8.- Employee Engagement

COMPENSATION

Compensation has three components. The proportion of each is known as the pay mix and it differs a lot by firm. Usually the largest element of total compensation is base compensation (fixed pay an employee receives on a regular basis), secondly pay incentives (programs created to reward employees on good performance) and lastly, benefits or indirect compensation.

Compensation is the one most important cost for most firms. Research suggests that employees sometimes underestimate their employers efforts to provide for indirect compensations or benefits, which is why recently, companies are increasing employee communication involving the real const of benefits.

DESIGNING A COMPENSATION SYSTEM

Due to society’s relationship with a person’s paycheck, compensation affects individuals economically, sociologically and also psychologically. This is why, a firm must handle compensation properly to avoid a bad impact on both employees and the firm’s performance.

Managers have a double challenge: designing a system that enables the firm to achieve its strategic objectives and simultaneously fits the firm’s characteristics and environment. These are some criteria or checkpoints to go through when creating a compensation system.

COMPENSATION TOOLS

We have two broad categories according to the unit of analysis used to make pay decisions:

• job-based approaches: Include the most traditional and widely used types of compensation programs. It is assumed that the people being paid are properly performing well-defined jobs. The compensation system’s primary objective is to allocate pay so that the most important jobs get paid most.
• skill-based approaches: Less common and it assumes that workers should be paid not according to the job they do, but rather by how flexible or capable they are at performing multiple tasks. Here, the greater the variety of job-related skills workers showcase, the more they are paid.

LEGAL ENVIRONMENT AND SYSTEM GOVERNANCE

The design and administration of compensation systems is greatly influenced by a legal framework. Federal laws carry compensation criteria and procedures. Ex: Fair Labor Standards Act, Equal Pay Act and the Internal Revenue. In addition to these federal regulations, in the USA, each state has its own rules as a compliment.

The FLSA defines two categories of employees: the exempt employee (not covered by the provisions of the FLSA, mostly professional, administrative, executive and outside sales jobs fall in this category) and the nonexempt employee (those who are covered by the FLSA).

These also cover issues like minimum wages, overtime, comparable worth (EPA), etc.

The Internal Revenue Code (IRC): this affects how much of their earnings employees can keep. It also affects how benefits are treated for tax purposes. It requires the company to withhold a portion of each employee’s income to meet federal tax obligations.

4.- Performance Management

Performance Appraisal

Organizations usually carry out appraisals for administrative and developmental purposes. They are used as administrative basis for for decision making such as work conditions, promotions, termination, and rewards. If it is used for development it is geared toward improving employees performance and strengthening their skills. It includes feedback, counseling employees and offering training.

It is very important to do appraisal well, because it will let you see what is going well and was is not.

Performance Dimensions

Performance dimensions are aspects of performance that determine effective job performance.

Performance dimensions should be identified by a mechanism called JOB ANALYSIS.

Measuring Performance

There are two classifications of the methods used to measure employee performance:

• whether the type of judgement called for is relative or absolute
• whether the measure focuses on traits, behavior, or outcomes.

Theres advantages and disadvantages to both measures, however it is clear that the overall quality of ratings is more of a function of rater motivation and abilities rather than the type of instrument used.

Managers may face 5 challenges while measuring performance:

1. rater erros and bias
2. influence of liking
3. organizational politics
4. individual or group focus
5. legal issues (discrimination, employment at will, etc)

Managing Performance

Because the main goal of any appraisal system is performance management, in order to manage and improve employee performance, it is really important that managers look for and explore why there are performance problems then develop action plans and using performance-focused communication they empower workers to find solutions.

7.- TOTAL REWARDS

PAY-FOR-PERFORMANCE: THE CHALLENGES

These programs also known as incentive programs, can improve productivity once it has figured out several challenges in design and implementation.

Individual performance is hard to measure, this happens because the employee may feel like the they control the factors affecting his or her output. Pay incentive systems can be perceived as an employee right and may be complicated to adapt or change according to the organization’s needs. Being so focused on merit may put employees under a great deal of stress and thus lead to job dissatisfaction. Finally, it has been suggested that merit pay may decrease employee motivation overall.

