Textbook Notes (369,097)
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RSM100Y1 (431)
Chapter 8

RSM100Y1 Chapter 8 Notes

14 Pages

Rotman Commerce
Course Code
Michael Khan

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RSM100Y1 Textbook Notes Chapter 8  Human resource management: the function of attracting, developing, and retaining employees who can perform the activities needed to meet organizational objectives.  The core responsibilities of human resource management are: o Planning for staffing needs o Employee recruitment and selection o Employee training and performance evaluation o Employee compensation and benefits o Employee separation  By accomplishing these tasks, human resource managers achieve the following objectives: o Providing qualified, well-trained employees for the organization o Maximizing employee effectiveness in the organization o Satisfying individual employee needs through monetary compensation, benefits, opportunities to advance, and job satisfaction  HR plans must be based on an organization’s overall competitive strategies.  HR managers work with other managers to determine how many workers will be needed and what skills they will need and what skills they will learn on the job.  HR managers are often asked for their input on decisions to lay off workers to reduce costs or hire new workers increasing costs.  Methods of recruiting workers include: o College/university job fairs o Personal referrals o Want ads o Internet  Includes:  Listings on firm’s own website  Listings on social networking sites (i.e. FaceBook)  Listings on job sites (i.e. Monster.com)  Provincial and federal employment laws state that employers cannot discriminate against job applicants, or treat them unfairly, because of their race, religion, colour, sex, national origin etc. o Failure to follow the terms of equal employment opportunity laws can result in costly legal fees, expensive fines, bad publicity, and poor employee morale. o These laws even provide a basis for how the interviewing process must be carried out.  An interviewer may not ask job applicants about their marital status, children, race or nationality, age, criminal records, mental illness, medical history, or alcohol and substance abuse.  Drug testing for job applicants is one method employers use to screen out high-risk employees.  Another issue is whether employees can be required to speak a particular language in the workplace.  Employers may legally establish requirements for specific jobs – true occupational qualifications (i.e. only women applicants for a job under a designer of women’s clothing)  Costs associated with reqcruiting and selecting employees include: o Advertising o Interviewing o Employment testing o Medical exams  Once the employee has been hired, there are costs for training and for equipment.  One estimate suggests that the total cost of a hiring mistake amounts to 24x the applicants annual pay (important for HR managers to make the best decisions).  Employment tests are used to prove the applicant has certain skills, such as mechanical, technical, language, and computer skills. o Cognitive ability tests accurately predict job performance on many types of jobs.  Newly hired employees learn what is expected of them and how well they are performing through: o Orientation  Employees learn about company policies regarding their rights and benefits.  They might receive an employee manual that includes the company’s code of conduct/ethics. o Training  Provides workers with an opportunity to build their skills and knowledge.  Helps employers to keep long-term, loyal, high-performing workers.  On-the-job training: prepares employees for job duties by having them perform tasks under the guidance of experienced employees.  Apprenticeship: an employee who is an apprentice learns a job by working as an assistant to a trained worker (usually in blue-collar trades – such as plumbing/heating services).  Classroom training: lectures, conferences, workshops, or seminars that provide information.  Computer-based training (low-cost): offer consistent presentations (includes videos that stimulate the work environment); employees can learn at their own pace.  Online training (interactive learning): employees may work with a mentor/instructor who is located elsewhere; might include simulations where decisions have to be made regarding their work.  Management development program: training designed to improve the skills and broaden the knowledge of current or future managers and executives.  I.e. the Conference Board of Canada provides management training in leadership, team development, and strategic implementation. o Evaluation  Performance appraisal: evaluation of and feedback on employee’s job performance (can include attendance).  Used to make decisions about:  Compensation  Promotion  Additional training needs  Transfers  Termination  An effective performance review should meet the following criteria (guidelines):  Take place several times a year  Be linked to organizational goals  Be based on objective measures  Take place in the form of a two-way conversation  Forms of appraisal used:  Peer reviews o Co-workers assess the employees job performance  Upward appraisal o Employees are asked to evaluate their supervisors.  360° performance review o Feedback is gathered from a review panel of 8- 12 people (includes co-workers, supervisors, team members, subordinates, sometimes customers) o The major benefit is the multiple points of view of the panel members. o A potential disadvantage is its anonymous nature (employees with personal likes/dislikes might try to influence the outcome). o Employees benefit by:  Being more involved with the process  Understand more about their own strengths/weaknesses  Understand more about their own role in the organization o Managers benefit by:  Getting more in-depth feedback from all parts of the organization  Compensation: the amount employees are paid in money and benefits.  Compensation is divided into: o 70% wages/salaries o 30% benefits  The amount employees are paid, including any benefits they receive, has a huge effect on: o Where people live o What they eat o How they spend their leisure time o Job satisfaction  Balancing compensation for employees at all job levels can be a challenge for HR managers.  Wage: pay based on an hourly rate or the amount of work accomplished. o I.e. factory workers, construction workers, auto mechanics, retail salespeople, restaurant wait staff o Wage earners are eligible for overtime pay.  