefits,
and might also be offset by reduced turnover costs
or improved productivity.
Pat immediately stated, “I can barely get my
staff together now with all the work we have going
on. And, I certainly can’t hold their hands. They
would never be coddled this way in a law firm.
People work the hours needed, no questions
asked.” Francis said, “I can see the difference
such benefits would make, but how do I make
this work in a 24/7 department? While Legal
might see it as difficult, I see it as impossible,
especially any movement away from traditional
shifts.” A nursing director commented thought-
fully, “Some hospitals are considering shorter,
split shifts, and longer shifts to create flexibility—
there might be something to that.” A number of
departments immediately argued such scheduling
was a leader’s nightmare, and that the company’s
existing two hours of flextime in a number of
departments created serious issues. The V.P. of
finance for the hospital spoke up, “I don’t see
why people with children should be treated
differently—it’s their choice to have children.
I have a life, too, and you don’t see me asking for
special arrangements. I have employees asking me
to work from home—how do I appraise their per-
formance if they primarily work at home?” Mercer
thought about Robin’s request, wondering if other
baby-boomer employees would soon be making
similar requests.
Dr. Palmer listened to what was quickly
becoming a heated discussion, noting the varied
and complicated reactions of the different direc-
tors, vice presidents, and other top leaders of the
organization. Dr. Palmer commented, “We say in
our recruiting materials that our employees are
HealthCo, that it is individual care in all areas of the
company—from nursing to accounting—that
makes us different. How can we expect our
employees to give individual care if we, as an orga-
nization, don’t care about them and their lives?”
“I’d like a team of four to six volunteers to put
together a plan for becoming a top company in
terms of work–life benefits. Please identify the
key issues in serving all employees with such a
set of benefits, and any related issues.”
Questions
1. How would you conduct a diagnosis of the
situation at HealthCo?
2. Based on the information provided in the
scenarios and the case, what is your own
diagnosis of the situation?
3. What do you see as the key issues in
HealthCo becoming a top company in terms
of work–life benefits?
522 PART 5 HUMAN RESOURCE INTERVENTIONS
S
el
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C
a
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s DESIGNING AND IMPLEMENTING A REWARD
SYSTEM AT DISK DRIVES, INC.*
D
isk Drives, Inc. (DDI) is a specialty electron-
ics firm that designs, markets, and distri-
butes disk drives for the computer
industry. DDI began in 1980 by manufactur-
ing and marketing large-format disk drives for
minicomputer firms, such as Digital Equipment
Corporate (DEC) and Data General, as well as
for complex, large-scale word-processing sys-
tems offered by Xerox and Wang. DDI’s first
products were quite successful and the com-
pany grew to revenues of $119 million by 1985.
A strategic decision to integrate different tech-
nologies inside the disk drive for a different
type of customer resulted in a newer and smal-
ler product line with lower costs and lower
prices. Unfortunately, DDI was late to market
and its products did not have the performance
features these customers wanted or needed.
Thus, despite the new customers and higher
product volumes, sales and profits plummeted
as its original products faded and its new
products faltered.
One of DDI’s subsidiaries, however, was
designing and selling different and even smal-
ler disk drives to personal computer original
equipment manufacturers (OEMs). Following
a different business model, they had out-
sourced their manufacturing capacity to a
Japanese plant. The subsidiary—over the
1985–1989 time frame—saved DDI from failure.
By 1988, DDI announced it would stop develop-
ing and manufacturing all of its larger disk drives
and focus on the smaller ones for PCs. It also
phased out its domestic manufacturing opera-
tions and began sourcing its drives exclusively
from the Japanese plant. Whereas two-thirds of
DDI’s 1988 revenues had come from large
drives manufactured domestically, by the end
of 1989, 100% of its revenues were from the
small drives manufactured in Japan. The ques-
tion facing DDI management was how to main-
tain the momentum. It required a careful look
at the existing organization and determining its
fitness for the future.
The head of HR at DDI, who was quite
knowledgeable in organization change and
development, convinced the executive team
to go through a systematic process of diagnos-
ing the organization’s current operating model
and redesigning the company to handle the
projected growth and the increased complexity
it was facing.
THE CURRENT DDI ORGANIZATION
At the macro level, competition in the disk
drive market was characterized by fast-paced
technology change and product evolution as
well as a number of equally sized competitors.
First, customers—the OEM manufacturers of
PCs, such as IBM, Dell, Toshiba, and HP—
were not only designing newer, faster, and
more sophisticated computers, they were
demanding and expecting newer, faster, and
more sophisticated disk drives. Although man-
agement was confident in the firm’s technical
ability to offer the best price/performance
products in the industry, they realized that
the period during which a new DDI drive
could retain a performance edge before being
leapfrogged by a competitor was getting
shorter and shorter. Second, when an OEM
announced a new computer model, all of the
disk drive manufacturers competed aggres-
sively to get the business. The disk drive
firms had a limited amount of time—usually
less than a few months—to make their bid,
and it was often based on yet untried techno-
logical capabilities. Moreover, the sales pro-
cess had a “gold rush” or “winner take all”
feel. If a disk drive manufacturer could win a
contract with an OEM manufacturer, it usually
meant that a whole line of disk drives, including
follow-on models, would be part of the deal.