To avoid the problems usually present in pay-for-performance systems, managers can use these 7 tips:

• link pay and performance appropriately
• use pay for performance as a part of a broader HRM system
• build employee trust
• promote the belief that performance makes a difference
• use multiple layers of rewards
• increase employee involvement
• consider using non-financial incentives.

The participation of the employees in the creation of the plan can enhance its credibility and overall success.

TYPES OF FINANCIAL PAY-FOR-PERFORMANCE PLANS

There are four types of incentive programs.

1. Individual employee level: merit pay which becomes part of their base salary, and bonuses and awards.
2. Team-based plans: these reward the performance of the groups of employees who work together on joint projects. Usually bonuses and non-cash.
3. Plant or business unit level: here gainsharing is the most suitable program. It rewards employees based on cost savings mostly in the shape of a lump-sum bonus.
4. Organization (entire corporation): profit sharing and employee stock option plans (ESOPS) used to link the firm’s performance with the employee’s financial rewards. Both of these plans are used to fund retirement programs.

PLANS FOR EXECUTIVES AND SALESPEOPLE

There are two employee groups who are normally treated very differently than most other workers in pay-for-performance plans: Top executives and sales personnel. In their case incentives like short-term annual bonuses, long-term incentives and perks are used as motivators to make decisions that carry them all the way to the long-term goals. Because sales employees are revenue generators, their compensation system is normally used to reinforce productive behavior.

PAY-FOR-PERFORMANCE PLANS IN SMALL FIRMS

There are different challenges for small firms when designing pay-for-performance systems because its less likely that they have the development resources to create and administrate those plans. And it is very delicate because mistakes in allocating incentives can represent a big impact on a small business.

Because it is easier to have informal feedback on a small scale firm it is more convenient and beneficial to offer generous profit sharing and equity-based pay for employees.

3.- LABOR UNION AND LABOR LAW

Understanding the Legal Environment

Complying and understanding HR regulations is very important because it helps you: do the right thing, be aware of your firm’s legal and HR limitations and minimize any potential liability.

Being compliant with the law it’s the right thing to do, and the primary requirement of all these laws is to regulate good management practices. Which which in itself is the right thing to do. Being faithful to these laws will benefit you in different ways, it will help you avoid issues and it will also help you better your company’s environment.

The limitations of HR and Legal Departments

Every HR department is responsible for respecting HR law. This includes keeping records, writing and implementing good policies and monitoring the firm’s decisions. One of the key functions of legal counsel is to buffer damage after it has occurred.

Limiting Potential Liability

Financial liabilities can happen when HR laws are broken or seem to be broken. This camera present great financial loss for a corporation. Not to mention that and organization may also face PR trouble when claims such as discrimination surface.

Challenges to Legal Compliance

When managers attempt to comply with HR law there are several challenges they must face. Such as a dynamic legal landscape, complex regulations, fair employment strategies and unintended consequences.

Several laws affect the practice of human resource management, and rapid changes art taking place all the time. It is because of this that companies require HR teams to be constantly prepared an updated. HR law is very complicated and each individual law comes with a set of regulations.

Conflicting Strategies for fair Employment

Fair employment is a situation in which employment positions are not affected by illegal discrimination. Civil rights law prohibits employers for making decisions based on race, sex or age.

There are some strategies that can be implemented to reach this goal.

One is to make all employment positions without regard of these characteristics and another one is affirmative action. Affirmative action programs require that employment decisions are actually made on the basis of these characteristics. Affirmative action this is not permitted however during layoffs.

Why do employees join unions?

Employees generally seek representation from a union because they are not satisfied with aspects of their job, lack influence to make changes, believe their compensation is not adequate and basically see the union as the solution to their problems.

The company should have a labor relations to strategy, which is an overall plan for dealing with unions.

Unions can have a significant impact on HR management.

9.- EXIT MANAGEMENT

EMPLOYEE SEPARATIONS

What are they?

Employee separations occur when employees cease to be members of the organization and are handled differently from outplacement. Managers should have thoughtful policies in place to handle any outflow of Human Resources. Employee Separations have costs:

But they also have benefits:

TYPES OF EMPLOYEE SEPARATIONS

• Voluntary: this occurs when an employee decides, for either personal or professional reason, to end their contract/relationship with the employer/company. They can be either avoidable or unavoidable; 80% are avoidable and due to staffing mistakes.

