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Chapter 6: Human Resources The Functions of Human Resources Management

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1 Chapter 6: Human Resources The Functions of Human Resources Management
In business, human resources (HR) is part of the management team who hire workers, set up their training programs, and arrange for payment of their salaries. Small companies handle these duties themselves. However, large companies have a human resources department that is responsible for coordinating all employees’ activities, such as reviewing applications to arranging pay. The Labour Market The labour market is where employers (buyers of skills) meet employees (sellers of skills). Occupational forecasts involve predictions about jobs that help to inform individuals about future job conditions and wages. HR managers coordinate activities associated with the employees including: study of labour markets new hire decisions employee skill sets recruits conducts interviews selects employees training payroll and employee retention programs employee transitions THE LABOUR MARKET Unskilled labour are individuals with little training, such as a dishwasher or busboy. Semiskilled labour requires some instruction, such as a cashier. Skilled labour is characterized by having training from an education institution or from previous employment, such as a cake decorator. Professional labour is highly trained within the context of a specific occupation, such as an accountant or a teacher.

2 Chapter 6: Human Resources The Functions of Human Resources Management
The Importance of Productivity Employers want employees to be productive: the more they produce in the hours that they work, the more profit the business can make. e.g. If an employee produces 1000 units in a week and is paid $500 per week the approximate cost of labour for each unit is 50¢ ($500 ÷ 1000). What if the employee made 1200? If raw materials cost 9¢/unit and there is an order for 1000 units with a sale price of 99 ¢/unit, what’s the difference in profit? The Importance of Skilled Labour A skilled employee means that a business can save money because the worker can usually produce a better product or service. The Importance of a Positive Attitude Happy employees are more productive than unhappy ones. Determining the Need for a New Employee HR helps businesses to create a staffing plan to avoid hiring under pressure. HR also forecasts a company’s employee turnover, the rate at which employees leave a company for another job or to retire. THE LABOUR MARKET The Importance of Productivity If an employee produces 1000 units in a week and is paid $500 per week the approximate cost of labour for each unit is 50¢ ($500 ÷ 1000). The Importance of a Positive Attitude Working conditions, training, fitness facilities, and time off are some ways to promote a positive attitude in the workplace. DETERMINING THE NEED FOR A NEW EMPLOYEE Within medium to large businesses HR managers determine initial and expansion staffing requirements. HR managers can also predict how new technologies, changes in hiring practices, and shifts in economic conditions will effect staffing needs. When a vacancy occurs the search for a qualified internal candidates usually means checking employee records that show service length, skill level, training, and performance evaluations.

3 Chapter 6: Human Resources The Functions of Human Resources Management
Looking for the Right Employee HR uses a variety of recruitment sources to hire qualified employees including newspaper, journal, and magazine advertisements notices at universities or colleges postings on job banks at government employment centres online recruiting Web sites, such as Workopolis a company’s Web site employee search firm often called a headhunter employee referral program recent job applicants LOOKING FOR THE RIGHT EMPLOYEE Human Resources Development Canada (HRDC) is a department of the federal government responsible for workforce issues and programs. They have career centres and a comprehensive website. A headhunter is a term used for a recruitment agency or executive search companies.

4 Chapter 6: Human Resources The Functions of Human Resources Management
The Application Process and the Interview A person looking for a position in a company usually submits an application form, a cover letter, and a resumé. An HR person and the department manager who the new employee will work for usually interviews and decides on the successful applicant. Interview Tips dress appropriately go alone know the time, place arrive a few minutes early give a firm handshake, smile and make eye contact, stay focused, remain calm be pleasant, enthusiastic listen to questions, answer briefly be aware of body language thank the interviewer for their time reaffirm interest in the job THE APPLICATION PROCESS AND THE INTERVIEW A resumé usually lists the applicant’s education, experience, interests, and abilities. The interview team asks questions regarding personality, work habits, values, interests, and other qualities. An applicant my go through several interviews and a reference check that verifies the information on the application, and may be ask additional questions to gain more information. Interview Tips: Dress appropriately for the job. Do not be too formal or too casual. Go alone. Do not take friends or family with you. Know where the interview will take place and know when. Plan to arrive a few minutes early. You could run into traffic or delays on the way. Focus and calm down when you arrive. Give a firm handshake to the interviewers. Make eye contact and smile during the interview. Be pleasant and enthusiastic, but avoid talking too much. Do not say more than you are asked to say. Listen carefully to each question and give a brief but complete answer. Try to be aware of your body language, facial expressions, and tone of voice. Thank the interviewer(s) at the end of the interview and reaffirm your interest in the position.

