McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Business Dr. H. Ronald Moser Cumberland University

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

MARK PARKER Nike Started as shoe designer, rose to CEO in The 7,000 workers at Nike’s headquarters have access to two gyms, an Olympic-size pool, five restaurants, and have free on-site childcare. Nike’s Named one of the 100 Best Places to Work in 2006, 2007 and PROFILE

Human Resource Management 11-4 WORKING WITH PEOPLE IS JUST THE BEGINNING As this figure shows, human resource management is more than hiring and firing personnel. All activities are designed to achieve organizational goals within the laws that affect human resource management. (Note that human resource management includes motivation, as discussed in Chapter 10, and employee union relations, as discussed in Chapter 12.)

Human Resource Management (HRM) 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: 1. Increased recognition of employees as a resource. 2. Changes in law that rewrote old workplace practices WORKING WITH PEOPLE IS JUST THE BEGINNING

One reason human resource management is receiving increased attention now is that in U.S. economy has experienced a major shift from manufacturing industries to service and high tech manufacturing. Developing the Ultimate Resource The human resource job is now the job of all managers in an organization WORKING WITH PEOPLE IS JUST THE BEGINNING Such workers are scare, making recruiting and retention more important and more difficult. Service and high-tech manufacturing requires employees with highly technical job skills.

The Human Resource Challenges A shortage of trained workers in key areas in high tech such as computers, biotechnology and robots. Worker shortage in skilled trades. In coming years, high tech growth areas will experience skilled labor shortages, and particularly as baby boomers retire. An increasing number of baby boomers who delay retirement. A declining economy with fewer full-time jobs. Expanding global markets with low-wage workers. What about that 96 billion dollars going back to Mexico every year? 11-7 WORKING WITH PEOPLE IS JUST THE BEGINNING Increasing benefit demands, benefit costs and a decreased sense of employee loyalty.

Civil Rights Act of 1964 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  Disability  This laws was passed because many businesses did not exercise fair labor practices voluntarily LAWS AFFECTING HUMAN RESOURCE MANAGEMENT

1972 Equal Employment Opportunity Act (EEOA) 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 LAWS AFFECTING HUMAN RESOURCE MANAGEMENT

Controversial Procedures of the EEOC Affirmative Action -- Policy designed to “right past wrongs” by increasing opportunities for minorities and women in the workplace. Employers were originally mandated by minority quotas they were required to meet in their hiring practices. Reverse Discrimination -- Discrimination against whites or males in hiring or promoting. This policy has been at the center of many debates and lawsuits LAWS AFFECTING HUMAN RESOURCE MANAGEMENT Probably the most controversial program enforced by the Equal Employment Opportunity Commission concerns Affirmative Action.

Civil Rights Act of 1991 and OFCCP Civil Rights Act of 1991  Amended Title VII and gave victims of discrimination the right to a jury trial and possible damages. Office of Federal Contract Compliance Programs (OFCCP)  Ensures that employers doing business with the federal government comply with the nondiscrimination and affirmative action laws LAWS AFFECTING HUMAN RESOURCE MANAGEMENT The Civil Rights Act of 1991 expanded the remedies available to victims of discrimination by amending Title VII of the Civil Rights Act of 1964.

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.  Also requires “reasonable accommodations” for employees with disabilities.  Passage in 2008 of Americans with Disabilities Amendments Act expanded protection LAWS AFFECTING HUMAN RESOURCE MANAGEMENT Laws Protecting Employees with Disabilities and Older Employees

Age Discrimination in Employment Act (ADEA) of 1967  Protects workers 40 and over from employment and workplace discrimination in hiring, firing, promotion, layoff, compensation, benefits, job assignments and training LAWS AFFECTING HUMAN RESOURCE MANAGEMENT Laws Protecting Employees with Disabilities and Older Employees

Minding the Law in HRM Employers must know the law and act accordingly. Legislation affects all areas of HRM. Court cases highlight that sometimes it’s proper to go beyond providing equal rights. Changes in law and legislation occur regularly. Effects of Legislation LAWS AFFECTING HUMAN RESOURCE MANAGEMENT

