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Current Trends in HR
Kim Hester, Ph.D.Professor of ManagementArkansas State University
Current Trends
Current Trends
Current Trends
Harnessing New Technology
Current Trends
Rising Compensation Costs
1.Rising cost of benefits, especially health care
Great News: 2008
Health care costs for most employers is expected to be around 7%, a moderate increase compared to previous years
Employer Responses
Aggressive health care initiatives, such as higher deductibles, co-pays, and employee contribution levels.
• 88% of employees are required to pay some of the insurance premium out of their own pockets.
• The employee share rose from 14.0% in 1992 to 22.1% in 2005.
Source: Economic Policy Institute, 2008
Employee Contributions for Health Care
Employer Responses
Changes or elimination of employee health care coverage
Statistic: Employer coverage has declined from 61.5% in 1989 to 58.9% in 2000 and down to 55.9% in 2004 (the latest aggregate data available)
Source: Economic Policy Institute, 2008
Employer Responses
Focus on changing employee behaviors
Wellness programs Smoking cessation efforts Education of employees on health care options
and associated costs
Employer Responses
Some employers have been holding their health care costs to a 1% increase.
They're doing it by taking a multipronged approach, with programs to prod employees to take more responsibility for their health and to make more informed health care decisions.
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer ResponsesSuccessful employers are aggressively pushing
consumer directed health plans (CDHPs)
Combines a high deductible insurance policy with a tax advantaged health savings account
Firms are setting the premiums at 30% below traditional plans to encourage participation
Participation hit 15% this year, up from 10% in 2007 and likely to hit 20% in 2008
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
Saving money by providing free drugs and supplies for chronic diseases (e.g., asthma, diabetes) that are known to lead to costly complications.
Goal is to get patients to stick to their treatment schedules; often tied to classes or coaching
Upcoming survey from Hewitt Associates indicates nearly 20% of firms do this now, and 47% are considering doing so in the future
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
Paying the full amount of common preventive services can also help reduce costs
These include annual physicals, mammograms, prostate
screenings, flu shots, colonoscopies and prenatal office visits
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses Sending the sickest employees to the best doctors is
gaining as a strategy
Dubbed by some as a 20-20 approach - employers and their health plans use data to identify physicians rated in the top 20% for effective treatments and match them with the 20% of employees who most need care.
Employers provide financial incentives, (e.g., lower copayments) as incentives to use the top providers.
Eventually, firms will try predictive modeling to identify the sickest 20% of employees so steps can be taken today to "get ahead of the curve”
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses Increasing financial penalties for employees that poorly
manage their health
Many companies continue to reward workers who take health risk assessments and participate in health management programs, while punishing those who do not
Employers may deny a worker access to higher-benefit
plans if worker declines participation in wellness programs
Source: Watson Wyatt Worldwide and the National Business
Group on Health
Employer Responses
On-site medical clinics are growing in popularity Large companies staff clinics with own employees while
smaller firms contract out to nearby clinicsHelp provide primary care to workers at low or no cost On-site clinics lessen time employees spend away from work. On-site clinics expanding to include rehab services, dentistry,
X-ray and lab work Forms inviting specialists to come on-site and offer their
services. Clinics moving into more active management of workers'
health conditions
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
Putting health care into employee’s hands
As health insurance costs continue to rise, employers are adopting a controversial new approach: ending group coverage and giving employees $50 to $200 or so a month to help buy their own health care
Source: USA Today, March 26, 2008
Rising Compensation Costs
2. Competitive pressure on increasing employee wages
Linking pay to organizational goals, employee productivity, and labor market normsPay-for-Performance ProgramsPerformance Management
Success of Programs
• Pay for Performance Works When:
It is measurable and objectiveThere are clear expectationsThere is commitment to training and supportFlexibility for input
Source: workforce.com 5/05
Failure of Programs
• Pay for Performance Falls Short When:
It pits employees against each otherIt pushes one outcome to the detriment of the
othersIt is so subjective it opens the organization and
managers to allegations of bias
Source: workforce.com 5/05
Key Drivers of Success
Better communication of performance standards with all levels of the organization
Clearly Specify Incentive Measures
Organizational measures: • service quality • teamwork • income growth • cost savings
Individual measures: • based on established performance goals within
individual areas of responsibility
Source: JE Rocco. http://danenet.wicip.org/snpo/
Challenges in Implementing Performance-Based Pay
• Pervading Attitude of Equality• Custom of Cost of Living Approach• Challenge of Performance Measurement• Discomfort with Judging Performance• Weaknesses in Data Collection• Inadequacy of Funding Resources
Source: Performance-Based Pay Plans Family Services of Western Pennsylvania; Marc Andrews Kathy Yarzebinski; Catherine Greeno;Christopher Gjesfjeld; 2006
Employee Productivity and Performance ManagementPhase 1
• Business strategy—including its mission, vision and objectives, and specific outcomes required to achieve the overall strategy—are defined.