5 Chapter 6: Human Resources The Functions of Human Resources Management
Job Training Orientation is the time when new employees tour the workplace and meet other co-workers. At this point, employees may also receive training on equipment and be introduced to new technology and software. Keeping Good Employees It is for costly for businesses to search for, hire, and train new employees. Most businesses take steps to retain good employees. Some businesses offer employees perks—special benefits beyond ordinary compensation—to attract and retain them. Images: Dress Code? JOB TRAINING During orientation the HR department introduces business policies on compensation, work hours, benefits, rules of behaviour, dress code, health and safety procedures, etc. to the new employee. HR departments may also arrange motivational speakers and training in stress management, increased productivity, and management skills. KEEPING GOOD EMPLOYEES New employees are less productive, meaning less profitable. Perks can include a casual dress code, daycare services, on-site gym facilities, massage therapists, special food, reading, and rest rooms.

6 Chapter 6: Human Resources The Functions of Human Resources Management
Departures, Dismissals, and Retirements HR tries to ensure a smooth transition when employees leave the business regardless of the reason for the departure. Businesses need to protect their reputation and maintain good relationships with employees. Departures During an exit interview, the employee may discuss their future goals, provide some feedback about the workplace, and ways for improvement. Some employers give a positive reference for or letter of recommendation to their employees. Dismissals Employers in corrective interviews discuss work problems with employees. Employees then improve or face dismissal. Employee layoffs can occur due to financial cut backs. Companies sometimes offer severance packages. If provided, outplacement counselling offers terminated employees ways to find new jobs. DEPARTURES, DISMISSALS, AND RETIREMENTS A positive relationship should be maintained with the employee who is leaving the company. Departures A departure could be due to family needs, job dissatisfaction, or a better opportunity elsewhere. Dismissals Corrective interviews are interviews with an employee who is having difficulties, in which problems are discussed openly and a plan for improvement is made, and often signed by both parties. If improvements are not shown within a period of time the employee may be dismissed. Dismissals can occur due to lateness, absenteeism, poor work habits, etc. Dismissing staff to reduce expenses is called employee layoffs. Companies with unionized employees usually lay off workers in order of seniority. Seniority is the length of service with a company. A severance package is final compensation paid to a laid-off or terminated employee. A severance package is usually based on the time an employee has worked for a business, perhaps one week’s pay for every year of service.

7 Chapter 6: Human Resources The Functions of Human Resources Management
Retirement Retirement occurs when an employee voluntarily withdraws from the labour market. Handling Compensation Compensation is the money and other benefits received by employees in exchange for their work. Hourly Wages A common compensation payment method is an hourly wage. The minimum wage is the lowest hourly wage an employer can legally pay an employee. Overtime is a higher hourly rate for working longer than the regular scheduled time or on holidays. DEPARTURES, DISMISSALS, AND RETIREMENTS Retirement Throughout the time an employee works for a company, they and the company may contribute to a pension that the retiree receives as an income once he/she no longer works for the company. HANDLING COMPENSTATION The payroll department calculates the amount owing to the employees, after deductions such as income tax, unemployment insurance, pension, etc. Supply and demand affects compensation in that the greater demand for a particular skill the greater the compensation paid. Hourly Wages Most part-time employees are paid an hourly wage. The amount per hour ranges from the minimum wage, paid to unskilled or semiskilled labour, to hundreds of dollars an hour for skilled or professional work.

8 Chapter 6: Human Resources The Functions of Human Resources Management
Salary A salary is a fixed amount of money paid to an employee on a regular schedule, usually weekly or monthly. Salary plus Commission Pay based on the amount of sales generated is called commission. Generally, it is a small amount of money added to the salary or hourly wage that acts as an incentive to encourage an employee to work harder. Straight Commission Straight commission is based solely on an employee’s sales. HANDLING COMPENSTATION Salary A salary is often paid weekly, bi-weekly, or monthly. A salary is often expressed as a yearly amount such as $64,000 a year. Usually salaried jobs do not specify the number of hours to be worked and if the employee works extended hours overtime is not paid. Salary Plus Commission An incentive is something added to the pay of an employee to encourage harder work or particular types of work. If an employee makes a 2% commission on goods sold, and sells $5000 worth of goods, the commission would be $5000 x .02 = $100. Higher commissions usually mean that the salesperson is paid a lower salary or hourly wage. Straight Commission People who sell high-priced items or that sell to wholesale businesses or large industries often earn straight commission. Car and real estate sales people often receive straight commission. If the person falls ill or need to take time off their income will suffer significantly.

