Human Resources Planning

Chapter 24

Human Resources Management

• Consists of all activities involved with acquiring, developing, and compensating the people who do the company’s work.

• HRM is sometimes called personnel management.

Human Resources Management

• To begin human resources planning, companies must determine the number of people they will need in order to complete all of the tasks and skills those people will need.

• Human resources managers must:– Recruit employees– Hire employees– Train employees

• Most companies have a department responsible for Human Resource Management.

Employment

• The employment function of human resources involves all activates required to maintain an adequate number of qualified employees for the company.

Employment

• Employment activities include:– Determining the need to hire employees.– Recruiting applicants.– Determining the qualifications of applicants.– Hiring the most qualified to fill the available jobs.– Transfers.– Promotions.– Retirement.– Dismissals.– Other job changes.

Wages and Benefits

• The compensation a company spends on employees is a major part of its operating budget.– Direct pay.

– Employee benefits.

• The level of wages and benefits, especially when compared to competitors, helps to determine who will apply for job openings and whether they will make a long term commitment to the company.

Wages and Benefits

• Wages and benefits must be carefully controlled.

• Employee productivity compared to the pay and benefits will determine whether the company can be profitable or not.

Wages and Benefits

– It is important that employees view the system for determining pay as fair and that there is a reasonable relationship between the amount paid to the employee and the value of that employee’s work to the company.

– Human resources is typically responsible for developing a pay system that classifies jobs according to levels and pay ranges.

– When a person is hired, promoted or given a pay raise, human resources completes or monitors the procedure to ensure the person gets paid the correct amount.

Performance Improvement

• Typically employees must improve their skills and learn new ones on the job.

• Human resources involve training and educating employees to ensure high quality and efficient work.

Performance Improvement

• Often HR department plans and manages performance improvement programs in cooperation with mangers and employees.– Once hired, employees receive an orientation to the

company and initial training.– As equipment or procedures change companies will

provide training.– When employees are not meeting expected

performance the company will provide support and training for the employee to improve his or her performance.

Employee Relations

• Human relations plays a major role in employee relations by ensuring effective communication and cooperation between management and employees.

• If a company is unionized human resources plays an important rule in negotiating the contract with the union. – If employees are not represented by a union, HR

sill performs the same type of activities in a less formal way.

Employee Relations

• Human relations departments make sure the company complies with all equal employment and affirmative action laws.

• Human relations works with people to prepare them for future job opening and promotions.

Health and Safety

• Illness costs the company money.– Illness ties up workers covering for sick

employees.

– Illness increases the cost of insurance and health coverage.

– Substance abuse can greatly increase job injuries and lead to employee illness.

Health and Safety

• The Human Resources department is responsible for maintaining a safe work environment.– Safe work procedures.

– Enforcing laws and regulations related to health and safety.

– Providing adequate education and training in health and safety.

Performance Management

• Mangers regularly evaluate their employees’ performance to determine how well it is meeting expectations.– Mangers identify their employee’s strengths and

reward them for superior performance. – Individual managers are responsible for evaluation the

employees they supervise and using the results of the evaluation to improve performance.

– The rule of human resources in performance management is to develop the evaluation system and material and make sure they are implemented in the proper manner.

Performance Management

• 360-degree feedback– Uses performance feedback gathered from a broad range of

people with whom the employee works, both inside and outside of the organization rather than just the employee’s manager.• Peers contribute to performance feedback.• People to who report to the individual being reviewed contribute to

feedback.• Sometimes suppliers and customers are asked to submit feedback.

– People completing the reviews are asked to fill out detailed questionnaires about the person’s performance.

– The questionnaires are kept anonymous.– The information is summarized and a report is filed.

Employee Assistance Programs

• Because personal and family concerns may interfere with employees work company’s may offer employee assistance programs.

• Employee assistance programs provide confidential personal problem-solving, counseling, and support services for employees.

Employee Assistance Programs

• For these types of employee assistance programs the company hires, or refers employees to, specialists. – Counselors

– Psychologists

–Medical personnel

Employment Planning and Research

• It may take weeks to hire new people, design training programs, or complete performance reviews.

