Human Resource Management: Finding and Keeping the Best Employees Chapter 11 Human Resource Management: Finding and Keeping the Best Employees McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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 of: Increased recognition of employees as a resource. Changes in law that rewrote old workplace practices. See Learning Goal 1: Explain the importance of human resource management, and describe current issues in managing human resources. 11-2

DEVELOPING the FIRM’S ULTIMATE RESOURCE LG1 The human resource job is now the job of all managers in an organization. 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…make job of recruiting and retaining employees much harder See Learning Goal 1: Explain the importance of human resource management, and describe current issues in managing human resources. 11-3

CHALLENGES in FINDING HIGH-LEVEL WORKERS The Human Resource Challenge CHALLENGES in FINDING HIGH-LEVEL WORKERS LG1 A shortage of trained workers in key areas An increasing number of baby boomers who delay retirement A declining economy with fewer full-time jobs Increasing benefit demands and benefit costs A decreased sense of employee loyalty A shift in employee attitudes toward work. Leisure time has become a much higher priority, as have flextime and a shorter workweek. See Learning Goal 1: Explain the importance of human resource management, and describe current issues in managing human resources. Demographic changes are creating a challenging environment for HR managers, requiring companies to come up with creative ways to attract, develop and retain employees. 11-4

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 See Learning Goal 2: Illustrate the effect of legislation on human resource management. The Civil Rights Act of 1964 was a significant piece of legislation and directly brought the federal government into human resource management. Created the Equal Employment Opportunity Commission (EEOC) 11-5

1972 EQUAL EMPLOYMENT OPPORTUNITY ACT (EEOA) …amended title VII Laws Affecting Human Resource Management 1972 EQUAL EMPLOYMENT OPPORTUNITY ACT (EEOA) …amended title VII LG2 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. See Learning Goal 2: Illustrate the effect of legislation on human resource management. 11-6

CIVIL RIGHTS ACT of 1991 Civil Rights Act of 1991 Laws Affecting Human Resource Management CIVIL RIGHTS ACT of 1991 LG2 Civil Rights Act of 1991 Amended Title VII and gave victims of discrimination the right to a jury trial and possible damages. See Learning Goal 2: Illustrate the effect of legislation on human resource management. 11-7

LAWS PROTECTING EMPLOYEES with DISABILITIES Laws Protecting Employees with Disabilities and Older Employees LAWS PROTECTING EMPLOYEES with DISABILITIES LG2 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. Passage in 2008 of Americans with Disabilities Amendments Act expanded protection. 2011 saw new regulations that widen the range of disabilities covered by the ADA and shift the burden of proof of disability from employees to employers. See Learning Goal 2: Illustrate the effect of legislation on human resource management. Diabetes, epilepsy, cancer, heart disease depreression 11-8

1967 AGE DISCRIMINATION in EMPLOYMENT ACT (ADEA) Laws Protecting Employees with Disabilities and Older Employees 1967 AGE DISCRIMINATION in EMPLOYMENT ACT (ADEA) LG2 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. See Learning Goal 2: Illustrate the effect of legislation on human resource management. 11-9

HUMAN RESOURCE PLANNING PROCESS Determining a Firm’s Human Resource Needs LG3 Preparing a human resource inventory of employees. Preparing a job analysis. Assessing future human resource demand. Assessing future labor supply. Establishing a strategic plan. See Learning Goal 3: Summarize the five steps in human resource planning. 11-10

WHAT’S a JOB ANALYSIS? Determining a Firm’s Human Resource Needs LG3 Job Analysis – A study of what employees do who holds various job titles. Job Description – A summary of the objectives of the job, the type of work, the responsibilities and duties, working conditions and relationship to other jobs. About the job… Job Specifications -- A summary of the minimum qualifications needed to do a particular job. About the person in the job… See Learning Goal 3: Summarize the five steps in human resource planning. 11-11