• Retirements: it differs from quitting. It usually happens at the end of an employee’s career and result in the individual receiving retirement benefits from the company/organization.
• Involuntary: occur when management decides to terminate its relationship with an employee. Happens due to : economic necessity or a poor fit between the employee and the organization. HR staff should always make sure that the dismissed employee receives proper “processing” and avoid claims of wrongful termination. They include discharges (result of poor performance or repeated bad behaviors), layoffs (cost cuts from the organization), downsizing and rightsizing (reduce the scale of business or reorganizing the employees).

MANAGING EARLY RETIREMENTS

There are two features to this:

1. Package of financial incentives: makes it more attractive for senior employees to retire earlier than planned.
2. Open window : restricts eligibility to a fairly short period of time and the incentives are no longer available after the window is closed.

Early retirement policies can reduce the size of the company’s workforce substantially.

This issue has to be managed in a way that eligible employees do not feel like they are being forced to retire and so file an age discrimination claim.

MANAGING LAYOFF

Usually, organizations will turn to layoffs when they cannot reduce it’s labor costs by any other means.

After the decision to implement layoffs is made, managers should concern themselves with the outplacement of the former employees.

Some alternatives to layoffs include freezing employment, not renewing contract workers and encouraging employees to take the time off voluntarily. Here are some major alternatives to layoffs that managers can use to reduce labor costs and protect the full-time employees.

There should always be a record of every move and detail before letting go an employee, there should be proof of any mistake or wrongdoing that will justify the termination clearly and legally.

OUTPLACEMENT

It is always a good idea for the firm to use outplacement services to help the terminated employees to cope with their emotions and minimize the amount of time they are unemployed.

It is important to reduce the morale problems for employees who are about to be laid off so that they remain productive until they leave the firm and the amount of litigation caused by separated employees is minimized. Also, assisting separated employees in finding comparable jobs and concentrate on moving the organization forward. Provide outplacement can protect an employer’s reputation and help the organization be known as a coveted employer.

10.- STRATEGY AND PLANNING – ETHICS.

PLANNING AND IMPLEMENTING STRATEGIC HR POLICIES

Aligning HR strategies and programs with environmental opportunities, business strategies and organizational characteristics is the key to success.

Strategic HR planning is the process of formulating HR strategies and establishing programs or tactics to implement them to bring many direct and indirect benefits to the company.

Some strategies are:

• Encouragement of proactive rather than reactive behavior
• Explicit communication of company goals
• Stimulation of critical thinking and ongoing examination of assumptions
• Identification of gaps between current situation and future vision
• Encouragement of line managers’ participation
• Identification of HR constraints and opportunities
• Creation of common bonds

Somethings that may prove challenging of strategic planning include:

• Maintaining a competitive advantage
• Reinforcing overall business strategy
• Avoiding excessive concentration on day-to-day problems.
• Developing HR strategies suited to unique organizational features.
• Coping with the environment
• Securing Management Commitment.
• Translating the strategic plan into action.
• Combing intended and emergent strategies
• Accommodating change

STRATEGIES TO INCREASE PERFORMANCE

Strategic HR choices are the resources available in designing its Human Resources system. Here is a brief description of strategic HR choices:

No strategy is necessarily good or bad in itself, it is more about the effect it has on a specific firm and how well it fits with other factors. Some key factors that a firm should consider in determining which strategies will have a positive impact in performance are organizational strategies, environment, organizational characteristics and organizational capabilities.

HR DEPARTMENT AND MANGERS

Managers are the first line of responsibility for the effective use of a company’s Human Resources, meaning all mangers are personnel managers. The role of HR professionals is to act as internal consultants or experts, assisting other department managers to do their jobs even better. An increase of HR professionals reflects the growth and complexity of government regulations and also the awareness of the importance of HR issues its relation to achieving business objectives.

