Executive Briefing

By Rita Zeidner Sep 1, 2008

What’s Important About Dispute Resolution; Subchapter S Has Benefits, Remains Controversial; More.

What’s Important About Dispute Resolution?

Managers and employees disagree on lots of issues—including the best way to resolve disputes. In union and nonunion workplaces, speed and satisfaction have long been the gold standard for deciding whether to arbitrate, mediate, litigate or take some alternative route. But, in an article in the July issue of Industrial Relations: A Journal of Economy and Society, employment relations professors John W. Budd at the University of Minnesota and Alexander J.S. Colvin at Penn State University argue for different metrics.

Speed, the authors say, tells little about the effectiveness of the dispute resolution options. Meanwhile, empirical research shows little relationship between speed of resolution and the parties’ satisfaction with the outcome.

They recommend that organizations scrap the analytics and seek a balance between efficiency, equity and voice. An efficient system conserves scarce resources, especially time and money. Equity provides a standard for gauging fairness and unbiased decision-making. Voice measures the extent to which individuals on all sides participate in the resolution.

View graph on Geometry of Dispute Resolution

Subchapter S Has Benefits, Remains Controversial

Subchapter S corporations that are owned by employees through employee stock ownership plans (ESOPs) generate some 85,000 new jobs each year and create $14 billion in new savings for workers that otherwise would not have been earned, according to a working paper by two University of Pennsylvania professors.

The study is one of the first to closely examine ESOP arrangements at so-called S corporations—mostly small companies eligible for special tax status and exemption from corporate income tax. Congress began allowing ESOPs to own S-corporation shares a decade ago.

Study authors Michael Knoll and Steven Freeman, who received some funding from an ESOP industry group, says research suggests that S-corporation ESOP companies are more stable than other types of companies and that employee ownership is associated with increased job satisfaction and higher organizational commitment.

But ESOPs do have an Achilles’ heel: a lack of funding diversity that can leave workers who rely on them for retirement in a lurch—a scenario that played out at Enron. “Any time a firm goes bankrupt, nearly all equity is lost, so when firms with substantial employee ownership become insolvent, workers can lose not only their jobs and careers, but their retirement stakes as well,” the authors wrote.

S-corporation ESOP companies became the subject of some scrutiny more recently when real estate magnate Sam Zell used the special tax status to finance his 2007 purchase of the Tribune Publishing Co. Some policy-makers questioned whether the special tax status afforded to S-corporation ESOP companies should be used to finance such transactions.

Why It Hurts To Flirt

A common stereotype about women is that they are less effective negotiators than men—so much so that popular lore suggests women do well to bring men with them when they buy a car.

In contrast, women are widely viewed as adept flirters; in a recent Harper’s Bazaar survey of 500 professional women, for example, 86 percent said they would “happily flirt with a male colleague if it meant they got their own way.”

So, can flirting enhance women’s effectiveness as negotiators? That would be a big “No,” an academic research study confirms. In fact, when it comes to obtaining a good deal, flirting has a “detrimental effect,” even though flirtatious bargainers, particularly women, are judged “more likable” than non-flirts.

In a series of experiments, University of California-Berkeley Haas School of Business professor Laura Kray and doctoral candidate Connson Locke had professional actors—both male and female—play the roles of sellers of a fictional biotech business. Each actor recorded two videos with the same script, but one was delivered with flirtatious gestures. Both male and female “buyers” who viewed the videos offered the flirts 20 percent less, on average, than they offered the neutral sellers. The female flirts fared worst, receiving the lowest offers from both males and females. Male sellers, however, were penalized only by male buyers.

Being flirtatious wasn’t all bad. Subjects agreed that flirts were “more likeable.” But this trade-off, the authors note, begs the question of what currency is ultimately more important—a likable disposition or an ability to bargain.

Shutting Out Recruiters?

Being a recruiter can’t be easy these days. First, the poor economy is eating into commissions. Now, employers are shutting recruiters out of the hiring process.

To help reduce recruitment costs—estimated at $3,000 to $6,000 per entry-level job—seven large companies including Starbucks and Best Buy Co. recently began pooling job candidates. Under the arrangement, individuals passed over by one company are invited to join the so-called AllianceQ, which pushes applicants’ information out to other companies in the consortium.

The system is being powered by QuietAgent, the brainchild of software developer Jason Kerr, the company’s chief executive officer. “Collectively, the Fortune 500 is the world’s largest job board,” Kerr says. “They have all the jobs, they attract the most job candidates, so it just makes sense for them to collaborate on resources and help each other save money.”

Membership in the consortium is free and limited to large companies with more than 5,000 employees.

In addition to Starbucks and Best Buy, AllianceQ’s other founding members are Automatic Data Processing Inc., Baxter, Entergy Corp., FPL Group (Florida Power & Light Co., FPL Energy) and Wachovia Corp.

Small Businesses Targeted For Health Insurance Relief

Employers in a handful of states are getting some relief on their health benefits tabs.

Some states, including Arizona, are extending tax credits to small employers that provide medical coverage. Other states, including New Mexico and Montana, are considering legislation to allow small businesses to band together to amass the purchasing power of large employers. Colorado has passed a law governing how much insurers can charge small companies.

Traditionally, the likelihood of a business offering coverage decreases with its size. Only about 45 percent of companies with three to nine workers offer health benefits, according to the Kaiser Family Foundation. Among companies with 10 to 24 workers, the percentage jumps to 76 percent, and among those with 25 to 49 workers, it increases to 83 percent.

The author is senior writer for HR Magazine.


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