Human Resource Management: Finding and Keeping the Best Employees Chapter 11 McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

1. Explain the importance of human resource management, and describe current issues in managing human resources. 2. Illustrate the effects of legislation on human resource management. 3. Summarize the five steps in human resource planning. 4. Describe methods that companies use to recruit new employees, and explain some of the issues that make recruitment challenging. LEARNING GOALS Chapter Eleven 11-2

5. Outline the six steps in selecting employees. 6. Illustrate employee training and development methods. 7. Trace the six steps in appraising employee performance. 8. Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. LEARNING GOALS Chapter Eleven 11-3

9. Demonstrate how managers use scheduling plans to adapt to workers’ needs. 10. Describe how employees can move through a company: promotion, reassignment, termination, and retirement. LEARNING GOALS Chapter Eleven 11-4

MARK PARKER Nike Started as a shoe designer and 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 11-5

This company is one of the largest U.S. steel producers. It pays its teams bonuses that are calculated on quality—tons of steel that go out the door with no defects. There are no limits on bonuses a team can earn; they usually average around $20,000 per employee each year. Name that company! NAME that COMPANY Chapter Eleven 11-6

HUMAN RESOURCE MANAGEMENT Working with People is Just the Beginning LG1 11-7

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 of: 1. Increased recognition of employees as a resource. 2. Changes in law that rewrote old workplace practices. LG1 Working with People is Just the Beginning 11-8

UNCOVERING the SECRETS of HRM Things Your HR Manager Doesn’t Tell You We’re short-staffed and under pressure too. We’re not always going to be able to help in the way you hope. We can help you move up the career ladder. What you post on Facebook can get you fired.post on Facebook LG1 Working with People is Just the Beginning Source: Smart Money, May

DEVELOPING the FIRM’S ULTIMATE RESOURCE Service and high-tech manufacturing requires employees with highly technical job skills. Developing the Firm’s Ultimate Resource Such workers are scarce, making recruiting and retention more important and more difficult. The human resource job is now the job of all managers in an organization. LG

CHALLENGES in FINDING HIGH-LEVEL WORKERS A shortage of trained workers in key areas Worker shortage in skilled trades An increasing number of baby boomers who delay retirement A declining economy with fewer full-time jobs Expanding global markets with low-wage workers Increasing benefit demands and benefit costs A decreased sense of employee loyalty The Human Resource Challenge LG

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 Laws Affecting Human Resource Management LG

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. LG2 Laws Affecting Human Resource Management 11-13

CONTROVERSIAL PROCEDURES of the EEOC Affirmative Action -- Policy designed to “right past wrongs” by increasing opportunities for minorities and women. Reverse Discrimination -- Discriminating against members of a dominant or majority group (e.g. whites or males) usually as a result of policies designed to correct previous discrimination against minority or disadvantaged groups. This policy has been at the center of many debates and lawsuits. LG2 Laws Affecting Human Resource Management 11-14

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. LG2 Laws Affecting Human Resource Management 11-15

LAWS PROTECTING EMPLOYEES with DISABILITIES 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. Laws Protecting Employees with Disabilities and Older Employees  Passage in 2008 of Americans with Disabilities Amendments Act expanded protection.  2011 saw new regulations that widen the range of disabilities covered by the ADA and shift the burden of proof of disability from employees to employers. LG

AGE DISCRIMINATION in EMPLOYMENT ACT (ADEA) Age Discrimination in Employment Act (ADEA)  Protects workers 40 and over from employment and workplace discrimination in hiring, firing, promotion, layoff, compensation, benefits, job assignments and training. LG2 Laws Protecting Employees with Disabilities and Older Employees 11-17

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 LG

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

PROGRESS ASSESSMENT What’s human resource management? What did Title VII of the Civil Rights Act of 1964 achieve? What’s the EEOC and what was the intention of affirmative action? What does accommodations mean in the Americans with Disabilities Act of 1990? Progress Assessment 11-20

HUMAN RESOURCE PLANNING PROCESS Determining a Firm’s Human Resource Needs 1) Preparing a human resource inventory of employees. 2) Preparing a job analysis. 3) Assessing future human resource demand. 4) Assessing future labor supply. 5) Establishing a strategic plan. LG