Salary: pay calculated on a periodic basis, such as weekly or monthly (hours worked does not matter). o I.e. office personnel, executives, and professional employees o Salary earners are not eligible for overtime pay.  An effective compensation system should: o Attract well-qualified workers o Keep them satisfied in their jobs o Inspire them to succeed  Most firms base their compensation policies on: o What competing companies are paying o Government regulation o The cost of living o Company profits o An employee’s productivity  Programs that try to motivate employees to excel by offering some incentive compensation in addition to salaries/wages include: o Profit sharing: awards that are bonuses based on company profits. o Gain sharing: companies share the financial value of productivity gains, cost savings, or quality improvements with their workers. o Lump-sum bonuses and stock options: such as one-time payments and the right to purchase stock in the company based on performance. o Pay for knowledge: distributes wage or salary increases as employees learn new job tasks.  Employee benefits: additional compensation – such as vacation time, retirement savings plans, profit-sharing, health insurance, gym memberships, child and elder care, and tuition reimbursement – aid entirely or in part by the company.  Some benefits are required by law (i.e. firms may be required to make pension contributions).  Incentives for employees to live healthier lives (to lower costs associated with health because they continually increase) can include: o Gym memberships o Nutrition programs o Wellness visits to the doctor o Smoking-cessation classes  Flexible benefit plans (cafeteria plans): offer a choice of benefits, including different types of medical insurance, dental and vision plans, and life and disability plans. o Typically, employees each receive a set allowance (called flex dollars/credits) to pay for benefits that suit their needs. o Contributions to cafeteria accounts can be made by both the employee and employer. o Offer tax benefits to both employees and employers. o Used to address the increasing diversity in the workforce.  Paid time off (PTO): instead of having a set number of holidays, vacation days, and sick days (days are in a bank). o A major advantage is that employees can use days from their PTO accounts without having to explain why they need the time (freedom). o A major disadvantage is that it is an expensive benefit for employers.  Flexible work plans: plans that allow employees to adjust their working hours or their places of work according to their needs. o Options include:  Flextime  Allows employees to set their own work hours within certain limits (i.e. all workers need to be present between 10 – 3 but they can choose to start early or end late).  Effective in jobs that are independent.  In Europe, 56% of all companies offer some kind of flextime arrangement.  Web-based software makes it easy for larger organizations to make scheduling easier (i.e. employees can log in and request certain shifts or schedule changes).  Compressed workweeks  Allow employees to work longer hours on fewer days (i.e. 4 10-hour days rather than 5 8-hour days).  Advantages: o Reduces the number of hours employees spend commuting each week o Stretches out the company’s overall workday, providing more availability to customers in other time zones.  Used frequently in hospitals, airlines, and police and fire departments.  Job sharing  Allows two or more employees to divide up the tasks of one job.  Appealing to those who prefer to work part-time rather than full-time.  Requires a lot of cooperation and communication between the partners, but a company benefits from the talents of both people.  Home-based work (telecommuting)  Allows employees to work from the comfort of their own home while they are connected to their employers through the Internet, voice and video conferencing, and mobile devices.  Appeals to: o Employees who want freedom o Persons with disabilities o Older workers o Parents  Company benefits because they can expand their pool of talent and increase productivity without increasing costs.  Telecommuters need to be self-disciplined and reliable employees. o Their managers need to be comfortable with setting goals and managing from afar.  NA = 34 million telecommuters (projected 63 million by 2016). o Reduces employee turnover and absenteeism and boosts productivity and job satisfaction. o +70% generation Y professional are concerned with balancing career and personal life.  Most reject the idea of sitting in an office cubicle for 8-10 hours a day.  Employee separation: a broad term for the loss of an employee for any reason, voluntary or involuntary. o Turnover occurs when an employee leaves his or her job.  Voluntary turnover occurs when the employee decides to resign for his or her own reasons (i.e. take another job, start a new business, pay issues, job security worries etc.).  Exit interviews are sometimes used by HR managers to find out why employees are resigning in an attempt to address the issue and keep the employee.  Involuntary turnover occurs when employees are terminated because of poor job performance or unethical behaviour n their business practices or in the workplace.  Also includes when firms are forced to eliminate jobs as a cost-cutting measure (i.e. downsizing/outsourcing).  HR managers need to remain calm and professional when dealing with emotional employees who have been terminated. o They must also be educated in employment laws so the termination if handled properly (some employees file formal complaints saying they have been wrongfully dismissed).  Downsizing: the process of reducing the number of employees within a firm by eliminating jobs.  Can be done by offering early retirement or voluntary severance programs.  After downsizing, some firms report improvements in profits, market share, employee productivity, quality, and customer service.  Negative effects associated with downsizing: o Anxiety, health problems, and lost productivity among the remaining workers o Expensive severance packages paid to laid-off workers o A domino effect on the local economy – unemployed workers have less money to spend, which creates less demand for consumer goods and services, which increases the likelihood of more layoffs and other failing businesses.  If a firm is committed to its workforce as a part of its mission, it will do everything it can to support both the workers who must leave and the workers
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