As a result, quality, speed of customer
response, and cost were increasingly important
*This case was derived and adapted from materials found
in C. Christensen, “Quantum Corporation—Business
and Product Teams,” Harvard Business School Case
9-692-023 (Boston: Harvard Business School, 1992);
S. Mohrman, “Computer Components,” Center for
Effective Organizations (Los Angeles: University of
Southern California, 2012).
SELECTED CASES 523
dimensions to be managed. Quality was necessary
to win the confidence of the OEMs and increase
the chances of winning follow-on business, speed
of response was necessary given the narrow time-
frame, and cost vigilance was necessary to pro-
duce a profit.
In this environment, the company was clear
about the processes for adding value (Figure 1).
The key work processes included:
1. Working with appropriate technical support, it
was important to bid and win on new accounts.
A Request for Proposal (RFP) provided by the
OEM detailed the technical specifications for
the disk drive in its new computer model.
2. The disk drive was then designed to fit the
technical specifications and to meet quality
and cost targets.
3. The resulting design was then prepared for
transfer to the manufacturing facility.
4. The drive was manufactured in Japan.
5. The drive was then released to the OEM to be
incorporated into the computer, and support
issues were handled.
DDI was growing fast and new models were
being continually released that embodied technology
advances, new capabilities, and enhanced designs.
The life cycle for a disk drive (once a contract was
signed with the OEM) was about six to eight
months for development, first-run production, and
field distribution and service. Even including a sec-
ond release (follow-on) product, the entire life cycle
for the model was generally about 12 to 16 months.
The company was handling about five to six disk
drive designs at any particular time and that number
was expected to increase significantly.
As described above, DDI had signed a long-
term, exclusive contract to outsource manufactur-
ing to a Japanese company that promised, in turn,
to continually retool and upgrade its manufacturing
capabilities as DDI grew. To manage this process,
DDI had experienced manufacturing engineers,
quality assurance, process optimization, and distri-
bution staff to plan the movement of the disks into
the contracted factory and to manage its introduc-
tion into the field.
In line with this functional structure and work
process, the organization was governed by the
executive committee, composed of the CEO and
trusted colleagues who had “grown up” together
in the industry. Each took responsibility for certain
functional tasks (Figure 2). Each hired people to
carry out the functions they managed as the com-
pany achieved success and grew rapidly.
The executive team was also responsible for
the planning, coordination, and integration of the
activities of marketing and sales, technical devel-
opment, and managing operations and field distri-
bution and support. That is, decision making, goal
setting, and strategic direction were centralized to
this group. Similarly, the organization’s perfor-
mance management system was centralized and
traditional. Managers and functional employees
were given overall company targets for revenue
and each function was expected to translate
those goals into specific objectives for their
group. Functional supervisors gave annual perfor-
mance appraisals that provided the basis for merit
pay increases. In addition, all DDI employees were
eligible for a profit sharing bonus that had been
running at about 5% of salary. Executives were eli-
gible for stock options as well.
FIGURE 1
The DDI Value Chain
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524 PART 5 HUMAN RESOURCE INTERVENTIONS
ENGAGING IN A REDESIGN OF DDI
Although happy with the recent success of the
company, the executive team realized that it could
not continue to grow and be successful as it was
currently designed. It was not effectively coordinat-
ing the complexity that came with rapid growth, and
it was having trouble keeping up with demand. It
had experienced several delays and quality inci-
dents, including one major field warranty problem
due to a disk drive failure. The executive team
was highly involved in ongoing operational issues,
and the CEO was concerned that they did not
have time to attend to the strategic decisions
required in the rapidly developing computer indus-
try. He also believed that the executive team had
become a bottleneck and was slowing product deci-
sion making. The CEO recalled being in an execu-
tive committee meeting and asking about why a
particular product had not yet shipped to the cus-
tomer. After collecting a variety of data and informa-
tion about component inventories, capacity
planning, forecasts, and other details, he realized
that management—in particular, the executive
committee—was part of the problem. “We were
trying to manage details we weren’t knowledgeable
about. We had a bandwidth problem—the executive
staff just didn’t have enough time or brain capacity
to keep making all the key decisions.”
The executive team decided that they needed
to assume a more strategic role in the organization
and decentralize cross-functional integration and
operational decision making about new product
development, manufacturing, and field support.
Although they wanted insight into product develop-
ment progress and milestone achievement, they
also understood that to decentralize this integration
and decision making, they needed to be clear
about the roles, responsibilities, and accountabil-
ities for success. They believed such a change
would create and build a cadre of future leaders
for the organization.