Goals and plans for how to measure achievement must be identified.
Outputs and measures are defined
Data collection and analysis processes and procedures are developed and implemented
Most importantly—employees come to understand their individual roles and responsibilities with respect to performance measurement
Employees are given the fundamental information, resources, competencies, and motivation to ensure their successful execution.
Employee Productivity and Performance Management
Phase 2
Data that informs areas of success and challenge for the organization are collected and analyzed
Specific elements and factors that contribute to successes or challenges along with new and/or modified information needs and lessons learned are identified
Employee Productivity and Performance Management
Phase 3
Solutions to address identified challenges are developed and implemented, along with mechanisms to ensure the continuation of program or organizational successes
Performance measurement systems and processes may be modified as needed to ensure that information collected through the performance measurement process is timely, relevant, and sufficient—steps that cycle back to performance planning
According to the U.S. Government Accountability Office (GAO), federal managers reported having more performance measures in 2003 than in 1997, but they also reported that use of performance data for program management activities has essentially remained unchanged
Employee Productivity and Performance Management
Phase 4• Several commonly used methodologies for performance
measurement
Behavior-Based Approaches - These approaches tend to use specific performance factors to evaluate staff.
1. Quantitative -- use of numbers or frequencies of specific behaviors observed or reported
2. Qualitative -- use of subjective impressions of raters
Behavior-Based Approaches
Behaviorally anchored scalesBroad categories of practice are identified, ideally
through collaborations between supervisors and staff.
Specific job behaviors are then linked to the categories. Measures of staff member behavior are rated on a scale in relation to specific behavior items, such as "understands department functions."
Behavior-Based Approaches
Behavioral frequency scale
Desired behaviors are described and the staff member is evaluated on how often those behaviors occur
Behavior-Based Approaches
Weighted checklist - method provides a list of performance related statements that are weighted
Staff members are judged on a scale indicating the degree to which the statement accurately describes performance
Behavior-Based Approaches
Forced-choice method - list of performance related statements about job performance are evaluated on how well they discriminate among staff and how important they are to unit or institutional performance
Other Approaches to Measuring Performance
Results-Focused Approaches
Management by Objectives (MBO) and Accountabilities and Measures
Source: Grote, D. (1996). The complete guide to performance appraisal. New York: American Management Association.
Core Elements in MBO
Formation of trusting and open communication throughout the organization
Mutual problem solving and negotiations in the establishment of objectives
Creation of win-win relationships Organizational rewards and punishments based on job-related
performance and achievement Minimal uses of political games, forces, and fear Development of a positive, proactive, and challenging
organizational climate
Source: Grote, D. (1996). The complete guide to performance appraisal. New York: American Management Association.
Steps in MBO Process
Formulate long-range goals and strategic plans Develop overall organizational objectives Establish derivative objectives for major operating units Set realistic and challenging objectives and standards of performance for
members of the organization Formulate action plans for achieving the stated objectives Implement the action plans and take corrective action when required to
ensure the attainment of objectives Periodically review performance against established goals and objectives Appraise overall performance, reinforce behavior, and strengthen motivation.
Begin the cycle again
Source: Grote, D. (1996). The complete guide to performance appraisal. New York: American Management Association.
Team Performance Measurements
Team appraisal matrix - team members are listed on a vertical dimension, and specific tasks on the horizontal
• Such an arrangement reflects individual performance, and collectively reflects the overall team performance
Source: Creamer, D.G., & Janosik, S. M. Performance appraisal: Accountability that leads to professional development. In S. M. Janosik, D. G. Creamer, J. B. Hirt, R. B. Winston, Jr., S. Saunders, & D. Cooper (Eds.), Supervising new professionals in student affairs. New York: Brunner-Rutledge.
