8/19/2011. Human Resource Management: Finding and Keeping the Best Employees. SALLY MAINQUIST Certes Financial Pros HUMAN RESOURCE MANAGEMENT

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1 Chapter Eleven Human Resource Management: Finding and Keeping the Best Employees McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. SALLY MAINQUIST Certes Financial Pros Certes finds financial professionals to fit temporary, flexible work environments. Besides receiving outstanding benefits, Mainquist s workers gain a very broad range of work experience. Profile 11-2 HUMAN RESOURCE MANAGEMENT Working with People is Just the Beginning LG

2 HUMAN RESOURCE MANAGEMENT (HRM) Working with People is Just the Beginning LG1 Human Resource Management -- The process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating and scheduling employees to achieve organizational goals. HRM s role has grown because: 1. Increased recognition of employees as a resource. 2. Changes in law that rewrote old workplace practices DEVELOPING the FIRM S ULTIMATE RESOURCE Service and high-tech manufacturing requires employees with highly technical job skills. Such workers are scarce, making recruiting and retention more important and more difficult. The human resource job is now the job of all managers in an organization. Developing the Firm s Ultimate Resource LG CHALLENGES in FINDING HIGH-LEVEL WORKERS A shortage of trained workers in key areas Worker shortage in skilled trades Changes in employee attitudes about work A declining economy with fewer full-time jobs Expanding global markets with low-wage workers Increasing benefit demands and benefit costs A decreased sense of employee loyalty The Human Resource Challenge LG

3 CIVIL RIGHTS ACT of 1964 Laws Affecting Human Resource Management LG2 Title VII prohibits discrimination in hiring, firing, compensation, apprenticeships, training, terms, conditions or privileges of employment based on: - Race - Religion - Creed - Sex - Age - National Origin EQUAL EMPLOYMENT OPPORTUNITY ACT (EEOA) Strengthened the Equal Employment Opportunity Commission (EEOC). Gave EEOC the right to issue workplace guidelines for acceptable employer conduct. EEOC could mandate specific recordkeeping procedures. EEOC was vested with the power of enforcement. Laws Affecting Human Resource Management LG CONTROVERSIAL PROCEDURES of the EEOC Affirmative Action -- Policy designed to right past wrongs by increasing opportunities for minorities and women in the workplace. Reverse Discrimination -- Discrimination against whites or males in hiring or promoting. This policy has been at the center of many debates and lawsuits. Laws Affecting Human Resource Management LG

4 CIVIL RIGHTS ACT of 1991 and OFCCP Civil Rights Act of Amended Title VII and gave victims of discrimination the right to a jury trial and possible damages. Office of Federal Contract Compliance Programs (OFCCP) - Ensures that employers doing business with the federal government comply with the nondiscrimination and affirmative action laws. Laws Affecting Human Resource Management LG LAWS PROTECTING EMPLOYEES with DISABILITIES Americans with Disabilities Act of 1990 (ADA) - Requires employers to give applicants with physical or mental disabilities the same consideration for employment as people without disabilities. - Also requires reasonable accommodations for employees with disabilities. - Passage in 2008 of Americans with Disabilities Amendments Act expanded protection. Laws Protecting Employees with Disabilities and Older Employees LG AGE DISCRIMINATION in EMPLOYMENT ACT (ADEA) Age Discrimination in Employment Act (ADEA) - Protects workers 40 and over from employment and workplace discrimination in hiring, firing, promotion, layoff, compensation, benefits, job assignments and training. Laws Protecting Employees with Disabilities and Older Employees LG

5 MINDING the LAW in HRM Employers must know the law and act accordingly. Legislation affects all areas of HRM. Court cases highlight that sometimes it s proper to go beyond providing equal rights. Changes in law and legislation occur regularly. Effects of Legislation LG PROGRESS ASSESSMENT What s human resource management? What did Title VII of the Civil Rights Act of 1964 achieve? What s the EEOC and what was the intention of affirmative action? What does accommodations mean in the Americans with Disabilities Act of 1990? Progress Assessment HUMAN RESOURCE PLANNING PROCESS Preparing a human resource inventory of employees. Preparing a job analysis. Assessing future human resource demand. Assessing future labor supply. Establishing a strategic plan. Determining a Firm s Human Resource Needs LG

6 WHAT S a JOB ANALYSIS? Job Analysis -- A study of what employees who holds various job titles do. Determining a Firm s Human Resource Needs LG3 Job Description -- Specifies the objectives of the job, the type of work, the responsibilities and duties, working conditions and relationship to other jobs. Job Specifications -- A summary of the minimal education and skills needed to do a particular job RECRUITING EMPLOYEES Recruiting Employees from a Diverse Population LG4 Recruitment -- The set of activities for obtaining the right number of qualified people at the right time. Human resource managers use both internal and external sources to recruit employees. Small businesses often make use of web sources like CareerBuilder and Monster to recruit employees IT S NOT EASY BEING SMALL (Spotlight on Small Business) To survive, small businesses must recruit and retain qualified workers. Unfortunately, they lack the resources of larger companies to compete for employees. Small businesses need innovations like: - Letting staff help recruit and select candidates. - Test-Drive an employee. - Seek out publicity through local media

