Similar to the organizational structure, supporting functions do not play the initial role in HRM but are important for the correct functioning of all the main functions.
There are some specific HR roles or HRM supporting functions:
1. Labor Relationships
3. Health and Safety
1. Labor Relationships
Having good employee relationships means providing fair and consistent treatment to all employees so that they will be committed to the organization.
Psychological contract —Employees expect to be treated fairly and ethically in return for providing their employer with a fair and reasonable amount of work.
What is the role of the manager in employee relationships?
What is the role of the HR manager?
Managers and supervisor in employee relationships:
evaluate, reward, and discipline employees
in line with the company’s Employee Relations Philosophy (Policy)
Be truthful and avoid white lies
Meet with employees
Ensure that employees are treated equitably
Control to clear standards
Demonstrate respect and recognition toward employees
Employee relations representatives from the HR department:
ensure that employment policies are being fairly and consistently administered within the company.
consult on specific employee relations problems with both supervisors and employees.
Effective communications <=> Feedback
downward communication – allows managers to implement their decisions and to influence lower employees (in the organizational hierarchy).
upward communication – allows employees at lower levels to communicate their ideas and feelings to higher-level decision-makers.
Informal communications also called “the grapevine.” Information exchanges without a planned agenda that occur informally among employees.
employee feedback program. A program designed to improve employee communications by giving employees a voice in policy formulation and making sure that they receive due process on any complaints they lodge against managers.
employee assistance program. (EAP). A company-sponsored program that helps employees cope with personal problems that are interfering with their job performance.
employee recognition program. A program that rewards employees for their ideas and contributions.
multimedia technology A form of electronic communication that integrates voice, video, and text, all of which can be encoded digitally and transported on fiber-optic networks.
Telecommuting is also called “remote work”, “telework”, or “teleworking”. A person who telecommutes is known as a “telecommuter,” “teleworker,” and sometimes as a “home-sourced,” or “work-at-home” employee. (Wikipedia)
Challenges of telecommuting: feeling out of the team, need a high level of self-control, difficulties in on-line communications, technological problems.
Internal Marketingis used to build enthusiastic commitment among the organisation’s middle managers, front-line managers and employees. Note! Employees are possible customers. Employees have direct contact with customers.
Internal marketing strategy:
Hiring and training
Monitoring and rewards
Example, Intel Commercials
Another good example is Starbucks, all employees are called partners, and the waiters at Starbucks are called baristas to make them feel exceptional and proud about their workplace, not to feel just simple service worker.
Watch the interview “How Starbucks Trains Customers to Behave”>>>, Anne Morriss, managing director of the Concire Leadership Institute, explains how the coffee giant increased efficiency and satisfaction by treating customers like employees. Like not-payed employees. (source https://hbr.org/video/2226726792001/how-starbucks-trains-customers-to-behave)
A HRIS (human resource information system) or human resource management system (HRMS), is basically an intersection of human resources and information technology through HR software. This allows HR activities and processes to occur electronically. HRIS is
not only useful as a database of current workers, but also for contingent (or seasonal workers).
HRIS also rise up some ethical issues related with the treatment of personal information.
personnel file – A file maintained for each employee, containing the documentation of critical HR-related information, such as:
disciplinary actions, and
The company should guarantee the safety and secrecy of this information.
3. Workplace Safety and Health
Dust from sugar is highly combustible, an explosion caused by sugar dust killed 14 workers at the Imperial Sugar refinery in 2008. Source: Maksud/Shutterstock
It is difficult to be definitive in terms of identifying the number of people who may be HIV positive or have AIDS within the workplace.
Workplace Safety and the Law
There are two sets of workplace safety laws:
(1) workers’ compensation, an employer-funded insurance system that operates at the state level
(2) the law that mandates safety standards in the workplace.
Comprehensive Safety Programs are well-planned efforts in which management
(1) involves employees and carefully considers their suggestions,
(2) communicates safety rules to employees and enforces them,
(3) invests in training supervisors to demonstrate and communicate safety on the job,
(4) uses incentives to encourage safe behaviors and discipline to penalize unsafe behaviors, and
(5) engages in regular self-inspection and accident research to identify and correct potentially dangerous situations.
The health program is the range of activities with the focus on employee health improvement provided from the organization.
Benefits for EMPLOYEES:
improving physical health
improving focus at work
increasing job satisfaction
bettering relations with co-workers and supervisors
Benefits for EMPLOYERS:
attract and retain good employees, reduce turnover
job satisfaction, employee morale brings a stronger organizational commitment
enhance corporate image
Diversity – Human characteristics that make people different from one another.
Why Manage Employee Diversity? Management of Diversity – the set of activities involved in integrating nontraditional employees (for ex. minorities) into the workforce and using their diversity to the firm’s competitive advantage.
diversity management = inclusiveness
Better problem solving
Greater system flexibility
Diversity training programs – programs that provide diversity awareness training and educate employees on specific cultural and sex differences and how to respond to these in the workplace.