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. See Learning Goal 4: Describe methods that companies use to recruit new employees, and explain some of the issues that make recruitment challenging. 11-12

SELECTION Selecting Employees Who Will be Productive LG5 Selection -- The process of gathering information and deciding who should be hired, under legal guidelines, to serve the best interest of the individual and the organization. Selection and training can be very costly – moving costs, time spent learning the job, interviewing, etc See Learning Goal 4: Describe methods that companies use to recruit new employees, and explain some of the issues that make recruitment challenging. 11-13

STEPS in the SELECTION PROCESS Selecting Employees Who Will be Productive STEPS in the SELECTION PROCESS LG5 Obtaining complete application forms Conducting initial and follow-up interviews Giving employment tests Conducting background investigations Obtaining results from physical exams Establishing trial (probationary) work periods See Learning Goal 5: Outline the six steps in selecting employees. 11-14

HIRING CONTINGENT WORKERS Selecting 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. Majority of contingent workers are under 25; no employer health care; benefits. See Learning Goal 5: Outline the six steps in selecting employees. What are the advantages disadvantages of hiring contingent workers 11-15

WHY HIRE CONTINGENT WORKERS? Selecting 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 See Learning Goal 5: Outline the six steps in selecting employees. 11-16

ARE UNPAID INTERNS TOO INTERRED? (Making Ethical Decisions) With few entry-level positions available, interns can end up in an unpaid position for as long as six months with no chance of advancement. Some businesses give interns lots of responsibility; a Toronto paper fired all paid staff and replaced them with unpaid interns. Is it ethical for companies to use unpaid interns if they know they don’t have jobs to offer or if the unpaid internships replace paid jobs? See Learning Goal 5: Outline the six steps in selecting employees. The actual compensation should be experience: not filling the coffee pot and picking up newspapers 11-17

TRAINING and DEVELOPING EMPLOYEES Training and Developing Employees for Optimum Performance TRAINING and DEVELOPING EMPLOYEES LG6 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. See Learning Goal 6: Illustrate employee training and development methods. 11-18

MOST COMMONLY USED TRAINING and DEVELOPMENT ACTIVITIES Training and Developing Employees for Optimum Performance MOST COMMONLY USED TRAINING and DEVELOPMENT ACTIVITIES LG6 Orientation On-the-Job Training Apprenticeships Off-the-Job Training Online Training Vestibule Training Job Simulation See Learning Goal 6: Illustrate employee training and development methods. An example of orientation: At Zappos every new employee in the online retailer’s Henderson, Nevada headquarters must spend two weeks answering customer calls, two weeks learning in a classroom, and a week shipping boxes in the company’s Kentucky fulfillment center. Off job can include higher education Vestibule– job equipment similar to what will be used computers or robotics Job simulation – exact conditions equipment and the environment – astronauts, airline pilots, etc 11-19

WHY GOOD EMPLOYEES QUIT Training and Developing Employees for Optimum Performance LG6 See Learning Goal 6: Illustrate employee training and development methods. Why Good Employees Quit This slide presents some of the reasons why good employees quit. Ask the students: Why is it important for managers to understand why employees leave a company? (It translates directly into the bottom line of the organization. The higher the turnover, the higher the costs for recruiting, selecting, training and development, etc.) Ask the students: What are other reasons why employee retention is important? (Some other reasons may be morale of the workers, ability to recruit, reputation and image of the company, etc.) Ask the students: Would you like to work at a place that feels like it has a revolving door? Source: Robert Half International 11-20

DEVELOPING EFFECTIVE MANAGERS Training and Developing Employees for Optimum Performance DEVELOPING EFFECTIVE MANAGERS LG6 Management Development -- The process of training and educating employees to become good managers and monitoring the progress of their skills over time. Management training includes: On-the-job coaching Understudy positions Job rotation Off-the-job courses and training See Learning Goal 6: Illustrate employee training and development methods. 11-21