• Federal and state employment laws as well as some company policies and procedures require a great deal of information about each employee to be collected and maintained.

• A major HR function involves researching and maintaining the information that managers need in order to determine personnel needs and manager the workforce.

Employment Planning and Research

• It may take weeks to hire new people, design training programs, or complete performance reviews.

• Federal and state employment laws as well as some company policies and procedures require a great deal of information about each employee to be collected and maintained.

• A major HR function involves researching and maintaining the information that managers need in order to determine personnel needs and manager the workforce.

Selecting Personnel

• Hiring new employees is on of the most expensive but important company activities.

• Effective selection means hiring people with the right skills for the job.

Establishing a Need

• Managers must first establish that they actually need a new employee.

• Normally this need develops to replace a current employee who has left his or her position.

• If the company or department is growing, new employees may be needed.

Establishing a Need

• Changes in operations or a department or the use of new procedures or equipment may require that new employees be hired to perform those duties.

• Human resources works closely with managers to define a job.– Job Description – is a list of basic tasks that make up a

job.

– Job Specification - is a list of qualifications a worker needs to do a job.

Recruiting Applicants

• After a need for a new employee has been established and a description of the job has been determined the HR department goes about trying to fill the job opening.

• An effective recruitment process will result in a number of applications from which a well-qualified person can be selected.

Current Employee

• Most companies make information about the job vacancies available and give the first opportunity to apply to current employees.

• Current employees can also recommend people for the position.

Unsolicited Applications

• A business that has a reputation as a good employer is likely to have people applying for jobs at all times.

• Most large companies take application regularly, even when they currently have no openings.

• Companies screen and maintain these applications in an active file for a period of time and review them when an opening occurs.

Employment Agencies

• Employment agencies are business that actively recruit, evaluate, and help people prepare for and locate jobs.

• All states maintain an employment service supported by state and federal taxes.

Other Sources

• Some colleges, universities, vocational and technical schools have placement offices.

• Advertisement is a common method of obtaining applicants.

• The many companies post jobs on the internet.–Monster.com– Careerbuilder.com– Craigslist.org– Philly.com

Processing Applications• Most job seekers must fill out applications with information to aid the Human Resources

Department in making their decision on the best applicants for the job.

– HR reviews the applications to eliminate the people who do not have the minimum qualifications.

– An HR employee interviews remaining applicants.

– An HR employee checks the information supplied on an application.

– An HR employee administer tests to the applicants remaining in the pool at this point to determine if the applicants have the needed knowledge and skills for the specific job.

– The manager or work team of the department that has the opening interviews the top applicants.

– The final selection is made by comparing information gathered at the previous stages.

– When a new applicant is hired HR employees walk the new employee through filling out all of the necessary paperwork.

• Tax forms.

• Insurance enrollment forms.

• Non-compete clauses.

• Company confidentiality forms.

Promoting, Transferring and Releasing Employees

• The amount of time and money invested in recruiting, hiring, and training new employees is high.– Once the company finds a good employee they should

try and keep them.– Offering employees opportunities for promotions and

transfers can help retain good employees. • The company also needs a procedure for dealing

with employees who are not meeting expectations, and for reducing the number of employees if necessary.

Promotion

• Promotion is the advancement of an employee within a company to a position with more authority and responsibility.

• Usually with a promotion is an increase in pay.• Promotions create opportunities for other

employees as well, when they are promoted to replace the promoted employee.

• Whenever possible companies should fill vacancies by promotion.

Transfers

• Transfer is the assignment of an employee to another job in the company, which in general, involves the same level of responsibility and authority as the person’s current work.

– Employees being trained for management positions may be transferred among positions to gain experience.

– Employees may be transferred to new departments or new company locations due to growth or reduction of the size of he company.

– Employees may choose to transfer to jobs that better meet their current interests and needs.

– Employees may be transferred to overcome difficulties resulting from poor performance or conflicts with other people on the job.

Discharge

• Discharge is the release of an employee from the company due to inappropriate work behavior. (a.k.a. Fired)

Layoff

• Layoff is a temporary for permanent reduction in the number of employees because of change in business conditions.

Employee Turnover

• Employee turnover is the rate which people enter and leave employment in a business during a year.

