Week 7; Managing human resources (Chapter 6) Legislation e.g. the Fair Work Act 2009

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1 1 Week 7; Managing human resources (Chapter 6) Ø Human resource management (HRM) involves having the right number of the right people in the right place at the right time. Functions of the HRM process include; (1) Ensuring that competent employees are identified and selected; (2) Providing employee s with up- to- date knowledge and skills to do their jobs; and (3) Ensuring that the organisation retains competent and high- performing employees. Ø Environmental factors that directly influence the HRM process include; trade unions; demographic trends; and governmental laws and regulations in relation to employment relations. Although regulations have significantly helped to reduce employment discrimination and unfair employment practices, to ensure a fair, equitable, safe and healthy environment, they have, at the same time, reduce management s discretion over HR decisions. Consequently, managers need to constantly scan their regulatory environment and keep abreast of legal requirements. Legislation relating to HRM in Australia deals mostly with how employment conditions can be determine (e.g. the Fair Work Act 2009), ensuring that conditions are fair and equitable rather than discriminatory (e.g. Disability Discrimination Act 1992, Equal Employment Opportunity Act 1987, Sex Discrimination Act 1984), and providing a safe workplace that protects individuals (e.g. Crimes Act 1914, Privacy Act 1988). Ø The first phase of the HRM process involves 3 tasks; employment planning, downsizing, and recruitment and selection. 1. Employment planning is the process by which managers ensure that they have the right number and kinds of people in the right places at the right times, people who are capable of effectively and efficiently completing those tasks that will help the organisation achieve its overall goals. This process can be condensed into 2 steps; (i). Assessing current human resources and future resource needs; A human resource inventory contributes to this process by determining the talents, knowledge and skills currently available within the organisation. It details important employee information such as; name, education, training, skills, language spoken, capabilities etc

2 2 Job analysis determines the organisation s human resource needs by determining the kinds or skills, knowledge and attitudes needed to successfully perform each job. This information is then used to develop or revise job descriptions and job specifications. A job description is a written statement that typically portrays job content, environment, and conditions of employment. The job specification states the minimum qualifications that a person must possess to perform a given job successfully. It focuses on the person and identifies the knowledge, skills and attitudes needed to do the job effectively. The job description and job specification are important documents when managers begin recruiting and selecting. (ii). After they have assessed both current capabilities and future needs, managers are able to estimate where the demand for human resources meets supply. A plan can then be developed that matches theses estimates with forecasts of future labour supply. 2. Downsizing has become a relevant strategy for meeting the demands for a dynamic environment. This may be in the form of; (i). Reduced workweeks (ii). Job sharing (iii). Transfers (iv). Attrition (v). Early retirements (vi). Redundancies (vii). Firing 3. If one ore more vacancies exist, they can use the information gathered through job analysis to guide them in recruitment that is, the process of locating, identifying and attracting capable applicants. The source that is used should reflect the local labour market, the type or level of position, and the size of the organisation. Some examples include; Source Advantage Disadvantage Internal searches Low cost Build employee morale Candidates are familiar with Limited supply May not increase proportion of protected group of employees organisation Advertisement Wide distribution can be targeted to specific groups Generate many unqualified candidates Employee referrals Public employment agencies Private employment agencies School placement Temporary help services Employee leasing and independent contractors Knowledge about the organisation provided by current employees Can generate strong candidates because a good referral reflects on the recommender Free or nominal cost Wide contacts Careful screening Short- term guarantees often given Large, centralized body of candidates Fill temporary needs Fill temporary needs but usually for more specific, longer- term projects May not increase the diversity and mix of employees Candidates tend to be lower skilled, although some skilled employees available High cost Limited to entry- level positions Expensive Little commitment to an organisation other than current project