The Million Woman Suit against Walmart (Legal Briefcase) Over 1 million women filed suit against Walmart for gender dominance in the store’s management ranks. The case charged that not only did the company leapfrog over women for leadership roles, it engaged in pay inequality and harassment. The Supreme Court dismissed the class- action suit LAWS AFFECTING HUMAN RESOURCE MANAGEMENT

Human Resource Planning Process Preparing a human resource inventory of employees. Don’t forget languages. Preparing a job analysis. What employees do who hold various job titles. Assessing future human resource demand. What is needed in the future? Assessing future labor supply. Establishing a strategic plan DETERMING A FIRM’S HUMAN RESOURCE NEEDS All management, including human resource management, begins with planning. The five steps in the human resource planning process are:

What is a Job Analysis Job Analysis -- A study of what employees who holds various job titles do. Job Description -- Specifies the objectives of the job, the type of work, the responsibilities and duties, working conditions and relationship to other jobs. Job Specifications -- A summary of the minimal education and skills needed to do a particular job DETERMING A FIRM’S HUMAN RESOURCE NEEDS

What is a Job Analysis DETERMING A FIRM’S HUMAN RESOURCE NEEDS Store manager Assistance store managers Buyers/department managers Sales associates Receiving and marking staff Stockroom staff Security staff Office personnel/training Personal shoppers Maintenance staff Display staff Job Analysis -- A study of what employees who holds various job titles do. The gathering of information about the functions and requirements of each job.

What is a Job Description DETERMING A FIRM’S HUMAN RESOURCE NEEDS Job Description -- Specifies the objectives of the job, the type of work, the responsibilities and duties, working conditions and relationship to other jobs. Job Analysis should lead to written job descriptions which contains a position’s title, relationships (superior and subordinate), and specific roles and tasks. Example  This is a description of the job for a branch store manager.  “Can you do it?”  Tell me more about this job. Job Description

What is a Job Description DETERMING A FIRM’S HUMAN RESOURCE NEEDS Store Manager for a branch store. “Can you do it?” “Yes!”

What is a Job Specifications DETERMING A FIRM’S HUMAN RESOURCE NEEDS Job Specifications -- A summary of the minimal education and skills needed to do a particular job. Job Specification - Is written from the job analysis and describes those personal qualifications required to do the job. Example  This job requires a degree in Marketing or Fashion Merchandising with two years of full-time work experience. Job Descriptions are about the job, and Job Specifications are about the person who does the job.  “Do you have that?”

Recruiting Employees Recruitment -- The set of activities for obtaining the right number of qualified people at the right time. Its purpose is to select those who best meet the needs of the organization. Human resource managers use both internal and external sources to recruit employees RECRUITING EMPLOYEES FROM A DIVERSE POPULATION Small businesses often make use of web sources like CareerBuilder and Monster to recruit employees.CareerBuilder Monster

Selection Selection -- The process of gathering information and deciding who should be hired, under legal guidelines, to fit the needs of the organization and individuals SELECTING EMPLOYEES WHO WILL BE PRODUCTIVE

Steps in the Selection Process 1. Obtaining complete application forms. 2. Conducting initial and follow-up interviews- Tell me about yourself. 3. Giving employment tests. What is the big problem with using tests to screen applicants? 4. Conducting background investigations. Who do we ask to recommend us? 5. Obtaining results from physical exams. “Did all of our boys pass their physical?” 6. Establishing trial (probationary) work periods SELECTING EMPLOYEES WHO WILL BE PRODUCTIVE

HIRING CONTINGENT WORKERS Hiring Contingent Workers 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. LG

Contingent Workers -- Include part-time and temporary workers, seasonal workers, independent contractors, interns and co-op students. Majority of contingent workers are under 25. There are about 5.7 million contingent workers in the U.S. These workers do not have the expectation of regular, full time employment. These workers are hired for a specified period of time. They do not have expectations for extended or permanent employment Hiring Contingent Workers SELECTING EMPLOYEES WHO WILL BE PRODUCTIVE

Why Hire Contingent Workers? 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 SELECTING EMPLOYEES WHO WILL BE PRODUCTIVE Hiring Contingent Workers

Motivating Temporary Employees (Making Ethical Decisions) Contingent workers perform well if the promise of full-time employment is a possibility SELECTING EMPLOYEES WHO WILL BE PRODUCTIVE Hiring Contingent Workers Highbrow’s has no intention of hiring any temporary workers full-time. Gone on Jan. 15. But the company feels if they employ two workers one will be hired full time, it may improve employee performance. What is the ethical thing for them to do?

