Current Trends in HR
Kim Hester, Ph.D.
Professor of Management
Arkansas State University
Current Trends
Rising cost of
benefits,
especially
health care
Rising
Compensation
Costs
Competitive
pressure on
increasing
employee
wages
Current Trends
Managing
talent
Developing
Human
Capital
Higher
Ethical
Standards
Labor
Shortages
Current Trends
Use of
technology to
communicate
with employees
Evolution of new
technologies
A move toward
single software
platforms
Harnessing New Technology
Current Trends
Increased
diversity in the
workforce
Changing work
patterns – 24/7
availability, etc.
Managing
the
Changing
Workforce
Increased
vulnerability of
intellectual
property
Work-life
balance
Rising Compensation Costs
1.
Rising cost of benefits, especially health
care
Great News: 2008
Health care costs for most employers is expected
to be around 7%, a moderate increase compared
to previous years
Employer Responses
Aggressive health care initiatives, such as
higher deductibles, co-pays, and employee
contribution levels.
• 88% of employees are required to pay some of
the insurance premium out of their own
pockets.
• The employee share rose from 14.0% in 1992
to 22.1% in 2005.
Source: Economic Policy Institute, 2008
Employee Contributions for Health Care
Employer Responses
Changes or elimination of employee
health care coverage
Statistic: Employer coverage has
declined from 61.5% in 1989 to 58.9% in
2000 and down to 55.9% in 2004 (the
latest aggregate data available)
Source: Economic Policy Institute, 2008
Employer Responses
Focus on changing employee behaviors
 Wellness programs
 Smoking cessation efforts
 Education of employees on health care options
and associated costs
Employer Responses
 Some employers have been holding their health care
costs to a 1% increase.
 They're doing it by taking a multipronged approach, with
programs to prod employees to take more responsibility
for their health and to make more informed health care
decisions.
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
 Successful employers are aggressively pushing
consumer directed health plans (CDHPs)
Combines a high deductible insurance policy with a
tax advantaged health savings account
 Firms are setting the premiums at 30% below
traditional plans to encourage participation
Participation hit 15% this year, up from 10% in 2007
and likely to hit 20% in 2008
Source: Watson Wyatt Worldwide and the National Business Group on
Health
Employer Responses
 Saving money by providing free drugs and supplies for
chronic diseases (e.g., asthma, diabetes) that are known
to lead to costly complications.
 Goal is to get patients to stick to their treatment schedules;
often tied to classes or coaching
 Upcoming survey from Hewitt Associates indicates nearly 20%
of firms do this now, and 47% are considering doing so in the
future
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
 Paying the full amount of common preventive
services can also help reduce costs
These include annual physicals, mammograms, prostate
screenings, flu shots, colonoscopies and prenatal office
visits
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
 Sending the sickest employees to the best doctors is
gaining as a strategy
 Dubbed by some as a 20-20 approach - employers and their health plans
use data to identify physicians rated in the top 20% for effective
treatments and match them with the 20% of employees who most need
care.
 Employers provide financial incentives, (e.g., lower copayments) as
incentives to use the top providers.
 Eventually, firms will try predictive modeling to identify the sickest 20% of
employees so steps can be taken today to "get ahead of the curve”
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
 Increasing financial penalties for employees that poorly
manage their health
Many companies continue to reward workers who take
health risk assessments and participate in health
management programs, while punishing those who do not
Employers may deny a worker access to higher-benefit
plans if worker declines participation in wellness programs
Source: Watson Wyatt Worldwide and the National Business Group on
Health
Employer Responses
 On-site medical clinics are growing in popularity
 Large companies staff clinics with own employees while
smaller firms contract out to nearby clinics
Help provide primary care to workers at low or no cost
On-site clinics lessen time employees spend away from work.
On-site clinics expanding to include rehab services, dentistry,
X-ray and lab work
Forms inviting specialists to come on-site and offer their
services.