3 3 Once the recruiting effort has developed a pool of applicants, the next step in the HRM process is to determine who is best qualified for the job. This is known as the selection process. Reliability addresses whether a selection device measures the same characteristic consistently. Any selection device that a manager uses such as applicant forms, tests, interviews or physical examinations must also demonstrate validity. Validity is based on a proven relationship between the selection device used and some relevant measure. Managers can use a number of selection devices to reduce accept and reject errors. The best- known devices include written and performance- simulation tests and interviews. (i). Typical written tests include test of intelligence, aptitude, ability and interest. However, they were frequently characterized as discriminatory, and many organisations could not validate that their written tests were job related. (ii). Performance- simulation tests are based on job analysis data and, therefore, should more easily meet the requirement of job relatedness than do written tests. The advantage of performance simulation over traditional testing methods is that simulation content is essentially identical to job content, providing a better predictor of short- term job performance and minimizing potential employment discrimination allegations. Additionally, because of the nature of their content and the methods used to determine content, well- constructed performance- simulation tests are valid predictors. (iii). The interview, along with the application form, is an almost universal selection device. Interviews can be reliable and valid selection tools, but too often they re not as all kinds of potential biases can creep into interviews if they re not well structured and standardized. One modification to interviews that s now popular is the behavioural or situation interview. This type of interview provides an opportunity for interviewers to see how a potential employee will behave and how he or she will react under stress. Ø Managers should consider a realistic job preview (AJP), which includes both positive and negative information about the job and the company. Research indicates that applicants who have been given a realistic job preview hold lower and more realistic expectations for the jobs they will be performing and are better able to cope with the frustrating elements of the job than are applicants who have been given only inflated information. The result is fewer unexpected resignations by new employees. Ø New employees must be acclimated to the organisation s culture and be trained and given the knowledge to do the job in a manner consistent with the organisation s goals. To achieve this, HRM goes through its second phase, using orientation and training. 1. The major goal of orientation are to reduce the initial anxiety all new employees feel as they begin a new job; to familiarize new employees with the job, the work unit and the organisation as a whole; and to facilitate the outsider- insider transition. Job orientation outlines their specific duties and responsibilities as well as how his or her performance will be evaluated Work unit orientation familiarizes an employee with the goals of the work unit, makes clear how his or her job contributes to the unit s goals and provides an introduction to his or her coworkers. Finally, organisation orientation informs the new employee about the organisation s goals, history, philosophy, procedures and rules. Successful orientation, whether formal or informal, results in an outsider- insider transition that makes the new member feel comfortable and fairly well- adjusted, lowers the likelihood of poor work performance and reduces the probability of a surprise resignation by the new employee only a week or two into the job. 2. Employee training is a learning experience that seeks a relatively permanent change in employees by improving their ability to perform on the job. Many different types of training methods are available. For the most part, they can be classified as on- the- job or off- the- job training. On- the- job training methods include;

4 4 (i). Job rotation; lateral transfers allowing employees to work at different jobs, thus providing good exposure to a variety of tasks (ii). Understudy assignments; working with a seasoned veteran, coach or mentor provides support and encouragement from an experienced worker. Off- the- job training methods include; (i). Classroom lectures; that are designed to convey specific technical, interpersonal or problem- solving skills (ii). Films and videos; to explicitly demonstrate technical skills that are not easily presented by other training methods (iii). Simulation exercises; learning a job by actually performing the work (or its simulation). This may include case analyses, experiential exercises, role- playing and group interaction (iv). Finally, vestibule training; involves learning tasks on the same equipment that one actually will use on the job but in a simulated work environment Ø To ensure training is effective, it must be evaluated. Typical methods include reactions from participants or managers, but whilst easy to acquire, are the least valid. Beyond general reactions, training must also be evaluated in terms of how much the participants learned, how well they are using their new skills on the job, and whether the training program achieved its desired results. With this information, organisations can determine their return on investment in training. Ø Once an organisation has invested significant funds in recruiting, selecting, orienting and training employees, it wants to keep them. Two HRM activities that play a role in this are managing employee performance and developing an appropriate compensation and benefits program. 1. A performance management system is a process of establishing performance standards and evaluating performance in order to arrive at objective HR decisions. In organisations, the formal means of assessing the work of employees is through a systematic performance appraisal process. - The written essay entails the manager writing an evaluation of the employee s performance. It is simple to use and popular as it does not require complex forms or extensive training to complete. However, a good or bad appraisal may be determined as much by the evaluator s writing skills as by the employee s actual level of performance. - The use of critical incidents focuses the evaluator s attention on critical or key behaviours. The appraiser writes down anecdotes describing whatever the employee did that was especially effective or ineffective. The key here is that specific behaviours are cited, not vaguely defined personality traits. However, this method is time- consuming and lacks quantification. - Graphic rating scales list a set of performance factors such as quantity and quality of work, job knowledge, cooperation, loyalty, attendance, honesty and initiative. The evaluator then goes down the list and rates each factor on an incremental scale. This method, however, does not provide depth of job behaviour assessed. - An approach that ahs received renewed attention involves behaviourally anchored rating scales (BARS). These scales combine major elements from the critical incident and graphic rating scales approach. The appraiser rates an employee according to items along a numerical scale, but the items are examples of actual behaviour on a given job rather than general descriptions or traits. This method, however, is also time- consuming, as well as difficult to develop measures. - A 360- degree appraisal seeks performance feedbacks from such sources as the person being rates, bosses, peers, team members, customers and suppliers. Research studies into the effectiveness of 360- degree performance appraisals report positive results including more accurate feedback, empowering employees, reducing the subjective factors in the evaluation process and developing leadership in an organisation. However, it is extremely time- consuming. The methods previously identified have one thing in common. They require us to evaluate employees on the basis of how well their performance matches established or absolute criteria. - - Multiperson comparisons, on the other hand, compare one person s

