Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin CHAPTER 11 Human Resource Management: Finding and Keeping the Best Employees

LEARNING OBJECTIVES 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 OBJECTIVES 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 OBJECTIVES 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.

TONY HSIEH Zappos 11-5 Hsieh sold his first company to Microsoft for $265 million, before becoming Zappos’ CEO. Changed Zappos’ corporate work environment so reps wow customers. The work environment is kept open and accessible.

NAME that COMPANY 11-6 This company manages its global workforce of about 100,000 employees and 100,000 subcontractors with a database that matches employee skills, experiences, schedules, and references with jobs available. Name that company!

HUMAN RESOURCE MANAGEMENT 11-7 LO 11-1 Human Resource Management (HRM) -- 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.

HUMAN RESOURCE MANAGEMENT 11-8 LO 11-1

UNCOVERING the SECRETS of HRM Things Your HR Manager Doesn’t Tell You 11-9 Source: Smart Money, accessed November LO 11-1 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

DEVELOPING the FIRM’S ULTIMATE RESOURCE Service and high-tech manufacturing requires employees with highly technical job skills LO 11-1 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.

CHALLENGES in FINDING HIGH-LEVEL WORKERS LO 11-1 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

CIVIL RIGHTS ACT of LO 11-2 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

1972 EQUAL EMPLOYMENT OPPORTUNITY ACT (EEOA) LO 11-2 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.

CONTROVERSIAL PROCEDURES of the EEOC LO 11-2 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.

CIVIL RIGHTS ACT of 1991 and OFCCP LO 11-2 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 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 LO 11-2  Passage in 2008 of Americans with Disabilities Amendments Act expanded protection.  2011 saw regulations that widen the range of disabilities covered by the ADA and shift the burden of proof of disability from employees to employers.

AGE DISCRIMINATION in EMPLOYMENT ACT (ADEA) Age Discrimination in Employment Act (ADEA) LO 11-2  Protects workers 40 and over from employment and workplace discrimination in hiring, firing, promotion, layoff, compensation, benefits, job assignments and training.

MINDING the LAW in HRM LO 11-2 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.

TEST PREP 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?

HUMAN RESOURCE PLANNING PROCESS LO ) 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.

WHAT’S a JOB ANALYSIS? LO 11-3 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.

RECRUITING EMPLOYEES LO 11-4 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

COMPETING for the CREAM of the CROP 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.  Audition an employee.  Seek out publicity.

EMPLOYEE SOURCES LO 11-4

SELECTION LO 11-5 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.

STEPS in the SELECTION PROCESS LO 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

OOPS! Areas Where Job Applicants Make Mistakes Source: USA Today LO 11-5

KEEPING the RIGHT FACE on FACEBOOK Your online personality be appealing to employers. Some of the worst things to do are:  Posting provocative or inappropriate photos.  Information on drug use or excessive drinking.  Bad mouthing a previous employer.  Discriminatory comments related to race, gender, religion, etc.

HIRING CONTINGENT WORKERS Contingent Workers -- Include part-time and temporary workers, seasonal workers, independent contractors, interns and co-op students LO 11-5 There are about 5.7 million contingent workers in the U.S. Majority of contingent workers are under 25.

WHY HIRE CONTINGENT WORKERS? LO 11-5 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.

STUDENTS and the CONTINGENT WORKFORCE When students come back to town, they can call the agency and ask them to put their names into the system for work. LO 11-5 With temporary staffing agencies, companies have easier access to screened workers. Worker information is entered into their databases.

INTERN or INDENTURED SERVANT? 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?

TEST PREP 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?

TRAINING and DEVELOPING EMPLOYEES LO 11-6 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.

THREE STEPS of TRAINING and DEVELOPMENT LO 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.

MOST COMMONLY USED TRAINING and DEVELOPMENT ACTIVITIES LO 11-6 Orientation On-the-Job Training Apprenticeships Off-the-Job Training Online Training Vestibule Training Job Simulation

DEVELOPING EFFECTIVE MANAGERS LO 11-6 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

WHY GOOD EMPLOYEES QUIT Source: Robert Half International LO 11-6

USING NETWORKS and MENTORING LO 11-6 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.

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 LO 11-7 A 360-degree review gives managers opinions from people at different levels to get a more accurate idea of the worker’s ability.

SIX STEPS of PERFORMANCE APPRAISALS LO 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.

DOs and DON’Ts of PERFORMANCE APPRAISALS LO 11-7

MAJOR USES of PERFORMANCE APPRAISALS LO 11-7 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

PERFORMANCE APPRAISAL MISTAKES Common Problems Made While Reviewing Employees LO 11-7 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.

TEST PREP Name and describe four training techniques. What’s the primary purpose of a performance appraisal? What are the six steps in a performance appraisal?

COMPENSATION PROGRAMS LO 11-8 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.

TYPES of PAY SYSTEMS LO 11-8

TYPES of PAY SYSTEMS LO 11-8

TYPES of PAY SYSTEMS LO 11-8

COMPENSATING TEAMS LO 11-8 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

FRINGE BENEFITS on the JOB LO 11-8 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.

HEALTHCARE, a PERK NOT to be TAKEN LIGHTLY Source: Kiplinger’s Personal Finance, November LO 11-8 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.

WHO PAYS for EMPLOYEE BENEFITS? Source: Entrepreneur, accessed November LO % 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.

The RANGE of FRINGE BENEFITS LO 11-8 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

SPECIAL PERKS at DREAMWORKS LO 11-8 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.

CAFETERIA-STYLE and SOFT BENEFITS LO 11-8 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

LET’S GO to the BEACH! Average Vacation Days by Country Source: Reuters, June 24, LO 11-8

CULTURAL CHALLENGES without CONFLICT 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 LO 11-9 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.

USING FLEXTIME PLANS LO 11-9 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.

A FLEXTIME CHART LO 11-9

COMPRESSED WORK WEEKS LO 11-9 Employees enjoy long weekends after working long days. Productivity is a concern. Nurses and firefighters often work compressed work weeks.

HOME-BASED WORK About 13 million Americans work from home at least several days a month. 12% of U.S. businesses use some home-based work LO 11-9 Bank of America has My Work that permits employees to work remotely about 60% of the time.Bank of America

HOME-BASED WORK LO 11-9

VIRTUALLY THERE Tools to Help You Work From Home LO 11-9 Communication:  Google Apps Google Apps  Skype Skype  Yammer Yammer Collaboration:  Google Docs Google Docs  GoToMeeting GoToMeeting  Dropbox Dropbox

GOING NOWHERE FAST Worst Commutes in the World Source: Bloomberg Businessweek, accessed November LO 11-9

JOB SHARING BENEFITS LO 11-9 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.

MOVING EMPLOYEES LO Employees are promoted or reassigned. Employees are terminated due to performance or economic situations. Employees retire.

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 LO Firing employees is more difficult for employers because of laws preventing termination for certain acts.

PLAYING HOOKY Crazy Excuses for Missing Work LO 11-9 I woke up in a good mood and didn’t want to ruin it. I just put a casserole in the oven. I caught my uniform on fire by putting it in the microwave to dry I had been at the casino all weekend and still had money left to play with on Monday morning. I accidentally got on a plane. Source: Forbes, accessed November

TEST PREP 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?