Training and Developing Employees 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 TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE

Three Steps of Training and Development 1. Assessing organization needs and employee skills to develop appropriate training needs. 2. Designing training activities to meet identified needs. 3. Evaluating the training’s effectiveness TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE

Most Commonly Used Training and Development Activities Orientation. On-the-Job Training. Apprenticeships. Follow her around. Off-the-Job Training. Online Training. Vestibule Training. Job Simulation TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE

11-32 Every new employee should receive Orientation, an indoctrination on the firm’s history and policies, as well as a job orientation on hours, compensation, the chain of command, and job duties. On the Job Training teaches new (and existing) personnel how best to perform their jobs or how to improve themselves. Training can range from one-day sessions on operating companies’ equipment, selling techniques, or compliance with affirmative action programs to two-year programs for executive trainees on all aspects of the business and its operations. TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE Most Commonly Used Training and Development Activities

11-33 On the Job Training TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE Most Commonly Used Training and Development Activities Checking out customers at a local convenience store would be a type of work suited to the use of on-the-job training as a primary training method. Assembly line jobs, fast food services jobs, grocery cashiers are the types of jobs that are suitable for on the job training. Heavy construction equipment workers usually require vestibule training; electricians usually require apprenticeship programs in order to gain extensive experience: creative writers need classroom training.

Developing Effective Managers Management Development -- The process of training and educating employees to become good managers and tracking the progress of their skills over time. Management training includes: On-the-job coaching- A senior manager assists a lower- level manager.  Understudy positions- I am the assistant manager.  Job rotation- Rotate from department to department.  Off-the-job courses and training –The use of classes and seminars for a week or more TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE

Using Networks and Mentoring Networking 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 TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE

Diversity in Management Development TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE Two premises: That employees be hired and promoted in a fair and open way, without regard to gender, ethnic background, and other related factors. That in a diverse society, the workplace should be representative of such diversity.

Diversity in Management Development TRAINING AND DEVELOPING EMPLOYEES FOR OPTIMUM PERFORMANCE Laws prohibit (The Civil Rights Act of 1964, as amended in Equal Employment Opportunity Commission) business personnel from discriminating in employment practices on the basis of race, religion, national origin, sex, color and age.

Appraising Performance on the Job 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 APPRAISING EMPLOYEE PERFORMANCE TO GET OPTIMUM RESULTS

Six Steps of Performance Appraisals 1. Establishing performance standards that are understandable, measurable and reasonable. 2. Communicating those standards. 3. Evaluating performance against the standards. 4. Discussing the results with employees APPRAISING EMPLOYEE PERFORMANCE TO GET OPTIMUM RESULTS 5. Taking corrective action. 6. Using the results to make decisions

A managed and competitive compensation program helps:  Attract the kinds of employees the business needs.  Providing employees with the incentive to work efficiently and productively.  Keep valued employees from going to competitors or starting their own firm.  Maintain a competitive position in the marketplace by keeping costs low due to high productivity from a satisfied workforce COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST “We deliver on time.”  Provide employee financial security through wages and fringe benefits.

Compensation Programs COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST Businesses should have a formal plan to let employees understand not only their current salary but also where they can go as far as salary is concerned. Many people enjoy a mystery, but not when it is about how their pay is determined. What about the benefits? Profit sharing State of Tennessee- 35 percent A thorny issue facing many businesses today involves the benefits portion of employee compensation, especially as related to pensions and health care.

Type of Pay Systems Salary. Hourly Wage/Day Work. Piecework System. Commission Plans. Bonus Plans. Profit Sharing Plans. Gain-Sharing Plans. Stock Options COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST

Type of Pay Systems Straight Salary - A person working in a small business who has many responsibilities other than selling should be paid under this compensation plan. This plan does not provide an incentive for extra effort. This plan is characterized by high control, employee security, and known expenses COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST

Type of Pay Systems COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST Straight Commission - This plan would be used if a business wished to set up a compensation system for the firm’s salespeople which will serve to strongly motivate them to sell as much as possible. This plan has no fixed-cost component. The earnings of an employee are directly related to productivity. A disadvantage of this plan is that it can promote overly aggressive pressure selling in the retail business which can antagonize customers. “That’s my customer.”