WHAT’S a JOB ANALYSIS? Job Analysis – A study of what employees do who hold various job titles. Job Description – A summary of 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 minimum qualifications needed to do a particular job. LG3 Determining a Firm’s Human Resource Needs 11-22

RECRUITING EMPLOYEES Recruiting Employees from a Diverse Population Recruitment -- The set of activities for obtaining the right number of qualified people at the right time. Human resource managers use both internal and external sources to recruit employees. Small businesses often make use of web sources like CareerBuilder and Monster to recruit employees.CareerBuilderMonster LG

IT’S NOT EASY BEING SMALL (Spotlight on Small Business) To survive, small businesses must recruit and retain qualified workers. Unfortunately, they lack the resources of larger companies to compete for employees. Small businesses need innovations like:  Letting staff help recruit and select candidates.  “Test-drive” an employee.  Seek out publicity through local media

EMPLOYEE SOURCES Recruiting Employees from a Diverse Population LG

SELECTION Selecting Employees Who Will be Productive Selection -- The process of gathering information and deciding who should be hired, under legal guidelines, to serve the best interest of the individual and the organization. LG

STEPS in the SELECTION PROCESS 1. Obtaining complete application forms 2. Conducting initial and follow-up interviews 3. Giving employment tests 4. Conducting background investigations 5. Obtaining results from physical exams 6. Establishing trial (probationary) work periods LG5 Selecting Employees Who Will be Productive 11-27

OOPS! Areas Where Job Applicants Make Mistakes Source: USA Today, LG5 Selecting Employees Who Will be Productive 11-28

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

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 LG5 Hiring Contingent Workers 11-30

STUDENTS and the CONTINGENT WORKFORCE With temporary staffing agencies, companies have easier access to screened workers. Worker information is entered into their databases. LG5 Hiring Contingent Workers When students come back to town, they can call the agency and ask them to put their names into the system for work

ARE UNPAID INTERNS TOO INTERRED? (Making Ethical Decisions) With few entry-level positions available, interns can end up in an unpaid position for as long as six months with no chance of advancement. Some businesses give interns lots of responsibility; a Toronto paper fired all paid staff and replaced them with unpaid interns. Is it ethical for companies to use unpaid interns if they know they don’t have jobs to offer or if the unpaid internships replace paid jobs? 11-32

PROGRESS ASSESSMENT Progress Assessment What are the five steps in human resource planning? What factors make it difficult to recruit qualified employees? What are the six steps in the selection process? Who is considered a contingent worker, and why do company hire such workers? 11-33

TRAINING and DEVELOPING EMPLOYEES Training and Developing Employees for Optimum Performance 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. LG

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. LG6 Training and Developing Employees for Optimum Performance 11-35

MOST COMMONLY USED TRAINING and DEVELOPMENT ACTIVITIES Orientation On-the-Job Training Apprenticeships Off-the-Job Training Online Training Vestibule Training Job Simulation LG6 Training and Developing Employees for Optimum Performance 11-36

DEVELOPING EFFECTIVE MANAGERS Management Development Management Development -- The process of training and educating employees to become good managers and monitoring the progress of their skills over time. –Management training includes:  On-the-job coaching  Understudy positions  Job rotation  Off-the-job courses and training LG

WHY GOOD EMPLOYEES QUIT Source: Robert Half International LG6 Management Development 11-38

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. LG

APPRAISING PERFORMANCE on the JOB Appraising Employee Performance to Get Optimum Results 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. LG

SIX STEPS of PERFORMANCE APPRAISALS 1. Establishing performance standards that are understandable, measurable and reasonable. 2. Clearly communicating those standards. 3. Evaluating performance against the standards. 4. Discussing the results with employees. 5. Taking corrective action. 6. Using the results to make decisions. LG7 Appraising Employee Performance to Get Optimum Results 11-41

MAJOR USES of PERFORMANCE APPRAISALS Identify training needs Use as a promotion tool Recognize worker’s achievements Evaluate the firm’s hiring process Judge the effectiveness of the firm’s orientation process Use as a basis for possible termination of a worker LG7 Appraising Employee Performance to Get Optimum Results 11-42

PERFORMANCE APPRAISAL MISTAKES Common Problems Made While Reviewing Employees Contrast Effect - Comparing one employee to another. Halo/Horn Effect - Allowing performances in specific areas to unfairly influence overall performance evaluation. Similar-to-Me Effect - Generosity to those you feel are more like you. LG7 Appraising Employee Performance to Get Optimum Results 11-43