5 5 performance with that of one ore more individuals. The 3 most popular forms of this methods are; the group- order ranking which requires the evaluator to place employees into a particular classification; the individual ranking approach which requires the evaluator to list the employees in order from highest to lowest; and the paired comparison approach where each employee is compared with every other employee in the comparison group and rated as either the superior or weaker member of the pair. After all paired comparisons are made, each employee is assigned a summary ranking based on the number of superior scores he or she achieved. This however, would be unwieldy with large number of employees. - Finally, in management by objectives (MBO), employees are evaluated by how well they accomplish a specific set of objectives that are critical to the successful completion of their job. Although time- consuming, because MBO emphasizes ends rather than means, this appraisal method allows managers to choose the best path for achieving their goals. If an employee s performance is not up to par, discipline may be taken. This is an action taken by a manager to enforce an organisation s standards and regulations. Alternatively, the means of employee counselling may be used. This is a process designed to help employees overcome performance- related problems. 2. Finally, developing an effective and appropriate compensation system is an important part of the HRM process. It can help attract and retain competent and talented individuals who help an organisation accomplish its mission and goals. In addition, an organisation s compensation system has been shown to have an impact on its strategic performance. The goals of compensation administration are to design a cost- effective pay structure that will attract and retain competent employees and to provide an incentive for these individuals to exert high energy levels at work. Compensation administration also attempts to ensure that all employees will perceive pay levels, once determined, as fair. This is typically justified by the higher the skills, knowledge and abilities, and the greater the authority and responsibility, the higher the pay is. Many organisations are using alternative approaches to determine compensation including skill- based pay and variable pay. Skill- based pay systems reward employees for the job skills and competencies they can demonstrate. Under this type of pay system, an employee s job title doesn t define his or her pay category, skills do. Research shows that these types of pay systems tend to be more successful in manufacturing organisations, than in service organisations and in organisations pursuing technical innovation. On the other hand, many organisations use variable pay systems, in which an individual s compensation is contingent on performance, for example, real estate agents. Lastly, when an organisation designs its overall compensation package, it has to look further than just an hourly wage or annual salary. It has to take into account another element, employee benefits, which are nonfinancial rewards designed to enrich employee s lives. The benefits offered by an organisation vary widely in scope and may include paid time off from work, life and disability insurance, retirement programs and health insurance. Contemporary issues facing HRM managers include; Ø Downsizing is the planned elimination of jobs in an organisation, and is an important issue in HRM. Many organisation have done a fairly good job of helping layoff victims by offering a variety of employment services, psychological counselling, support groups, severance pay, extended health insurance benefits and detailed communications. Although some individuals react negatively to being laid off, the assistance offered reveals that the organisation does care about its former employees. Some organisations have used downsizing as the spark to implement increased employee participation programs such as empowerment and self- manager work teams. In short, to keep morale and productivity high, managers should make every attempt to ensure that those individuals still working in the organisation know that they re valuable and much- needed resources.

6 6 Ø Improving workforce diversity requires managers to widen their recruiting net. To increase diversity, managers are increasingly turning to nontraditional recruitment sources such as women s job networks, over- 50 clubs, urban job banks, disabled people s training centres, ethnic newspapers and gay rights organisations. Once a diverse set of applicants exists, efforts must be made to ensure that the selection process does not discriminate. Moreover, applicants need to be made comfortable with the organisation s culture and be made aware of management s desire to accommodate their needs. Finally, this could be improved through increasing diversity awareness with current staff, and providing a smooth transition and a customized orientation. Ø Sexual harassment is a serious issue in both public and private sector organisations. There are 3 major reasons why sexual harassment is an important issue for managers to understand and handle effectively. The first reason is that under the Sex Discrimination Act, employers are liable for acts of sexual harassment by their employees unless the employer has taken all reasonable steps to prevent it from taking place. The second reason is that sexual harassment creates a risk of costly lawsuits. The third reason is that sexual harassment creates an unpleasant work environment for organizational members and undermines their ability to perform their jobs. Sexual harassment results in millions lost in absenteeism, low productivity and turnover. Many organisations now provide harassment training to employees to help them learn how to identify, avoid and deal with harassing behaviour. Training programs usually include group discussions, role- play situations and coaching sessions. Group discussions allow participants to consider different perspectives on harassment issues. Role- plays provide insights into harassment situations and ways of dealing with them. During coaching, facilitators work with participants to help them reflect about their understanding of harassment and develop strategies for handling harassment situations. Ø Finally, although career development has been an important topic in management courses for years, there have been dramatic changes in the concept. Historically, companies tended

7 to assume responsibility for their employee s careers. Career development programs were designed to help employees advance their work lives within a specific organisation, as well as a way to attract and retain highly talented people. These days, employees increasingly expect and are expected to take responsibility for their own careers. This idea of increased personal responsibility for one s career has been described as a boundaryless career. The shift to employee- managed careers has several implications for organisations. First, organisations need to adopt a more collaborative approach to career planning. Career planning is the process of matching career goals and individual capabilities with opportunities for achieving those goals. Employees looking for growth and development opportunities will look inside and outside their current workplace. Helping employees plan their careers gives organisations the chance to encourage their staff to pursue career goals within the organisation. Second, organisations should think about the big picture of an employee s career. Sometimes, letting an employee go and develop themselves elsewhere means they can bring fresh perspectives back to the organisation. Letting staff pursue opportunities by taking leave without pay provides a win- win situation; the employee develops their talents and the employer sources of employee skills. Employees with the desired capabilities might have developed them by working for volunteer organisations, charities, not- for- profits, and aid organisations so employers should furthermore consider nontraditional career pathways as potential sources of valuable staff. 7