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PowerPoint Presentation by Charlie Cook The University of West Alabama

Chapter 18 Managing Human Resources in Entrepreneurial Firms

Part Five | Employee Relations

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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WHERE WE ARE NOW…

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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The main purpose of this chapter is to help you apply what you know about human resource management to running a small business. The main topics we’ll address include the small business challenge; using Internet and government tools to support the HR effort; leveraging small size with familiarity, flexibility, fairness, and informality; using professional employer organizations; and managing HR systems, procedures, and paperwork.

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Explain why human resource management in small companies is different from that in larger companies.
Give at least five specific examples of how you would use the Internet and government tools to support the HR effort in a small business.
Answer the question, “Why are familiarity, flexibility, and informality important tools that entrepreneurs can use to improve human resource management practices in their small businesses?”
Explain what professional employers’ organizations are and how entrepreneurs can use them.
Describe how HR systems traditionally evolve in a small business and give examples of how small businesses can use human resource management information systems.

LEARNING OUTCOMES

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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The Small Business Challenge

Why Entrepreneurship Is Important

Over one-half of the U.S. labor force works
for small firms.

Over 600,000 small businesses are created annually.

Three-fourths of employment growth comes from small firms.

Why Is HRM Important to Small Businesses?

Growth of any small business depends on effective HR activities.

Getting and keeping large customers requires compliance with international quality (HR) standards.

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Anyone interested in small businesses (or human resource management) needs to understand how managing human resources in small firms is different from doing so in larger firms.

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Size of
HR staff

Priority of
HR issues

Informality of HR practices

How Small Business Human Resource Management Is Different

Entrepreneur’s effect on HRM

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Managing human resources in small firms is different for four main reasons: size, priorities, informality, and the nature of the entrepreneur.

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The Entrepreneur’s Risky Human Resource Management Situation

Underdeveloped HRM creates competitive disadvantage

Lack of specialized HR expertise

Compliance with compensation regulations and laws

Lack of HRIS systems creates inefficiencies and data entry errors

Increased potential for workplace litigation not addressed

HR Risks in
Small Businesses

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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The lack of attention of HRM matters and lack of expertise means that entrepreneurs face at least five HR-type risks in managing a small business.

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Why HRM Is Important to Small Businesses

Effective HRM:

Is a competitive necessity for small firms.

Makes small firms more successful .

Helps small firms get and keep large customers.

Is necessary to meet ISO-9000 requirements
for competing internationally.

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Smart entrepreneurs take these risks to heart. Small firms need all the advantages they can get, and for them effective human resource management is both a competitive necessity and a requirement for competing in global markets.

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Complying with Employment Laws:
DOL: www.DOL.gov/elaws/firststep
www.dol.gov/esa/whd/flsa
EEOC: wwww.EEOC.gov/employers/smallbusinesses.html
OSHA: www.OSHA.gov
www.OSHA.gov/dcsp/smallbusiness/index.html

Employment Planning and Recruiting:

DOL: http://online.onetcenter.org

Employment Selection

Wonderlic: www.wonderlic.com

Employment Training

AMA: www.amanet.org
SHRM: www.shrm.org
SBA: www.SBA.gov/training
NAM: wwwnamvu.com

Using Internet and Government Tools
To Support The HR Effort

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Entrepreneurs can use the Internet sites and government tools listed in this slide to support the HR effort in a small business.

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FIGURE 18–1 FirstStep Employment Law Advisor

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Figure 18-1 shows the U.S. Department of Labor’s “FirstStep Employment Law Advisor,” which helps small employers determine which laws apply to their business.

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FIGURE 18–2 Sample DOL elaws Advisors

The Coverage and Employment Status Advisor helps identify which workers are employees covered by the FLSA.
The Hours Worked Advisor provides information to help determine which hours spent in work-related activities are considered FLSA “hours worked” and, therefore, must be paid.
The Overtime Security Advisor helps determine which employees are exempt from the FLSA minimum wage and overtime pay requirements under the Part 541 overtime regulations.
The Overtime Calculator Advisor computes the amount of overtime pay due in a sample pay period based on information from the user.
The Child Labor Rules Advisor answers questions about the FLSA’s youth employment provisions, including at what age young people can work and the jobs they can perform.
The Section 14(c) Advisor helps users understand the special minimum wage requirements for workers with disabilities.

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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FIGURE 18-2 presents a sampling of the DOL elaws Advisors Web tools available to entrepreneurs.

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FIGURE 18–3
OSHA Web Site

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Figure 18-3 shows OSHA’s Web site which provides, among other things, easy access to the OSHA Small Business Handbook, which contains practical information for small business owners, including industry-specific safety and accident checklists.