ETHICS AND SOCIAL RESPONSIBILITY

Now more and more companies are starting to embed their sustainability efforts into HR programs to include them in the employees every-day lives. these companies believe that this practices will help employees become more engaged in social and environmental causes. Here are some examples of companies taking this ethical and socially responsible approach:

• Alcatel-Lucent: committed to reducing 50% of the company’s carbon emissions by 2020
• Hitachi: announces a program to actively involve and engage employees in socially responsible practices and activities.
• Interface: introduced a system to address contamination and unnecessary waste and to reduce their carbon footprint
• Pepsi Cola: encourages employees to engage in organic gardening on company premises, they acquired land including a beehive and a fence to keep out deer and groundhogs.

6.- EMPLOYEE WELL-BEING, HEALTH AND SAFETY AT WORK

WORKERS SAFETY AND THE LAW

Thanks to improved safety and health conditions in workplaces there has been a decline in job-related fatalities and injuries in the United States. However, the decline may be due to the reduction of work hours for industries reporting high incidence of worker injuries and fatalities.

Many governments have passed action laws to regulate safety in the workplace. In the USA if state has its own workers compensation law, so the professions for funding and enforcing the lot differ by state.

The OSHA law was designed to meet the workplace safer by ensuring that the work environment is free from hazards but this law does not provide compensation for accident victims.

OCCUPATIONAL SAFETY

The Occupational Safety and Health Act (OSHA) was passed in 1970 to dress the burdening economic and human costs of workplace accidents and health hazards because around the 60’s the number of fatalities was really high.

OSHA is a federal law that requires employers to provide with a safe and healthy work environment, comply with the specific occupational safety and health standards, and finally keep the records od occupational injuries and illnesses.

MANAGING CONTEMPORARY SAFETY, HEALTH AND BEHAVIORAL ISSUES

The most significant health/safe/behavioral issues for employers are:

• AIDS
• Violence in the workplace
• cumulative trauma disorders
• fetal protection
• hazardous chemicals
• genetic testing

Managers must deal with a range of practical, legal and ethnical questions that usually demand careful balancing of employee’s individual rights (mainly privacy rights) with the needs of the business or organization.

SAFETY AND HEALTH PROGRAMS

A safe working environment has to be created, it won’t just happen. Many respectable organizations have developed well-devised safety programs. Managers and supervisors at all levels are responsible for enforcing these systems, creating awareness through training and maintaining a safe workplace.

Employees assistance programs, called EAPs, are carefully designed to help employees deal with any problems (physical, mental, stress, etc) that might be undermining their performance. Wellness programs on the other hand are preventive measures designed to help identify potential health risks and solve them before they even become real problems.

2.- LEARNING & DEVELOPMENT

Training versus Development

Training and development work in conjunction however they are not the same. Training focuses on giving the employee specific skills required to perform their job and correct any shortcomings. Development on the other hand provides the employees with the abilities they will need in the future.

Training focuses on immediate organizational needs as development focuses on long-term requirements.

Challenges in training

There are several challenges to the training process, it isn’t assured that any imperfections will be polished completely or or that the training will be successful. For a training program to work, there must be realistic goals and standards in place. The organization must train employees for the right reasons and after a successful hiring process has taken place.

Choosing not to train your employees might be more costly than properly training them in the first place. Training will work if it is related to organizational goals, for training can lead to setbacks in the long run.

Managing the training process

To ensure successful training managers must closely monitor the process. Formal training processes consist of phases:

• Needs assessment: identifies problems or needs addressed in the training process.
• Development and conduct training: the best type of training is assigned offered.
• Evaluation: the program’s effectiveness is assessed.

Orientation and Socialization

Orientation is important because it helps the new employee to transition into a new job. It helps the new employee with the stress of the transition.

Socialization can be defined as a process that helps employees of acclimate to new organizations, understand the company’s culture and expectations, ultimately, settle unto the job. This process is often informal, and it is the manager’s responsibility to carry it out properly and effectively.

Career development

Development is a concept different from training. It has a wider focus and a longer time frame. The goal of career development is to create enriched and more capable workers. Growing uncertainty in the workplace has made employers and employees realize that job security and loyalty I’ve been replaced by a marketability of skills. Despite an uncertain business environment, career development is still an important activity. More and more organizations now view career development as a way of preventing burnout and improving the quality of worker’s life.

