Chapter 23 – Managing Human Resources Human resources management (personnel management) – all activities involved with acquiring, developing, and compensating the people who do the company's work

Of all the resources used by a business, probably the most important resource to a business’s success is its people. People are responsible for the effective use of all the resources. People make decisions, operate equipment, maintain records, and deal with customers. Therefore, managing people is a critical function.

Major Human Resource Activities:  Employment  Wages and Benefits  Performance Improvement  Employee Relations  Health and Safety  Performance Management  Employee Assistance  Employment Planning and Research

Employment  Involves all activities required to maintain an adequate number of qualified employees  Hire employees  Recruit applicants  Determining qualifications of applicants  Also includes transfers, promotions, retirements, dismissals, and other job changes

Wages  Major part of company’s operating budget  Helps determine who will apply for jobs  Helps determine whether someone will give a long-term commitment or look for higher pay  HR employees plan and manage financial and non-financial rewards for employees  HR must develop a pay system according to pay levels and pay ranges

Benefits often offered:  Social Security and Medicare  Insurance  Vacations

Performance Improvement  Training and educating employees to ensure high quality and efficient work  Encouraged through promotions and transfers  Prepares employees for new jobs in the event of a department elimination

Employee Relations  Ensuring effective communication and cooperation between management and employees  If a labor union is organized within a company, a very formal set of relationships exist between employees and management.  Companies must comply with all equal employment and affirmative action.

Health and Safety  HR departments are providing regular safety and training, place posters and procedures reminding employees to follow safety procedures and correct safety problems.  HR collects data on work-related injuries and illnesses to keep the managers and employees well-informed.  Companies are organizing wellness and fitness programs.

Performance Management  HR develops the evaluation system and materials to educate managers and employees on proper methods to evaluate and improve performance.  Managers evaluate employees performance.  Supervisors complete all performance appraisal activities.  360-degree feedback – uses performance feedback gathered from a broad range of people with whom the employee works rather than from just the employee’s manager.

Employee Assistance Programs  Provide confidential personal problem- solving, counseling, and support services for employees  Deals with issues ranging from financial problems to marriage and family and alcohol/drug abuse  Companies hire counselors, psychologists, and medical personnel to provide the services.

Employment Planning and Research  Involves researching and maintaining the information that managers need in order to determine personnel needs and manage the workforce.

Selecting Personnel Effective Selection:  Hiring people with the right skills for each job  Reduces high training costs, dissatisfied employees and poor performance

3 Steps in Selecting Personnel  Establishing a need  Recruiting applicants  Process applications

Establishing a Need  Develops to replace a current employee or because the company is growing  HR compiles needed information by preparing a job description and job specification for each position.  Job description – list of basic tasks that make up a job; updated regularly  Job specification – list of qualifications a worker needs to do that job

Sources of Recruiting Applicants  Current employees – job post opportunities for promotions; present employees can recommend applicant for an open position  Unsolicited applications – people apply for jobs because of a company’s reputation as a good employer  Employment agencies – businesses that actively recruit, evaluate and help people prepare for jobs; states maintain employment agencies that are supported by State taxes  Other sources – colleges, vocational or tech schools assist graduates in obtaining jobs; advertising in magazines and newspapers is an excellent method of obtaining job applicants when they need a large number of employees or they must fill an opening quickly

7 Steps in Processing Applications 1. HR reviews the applicants to eliminate people who do not meet the minimum qualifications. 2. HR interviews the remaining applicants to confirm information received, gather more information and give information about the company to the applicant. 3. HR contacts schools applicant attended, previous employers, and listed references for info on applicant's strengths and work habits.

7 Steps in Processing Applications 4. HR administers tests to remaining applicants to determine knowledge and skills for a job; to be legal, test must measure only characteristics important for job success 5. Managers interview top applicants remaining in the pool. 6. Final selection is made by comparing info gathered with job requirements. 7. Applicant is hired, new employee fills out necessary paperwork (tax forms and insurance enrollment forms) and new employee begins an orientation program or initial training.

Promotion and Transfers Promotion: The advancement of an employee within a company to a position with more authority and responsibility Usually includes an increase in pay and greater prestige and benefits Occurs when another person vacates a job or the company creates a new position

Promotion and Transfers Transfer – assignment of an employee to another job in the company involving the same level of responsibility and authority as their current work

Promotion and Transfers Reasons for a transfer: Management trainees may receive transfers among several positions to gain experience. To give an employee a better opportunity for promotion Growth or reduction in size of a department. Different jobs may better meet their current interests and needs. To overcome difficulties resulting from poor performance or conflicts with other people on the job

Two Types of Release  Discharge – firing an employee  Layoff – temporary or permanent reduction in the number of employees because of a change in business conditions

Exit Interviews  Formal interview with an employee who is leaving the company to determine the person’s attitudes about the company and suggestions for improvement.  Provides an opportunity to learn about the causes of employee turnover and gather feedback about the company’s policies and procedures, management, and operations.

Employee Turnover – rate at which people enter and leave employment in a business during a year. Two common formulas: 1. Number of employees who have terminated employment with the business divided by the average number of employees = % of employee turnover 2. Number of employees hired to replace employees who have terminated employment with the business divided by the average number of employees = % of employee turnover

 3000 employees on average during the year  1000 employees terminated with the business Calculation: 1000 / 3000 = 33.3% employee turnover

Regulating Employment Conditions and Benefits  Fair Labor Standards Act (FLSA) – prescribes standards for wages and overtime pay  Occupational Safety and Health Act (OSHA) – regulates safety and health conditions in most businesses.  Social Security – social insurance program funded through payroll contributions

Regulating Employment Conditions and Benefits  Medicare – provides supplemental health insurance for retirement-age people as well as others with specified disabilities  Worker’s compensation – requires employers to provide insurance for the death, injury, or illness of employees that result from their work.  Unemployment insurance – state mandated program that provides temporary income to individuals who have been laid off from their jobs.  Family Medical Leave Act (FMLA) – requires that employers covered by the law must allow an eligible employee up to a total of 12 weeks of leave during a year for things such as birth, serious health conditions, or family members suffering illness.