7 EMPLOYEE SOURCES Recruiting Employees from a Diverse Population LG SELECTION Selection -- The process of gathering information and deciding who should be hired, under legal guidelines, to fit the needs of the organization and individuals. Selecting Employees Who Will be Productive LG STEPS in the SELECTION PROCESS 1. Obtaining complete application forms Selecting Employees Who Will be Productive LG5 2. Conducting initial and follow-up interviews 3. Giving employment tests 4. Conducting background investigations 5. Obtaining results from physical exams 6. Establishing trial (probationary) work periods

8 OOPS! Areas Where Job Applicants Make Mistakes Selecting Employees Who Will be Productive LG5 Source: USA Today, HIRING CONTINGENT WORKERS Hiring Contingent Workers LG5 Contingent Workers -- Include part-time and temporary workers, seasonal workers, independent contractors, interns and co-op students. There are about 5.7 million contingent workers in the U.S WHY HIRE CONTINGENT WORKERS? Hiring Contingent Workers LG5 Companies hire contingent workers: - When full-time workers are on leave - During periods of peak demand - In uncertain economic times - To save on employee benefits - To screen candidates for future employment

9 MOTIVATING TEMPORARY EMPLOYEES (Making Ethical Decisions) Contingent workers perform well if the promise of full-time employment is a possibility. Highbrow s has no intention of hiring any temporary workers full-time. But the company feels if they imply two workers will be hired full time, it may improve employee performance. What is the ethical thing for them to do? PROGRESS ASSESSMENT What are the five steps in human resource planning? What factors make it difficult to recruit qualified employees? Progress Assessment What are the six steps in the selection process? Who is considered a contingent worker and why do company hire such workers? TRAINING and DEVELOPING EMPLOYEES Training and Development -- All attempts to improve productivity by increasing an employee s ability to perform. Training focuses on short-term skills. Development focuses on long-term abilities. Training and Developing Employees for Optimum Performance LG

10 THREE STEPS of TRAINING and DEVELOPMENT 1. Assessing organization needs and employee skills to develop appropriate training needs. Training and Developing Employees for Optimum Performance LG6 2. Designing training activities to meet identified needs. 3. Evaluating the training s effectiveness MOST COMMONLY USED TRAINING and DEVELOPMENT ACTIVITIES Orientation On-the-Job Training Apprenticeships Off-the-Job Training Online Training Vestibule Training Job Simulation Training and Developing Employees for Optimum Performance LG DEVELOPING EFFECTIVE MANAGERS Management Development Management Development -- The process of training and educating employees to become good managers and tracking the progress of their skills over time. Management training includes: - On-the-job coaching - Understudy positions - Job rotation - Off-the-job courses and training LG

11 WHY GOOD EMPLOYEES QUIT Management Development LG6 Source: Robert Half International USING NETWORKS and MENTORING Networking -- Establishing and maintaining contacts with key managers in and out of the organization and using those contacts to develop relationships. Networking Mentors -- Managers who supervise, coach and guide selected lower-level employees by acting as corporate sponsors. Networking and mentoring go beyond the work environment. LG APPRAISING PERFORMANCE on the JOB Appraising Employee Performance to Get Optimum Results LG7 Performance Appraisal -- An evaluation that measures employee performance against established standards in order to make decisions about promotions, compensation, training or termination. A 360-degree review gives managers opinions from people at different levels to get a more accurate idea of the worker s ability

12 SIX STEPS of PERFORMANCE APPRAISALS 1. Establishing performance standards that are understandable, measurable and reasonable. 2. Clearly communicating those standards. Appraising Employee Performance to Get Optimum Results 3. Evaluating performance against the standards. 4. Discussing the results with employees. 5. Taking corrective action. 6. Using the results to make decisions. LG MAJOR USES of PERFORMANCE APPRAISALS Identify training needs Use as a promotion tool Recognize worker s achievements Evaluate the firm s hiring process Judge the effectiveness of the firm s orientation process Use as a basis for possible termination of a worker Appraising Employee Performance to Get Optimum Results LG PERFORMANCE APPRAISAL MISTAKES Common Problems Made While Reviewing Employees Contrast Effect - Comparing one employee to another. Halo/Horn Effect - Allowing performances in specific areas to unfairly influence overall performance evaluation. Similar-to-Me Effect - Generosity to those you feel are more like you. Appraising Employee Performance to Get Optimum Results LG