USING NETWORKS and MENTORING Training and Developing Employees for Optimum Performance USING NETWORKS and MENTORING LG6 Networking -- Establishing and maintaining contacts with key managers in and out of the organization and using those contacts to develop relationships. Mentors -- Managers who supervise, coach and guide selected lower-level employees by acting as corporate sponsors. Networking and mentoring go beyond the work environment…college classmates, professors, local businesses… See Learning Goal 6: Illustrate employee training and development methods. Many students are familiar with social networking, but are unfamiliar with career networking. Ask the students: How can you use sites like Facebook, YouTube, and Twitter to establish and maintain contacts with key managers in and out of the organization? 11-22

APPRAISING PERFORMANCE on the JOB Evaluating APPRAISING PERFORMANCE on the JOB 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. See Learning Goal 7: Trace the six steps in appraising employee performance. Establishing performance standards that are understandable, measurable and reasonable. Clearly communicating those standards. Evaluating performance against the standards. Discussing the results with employees. Taking corrective action. Using the results to make decisions. 11-23

COMPENSATION PROGRAMS Compensating Employees: Attracting and Keeping the Best LG8 A managed and competitive compensation program helps: Attract the kinds of employees the business needs. Keep valued employees from going to competitors or starting their own firm. Maintain a competitive market position by keeping costs low due to high productivity from a satisfied workforce. See Learning Goal 8: Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. 11-24

TYPES of PAY SYSTEMS Salary Hourly Wage/Day Work Piecework System Compensating Employees: Attracting and Keeping the Best LG8 Salary Hourly Wage/Day Work Piecework System Commission Plans Bonus Plans – monetary and non-monetary Profit Sharing Plans Gain-Sharing Plans – achieving objectives Stock Options See Learning Goal 8: Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. Students should be aware when accepting a job offer to consider not just the salary but the entire compensation package. 11-25

COMPENSATING TEAMS Compensating Employees: Attracting and Keeping the Best 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 objectives are met – like improvements over previous performance (Nucor Steel uses this system.) See Learning Goal 8: Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. Skill-based pay is increased when teams learn and apply new skills. Gain sharing bases team bonuses on improvements over previous performance. Nucor Steel calculates bonuses on quality—tons of steel that go out the door with no defects. There are no limits on bonuses a team can earn; they usually average around $20,000 per employee each year. 11-26

FRINGE BENEFITS on the JOB Compensating Employees: Attracting and Keeping the Best LG8 Fringe Benefits -- Sick leave, vacation pay, pension and health plans that provide additional compensation to employees beyond base wages. 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. See Learning Goal 8: Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. The rising cost of healthcare and the cost of employer provided health insurance is unsustainable in the long term. This requires both management and employees to create systems that keep cost down, but still provide meaningful coverage. This could include employee wellness programs and/or higher deductibles. 11-27

The RANGE of FRINGE BENEFITS Compensating Employees: Attracting and Keeping the Best The RANGE of FRINGE BENEFITS LG8 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 See Learning Goal 8: Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. 11-28

CAFETERIA-STYLE and SOFT BENEFITS Compensating Employees: Attracting and Keeping the Best CAFETERIA-STYLE and SOFT BENEFITS LG8 Cafeteria-Style Fringe Benefits -- Allow employees to choose the benefits they want (up to a certain dollar amount). Soft Benefits include: maintain work-life balance Onsite haircuts and shoe repair Concierge services Free meals at work Doggie daycare Onsite farmer’s markets See Learning Goal 8: Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. The name of the game today regarding employee benefits is creativity! 11-29

FLEXIBLE SCHEDULING PLANS LG9 Flextime Plan -- Gives employees some freedom to choose which hours to work as long as they work the required number of hours or complete their tasks. Core Time: when all employees are expected to be at their job stations Compressed Work Week -- Employees work the full number of work hours, but in fewer than the standard number of days. See Learning Goal 9: Demonstrate how managers use scheduling plans to adapt to workers’ needs. 11-30