Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler WHERE WE ARE NOW… The main purpose of this chapter is to help you apply what you know about human resource management to running a small business. The main topics we’ll address include the small business challenge; using Internet and government tools to support the HR effort; leveraging small size with familiarity, flexibility, fairness, and informality; using professional employer organizations; and managing HR systems, procedures, and paperwork. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler LEARNING OUTCOMES Explain why human resource management in small companies is different from that in larger companies. Give at least five specific examples of how you would use the Internet and government tools to support the HR effort in a small business. Answer the question, “Why are familiarity, flexibility, and informality important tools that entrepreneurs can use to improve human resource management practices in their small businesses?” Explain what professional employers’ organizations are and how entrepreneurs can use them. Describe how HR systems traditionally evolve in a small business and give examples of how small businesses can use human resource management information systems. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

The Small Business Challenge Human Resources Management 12e Gary Dessler The Small Business Challenge Why Entrepreneurship Is Important Over one-half of the U.S. labor force works for small firms. Over 600,000 small businesses are created annually. Three-fourths of employment growth comes from small firms. Why Is HRM Important to Small Businesses? Growth of any small business depends on effective HR activities. Getting and keeping large customers requires compliance with international quality (HR) standards. Anyone interested in small businesses (or human resource management) needs to understand how managing human resources in small firms is different from doing so in larger firms. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler Size of HR staff Priority of HR issues Informality of HR practices How Small Business Human Resource Management Is Different Entrepreneur’s effect on HRM Managing human resources in small firms is different for four main reasons: size, priorities, informality, and the nature of the entrepreneur. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

The Entrepreneur’s Risky Human Resource Management Situation Human Resources Management 12e Gary Dessler The Entrepreneur’s Risky Human Resource Management Situation Underdeveloped HRM creates competitive disadvantage Lack of specialized HR expertise Compliance with compensation regulations and laws Lack of HRIS systems creates inefficiencies and data entry errors Increased potential for workplace litigation not addressed HR Risks in Small Businesses The lack of attention of HRM matters and lack of expertise means that entrepreneurs face at least five HR-type risks in managing a small business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Why HRM Is Important to Small Businesses Human Resources Management 12e Gary Dessler Why HRM Is Important to Small Businesses Effective HRM: Is a competitive necessity for small firms. Makes small firms more successful . Helps small firms get and keep large customers. Is necessary to meet ISO-9000 requirements for competing internationally. Smart entrepreneurs take these risks to heart. Small firms need all the advantages they can get, and for them effective human resource management is both a competitive necessity and a requirement for competing in global markets. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Using Internet and Government Tools To Support The HR Effort Human Resources Management 12e Gary Dessler Using Internet and Government Tools To Support The HR Effort Complying with Employment Laws: DOL: www.DOL.gov/elaws/firststep www.dol.gov/esa/whd/flsa EEOC: wwww.EEOC.gov/employers/smallbusinesses.html OSHA: www.OSHA.gov www.OSHA.gov/dcsp/smallbusiness/index.html Employment Planning and Recruiting: DOL: http://online.onetcenter.org Employment Selection Wonderlic: www.wonderlic.com Employment Training AMA: www.amanet.org SHRM: www.shrm.org SBA: www.SBA.gov/training NAM: wwwnamvu.com Entrepreneurs can use the Internet sites and government tools listed in this slide to support the HR effort in a small business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 18–1 FirstStep Employment Law Advisor Figure 18-1 shows the U.S. Department of Labor’s “FirstStep Employment Law Advisor,” which helps small employers determine which laws apply to their business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 18–2 Sample DOL elaws Advisors The Coverage and Employment Status Advisor helps identify which workers are employees covered by the FLSA. The Hours Worked Advisor provides information to help determine which hours spent in work-related activities are considered FLSA “hours worked” and, therefore, must be paid. The Overtime Security Advisor helps determine which employees are exempt from the FLSA minimum wage and overtime pay requirements under the Part 541 overtime regulations. The Overtime Calculator Advisor computes the amount of overtime pay due in a sample pay period based on information from the user. The Child Labor Rules Advisor answers questions about the FLSA’s youth employment provisions, including at what age young people can work and the jobs they can perform. The Section 14(c) Advisor helps users understand the special minimum wage requirements for workers with disabilities. FIGURE 18-2 presents a sampling of the DOL elaws Advisors Web tools available to entrepreneurs. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 18–3 OSHA Web Site Figure 18-3 shows OSHA’s Web site which provides, among other things, easy access to the OSHA Small Business Handbook, which contains practical information for small business owners, including industry-specific safety and accident checklists. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 18–4 Wonderlic Personnel Test: Part of a Sample Report FIGURE 18-4 shows partial results of a sample report of the Wonderlic Personnel Test. