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Chapter 8

chapter 8 Human Resource Management.docx

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University of Toronto St. George
Rotman Commerce
Michael Khan

Chapter 8 Human Resource Management Human Resources: The people behind the people Achieving a high level of job satisfaction and dedication among employees the goal of human resource management, which attracts, develops, and retains the employees who can perform the activities needed to meet organizational objectives. Not very firm is large enough to have a separate human resources department. But whoever performs this function generally does the following: plans for staffing needs, recruits and hires workers, provides for training and evaluates performance, decides on compensation and benefits, and oversees employee separation. In accomplishing these five tasks, human resource managers achieve following objectives: 1. Provide qualified, well-trained employees for the organization 2. Maximizing employee effectiveness in the organization 3. Satisfying individual employee needs through monetary compensation, benefits, opportunities to advance, and job satisfaction Recruitment and Selection Human resource managers recruit and help select the right workers for a company. They ensure that job candidates bring the needed skills to the job or have the desire and ability to learn these skills. Finding qualified candidates The traditional methods of recruiting workers include college and university job fairs, personal referrals, and want ads. Most companies now rely on their websites for recruiting new workers. A firm’s website might include a career section that provides general employment information and a listing of open positions. Job seekers are often able to submit a resume and apply for an open position online. Internet recruiting is a quick, efficient and inexpensive way to reach a large number of job seekers. Using the internet is also the best way for firms to reach new college and university graduates and workers in their 20s and 30s. Recruiting techniques continue to change as technology advances. [JobsinPods.com] Selecting and Hiring Employees The human resource manager selects and hires employees, often by working with department managers or supervisors. Every firm must follow provincial and federal employment laws. These laws state that employers cannot discriminate against job applicants, or treat them unfairly, because of their race, religion, colour, sex, national origin, and so forth. These laws are designed to make the competition for jobs fairer for all job seekers. Because of the high cost of lawsuits and settlements, human resource managers must understand the laws that apply to employment so they can prevent unintended actions that might break these laws. Even the process of interviewing a job candidate must be carried out according to law. Dealing with hiring restrictions can be a challenge. Some firms try to screen out high-risk employees by requiring drug testing for job applicants. Drug testing is common in industries that deal with public safety- such as air travel and truck driving. But drug testing can lead to strong debates because of privacy issues. 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. One estimate suggests that total cost of a hiring mistake amounts to 24 times the applicant’s annual pay. It’s especially important for human resource managers to make the best choices when it comes to recruitment and selection. To avoid mistakes- many employers require applicants to complete employment tests. These tests may be used to prove the applicant has certain skills, such as mechanical, technical, language, and computer skills. [Wonderlic Basic Skills Test] Orientation, training, and evaluation After employees are hired, they need to know what is expected of them and how well they are performing. Companies provide this information through orientation, training, and evaluation. A new hire may complete an orientation program prepared by the human resource personnel and the department where the employee will work. Training program Training is a good investment for both employers and employees. Training provides workers with an opportunity to build their skills and knowledge. These new skills can also prepare them for new job opportunities within the company. Training also helps employers to keep long-term, loyal, high- performing workers. On the Job Training One popular teaching method is on-the-job training. This type of training prepares employees for job duties by having them perform tasks under the guidance of experienced employees. A variation of on- the-job training is apprenticeship training. An employee who is an apprentice learns a job by working as an assistant to a trained worker. Apprenticeships usually focus on blue-collar trades- such as plumbing and heating services. But many new entrants to white-collar professions also complete apprenticeships. [McDonalds’ in UK] Classroom and Computer-Based Training Many firms offer some form of classroom instruction, such as lectures, conferences, workshops, or seminars. [Ernst & young and you (EYU), this program focuses on classroom learning, experiential learning, and coaching.] Many firms are replacing classroom training with computer-based training program. These programs can significantly reduce the cost of training. Computer-based training offers consistent