What is Total compensation? Total compensation is the package of quantifiable monetary rewards an employee receives for his or her labour.
The Elements of Total Compensation:
● Base Compensation,
● Pay Incentives,
● Indirect Compensation/Benefits
Base compensation or Fixed Payis the payment an employee receives on a regular basis, either in the form of a salary or as an hourly wage (for example, a weekly or monthly paycheck). Pay-Per-Performance or Variable Pay is a program designed to reward employees for good performance (including bonuses and profit-sharing). Indirect Compensation or Benefits (for example, health insurance, vacations, and unemployment compensation).
Additionally, to Total Compensation (monetary) the company can also apply non-monetary Rewards to motivate employees (such as contacts, recognition programs and career opportunities).
Challenges of Managing Compensation:
How to optimize the company’s costs but get adequate performance?
How to motivate employees for better performance?
How to rich the balance between employee dedication and compensation (internal and external equity)?
How to increase job satisfaction and reduce turnover?
Thus, developed correctly, the Compensation System includes Monetary Total Compensation and non-monetary Total Rewards. The synergy of monetary and non-monetary compensations help the company to find a balance between expected performance and cost optimization, from one side, and employee work-life balance and motivation, from the other side.
There are several factors which may determine the Compensation Plan for the specific job position, such as level of responsibility, strategic relevance, the ration demand/supply in the market, cost of living for international HR, tenure or the longitude of an employee working in the company, etc.
2. Designing a Compensation System
While designing a Compensation System, the company take into consideration the 9 Criteria major criteria: 1. Internal Vs. External Equity .
Will the compensation plan be perceived as fair within the company, or will it be perceived as fair relative to what other employers are paying for the same type of labour?
Fair-pay is a payment that employees generally view as equitable based on:
● internal equity -the perceived fairness of the pay structure within a firm.
● external equity – the perceived fairness in payment relative to what other employers are paying for the same type of labour.
THE DISTRIBUTIVE JUSTICE MODEL (input/outcome ratio) states that employees exchange to the firm :
○ their contributions or input (skills, effort, time, etc.)
○ for a set of outcomes or outputs (compensations from the firm)
(1) analysing their own input/outcome ratio and
(2) comparing this input/outcome ratio with that of other employees within the firm whose job demands are similar to their own.
fairly paid is when –> employee’s input/outcome ratio = other employees input/outcome ratio
THE LABOR MARKET MODEL states that:
● the wage rate for any given occupation
● is set at the point where
● the labour supply = the labour demand
● in the marketplace.
This means that in the majority of situations:
Low demand for labour → fewer employers is willing to pay to → lower the pay workers are willing to accept for a given job
High supply of labour → lower the wage rate for that job.
2. Fixed Vs. Variable Pay
Will compensation be paid monthly on a fixed basis ?
Will it fluctuate depending on pre-established criteria?
a fixed basis—through base salaries
a variable pay – payment depending on performance or company profits
fixed pay as a percentage of total compensation continues to decline, and firms are asking employees to share more risks with them
3. Performance Vs. Membership
Will compensation emphasize performance and tie pay to individual or group contributions? – Progress by doing a job better(performance concept)
Will it emphasize membership in the organization—logging in a prescribed number of hours each week and progressing up the organizational ladder? – Progress by moving up in the organization (membership concept)
Will compensation be based on how the company values a particular job position? – it means that all job positions will the same title will have equal payments (for ex., all cooks in pizzeria get the same per-hour payment)
Will it be based on how much skill and knowledge an employee brings to that job? – it means the “more hats an individual worker can wear”, the more pay he or she will receive (for ex., the cook who has studied at Michelin chef school get an extra payment if to compare to other cooks in a pizzeria).
The job-based compensation plan can be applied:
(1) to achieve internal equity – the comparative relative value of jobs throughout the firm,
(2) to achieve external equity – salary data comparative to a benchmark,
(3) to achieve individual equity – an individual’s positioning of his/her experience, seniority, and performance established within the pay range.
A job-based policy better when:
● Technology is stable.
● Jobs do not change often.
● Employees do not need to cover for one another frequently.
● Much training is required to learn a given job.
● Turnover is relatively low.
● Employees are expected to move up through the ranks over time.
● Jobs are fairly standardized within the industry.
Individual Pay plan rewards employees for acquiring
depth skills (learning more about a specialized area),
horizontal or breadth skills (learning about more areas),
vertical skills (self-management ).
Knowledge/skills based-pay plan has the following advantages and disadvantages:
(+) Greater motivation
(-) higher labour costs
(+) Reduces turnover
(-) loss of labour specialization
(-) difficulties in selection
(-) chaotic workplace
Individual-based compensation better when:
● The firm has a relatively educated workforce with both the ability and the willingness to learn different jobs.
● The company’s technology and organizational structure change frequently.
● Employee participation and teamwork are encouraged throughout the organization.
● Opportunities for upward mobility are limited.
● Opportunities to learn new skills are present.
● The costs of employee turnover and absenteeism in terms of lost production are high.