Clinics moving into more active management of workers'
health conditions
Source: Watson Wyatt Worldwide and the National Business Group on Health
Employer Responses
Putting health care into employee’s hands
As health insurance costs continue to rise,
employers are adopting a controversial new
approach: ending group coverage and giving
employees $50 to $200 or so a month to help buy
their own health care
Source: USA Today, March 26, 2008
Rising Compensation Costs
2. Competitive pressure on increasing
employee wages
Linking pay to organizational goals,
employee productivity, and labor market
norms
Pay-for-Performance Programs
Performance Management
Success of Programs
• Pay for Performance Works When:
It is measurable and objective
There are clear expectations
There is commitment to training and support
Flexibility for input
Source: workforce.com 5/05
Failure of Programs
• Pay for Performance Falls Short When:
It pits employees against each other
It pushes one outcome to the detriment of the
others
It is so subjective it opens the organization and
managers to allegations of bias
Source: workforce.com 5/05
Key Drivers of Success
 Better communication of performance standards with all
levels of the organization
 Clearly Specify Incentive Measures
Organizational measures:
• service quality
• teamwork
• income growth
• cost savings
Individual measures:
• based on established performance goals within
individual areas of responsibility
Source: JE Rocco. http://danenet.wicip.org/snpo/
Challenges in Implementing Performance-Based Pay
•
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Pervading Attitude of Equality
Custom of Cost of Living Approach
Challenge of Performance Measurement
Discomfort with Judging Performance
Weaknesses in Data Collection
Inadequacy of Funding Resources
Source: Performance-Based Pay Plans Family Services of Western
Pennsylvania; Marc Andrews Kathy Yarzebinski; Catherine
Greeno;Christopher Gjesfjeld; 2006
Employee Productivity and Performance Management
Phase 1
•
Business strategy—including its mission, vision and objectives, and
specific outcomes required to achieve the overall strategy—are defined.
 Goals and plans for how to measure achievement must be identified.
 Outputs and measures are defined
 Data collection and analysis processes and procedures are
developed and implemented
 Most importantly—employees come to understand their individual
roles and responsibilities with respect to performance
measurement
 Employees are given the fundamental information, resources,
competencies, and motivation to ensure their successful execution.
Employee Productivity and Performance
Management
Phase 2
 Data that informs areas of success and challenge for the
organization are collected and analyzed
 Specific elements and factors that contribute to successes or
challenges along with new and/or modified information
needs and lessons learned are identified
Employee Productivity and Performance Management
Phase 3
 Solutions to address identified challenges are developed and
implemented, along with mechanisms to ensure the continuation of
program or organizational successes
 Performance measurement systems and processes may be modified as
needed to ensure that information collected through the performance
measurement process is timely, relevant, and sufficient—steps that cycle
back to performance planning
 According to the U.S. Government Accountability Office (GAO), federal
managers reported having more performance measures in 2003 than in
1997, but they also reported that use of performance data for program
management activities has essentially remained unchanged
Employee Productivity and Performance Management
Phase 4
• Several commonly used methodologies for performance
measurement
 Behavior-Based Approaches - These approaches tend to
use specific performance factors to evaluate staff.
1. Quantitative -- use of numbers or frequencies of
specific behaviors observed or reported
2. Qualitative -- use of subjective impressions of
raters
Behavior-Based Approaches
 Behaviorally anchored scales
Broad categories of practice are identified, ideally
through collaborations between supervisors and staff.
Specific job behaviors are then linked to the categories.
Measures of staff member behavior are rated on a scale in
relation to specific behavior items, such as "understands
department functions."
Behavior-Based Approaches
 Behavioral frequency scale
 Desired behaviors are described and the staff member
is evaluated on how often those behaviors occur
Behavior-Based Approaches
 Weighted checklist - method provides a list of
performance related statements that are
weighted
Staff members are judged on a scale indicating
the degree to which the statement accurately
describes performance
Behavior-Based Approaches
 Forced-choice method - list of performance
related statements about job performance are
evaluated on how well they discriminate
among staff and how important they are to
unit or institutional performance
Other Approaches to Measuring Performance
 Results-Focused Approaches
 Management by Objectives (MBO) and
Accountabilities and Measures
Source: Grote, D. (1996). The complete guide to performance appraisal. New
York: American Management Association.
Core Elements in MBO
 Formation of trusting and open communication throughout the
organization
 Mutual problem solving and negotiations in the establishment of
objectives
 Creation of win-win relationships
 Organizational rewards and punishments based on job-related
performance and achievement
 Minimal uses of political games, forces, and fear
 Development of a positive, proactive, and challenging
organizational climate
Source: Grote, D. (1996). The complete guide to performance appraisal.
New York: American Management Association.
Steps in MBO Process
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Formulate long-range goals and strategic plans
Develop overall organizational objectives
Establish derivative objectives for major operating units
Set realistic and challenging objectives and standards of performance for
members of the organization
Formulate action plans for achieving the stated objectives
Implement the action plans and take corrective action when required to
ensure the attainment of objectives
Periodically review performance against established goals and objectives
Appraise overall performance, reinforce behavior, and strengthen motivation.
Begin the cycle again
Source: Grote, D. (1996). The complete guide to performance appraisal. New York:
American Management Association.
Team Performance Measurements
 Team appraisal matrix - team members are listed on a vertical
dimension, and specific tasks on the horizontal
• Such an arrangement reflects individual performance, and
collectively reflects the overall team performance
Source: Creamer, D.G., & Janosik, S. M. Performance appraisal: Accountability
that leads to professional development. In S. M. Janosik, D. G. Creamer, J.