Challenges in career development

An important question is: How responsible is a company for managing its employees careers?

Management should consider 3 three challenges before putting a career development program in place:

• Appointing someone to handle career development activities.
• Employees need a realistic assessment.
• Employees must take an active role in planning and implementing their own personal development plans.

Effective development

There’s always three faces to creating a development program:

• Assessment phase: identifies employees strengths and weaknesses. Includes self-assessment and provided assessment.
• Direction phase: Determines the type of career that employees want and the steps needed to realize those goals. Requires good understanding of one’s current position.
• Development phase: Taking actions to create and increase skills to prepare for the future. Most common programs areare mentoring, coaching and tuition assistance.

Self development

In today’s workplace, we can conclude that things are uncertain. This means as workers must face a dynamic reality and find meaning in a work that suits us and provide some satisfaction.

An initial step in self-management is determining what personal success means to you. In order to be satisfied with your end result you should be very sure of what success truly means to you in the first place. It is crucial to maintain a work-life balance to be successful as a whole. Nowadays companies I focusing more and more in providing this balance to their employees.

It is said that there are at least three domains in which people consider someone to be successful: money, work and life.

Employees must increasingly taken active role in development, otherwise the risk of stagnation and obsolescence.

5.- LEGAL COMPLIANCE, DISCIPLINE AND GRIEVANCE.

EMPLOYEE RIGHTS

A right is the ability to engage in conduct that is protected by law or social sanction, free from interference by another party (in this case an employer). Employees have the legal right to form unions, and it is illegal for an employer to discourage employees to do so, for example.

There are different types of rights.

There has been great improvement for employee rights in the past 50 years and courts are more proactive when it comes to protecting employees too.

1. Statutory Rights: these rights are protected by specific laws enacted by government. Some main examples of statutory rights of employees are protection from discrimination on race, sex, religion, national origin, age, and disabilities, etc. This rights also include protection against unsafe or unhealthy working conditions.
2. Contractual Rights: These rights are based on the Law of contracts, which are legally binding between two parties. Legal remedy comes into action when either party breaches said contract. Both employees and employers have rights and obligations to each other and they must upheld them. Here Union contracts can come into play as well and it is up to the employee to consider which type of contract will suits its needs better.
3. Other Rights: These include a right to ethical treatment and limited rights to free speech and privacy. These other rights are different from the other ones in that even though employees may expect to have them, they may not have a legal recourse if they feel these rights are not been upheld. Employers may not be required to extend these rights to their employees but doing so may certainly increase satisfaction among them.

MANAGEMENT RIGHTS

Usually called “rights if the employer” can be defined as the rights to run the business and to retain any profits that result from said business. Stockholders and owners who control a from through their property rights are the ones who delegate the authority to run a business to managers.

These management rights include: the right to manage the workforce and the rights to hire employees, in this they can promote, adding, discipline and dismiss the employees. Employee rights simultaneously moderate the manager’s right to direct the workforce. The same goes for contracts, a manager can dictate what remuneration the employee will receive but this will be regulated by the presence of a union labor contract for example.

Management rights are usually referred as “residual rights” because they pertain to the rights not affected by the laws or or contracts that represent the interests of other parties (employees & unions).

Employment at will is one of the most important employer rights.

EMPLOYEE RIGHT CHALLENGES

There are some issues that fall in the line between employee and management rights.

1. Random drug testing: It is considered a violation of privacy by many employees however, this measure is required by law on some occupations due to safety reasons. One way of avoiding this practice is laying out contracts that ban drug consumption since the beginning or state that it will be conducted based on “probable cause”.
2. Electronic monitoring: Businesses try to fight various forms of theft by using electronic surveillance devices to monitor employees. Sometimes even hidden microphones and transmitters attached to stationary. This kind of surveillance is seen as taking the human element out of work and causing too much stress. This can also be done in the shape of checking a possible candidate’s financial records, which is very badly seen.
3. Whistle-blowing: This happens when an employee discloses an illegal, immoral or illegitimate matter happening inside a company. Most of the time whistle blowers have clean motives, but they are harassed and shunned in return. Whistle-blower protection laws are different in nature and effectiveness everywhere.
4. Moonlighting: Is defined as having a second job outside the normal working hours. Moonlighting has different reasons: extra income, recessions or even pay freezes. In some situations the employer may try to prevent an employee from doing that second job, but it depends on the situation if that may be legal or not.
5. Office romance: Managers are responsible of protecting their staff of sexual harassment situations and thins why the grip on office romantic relationships may be tight. It depends on the goals and culture of the organization how they decide to handle or regulate this issue.