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler Employment Training Private vendors Small Business Administration (SBA) Training Resources for Small Businesses National Association of Manufacturers (NAM) Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler FIGURE 18–5 Part of Small Business Administration’s Virtual Campus for Small Business Training Figure 18-5 shows the federal government’s Small Business Administration (www.SBA.gov/training) virtual campus that offers online courses, workshops, publications, and learning tools aimed toward supporting entrepreneurs. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler Having flexibility in providing work-life benefits and rewards Using simple, informal employee selection procedures Treating nonfamily employees fairly and equitably Maintaining effective communications with employees Providing flexibility in employee training procedures Leveraging the Small Firm Size Advantage Small businesses need to capitalize on their strengths, so in dealing with employees they should capitalize on their smallness. Smallness should translate into personal familiarity with each employee’s strengths, needs, and family situation. And it should translate into the luxury of being able to be relatively flexible and informal in the human resource management policies and practices the company follows. Smaller businesses often need to adapt quickly to environmental realities like competitive challenges. This means that entrepreneurs tend to conduct matters on an informal, reactive basis with a short time horizon. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Building Communication Human Resources Management 12e Gary Dessler Building Communication Online reporting Newsletters Online information Building Effective Communications in Small Businesses The Huddle Effective communications are important for any manager, but especially for those managing small businesses. In a small restaurant or retail shop, one or two disgruntled employees can destroy the business’ quality service. Yet small business owners generally don’t have the means to implement expensive communications programs. That’s why simple programs like these are important. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Using Professional Employer Organizations (PEO) Human Resources Management 12e Gary Dessler Using Professional Employer Organizations (PEO) Dedicated HR support Group benefits Paperwork reduction Reasons for Employers To Use a PEO Decreased liability Higher performance Employers turn to PEOs for the reasons listed in this slide. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Guidelines for Finding and Working with PEOs Human Resources Management 12e Gary Dessler Guidelines for Finding and Working with PEOs Conduct a needs analysis. Review the services of all PEO firms you’re considering. Determine if the PEO is accredited. Check the provider’s bank, credit, and professional references. Understand how the employee benefits are funded. See if the provider contract assumes the employment law compliance liabilities in the applicable states. Review the service agreement carefully. Investigate how long the PEO has been in business. Check out the prospective PEO’s staff. Ask how will the firm deliver its services. Ask about upfront fees and how these are determined. Periodically get proof that payroll taxes and insurance premiums are being paid properly and that any legal issues are handled correctly. Small business managers need to choose and manage the PEO relationship carefully. Suggestions for doing so are listed in this slide. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Managing HR Systems, Procedures, And Paperwork Human Resources Management 12e Gary Dessler Managing HR Systems, Procedures, And Paperwork Employee records are compiled on forms from office supply companies and maintained in physical files Manual HRM system One or more packaged systems for automating individual HR tasks, such as applicant tracking and performance appraisal Computerized HRM system Interrelated components collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization of an organization’s HRM activities Human Resource Management Information System (HRIS) As the small business grows, it becomes increasingly unwieldy and uncompetitive to rely on manual HR systems. Most small- to medium-sized firms begin computerizing individual human resource management tasks. As companies continue to grow, they turn to integrated human resource information systems (HRIS). Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler TABLE 18–1 Some Important Employment Forms New Employee Forms Current Employee Forms Employee Separation Forms Application New Employee Checklist Employment Interview Reference Check Telephone Reference Report Employee Manual Acknowledgement Employment Agreement Employee Application Disclaimer Probationary Evaluation Employee Status Change Request Employee Record Performance Evaluation Warning Notice Vacation Request Probation Notice Job Description Direct Deposit Acknowledgement Absence Report Disciplinary Notice Employee Secrecy Agreement Grievance Form Expense Report 401(k) Choices Acknowledgement Injury Report Retirement Checklist Termination Checklist COBRA Acknowledgement Unemployment Claim Employee Exit Interview Table 18-1 lists some the many forms you could conceivably need even for a small business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resource Management Information Systems (HRIS) Human Resources Management 12e Gary Dessler Human Resource Management Information Systems (HRIS) Levels of Information Systems Transaction processing systems Management information systems (MIS) Executive support systems Benefits of HRIS Improved transaction processing Online self-processing Improved reporting capability HR systems integration HR intranets Companies need information systems to get their work done. The term information system refers to the interrelated people, data, technology, and organizational procedures a company uses to collect, process, store, and disseminate information. Of course, as the company grows, it makes sense to computerize its information systems. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Human Resources Management 12e Gary Dessler All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall