Small Business Discussion Board 11

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Chapter_20_Managing_Human_Resources.pdf

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Small Business Management, 18e

Longenecker/Petty/Palich/Hoy

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Managing Human Resources

Chapter 20

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Learning Goals:

 Explain the importance of employee recruitment,

and list some useful sources for finding suitable

applicants.

 Identify the steps in evaluating job applicants.

 Describe the roles of training and development for

both managerial and nonmanagerial employees.

 Explain the various types of compensation plans,

including the use of incentive plans.

 Discuss the human resources issues of co-

employment, legal protection, labor unions, and the

formalizing of employer-employee relationships.

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Recruiting Personnel

 The Need for Quality Employees

Employee performance directly or indirectly

affects the capability of the firm to service

customer needs.

Employee performance affects profitability.

Payroll costs affect firm’s bottom line.

Quality of employees determines the long-

term competitive potential of the firm.

20–4

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

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The Lure of Entrepreneurial

Firms

 Advantages of Employment in Small Firms

Quicker movement to decision-making levels

of management

Greater managerial freedom

More opportunities for broad-based

managerial experience

Flexibility in work scheduling

and job sharing

20–5

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Sources of Employees

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website

for classroom use.

Internet

recruiting

Public employment

offices

Employee

referrals

Walk-ins

Private employment

agencies

Help-wanted

advertising

Schools

Executive

search firms

Temporary help

agencies

Diversity in the Workforce

 Workforce Diversity

Differences among employees in terms of

such dimensions as gender, age, and race.

Diversity is increasing with higher

proportions of women, older workers, and

racial minorities entering the workforce.

20–7

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Job Descriptions

 Job Description

A summary outlining the essential duties

required by a specific job

Aids in personnel recruitment.

Helps focus employees on their work.

Provides direction in training.

Serves as the basis for performance review.

20–8

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Job Descriptions (cont.)

 Job Specification

A list of the knowledge, skills and abilities

needed by the job holder to successfully

perform a specific job

Aids in selecting the most qualified job applicant.

20–9

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password-protected website for classroom use.

Evaluating Prospects and

Selecting Employees

Test the applicant

Interview the applicant

Use application forms

Check references and background information

Require physical examinations5

Steps in Recruiting Employees

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Evaluating Job Applicants

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Telephone

Screening

Credit

Checks

Skills

Assessment

Face-to-Face

Interviews

Drug

Screening

Motor Vehicle

Record Checks

Background

Checks

Personality and

Behavior Testing

Physical

Examinations

Testing the Applicant

 Job-Related Testing

◦ The U.S. Supreme Court has upheld the Equal Employment Opportunity Commission’s

requirement that any test used in making

employment decisions must be job-related.

 Validity

◦ The extent to which a test assesses true job performance ability.

 Reliability

◦ The consistency of a test in measuring job performance ability.

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Training and Developing

Employees

 Purposes of Training and Development

Prepare new recruit to perform the duties of

the job.

Improve the performance of current

employees.

Prepare employees for career advancement.

Improve morale of current employees.

Serve as an inducement to potential

applicants.

20–13

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Types of Training and Development

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Orientation of

New and Current

Personnel

Development of

Managers and

Professionals

Training to

Improve

Quality

Training of

Nonmanagerial

Employees

Training and Development

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Steps in Job Instruction Training

PREPARE EMPLOYEES

• Put employees at ease.

• Place them in appropriate jobs.

• Find out what they know.

• Get them interested in learning

PRESENT THE

OPERATIONS

• Tell, show, and illustrate

the task.

• Stress key points.

• Instruct clearly and

completely

TRY OUT

PERFORMANCE

• Have employees perform the

task.

• Have them tell, show,

and explain.

• Ask employees questions and

correct any errors.

FOLLOW UP

• Check on employees

frequently.

• Tell them how to obtain

help.

• Encourage questions.

20.1

From Training to Implementation

 Suggestions for Training Efforts:

Put it (an employee’s personal action plan) on

paper

Measure results (increased productivity) of

training

Involve peers to support and reinforce training

Involve supportive superiors

Provide access to experts

to fill in training gaps

20–16

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Development of Managerial and

Professional Employees

 Determining the need for training

 Creating a plan for training

 Setting a timetable for training

 Providing employee counseling

20–17

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Compensation and Incentives

for Employees

 Wage or Salary Levels

Competitive compensation

Time- or output-based compensation

 Financial Incentives

Commission systems

Piecework

Group incentives and team awards

Bonus and profit-sharing plans

20–18

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

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Compensation and Incentives

for Employees (cont.)

 Performance-Based Compensation Plans

Keys to developing an effective bonus plan:

Set attainable goals.

Include employees in planning.

Keep updating goals.

20–19

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Stock Incentives

 Employee Stock Ownership Plans

(ESOPs)

Plans through which a firm is sold either in

part or in total to its employees.

Employees’ performance is motivated by

their sharing of ownership in the firm.

Owners can cash out and withdraw

without selling to outsiders.

ESOPs offer tax advantages to

owners and employees.

20–20

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Compensation and Incentives

for Employees (cont.)

 Employee Benefits

Supplements to compensation designed

to be attractive and beneficial to

employees.

Benefits are a substantial portion of payroll

costs.

Small firms tend to provide fewer benefits.

Use of flexible benefit plans is growing.

Small firms are increasingly outsourcing the

administration of their benefits programs.

20–21

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Special Issues in HRM

 Co-Employment Agreements

Outsourcing administrative processes to a

fee-for-services organization (PEO) that

handles payroll and benefit administration for

those employees.

Allows small firms to provide improved employee

benefits.

Makes small firms subject to additional government

regulations affecting larger firms.

20–22

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Special Issues in HRM (cont.)

 Co-Employment Agreements (cont.)

Professional Employment Organization (PEO)

A company that sets up co-employment

agreements, assisting businesses with the

administrative demands of keeping employees on

their payrolls.

20–23

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Legal Protection of Employees

 Civil Rights Act (1964) as amended

Legislation prohibiting discrimination based

on race, color, religion, sex, or national origin.

Applies to all employers of more than 15

people.

 Americans with Disabilities Act (1990)

Legislation prohibiting discrimination against

persons with disabilities; requires firms make

“reasonable accommodations” in the

employment of disabled persons.

20–24

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password-protected website for classroom use.

Legal Protection of Employees

(cont.)  Sexual harassment policy guidelines:

Establish clear policies and procedures regarding

sexual harassment in the workplace.

Require employees to report incidents of

harassment to management immediately.

Investigate any and all complaints of sexual

harassment fairly and thoroughly.

Take appropriate action against violators and

maintain claimant confidentiality.

If a lawsuit is to be filed, contact an attorney.

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Legal Protection of Employees

(cont.)  Occupational Safety and Health Act (1970)

Legislation that regulates the safety of

workplaces and work practices.

Created the Occupational Safety and Health

Administration (OSHA) to establish and enforce

health and safety standards.

 Fair Labor Standards Act (FLSA)

Federal law that establishes a minimum wage

and provides for overtime pay for more than 40

hours per week.

20–26

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Legal Protection of Employees

(cont.)

 Family and Medical Leave Act (1993)

Firms must provide up to 12 weeks of unpaid leave

for childbirth and other family needs.

Firms must continue health-care coverage during

the leave and guarantee that employee can return to

the same or a comparable job.

 Labor Unions

Participating in collective bargaining for labor

contracts.

Implementing HR policies to minimize employees’

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Special Issues in HRM (cont.)

 Formalizing Employer-Employee

Relationships

Standardizing personnel policies and

procedures

Avoiding the paralytic effects of excessive

regulation while avoiding the increasing costs of

informality

20–28

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password-protected website for classroom use.

Special Issues in HRM (cont.)

 Formalizing Employer-Employee

Relationships (cont.)

Establishing a performance review system

based on SMART goals:

 Specific

 Measurable

 Achievable

 Realistic

 Time-bound

20–29

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Special Issues in HRM (cont.)

 The Need for a Human Resource Manager

Conditions favoring appointment of an HR

manager:

A substantial number of employees (100 or more)

Unionized employees

High labor turnover rate

Need to recruit and select skilled/professional

employees

20–30

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password-protected website for classroom use.

Special Issues in HRM (cont.)

 The Need for a Human Resource Manager

Conditions favoring appointment of an HR

manager (cont.):

Considerable need to train supervisors or operative

employees

Poor employee morale

Strong competition for personnel

20–31

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Key Terms

behavioral interview

Civil Rights Act

co-employment

employee benefits

employee training

Fair Labor Standards Act (FLSA)

Family and Medical Leave Act

flexible benefit programs (cafeteria

plans)

headhunter

human resource management (HRM)

job description

Job Instruction Training

job specification

management development

Occupational Safety and Health Act

on-the-job training

piecework

professional employer organization

(PEO)

reliability

validity

workforce diversity

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