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FIGURE 18–4 Wonderlic Personnel Test: Part of a Sample Report

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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FIGURE 18-4 shows partial results of a sample report of the Wonderlic Personnel Test.

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Employment Training

Private
vendors

Small Business Administration (SBA)

Training Resources for Small Businesses

National Association of Manufacturers
(NAM)

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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FIGURE 18–5
Part of Small Business
Administration’s Virtual
Campus for Small
Business Training

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Figure 18-5 shows the federal government’s Small Business Administration (www.SBA.gov/training) virtual campus that offers online courses, workshops, publications, and learning tools aimed toward supporting entrepreneurs.

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Having flexibility in providing
work-life benefits and rewards

Using simple, informal employee selection procedures

Treating nonfamily employees fairly and equitably

Maintaining effective communications with employees

Providing flexibility in employee
training procedures

Leveraging the Small Firm Size Advantage

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Small businesses need to capitalize on their strengths, so in dealing with employees they should capitalize on their smallness. Smallness should translate into personal familiarity with each employee’s strengths, needs, and family situation. And it should translate into the luxury of being able to be relatively flexible and informal in the human resource management policies and practices the company follows. Smaller businesses often need to adapt quickly to environmental realities like competitive challenges. This means that entrepreneurs tend to conduct matters on an informal, reactive basis with a short time horizon.

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Building Communication

Online reporting

Newsletters

Online information

Building Effective Communications
in Small Businesses

The Huddle

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Effective communications are important for any manager, but especially for those managing small businesses. In a small restaurant or retail shop, one or two disgruntled employees can destroy the business’ quality service. Yet small business owners generally don’t have the means to implement expensive communications programs. That’s why simple programs like these are important.

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Using Professional Employer
Organizations (PEO)

Dedicated HR support

Group
benefits

Paperwork
reduction

Reasons for Employers To Use a PEO

Decreased
liability

Higher
performance

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Employers turn to PEOs for the reasons listed in this slide.

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Guidelines for Finding and Working with PEOs

Conduct a needs analysis.
Review the services of all PEO firms you’re considering.
Determine if the PEO is accredited.
Check the provider’s bank, credit, and professional references.
Understand how the employee benefits are funded.
See if the provider contract assumes the employment law compliance liabilities in the applicable states.
Review the service agreement carefully.
Investigate how long the PEO has been in business.
Check out the prospective PEO’s staff.
Ask how will the firm deliver its services.
Ask about upfront fees and how these are determined.
Periodically get proof that payroll taxes and insurance premiums are being paid properly and that any legal issues are handled correctly.

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Small business managers need to choose and manage the PEO relationship carefully. Suggestions for doing so are listed in this slide.

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Managing HR Systems, Procedures,
And Paperwork

Employee records
are compiled on forms from office supply companies and maintained in physical files

Manual HRM
system

One or more packaged systems for automating individual HR tasks, such as applicant tracking and performance appraisal

Computerized HRM system

Interrelated components collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization of an organization’s HRM activities

Human Resource Management Information System (HRIS)

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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As the small business grows, it becomes increasingly unwieldy and uncompetitive to rely on manual HR systems. Most small- to medium-sized firms begin computerizing individual human resource management tasks. As companies continue to grow, they turn to integrated human resource information systems (HRIS).

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TABLE 18–1 Some Important Employment Forms

New Employee Forms	Current Employee Forms	Employee Separation Forms
Application New Employee Checklist Employment Interview Reference Check Telephone Reference Report Employee Manual Acknowledgement Employment Agreement Employee Application Disclaimer Probationary Evaluation	Employee Status Change Request Employee Record Performance Evaluation Warning Notice Vacation Request Probation Notice Job Description Direct Deposit Acknowledgement Absence Report Disciplinary Notice Employee Secrecy Agreement Grievance Form Expense Report 401(k) Choices Acknowledgement Injury Report	Retirement Checklist Termination Checklist COBRA Acknowledgement Unemployment Claim Employee Exit Interview

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Table 18-1 lists some the many forms you could conceivably need even for a small business.

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Human Resource Management Information Systems (HRIS)

Levels of Information Systems

Transaction processing systems

Management information systems (MIS)

Executive support systems

Benefits of HRIS

Improved transaction processing

Online self-processing

Improved reporting capability

HR systems integration

HR intranets

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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Companies need information systems to get their work done. The term information system refers to the interrelated people, data, technology, and organizational procedures a company uses to collect, process, store, and disseminate information. Of course, as the company grows, it makes sense to computerize its information systems.

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Human Resources Management 12e Gary Dessler

Human Resources Management 12e
Gary Dessler

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