Part 5
Managing Growth in the Small Business
CHAPTER 19
Managing Human
Resources
Longenecker • Moore • Petty • Palich
© 2008 Cengage Learning.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Looking AHEAD
After you have read this chapter, you should be able to:
1.
Explain the importance of employee recruitment and list some
sources that can be useful in finding suitable applicants.
2.
Identify the steps to take in evaluating job applicants.
3.
Describe the roles of training and development for both
managerial and nonmanagerial employees in a small business.
4.
Explain the various types of compensation plans, including the
use of incentive plans.
5.
Discuss the human resource issues of employee leasing, legal
protection, labor unions, and the formalizing of employer–
employee relationships.
© 2008 Cengage Learning. All rights reserved.
19–2
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.
© 2008 Cengage Learning. All rights reserved.
19–3
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
© 2008 Cengage Learning. All rights reserved.
19–4
Sources of Employees
Help-Wanted
Advertising
Walk-ins
Schools
Public Employment
Offices
Private Employment
Agencies
Executive
Search Firms
Employee
Referrals
Internet
Recruiting
Temporary Help
Agencies
© 2008 Cengage Learning. All rights reserved.
19–5
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.
© 2008 Cengage Learning. All rights reserved.
19–6
Job Descriptions
• Job Description
 A written summary of 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.
• Job Specification
 A list of the skills and abilities needed by the job
holder to successfully perform a specific job
 Aids in selecting the most qualified job applicant.
© 2008 Cengage Learning. All rights reserved.
19–7
Evaluating Prospects and Selecting Employees
Steps in Recruiting Employees
1
Using application forms
2
Interviewing the applicant
3
Checking references and background information
4
Testing the applicant
5
Requiring physical examinations
© 2008 Cengage Learning. All rights reserved.
19–8
Is an Idea a Good Investment Opportunity?
Market
Factors
Fatal
Flaws
Management
Capability
© 2008 Cengage Learning. All rights reserved.
Judging a
Business
Opportunity
Competitive
Advantage
Economics
19–9
Types of Training and Development
Orientation of
New Personnel
Development of
Managers and
Professionals
Training
and
Development
Training to
Improve Quality
Training of
Nonmanagerial
Employees
© 2008 Cengage Learning. All rights reserved.
19–10
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.
© 2008 Cengage Learning. All rights reserved.
19–11
19-1
Steps in Job Instruction Training
© 2008 Cengage Learning. All rights reserved.
19–12
Training and Developing Employees
(cont’d)
• Development of Managerial and Professional
Employees
 Determining the need for training
 Creating a plan for training
 Setting a timetable for training
 Providing employee counseling
© 2008 Cengage Learning. All rights reserved.
19–13
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
© 2008 Cengage Learning. All rights reserved.
19–14
Compensation and Incentives
for Employees (cont’d)
• Performance-Based Compensation Plans
 Keys to developing an effective bonus plan:
 Set
attainable goals.
 Include
 Keep
employees in planning.
updating goals.
© 2008 Cengage Learning. All rights reserved.
19–15
Stock Incentives
• Stock Options
• 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.
© 2008 Cengage Learning. All rights reserved.
19–16
Compensation and Incentives for
Employees (cont’d)
• Fringe Benefits
 Supplements to compensation designed to be
attractive and beneficial to employees.
 Benefits
 Small
are a substantial portion of payroll costs.
firms tend to provide fewer benefits.
 Small
firms are increasingly outsourcing the
administration of their benefits programs.
© 2008 Cengage Learning. All rights reserved.
19–17
19-2
Some Affordable Perks
1.
Give employees a paid day off on their birthday.
2.
Offer employees $100 a year to use for personal enrichment, such
as taking an art class, getting a massage, or attending a play—if it
makes them happy, they may be more productive.
3.
Bring in lunch for everyone on Fridays.
4.
Have employees select a “star employee” for his or her
contributions at the office, and reward that individual with an
extra day of vacation, a cash prize, or some other gift.
5.
Offer recruitment bonuses to those who refer potential employees
who stay with your company six months or longer—one good
employee can often lead to another.
6.
Pass on to employees perks accrued from the use of corporate
credit cards, including airline miles, tickets to fun events, and
other benefits.
Sources: Rich Mintzer, “20 Low-Cost Employee Perks,” Entrepreneur, December 8, 2006, http://www.entrepreneur.com/article/printthis/171630.html,
accessed December 12, 2006; and Kathleen Landis, “Blue Sky Thinking,” MyBusiness, June-July 2003, p. 39.
© 2008 Cengage Learning. All rights reserved.
19–18
Special Issues in HRM
• Employee Leasing
 The “renting” of personnel from an organization that
handles paperwork and administers benefits for
those employees
 Leasing
allows small firms to provide employee
benefits.
 Leasing
makes small firms subject to additional
government regulations.
 Professional Employment Organization
 A personnel-leasing
company that places
employees on its own payroll and then “rents”
them to employers on a permanent basis.
© 2008 Cengage Learning. All rights reserved.
19–19
Special Issues in HRM (cont’d)
• 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 “reasonable
accommodation” by firms in the employment of
disabled persons.
© 2008 Cengage Learning. All rights reserved.
19–20
Special Issues in HRM (cont’d)
•
Legal Protection of Employees (cont’d)
 Sexual harassment policy guidelines:
1. Establish clear policies and procedures
regarding sexual harassment in the workplace.
2. Require employees to report incidents of
harassment to management immediately.
3. Investigate any and all complaints of sexual
harassment fairly and thoroughly.
4. Take appropriate action against violators and
maintain claimant confidentiality.
5. If a lawsuit is to be filed, contact an attorney.
© 2008 Cengage Learning. All rights reserved.
19–21
Special Issues in HRM (cont’d)
• Legal Protection of Employees (cont’d)
 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.
© 2008 Cengage Learning. All rights reserved.
19–22
Special Issues in HRM (cont’d)
• Legal Protection of Employees (cont’d)
 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’
desire for organization and representation.
© 2008 Cengage Learning. All rights reserved.
19–23
Special Issues in HRM (cont’d)
• Formalizing of Employer-Employee
Relationships
 Employee handbook contents
 Expression
of company philosophy
 Recruitment
 Selection
 Training
 Vacations
 Grievances
 Discipline
 Performance reviews
© 2008 Cengage Learning. All rights reserved.
19–24
Special Issues in HRM (cont’d)
• 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
 Considerable need to train supervisors or
operative employees
 Poor employee morale
 Strong competition for personnel
© 2008 Cengage Learning. All rights reserved.
19–25
Key TERMS
•
•
•
•
•
•
•
•
•
headhunter
workforce diversity
job specification
behavioral interview
validity
reliability
Job Instruction Training
fringe benefits
employee stock
ownership plans (ESOPs)
© 2008 Cengage Learning. All rights reserved.
• employee leasing
• professional employment
organization (PEO)
• Civil Rights Act
• Occupational Safety and
Health Act
• Fair Labor Standards Act
(FLSA)
• Family and Medical Leave
Act (FMLA)
19–26