Type of Pay Systems COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST Bonus Plan - This plan provides, in addition to base salary, for payment of a bonus of a varying percentage of sales achieved above a quota established for each merchandise category.

Compensating Teams 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.)Eastman Chemical  Gain-Sharing: Pay is increased as performance increases. (Nucor Steel uses this system.)Nucor Steel COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST

Compensating Teams  Gain-Sharing: Pay is increased as performance increases. (Nucor Steel uses this system.)Nucor Steel COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST A common way of compensating teams is a Gain- Sharing System, in which bonuses are based on improvements over a previous performance baseline. Teams are often compensated by a gain-sharing pay system whereby the team members are compensated for improvement over a previous performance baseline. Often times they are compensated for quality improvements or improvements in customer satisfaction as well as improvement in profits.

Fringe Benefits on the Job Fringe Benefits 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 costs COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST

The Range of Fringe Benefits Fringe Benefits 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.  Health, dental and vision care.  Legal counseling.  Short or compressed work weeks COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST

Cafeteria-Style and Soft Benefits Cafeteria-Style Fringe Benefits -- Allow employees to choose the benefits they want (up to a certain dollar amount). Soft Benefits include:  Onsite haircuts and shoe repair.  Concierge services.  Free meals at work.  Doggie daycare.  Onsite farmer’s markets COMPENSATING EMPLOYEES: ATTRACING AND KEEPING THE BEST Fringe Benefits

Working Worldwide (Reaching Beyond Our Borders) Managers need to understand the business needs of each country they operate in.  Compensation: Conversion to foreign currencies and special allowances often are needed.  Health and Pension Standards: Benefits are different country-by-country.  Paid Time Off: Vacation time, sick and personal leave vary.  Taxation: Tax policies vary.  Communication: Employees can feel disconnected in other countries SCHEDULING EMPLOYEES TO MEET ORGANIZATIONAL AND EMPLOYEE NEEDS

Flexible Scheduling Plans SCHEDULING EMPLOYEES TO MEET ORGANIZATIONAL AND EMPLOYEE NEEDS Flextime Plan -- Gives employees some freedom to choose which hours to work as long as they work the required number. We are open from 07:00am-09:00pm. Which 8 hours are good for you? Core Time– This is the period when all employees are expected to be at their job stations. “I only want night classes.” Compressed Work Week -- Employees work the full number of work hours, but in fewer than the standard number of days. Employees may work four 10 hours days and have a long three day week-end.

A Flextime Chart SCHEDULING EMPLOYEES TO MEET ORGANIZATIONAL AND EMPLOYEE NEEDS

Home-Based Work About 10 million Americans telecommute at least several days a month. 12% of U.S. businesses use some home- based work. Bank of America has My Work that saves an estimated $5,500 per enrolled employee every year.Bank of America SCHEDULING EMPLOYEES TO MEET ORGANIZATIONAL AND EMPLOYEE NEEDS

Job Sharing Plans Provides employment opportunities for many people who cannot work full time. Workers tend to be enthusiastic and productive. Absenteeism and tardiness are reduced. Employers can schedule part-time workers in peak demand periods and retention of experienced employed who might otherwise have retired SCHEDULING EMPLOYEES TO MEET ORGANIZATIONAL AND EMPLOYEE NEEDS

Promoting and Reassigning Employee MOVING EMPLOYEES UP, OVER, AND OUT Employees are promoted or reassigned. Employees are terminated due to performance or economic situations. Employees retire Moving Employee

Terminating Employees As the economic crisis grew, more and more employers have had to layoff employees. Even when the economy is booming, employers are hesitant to hire full-time workers because of the cost of termination. Firing employees is more difficult for employers because of laws preventing termination for certain acts MOVING EMPLOYEES UP, OVER, AND OUT

Retiring Employees Companies looking to downsize sometimes offer early retirement benefits to entice older (and more expensive) workers to retire. Such benefits can include one-time cash payment, known in some companies as Golden Handshakes MOVING EMPLOYEES UP, OVER, AND OUT The advantage early retirement benefits have over layoffs or firing is the increased morale of surviving employees. Retiring senior workers earlier also increases promotional opportunities for younger employees.

3-59 The End!