DISCIPLINING EMPLOYEES

This should be a communication tool for managers to let employers know, when something is not working properly. This entails communicating to the employee that whatever wrong behavior they are engaging in is not acceptable. It is usually performed by supervisors but in a self-managed work team it may be carried out by a team.

In some instances, employees may feel they are being disciplines unfairly, in this cases HR staff are appointed to help sort out the misunderstandings. The HR department’s contribution is important because it serves as a mediator so that the employer and employee can maintain a effective working relationship.

The steps of a Progressive Discipline Procedure are:

MANAGING DIFFICULT EMPLOYEES

It is often necessary to discipline employees who exhibit poor performance, this includes: poor attendance, insubordination, workplace bullying or substance abuse. Common sense and good judgement are required to manage any discipline process since not all situations require a discipline.

PREVENTING THE NEED FOR DISCIPLINE WITH HRM

A strategic and proactive approach can help avoid the need for discipline, also recruiting and selecting the right employees for the right positions from the beginning can save up these procedures as well. Other strategies to avoid discipline include training and developing workers, by designing jobs and also opportunities so people can exploit their talents and go through effective appraisal systems. Finally, compensating employees for their contributions is a good incentive.

1.- RECRUITMENT & SELECTION

Book: Managing Human Resources.

Human Resources Supply and Demand.

Human Resource Planning (HRP) is an organization process used to ensure that the company is properly equipped with the right amount of the right people. Failing to plan properly is can lead to financial costs and production crisis.

Labor supply is the availability of its workers to possess the required skills that an employer might need. Labor demand is the number of workers needed at an organization. There should always be planning to ensure a balance between both. Forecasting techniques should be used to anticipate any shortage or excess of employees, thus helping to create appropriate actions to maintain that balance.

The Hiring Process

Determining the staffing needs is always followed by hiring the right people to fill those positions. The hiring process has three stages: Recruitment, Selection and Socialization.

Managers must focus especially in socializing new employees to maximize the potential of the new Human Resources acquired and make sure the new employees are acclimated to their new roles and environment. This way new comers will feel like part of the team and not outsiders.

The Hiring process is very important because each new employee represents costs for the organization and those resources should always be spent on employees who will become a functional part of the company. There are several aspects key to scouting the right people for the job: determining characteristics important to performance, ability required for the position and the motivation factor. Performance = Ability * Motivation.

Most importantly, the organization must ensure that its employment practices are in agreement with all legal requirements.

Effective Staffing

Recruitment

During the recruitment process you are basically selling the job to the new employee. In order to get to the potential recruits you have to go where the “customers” are, in this case that would be social media for example. you have to state what you have to offer to them. You have to state what you have to offer to them, and treat the applicants ask customers. If you treat them positively they will buy the position you are offering to them. And they are likely to have a positive impression of the organization.

Selection

Selection process is a very important, inappropriate hires me even lead better employees to seek employment somewhere else. different tools can be used in the selection process. Different tools can be used in the selection process and there are two concepts that are very important for these tools: reliability and validity.

Tools as predictors of job performance:

• Letters of Recommendation
• Application forms
• Ability tests
• Personality test
• Honesty tests
• Interviews

during any of these selection methods always operate within the limits of law to avoid any misunderstandings or allegations of discrimination.

Legal Issues

Legality plays an exceptionally important role in staffing.

All organizations must be aware of discrimination laws and regulations to avoid any lawsuits or complaints. The organization should always have evidence to document the job relatedness of the selection process.

You should always conduct a sound investigation into an applicants background to prevent negligent hiring. Lack of attention to this point can lead to unfortunate situations for your employees for your employees and lawsuits.