• The rate of employee turnover is important to businesses because hiring and training new employees, costs money. – New employee may not be as productive as

experienced ones for some time.

– Most companies watch their employee turnover rate and make every effort to keep it low.

Employee Turnover

• Two formulas for calculating employee turnover.– Number of employees who have left the company

+ average number of employees = % of employee turnover.

– Number of employees hired to replace employees who have left + average number of employees = % of employee turnover.

Exit Interviews

• When an employee leaves the company, interviewing the employee can give you some important feedback.

• An exit interview is a formal interview with an employee who is leaving the company to determine why he or she is leaving the company.

• The exit interview is a way to learn the causes of employee turnover and feedback about the company’s policies and procedures.

Paying Employees

• Compensation is the pay and other benefits an employee receive in exchange for their labor.

• The method used in determining pay can be an important factor in attracting, keeping and motivating employees.

• Some factors affecting what an employee gets paid are:– Skills required for the job.– Work conditions.– The amount of education needed.– The supply and demand for that type of worker.

Wage and Salary Plans

• A wage is pay based on hourly rate.

• Salary is pay based on a time frame other than hourly, such as weekly or monthly.

Time Plans

• The most common payment method is to pay a certain amount for a specified period of time worked. – Wages usually being by the hour.– Salary can be by the week, biweekly, month, year,

etc…

• Time plans are easy to administer, because pay is based directly on the amount of time worked.

• Times plans do not reward employees financially who provide extra effort or do outstanding work.

Performance Plans

• Performance plans pay employees for the amount of work they complete.– Commission Plans – pay employees a percentage

of the volume of sales for which they are responsible.

– Piece Rate Plan – pay the employee a fixed rate for each unit produced.

Combination Plans

• Combination plans are play plans that provide each employee a small wage or salary and adds incentives pay based on the person’s performance.– Sometimes companies provide the incentive based

on the performance of a work team rather then on an individual’s performance alone.

• A bonus is money paid at the end of a specific but long period of time for performance that exceeds the expected standard for that time.

Employee Benefits

• Employee benefits are all forms of compensation and services the company provides to employees in addition to salaries and wages.

• In addition to pay employees receive other benefits as part of their total compensation.

Customary Benefits

• Profit Sharing Plan is a benefit plan that pays employees a small percentage of the company’s profits at the end of the year.– Profit sharing plans encourage employees to do things that

increase company profit.– Pension plan is a company-sponsored retirement plan that makes

regular payment to employees after retirement.• Companies with pension plans put a percentage of employees’ salaries

into a pension fund.• The funds are invested and earnings are used to make pension payment to

retired employees. – In a few pension plans the employer pays the entire cost of the pension. – However, in most plans the employee make a contribution as well of pays the

entire cost of the pension contribution.• Vacation days

– After an employee has worked for a company for a specified time, they may begin earning vacation days.» Most companies pay the employee’s regular salary during vacation days.

Hours of Work

• Many companies have experimented with changes to the standard 40-hour work week, and the five day workweek.

• Flextime lets employees choose their own work hours, within a specified time.

• Job sharing allows two people to share one full-time job.

Other Benefits

• Many companies are offering employees additional benefits.– Gas cards– Cell phones– Free or low cost parking– Food services and cafeterias.– Discounts on the purchase of products produced or sold by the

company.– Daycare

• Cafeteria plan is a program where each employee can choose among benefits with equal value or give up certain benefits and receive their cost as additional compensation.

The Increasing Value of Human Resources.

• Managers faced with improving the effectiveness and profitability of their business are increasing looking at ways that they can improve employee performance.

Employment Laws

• State and federal governments have been concerned for years about protecting employees, so they have passed several laws to protect employees, improving their health and safety, and providing employee benefits.

Equal Opportunity in Employment

• In recent years, many businesses have taken positive steps to correct discrimination in employment.– Companies use fair employment and hiring

practices to ensure equal employment opportunities.

Changes in Providing Human Resources Services

• Companies are looking at ways to improve HR services while controlling the costs of providing those services. – Companies are using technology to reduce

paperwork and streamline possesses.

– Some companies are also employing outside companies to perform some HRM tasks.