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Incentive Bonus When employees perform well, they may be rewarded with bonuses. Performance-based Pay Piecework is performance-based pay that is calculated on how much product can be made by one person. Sweatshops are piecework factories characterized by low wages and unsafe or unhealthy conditions. Fee for Service A complete job is paid by one fee, and is usually documented in a signed contract. HANDLING COMPENSTATION Incentive Bonus An incentive is added to the pay of an employee to encourage harder work or a particular type of work. A bonus system can also be called variable pay. When employees meet their sales quotas, targets, or performance goals, they can receive extra money, or something else of value. Performance-based Pay Is widely used in the clothing industry. Requires speed and skill. This pay system can lead to abuses especially in poverty stricken countries where very little is paid, especially to child labour. Many reputable businesses use piecework. It can allow employees to work at home, using their own equipment and to set their own pace. Fee for Service The fee usually consists of the cost of the time and materials to do the job plus and additional fee to ensure a profit. Renovation, catering, and cleaning are sectors that often work on a fee-for-service basis. The contract helps to prevent misunderstandings as it states costs, time lines, materials, and so on.

10 Chapter 6: Human Resources The Functions of Human Resources Management
Royalty or Licensing Fee A royalty is a fee paid to the owner of a patent or copyright by someone who uses it. A licensing fee is money paid to obtain a license. Stock Options Stock options are a form of compensation that gives employees the opportunity to buy shares in the company at a lower-than-market price. HANDLING COMPENSTATION Royalty or Licensing Fee Writing a book, recording a song, or have an idea you can sell may result in the payment of a royalty or licensing fee. If you license your idea to someone else the fee you are paid could be a percentage of sales, a fixed fee, or a combination of both. The person you licenses to is the licensee. Stock Options With this option, employees can buy stocks, for a given period of time, at the quoted price even if the market price increases, therefore if and when the employee sells the stocks they will make money or a profit. Companies benefit because employees who own part of the company work harder for organizational success.

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Health and Safety Federal and provincial laws require businesses to provide and maintain a safe and healthy work environment. Health Sick pay are wages paid to any employee who is absent from work due to illness. Employers benefit from healthy employees. To encourage this, many businesses have established wellness programs that promote the physical and emotional well-being of their employees. HEALTH AND SAFETY Provincial and Federals laws enforce health and safety standards. Sick or injured workers are unproductive and they can bring legal action. Health Sick pay is usually full pay while the employee is off work. Wellness programs aim to reduce absenteeism. See Table 6.1, “Health and Wellness Programs” on page 192.

12 Chapter 6: Human Resources The Functions of Human Resources Management
Safety According to Part Two of the Canada Labour Code, employees have the right to be informed about known and foreseeable hazards in the workplace identify and resolve job-related problems in safety and health refuse dangerous work if they have reasonable cause to believe that a situation constitutes a danger HEALTH AND SAFETY Safety Legislation is intended to prevent accidents, injury, and disease. Some foreseeable hazards involve the use of equipment so employers should be provided with the necessary training. Carpal tunnel syndrome is a painful injury caused by using a computer improperly. First-aid equipment should be made available and associated training can be provided. Proper lifting techniques should be used on the job. The Workplace Safety and Insurance Board (WSIB) is an organization that provides insurance that pays employees while they recover (medical coverage, rehabilitation). Employers pay WSIB premiums. Poor health and safety records affects a companies reputation and may bring government investigations and possibly charges.

13 Chapter 6: Human Resources Key Employability Skills
The Conference Board of Canada has developed a list of employability skills including academic skills, personal management skills, and teamwork skills. Academic Skills Academic skills allow you to obtain, retain, and progress on the job. These skills include the ability to communicate think learn ACADEMIC SKILLS Communication skills include the ability to: understand and speak the language in which business is conducted listen to understand and to learn read, comprehend, and use written materials, including graphs, charts, and displays write effectively in the languages in which business is conducted Thinking skills include the ability to: think critically and act logically to evaluate situations, solve problems, and make decisions understand and solve problems involving math and use the results use technology, instruments, tools, and information systems effectively access and apply specialized knowledge from various fields To learn means: lifelong learning

14 Chapter 6: Human Resources Key Employability Skills
Personal Management Skills Canadian employers need people who can demonstrate the following skills, attitudes, and behaviours: positive attitudes and behaviours responsibility Teamwork Skills To achieve organizational goals, employees need to work collaboratively with one another in the workplace. PERSONAL MANAGEMENT SKILLS Positive Attitudes and Behaviours self-esteem and confidence honesty, integrity, and personal ethics a positive attitude towards learning, growth, and personal health initiative, energy, and persistence to get the job done Responsibility the ability to set goals and priorities in ones work and personal life the ability to plan and manage time, money, and other resources to achieve goals accountability for actions taken adaptability a positive attitude towards change the ability to identify and suggest new ideas to get the job done—creativity TEAMWORK SKILLS works well with others understands and works within the culture of the group plans and makes decisions with others and supports the outcome respects the thoughts and opinions of others in the group exercises “give and take” to achieve group results seeks a team approach as appropriate leads where appropriate, mobilizing the group for high performance