Based on the diagnostic data and the executive
team’s requirements, the head of HR led the team
through a systematic redesign of the organization.
Commitment to Strategic Direction
The executive team first recommitted itself to the
basic strategy of rapidly advancing the technology
through aggressively bidding on and delivering disk
drives to computers that required increasing oper-
ating speed, flawless quality, and continual new
functionalities.
Structure Modification
The executive team believed that the existing func-
tional structure provided important advantages.
FIGURE 2
DDI’s Functional Organization
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SELECTED CASES 525
There was a clear focus on technical excellence and
clear technical career paths. However, to achieve
the cross-functional integration and speed objec-
tives and to begin building leadership skills, they
decided to implement cross-functional product
teams as a lateral structure to coordinate the devel-
opment of each disk drive. Functions would remain
the core units of the company, but the management
of each disk drive model would be carried out by a
team, established as soon as a contract was signed,
to manage the product over its life cycle (see the
dotted horizontal lines in Figure 3).
The members of each product team would
be functional managers at the director or senior
manager level—moving the operational cross-
functional coordination and management lower in
the organization and freeing up the executive team
to concentrate on more strategic issues.
The teams were to consist of seven members,
one from each function (although there was no
member from the sales organization). They were
to be collectively responsible for the general man-
agement of their product and not just represent
their functional point of view. In general, the engi-
neering team member was to be the leader during
the initial phases of the program, but as the product
approached commercial launch, the marketing
member would assume more leadership responsi-
bilities. The engineering team member would also
lead a dedicated group of engineers assigned to
develop the drive and to work through any product
design problems encountered during manufactur-
ing and in the field (see the solid vertical lines in
Figure 3). The engineering member was the only
person with a functional group dedicated to the
product; all other functions would allocate personnel
to a product team based on the project’s stage of
development and need. Each team member
would continue to have management responsibilities
within their function. In other words, working on a
team was considered an “overload” responsibility
in addition to their regular functional responsibilities.
Management Processes
The executive team was careful to delineate which
issues were the responsibility of the product teams,
FIGURE 3
The Proposed Product Team Structure
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526 PART 5 HUMAN RESOURCE INTERVENTIONS
the functional organizations, and the executive
staff. The product team would be empowered to
make all decisions relating to developing and
bringing a specific product into the field—and it
would be incented to bring the product to market
on time, within cost, and with high levels of qual-
ity and customer satisfaction. Teams were
responsible for the revenues and gross margins
generated by the product and for the inventories
required to support the revenues. The product
teams were responsible for achieving faster and
faster development cycle times. Each product
team was given clearly defined milestones that
were derived from the contract, including cost,
quality, and profitability targets.
Functional groups, on the other hand, were
charged with managing ongoing functional activi-
ties and expenses, providing effective career
paths and skill-building programs, executing the
plans, and staffing the programs initiated by the
product teams. For example, the engineering
organization was responsible for maintaining
DDIs overall technical edge, dedicating a group
of engineers to a specific product, and defining
professional development. In addition, each func-
tion was divided into discipline groups that car-
ried out specialty tasks. For example, the quality
function had a group that specialized in design
quality, prototype testing, and manufacturing
quality specifications and monitoring (the latter
working closely with the contract manufacturing
facility). The responsibilities of the product teams
and the functional organizations are summarized
in Table 1.
Finally, the executive team controlled milestone
reviews for each product, including prototype
design completion, design completion/release to
manufacturing, release to customer, and the three-
week release to field.
Performance Management
The executive team next considered the question
of performance management and incentives.
Questions
1. Does DDI need a new performance system to
account for the structural and management
process changes they are contemplating?
Why or why not?
2. Assuming a modification to the performance
management system is necessary, describe the
features of a system you would recommend.
What changes need to be made in the goal
setting, feedback/appraisal, and reward sys-
tems at DDI? Be specific about the features of
the system(s) you believe need to be changed
and the characteristics of the system itself. That
is, do not describe the process for designing
the system (see Question 3) but focus on the
characteristics of the reward system that are
required to fit or align with the strategy,
structure, and management processes.
3. Describe the change management process
you would use to design and implement the
new system. What roles and responsibilities
should the executive team take on? How fast
should the system be implemented?
TABLE 1
Product Team and Functional Organization Responsibilities
Product Team Mission: To work in a
coordinated way to address market needs
Functional Organization Mission: To ensure
high quality technical support services
• Define, develop, and introduce new products
• Manage cycle time, cost, and quality
objectives
• Manage the inventories required to support
revenues
• Manage product revenues and gross margins
• Provide career path and skill development
• Support team projects and provide specialized
services
• Allocate engineering and manufacturing
personnel to product team projects
• Execute plans and staffing programs initiated
by product teams
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