presentations. It can also include videos that stimulate work environment often by using actors in similar situations. In a study on training, Accenture discovered that for every hour its competitors spent on training. Accenture spent two hours. Accenture invests heavily in its employees because it believes these workers will be able to help their company gain a competitive edge in the marketplace. Management Development A management development program provides training designed to improve the skills and broaden the knowledge of current or future managers and executives. Training may be aimed at increasing specific technical knowledge or more general knowledge, in areas such as leadership and interpersonal skills. Performance Appraisals The best way for a company- and its employees- to improve is to provide feedback about job performance. Most firms use an annual performance appraisal to evaluate an employee’s job performance and provide feedback. A performance appraisal can include assessments of everything from attendance to goals met. A manager will use this evaluation to make decisions about compensation, promotion, additional training needs, transfers, or even termination. Performance appraisals are common, but not everyone agrees how useful they are. If a performance review is to be effective, it should meet the following criteria, or guidelines: 1. Take place several times a year 2. Be linked to organization goals 3. Be based on objective measures 4. Take place in the form of a two-way conversation Some firms use peer reviews, which have employees assess the job performance of their co-workers. Other firms ask employees to review the job performance of their supervisors and managers. One such performance appraisal is the 360-degree performance review. This type of appraisal gathers feedback from a review panel of 8 to 12 people, including co-workers, supervisors, team members, people who report to the employees, and sometimes even customers. The idea is to get as much feedback from as many viewpoints as possible. {Employees benefit: more involved with the process; understand more about their weaknesses, strengths and roles in the company. / Mangers benefit: much more in depth feedback from all parts of the organization.//Weakness: Anonymous nature} [Halogen Software] Compensation Compensation- the amount employees are paid in money and benefits- is one of the most highly charged issues faced by human resource managers. The amount employees are paid, including any benefits they receive, has a huge effect on where people live, what they eat, and how they spend their leisure time. It also has an effect on job satisfaction. The term wage and salary are often used as if they mean the same thing, but actually the two terms are different. A wage is pay that is based on an hourly pay rate or the amount of work accomplished. Typical wage earners are factory workers, construction workers, auto mechanics, retail salespeople, and restaurant wait staff. A salary is calculated periodically, often weekly or monthly. Salaried employees receive a set amount of pay that does not rise or fall with the number of hours works. Wage earners can receive overtime pay, but salaried workers do not. Office personnel, executives, and professional employees usually receive salaries. Most firms base their compensation policies on the following factors: (1) what competing companies are paying (2) government regulation (3) the cost of living (4) company profits (5) an employee’s productivity (P220) Four forms of incentive compensation: 1. Profit Sharing 2. Gain Sharing 3. Lump-sum bonus and stock option 4. Pay for knowledge Employee Benefits In addition to paying wages and salaries, firms also provide benefits to employees and their families as part of their compensation. Employee benefits are additional compensation that is paid entirely or in part by the company sharing, health insurance, gym memberships, child and elder care, and tuition reimbursement. Benefits represent a large portion of an employee’s total compensation. Wages and salaries account for around 70% of the typical employees’ earnings. The other 30% takes the form of employee benefits. Pensions and other retirement plans make up a large portion of employee benefits. In general, large companies often pay for supplementary health care benefits, leaving employees paying little of the cost. However, with costs increasing each year, employers now offer incentives for workers to live healthier lives. Gym memberships, nutrition programs, wellness visits for the doctor, and smoking-cessation classes are all examples of these incentives. [SAS] Flexible Benefits In today’s workplaces, employees now represent a wide range of personalities and lifestyles. In response to this increasing diversity, firms are developing creative ways to tailor their benefit plans to employees’ needs. One approach sets up flexible benefit plans, also called cafeteria plans. These plans offer a choice of benefits, including different types of medical insurance, dental and vision plans, and life and disability insurance. Typically, each employee receives a set allowance (called flex dollars or credits) to pay for benefits that suit his or her needs. Another way to increase the flexibility of employee benefits involves time off from work. Instead of having a set numbers of holidays, vacation days, and sick days, some employers give each employee a bank of