15 Chapter 6: Human Resources Business Careers
Professions such as medicine or the law as well as the trades of plumbing or construction are a few of the career choices that people can make today. General Business A high-school education is usually the minimum requirement for entry-level jobs in business. Accounting Careers Professional accountants must be certified and obtain one of the following designations: Certified Accountants (CA) Certified General Accountants (CGA) Certified Management Accountants (CMA) GENERAL BUSINESS General business careers provide a good living for hundreds of thousands of people who work in occupations such as; waiters, bartenders, secretaries, clerks, drivers, and assembly workers. Entry-level positions are often the first step towards higher-level positions. ACCOUNTING CAREERS Accountants work with a company’s finances, income, and expenses, assets, and liabilities. After a four year business degree, and two or three years working in an accounting office, a tough certification exam must be written and passed.

16 Chapter 6: Human Resources Business Careers
Consulting Careers Consultants are individuals who are paid by businesses for their expertise and advice on specific topics. Entrepreneurship Many successful individuals start their own businesses. They apply their skills and invest capital to create unique businesses that meet the needs and wants of consumers. Financial Careers A financial career involves looking after and giving advice about other people’s investments or assets. CONSULTING CAREERS Consultants are knowledgeable on specific topics, such as a business consultant would consult on management issues, marketing problems, public relations, international trade, etc. Consultants usually have considerable knowledge or experience in a field and proven success. ENTREPRENEURSHIP Ray Kroc (McDonalds) and Dave Thomas (Wendy’s) where vastly successful entrepreneurs that never completed high school. FINANCIAL CAREERS Bankers, stockbrokers, and money managers are examples of financial occupations. These hard working careers are often under pressure. Bank tellers, loan officers, and financial planners are also financial occupations, however these positions are not as stressful. Financial institutions usually provide on-the-job training.

17 Chapter 6: Human Resources Business Careers
Human Resources Careers Large corporations seek individuals who have taken human resources management courses at a community college or at university. Marketing Careers The range of careers within marketing differ with most requiring post-secondary education, strong communication skills, and a creative edge. Personal Selling Careers Task ranges, skill levels, and incomes vary to a great extent within the personal sales sector. HUMAN RESOURCES CAREERS The chapter has outlined the responsibilities and opportunities within a HR department. MARKETNG CAREERS Careers in advertising, promotions, publicity, packaging, and event planning all require special community college or university degrees, plus creativity. Retail marketing careers require a community college background and on-the-job training. Product development requires an academic background in design. Logistics (determining the cheapest, fastest, and the safest way to transport goods) requires a community college certificate and accreditation from the Canadian Institute of Traffic and Transportation (CITT). PERSONAL SELLING CAREERS See Table 6.2, “Types of Sales Positions”, on page 200.

18 Chapter 6: Human Resources Rights in the Workplace
The Universal Declaration of Human Rights, adopted by the General Assembly of the United Nations on December 10, 1948, is the source for many of the workplace rights available to employees and employers today. The Rights of the Employee The provincial and federal governments provide legislation that determines employment standards for public and private sector employees. Each province has human rights legislation that protects employees against discrimination and harassment. The Right of the Employer Employers have the right to hire, dismiss, and promote employees, and to establish conditions of employment that best serve their business goals. The declaration was adopted on December 10, 1948. See “Universal Declaration of Human Rights” on page 201. THE RIGHTS OF THE EMPLOYEE The legislation sets out provisions for the following: minimum employment age, hours of work, minimum wages, overtime, holidays, and vacation pay, paid public holidays, parental leave, individual and group terminations of employment, and the recovery of unpaid wages Human rights codes make it illegal to harass or discriminate against employees or potential employees. Protected grounds are characteristics (gender, race, religion, etc.) of an employee that, by law, cannot lead to harassment or discrimination. Discrimination is denying a qualified individual an interview, a job, or a promotion because of religion, gender, or physical disability. Harassment is making a person or group feel uncomfortable in a work situation because of their race, religion, gender, etc. THE RIGHTS OF THE EMPLOYER Employers have the right to: decide what their employment needs are require that employees have job-related qualifications and/or experience hire, promote, and assign the most qualified person to a position establish standards for evaluating job performance require that employees adhere to clearly defined job descriptions and performance criteria discipline, demote, or dismiss incompetent, negligent, or insubordinate employees set employment terms and conditions establish salary and wage scales either independently or through negotiations

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