13 PROGRESS ASSESSMENT Progress Assessment Name and describe four training techniques. What s the primary purpose of a performance appraisal? What are the six steps in a performance appraisal? COMPENSATION PROGRAMS A managed and competitive compensation program helps: - Attract the kinds of employees the business needs. - Build employee incentive to work efficiently and productively. - Keep valued employees from going to competitors or starting their own firm. Compensating Employees: Attracting and Keeping the Best LG8 - Maintain a competitive market position by keeping costs low due to high productivity from a satisfied workforce. - Provide employee financial security through wages and fringe benefits TYPES of PAY SYSTEMS Salary Hourly Wage/Day Work Piecework System Commission Plans Bonus Plans Profit Sharing Plans Gain-Sharing Plans Stock Options Pay Systems LG

14 COMPENSATING TEAMS Compensating Teams LG8 Team-based pay programs are more challenging than individual pay systems. The two most common methods for teams involve: - Skill-Based: Pay is increased as skill increases. (Eastman Chemical uses this system.) - Gain-Sharing: Pay is increased as performance increases. (Nucor Steel uses this system.) FRINGE BENEFITS on the JOB Fringe Benefits -- Sick leave, vacation pay, pension and health plans that provide additional compensation to employees beyond base wages. Fringe Benefits In 1929, Fringe benefits accounted for less than 2% of payroll cost. Today it s about 30%. Healthcare has been the most significant increase in fringe benefit cost. LG The RANGE of FRINGE BENEFITS Fringe benefits include incentives like: - Company cars - Country club memberships - Recreation facilities - Special home mortgage rates - Paid and unpaid sabbaticals - Day-care and elder care services - Dental and eye care - Legal counseling - Short or compressed work weeks Fringe Benefits LG

15 SPECIAL PERKS at DREAMWORKS Free DVDs and screenings of current films. Free breakfast and lunch plus dinner when working late. Free snack rooms on every floor. Profit sharing. Ping-Pong and poker tournaments during work hours. Fringe Benefits LG CAFETERIA-STYLE and SOFT BENEFITS Fringe Benefits LG8 Cafeteria-Style Fringe Benefits -- Allow employees to choose the benefits they want (up to a certain dollar amount). Soft Benefits include: - Onsite haircuts and shoe repair - Concierge services - Free meals at work - Doggie daycare - Onsite farmer s markets CHANGING TIMES, CHANGING EMPLOYEE BENEFITS Employer Benefits Provide Pension Plans Offer Wellness Programs Retirement Plan Contribution Permit Some Flexible Work Hours % 29% 51% 60% 91% 81% 68% 80% Fringe Benefits LG8 Source: National Study of Emplyees (2008), Family & Work Institute

16 LET S GO to the BEACH! Average Vacation Days by Country Fringe Benefits LG WORKING WORLDWIDE (Reaching Beyond Our Borders) Managers need to understand the business needs of each country they operate in. - Compensation: Conversion to foreign currencies and special allowances often are needed. - Health and Pension Standards: Benefits are different country-by-country. - Paid Time Off: Vacation time, sick and personal leave vary. - Taxation: Tax policies vary. - Communication: Employees can feel disconnected in other countries FLEXIBLE SCHEDULING PLANS Scheduling Employees to Meet Organizational and Employee Needs LG9 Flextime Plan -- Gives employees some freedom to choose which hours to work as long as they work the required number. Compressed Work Week -- Employees work the full number of work hours, but in fewer than the standard number of days. Job Sharing -- Lets two or more part-time employees share on a full-time job

17 USING FLEXTIME PLANS Flextime Plans LG9 Most flextime plans require Core Time -- When all employees are expected to be at their job stations. Flextime is hard to incorporate into shift work and managers have to work longer hours. Communication among employees can also be difficult under flextime and managers have to be alert to any system abuses A FLEXTIME CHART Flextime Plans LG COMPRESSED WORK WEEKS Flextime Plans LG9 Employees enjoy long weekends after working long days. Productivity is a concern. Nurses and firefighters often work compressed work weeks

18 JOB SHARING BENEFITS Provides employment opportunities for many people who cannot work full time. Job Sharing Plans LG9 Workers tend to be enthusiastic and productive. Absenteeism and tardiness are reduced. Employers can schedule part-time workers in peak demand periods MOVEMENT of EMPLOYEES Employees are promoted or reassigned. Moving Employees Up, Over and Out LG9 Employees are terminated due to performance or economic situations. Employees retire TERMINATING EMPLOYEES As the economic crisis grew, more and more employers have had to layoff employees. Terminating Employees LG10 Even when the economy is booming, employers are hesitant to hire full-time workers because of the cost of termination. Firing employees is more difficult for employers because of laws preventing termination for certain acts

19 PROGRESS ASSESSMENT Progress Assessment Name and describe five alternative compensation techniques. What advantages do compensation plans such as profit sharing offer an organization? What are the benefits and challenges of flextime? Telecommuting? Job sharing?