B. Hirt, R. B. Winston, Jr., S. Saunders, & D. Cooper (Eds.), Supervising new
professionals in student affairs. New York: Brunner-Rutledge.
Success Factors in Performance Management
Systems
 Success in obtaining meaningful performance data and
using this data to manage, and institutionalizing these
practices so that they become ingrained in the
organization
This depends on several factors:
 1. Presence of a culture of accountability within the
organization
 2. Leadership demonstrates commitment to managing for
results.
 3. Staff engages and invests in the process, which leads to
feelings of empowerment and continuity.
Points to Remember
 Before implementing a performance measurement or
management system, see if other areas of your organization have
implemented their own system
 Anticipate and consider unintended consequences of measuring
performance
 Reinforced behavior will be repeated, so carefully consider what
behaviors should be emphasized (e.g., individual achievements
versus team achievements)
 Communication of performance information among relevant
stakeholders crucial to the success of any performance
measurement or management system
Current Trends
Developing Human Capital
1. Managing talent – recruitment, development, and
retention of the best workers
 Employers need to find innovative ways to “brand”
themselves, setting them apart from competitors and
becoming an “employer of choice”
 As talent becomes scarce, development of current
employees for promotional opportunities
Developing Human Capital
2. Labor shortage – finding the right talent
 Statistic: By 2020, gap between available and required
skilled workers is projected to be 14 million
 Use of e-recruiting and non-traditional labor pools
 Establishing selection system geared to retention: better
skills assessment, knowledge, and fit for jobs
 Source: Kaihla, P. Business 2.0, 4(8), 97-104.
Developing Human Capital
3. Higher ethical standards
 Greater focus on trust and integrity at all levels
 Regulatory compliance issues (i.e., SarbanesOxley Act)
Current Trends
• Harnessing New Technology
1. Use of technology to communicate with
employees
 Company intranets
 E-Newsletters
 Company emails
Harnessing New Technology
2. A move toward single software platforms
 Integrated HRIS
 PeopleSoft
 SAP
 Oracle
Harnessing New Technology
 Specialized applications
 Succession planning
 Applicant tracking
 Job evaluation
 Employee performance evaluation
 Grievance handling
Harnessing New Technology
 Perhaps most significant development is the use of
organizational intranets
An intranet is internal network that makes use of World
Wide Web technology (browsers, servers, etc.) to gather
and disseminate information within the firm
Intranets may be linked to the external Internet, but are
secured so that only authorized users can access
information on internal components
Harnessing New Technology
3. Evolution of new technologies
• Employee Self-Service and Data Exchange
 Capability to maintain personal data
 View context-specific information
 Initiate benefits transactions
 Internet-based tools are quickly becoming the preferred method for
employees to execute benefits transactions
Benefits of Automated Benefit Administration
• Reducing and eliminating extensive manual efforts formerly
needed to:
 Distribute, collect, and process forms
 Test programming required to export/import data
 Administer the periodic data exchanges
 Reconcile data
 Resolve employees’ problems resulting from the time lag between
data collection and processing
Source: Benefits Perspectives: Current Issues in Employee – Winter 20022003; Milliman USA
Current Trends
Managing the Changing Workforce
1. Increased diversity in the workforce
 Creating workplace that respects and includes differences
 Recognizing unique contributions individuals with
differences can make
 Creating work environment that maximizes potential of all
employees
Managing the Changing Workforce
2. Work-life balance
 Employees experiencing burnout due to overwork and
increased stress – in nearly all occupations
 Rise in workplace violence, increase in levels of absenteeism
as well as rising workers’ compensation claims
 Causes range from personal ambition and the pressure of
family obligations to the accelerating pace of technology
Source: Center for Work Life Policy
Work-Life Balance
 According to study by Center for Work-Life Policy, 1.7 million
people consider their jobs and work hours excessive
 50% of top corporate executives leaving current positions
 64% of workers feel work pressures are “self-inflicted”, and
taking a toll
 In the US, 70%, and globally, 81%, say jobs are affecting their
health.
 Between 46% and 59% of workers feel stress is affecting
their interpersonal and sexual relationships.
 Males feel there is stigma associated with saying “I can’t do
this”
Managing the Changing Workforce
3. Structural shift from the manufacturing to the
service sector
 Growth in part-time employment
 Rising prominence of women in the workforce
 Gradual ageing of labor force with fewer young
people entering workforce and participation rates
among older workers increasing
 Growing importance of temporary employment and
self employment
 Adoption of flexible working practices, such as job
sharing and the increasing opportunity to work from
home.
Conclusions
Exciting time for HR professionals
More emphasis on cost containment and control
Focus on employee responsibility and
involvement at work
Greater use of technology in communication with
employees
More flexible patterns of work