Success Factors in Performance Management Systems
Success in obtaining meaningful performance data and using this data to manage, and institutionalizing these practices so that they become ingrained in the organization
This depends on several factors:
1. Presence of a culture of accountability within the organization
2. Leadership demonstrates commitment to managing for results.
3. Staff engages and invests in the process, which leads to feelings of empowerment and continuity.
Points to Remember
Before implementing a performance measurement or management system, see if other areas of your organization have implemented their own system
Anticipate and consider unintended consequences of measuring performance
Reinforced behavior will be repeated, so carefully consider what behaviors should be emphasized (e.g., individual achievements versus team achievements)
Communication of performance information among relevant stakeholders crucial to the success of any performance measurement or management system
Current Trends
Developing Human Capital
1. Managing talent – recruitment, development, and retention of the best workers
Employers need to find innovative ways to “brand” themselves, setting them apart from competitors and becoming an “employer of choice”
As talent becomes scarce, development of current employees for promotional opportunities
Developing Human Capital
2. Labor shortage – finding the right talent
Statistic: By 2020, gap between available and required skilled workers is projected to be 14 million
Use of e-recruiting and non-traditional labor pools
Establishing selection system geared to retention: better skills assessment, knowledge, and fit for jobs
Source: Kaihla, P. Business 2.0, 4(8), 97-104.
Developing Human Capital
3. Higher ethical standards
Greater focus on trust and integrity at all levels
Regulatory compliance issues (i.e., Sarbanes-Oxley Act)
Current Trends
• Harnessing New Technology1. Use of technology to communicate with
employees
Company intranets
E-Newsletters
Company emails
Harnessing New Technology
2. A move toward single software platforms
Integrated HRIS
PeopleSoft
SAP
Oracle
Harnessing New Technology Specialized applications
Succession planning
Applicant tracking
Job evaluation
Employee performance evaluation
Grievance handling
Harnessing New Technology
Perhaps most significant development is the use of organizational intranets
An intranet is internal network that makes use of World Wide Web technology (browsers, servers, etc.) to gather and disseminate information within the firm
Intranets may be linked to the external Internet, but are
secured so that only authorized users can access information on internal components
Harnessing New Technology
3. Evolution of new technologies
• Employee Self-Service and Data Exchange
Capability to maintain personal data
View context-specific information
Initiate benefits transactions
Internet-based tools are quickly becoming the preferred method for employees to execute benefits transactions
Benefits of Automated Benefit Administration
• Reducing and eliminating extensive manual efforts formerly needed to:
Distribute, collect, and process forms Test programming required to export/import data Administer the periodic data exchanges Reconcile data Resolve employees’ problems resulting from the time lag between
data collection and processing
Source: Benefits Perspectives: Current Issues in Employee – Winter 2002-2003; Milliman USA
Current Trends
Managing the Changing Workforce1. Increased diversity in the workforce
Creating workplace that respects and includes differencesRecognizing unique contributions individuals with
differences can makeCreating work environment that maximizes potential of all
employees
Managing the Changing Workforce
2. Work-life balance
Employees experiencing burnout due to overwork and increased stress – in nearly all occupations
Rise in workplace violence, increase in levels of absenteeism as well as rising workers’ compensation claims
Causes range from personal ambition and the pressure of family obligations to the accelerating pace of technology
Source: Center for Work Life Policy
Work-Life Balance
According to study by Center for Work-Life Policy, 1.7 million people consider their jobs and work hours excessive
50% of top corporate executives leaving current positions 64% of workers feel work pressures are “self-inflicted”, and
taking a toll In the US, 70%, and globally, 81%, say jobs are affecting their
health. Between 46% and 59% of workers feel stress is affecting
their interpersonal and sexual relationships. Males feel there is stigma associated with saying “I can’t do
this”
Managing the Changing Workforce3. Structural shift from the manufacturing to the
service sector Growth in part-time employment Rising prominence of women in the workforce Gradual ageing of labor force with fewer young
people entering workforce and participation rates among older workers increasing
Growing importance of temporary employment and self employment
Adoption of flexible working practices, such as job sharing and the increasing opportunity to work from home.
ConclusionsExciting time for HR professionalsMore emphasis on cost containment and controlFocus on employee responsibility and
involvement at workGreater use of technology in communication with
employeesMore flexible patterns of work