PROGRESS ASSESSMENT Progress Assessment Name and describe four training techniques. What’s the primary purpose of a performance appraisal? What are the six steps in a performance appraisal? 11-44

COMPENSATION PROGRAMS Compensating Employees: Attracting and Keeping the Best A managed and competitive compensation program helps:  Attract the kinds of employees the business needs.  Build employee incentive to work efficiently and productively.  Keep valued employees from going to competitors or starting their own firm.  Maintain a competitive market position by keeping costs low due to high productivity from a satisfied workforce.  Provide employee financial security through wages and fringe benefits. LG

TYPES of PAY SYSTEMS Pay Systems Salary Hourly Wage/Day Work Piecework System Commission Plans Bonus Plans Profit Sharing Plans Gain-Sharing Plans Stock Options LG

COMPENSATING TEAMS 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 LG

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 cost. LG

HEALTHCARE, a PERK NOT to be TAKEN LIGHTLY Compare all the costs, not just premiums. Take part in wellness programs. The average wellness bonus is $386! Order generic drugs when you need prescriptions filled. LG8 Fringe Benefits Source: Kiplinger’s Personal Finance, November

WHO PAYS for EMPLOYEE BENEFITS? 74% of full-time workers have employee-provided retirement plans. 39% of part-time workers have employee-provided retirement plans. 71% of workers have medical care benefits. LG8 Fringe Benefits Source: Entrepreneur, May

The RANGE of 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  Dental and eye care  Legal counseling  Short or compressed work weeks LG8 Fringe Benefits 11-51

SPECIAL PERKS at DREAMWORKS Free DVDs and screenings of current films. Free breakfast and lunch plus dinner when working late. Free snack rooms on every floor. Profit sharing. Ping-Pong and poker tournaments during work hours. LG8 Fringe Benefits 11-52

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 LG8 Fringe Benefits 11-53

LET’S GO to the BEACH! Average Vacation Days by Country LG8 Fringe Benefits Source: Reuters, June 24,

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

FLEXIBLE SCHEDULING PLANS Flextime Plan -- Gives employees some freedom to choose which hours to work as long as they work the required number of hours or complete their tasks. Compressed Work Week -- Employees work the full number of work hours, but in fewer than the standard number of days. Job Sharing -- Lets two or more part-time employees share on a full-time job. LG9 Flextime Plans 11-56

USING FLEXTIME PLANS Flextime Plans Most flextime plans require Core Time -- When all employees are expected to be at their job stations. Flextime is difficult to incorporate into shift work and managers have to work longer hours. Communication among employees can also be difficult under flextime and managers have to be alert to any system abuses. LG

A FLEXTIME CHART LG9 Flextime Plans 11-58

COMPRESSED WORK WEEKS Employees enjoy long weekends after working long days. Productivity is a concern. Nurses and firefighters often work compressed work weeks. LG9 Flextime Plans 11-59

HOME-BASED WORK About 10 million Americans telecommute at least several days a month. 12% of U.S. businesses use some home-based work. LG9 Home-Based Work Bank of America has My Work that saves an estimated $5,500 per enrolled employee every year.Bank of America 11-60

VIRTUALLY THERE Tools to Help You Work From Home LG9 Home-Based Work Source: Entrepreneur, January Communication:  Google Apps Google Apps  Skype Skype  Yammer Yammer Collaboration:  Google Docs Google Docs  GoToMeeting GoToMeeting  Dropbox Dropbox 11-61

GOING NOWHERE FAST Worst Commutes in the World LG9 Home-Based Work Source: Bloomberg Businessweek, December 20,

JOB SHARING BENEFITS 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. LG

MOVING EMPLOYEES Moving Employees Up, Over and Out Employees are promoted or reassigned. Employees are terminated due to performance or economic situations. Employees retire. LG

TERMINATING EMPLOYEES Terminating Employees As the economic crisis grew, more and more employers have had to lay off 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. LG

PROGRESS ASSESSMENT Progress Assessment Name and describe five alternative compensation techniques. What advantages do compensation plans such as profit sharing offer an organization? What are the benefits and challenges of flextime? Telecommuting? Job sharing? 11-66