paid time off (PTO). Employees can use days from their PTO accounts without having to explain why they need to time. The greatest advantage of PTO is the freedom it gives workers to make their own choices. The greatest disadvantage is that it is an expensive benefit for employers. Flexible Work Some firms offer the option of flexible work plans. These plans allow employees to adjust their working hours or their places of work according to their needs. Flexible work plan options include flextime, compressed workweeks, job sharing, and home based work (telecommuting). These benefit programs reduce employee turnover and absenteeism and boost productivity and job satisfaction. Flextime allows employees to set their own work hours within certain limits. Outside the core hours, employees can choose to start and end early, or start and end late. Flextime works well in jobs that are independent. But it does not work so well when the employees work in teams or provide direct customer service. Flextime is popular in Europe, where 56% of all companies offer some kind of flextime arrangement. Some companies offer a compressed workweek. This plan allows employees to work longer hours on fewer days. Employees might work four 10-hour days and then have three days off each week. Thee work arrangements not only reduce the number of hours employees spend commuting each week but can stretch out the company’s overall workday, providing more availability to customers in other time zones. People who work in hospitals, airlines, and police and fire departments often work several long days, then have several days off. A job sharing program allows two or more employees to divide up the tasks of one job. This plan appeals to more and more people who prefer to work part-time rather than full-time- such as older workers, students, working parents, and people of all ages who want more time for personal interests or leisure. Home based work program allow employees to perform their jobs form home instead of at the workplace. These telecommuters are connected to their employers through the internet, voice and video conferencing, and mobile devices. Working from home generally appeals to employees who want freedom. It also appeals to person with disabilities, older workers, and parents. Forrester Research predicts that telecommuting will grow its current 34 million North American workers to 63 million by year 2016. More than 70% of Generation Y professionals-those just entering the workforce are concerned with balancing career with personal life. Most simple reject the idea of sitting in an office cubicle for 8 to 10 hours a day. Employee Separation Employee separation is a broad term for the loss of an employee for any reason, voluntary or involuntary. Voluntary separation includes workers who resign to take a job at another firm or to start a business. Involuntary separation includes downsizing and outsourcing. Voluntary and Involuntary Turnover 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- perhaps to take another job, start a new business, or retire. Some human resource managers will ask the employee for an exit interview to learn why he or she is leaving; this conversation can provide valuable information to a firm. Involuntary turnover occurs when employees are terminated because of poor job performance or unethical behaviour in their business practices or in the workplace. Involuntary turnover also occurs when firms are forced to eliminate jobs as a cost-cutting measure, as in the case of downsizing or outsourcing. Some employees who are fired say they have been wrongfully dismissed and file their complaint formally, in a lawsuit. Downsizing Downsizing is the process of reducing the number of employees within a firm by eliminating jobs. Downsizing 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. Downsizing can have the following negative facts: - Anxiety, health problems, and lost productivity among the remaining workers - Expensive severance packages paid to laid-off workers - 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 downsizing is the only option for company survival, then managers can take steps to make sure it is done the best way possible. If a firm is committed to its workforce as part of its mission, it will do everything it can to support both the workers who must leave and the workers who will stay. Outsourcing Outsourcing involves using outside vendors to produce goods or fulfill services and functions that were previously handled in-house or in-country. Jobs are transferred from inside a firm to outside the firm. Jobs that are most often outsourced include office maintenance, deliveries, food service, and security. However, other job functions can be also outsourced, including manufacturing, design, information technology (IT), and accounting. In general, companies will try to outsource functions that are not part of their core business so they can save on expenses and remain flexible. Motivating Employees One of a manager’s main goals is to motivate employees to be loyal to their company and to perform the best on the job. Motivation starts with good employee morale. Morale is the employee’s mental view toward their employer and jobs, often including a common sense of purpose. High employee morale occurs when workers feel they are valued, their opinions are heard, and they are empowered to contribute
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