● Individual-based pay plans are common in manufacturing environments that rely on continuous-process technologies.
5. Egalitarianism Vs. Elitism
Will the compensation plan place most employees under the same compensation system (egalitarianism)?
Will it establish different plans by organizational level and/or employee group (elitism)?
An egalitarian pay system is a payment plan in which most employees are part of the same compensation system. Egalitarianism (+) (common for older, well-established firms)
● more flexibility to deploy employees in different areas without having to change their pay levels.
● reduce barriers between people who need to work closely together.
An elitist payment system is a payment plan in which different compensation systems are established for employees or groups at different organizational levels. Elitist pay structures (+) (common and risky and high competition environment, high-tech products)
● more stable workforce
6. Below-Market Vs. Above-Market Compensation
Will employees be compensated at below-market levels, at market levels, OR at above-market levels?
To hire the “cream of the crop” – above-market
Company may apply different policy for different Job positions depending, for example, on the strategic relevance. Also, the decisions can be combined with other criteria, for example, market-median based salary with aggressive incentives to give extra value to the job offer.
7. Monetary Vs. Nonmonetary Awards
Will the compensation plan emphasize motivating employees through monetary rewards like pay and stock options?
Will it stress non-monetary rewards such as interesting work and job security? for ex., “family-friendly policies” or “work-life balance programs”
The organization should be realistic regarding the costs issues and search for the balance between monetary and non-monetary rewards.
8. Open Vs. Secret Pay
Will employees have access to information about other worker’s compensation levels and how compensation decisions are made (open pay)?
Will this knowledge be withheld from employees (secret pay)?
(+) force managers to be more fair and effective in managing compensation
(+) reduce dissatisfaction as employees tend to overestimate the pay of coworkers and superior
(+) help managers to avoid arguments with employees
9. Centralization Vs. Decentralization of Pay Decisions
Will compensation decisions are made in a tightly controlled central location?
Will they be delegated to managers of the firm’s units/department? – for example, is the pizzeria chain it may be done by the manager of each restaurant individually
Summary. Compensation is a complex topic that has a significant impact on organizational success.
● None of the options is a simple either/or decision
● Many possibilities between them are possible.
Pay-per-performance is a system that compensates employees on the assumptions that:
Individual employees and work teams differ
Overall performance depends on the performance of the individuals
To attract, retain and motivate high performers employees should be rewarded based on their relative performance
Types of incentives:
● the piece-rate system is a compensation system in which employees are paid per unit produced.
● the merit pay is an increase in base pay, normally given once a year.
● the bonus program is a financial incentive that is given on a one-time basis and does not raise the employee’s base pay permanently.
● the award a one-time reward is usually given in the form of a tangible prize.
Pay-for-performance plans can be designed to reward the performance of the individual, team, business unit or plant, an entire organization, or any combination of these.
Advantages and Disadvantages of Individual- and Team-Based Pay-for-Performance Plans
Conditions That Favour Various Pay-Per-Performance Plans
The Challenges of Pay-Per-Performance plans:
● The «Do Only What You Get Paid For» syndrome (employee focus only on the rewarded objectives)
● Unethical Behaviors («white lies» to «meet or exceed» targets)
● Negative effect on the Spirit of Cooperation (internal competition effect on communication)
● Lack of Control (factors beyond an employee’s control, or employee overloaded)
● Difficulties in Measuring Performance (individual contribution of the group work)
● Psychological Contracts (damaging results of changes)
● The Credibility Gap (fairness of the reward)
● Job dissatisfaction and Stress (greater productivity – more work)
● Potential Reduction of Intrinsic Drivers (no motivation to work without reward)
Meeting the Challenges:
Opportunity to align employees ́objectives with the organization
● Link Pay and Performance Appropriately (piece-rate system*)
● Use Pay for Performance as Part a Broader HRM System (for example with training)
● Build Employee Trust (managers need to show that they care about employees)
● Promote the Belief that Performance Makes Difference
● Use Multiple Layers of Rewards (variable pay)
● Increase Employee Involvement (in the design of the pay system)
● Stress the importance of Acting Ethically (training programs ‘how to meet performance expectations’)
● Use Motivation and Nonfinancial Incentives (balance – public and nonpublic praise, honorary titles, mentoring programs, expanded job responsibilities, etc.)
Pay-for-performance plans in small firms are more likely to be successful if there is active employee participation in the development of the plan, incentives are linked to the achievement of organizational goals, and frequent informal feedback is provided to employees.
4. Benefits, or Indirect Compensation
Benefits are group membership rewards that provide security for employees and their family members. Indirect compensation is given to the employee in the form of plan (health insurance) rather than cash).
Types of Benefits
Legally required benefits (1) Social Security, (2) workers’ compensation, (3) unemployment insurance, and (4) family and medical leave.
Other benefits types: Health insurance, Retirement, Insurance, Paid time off, Employee services
Challenges in Managing Benefits:
(1) give employees meaningful benefit choices that match their needs,
(2) keep the costs of these benefits under control,
(3) ensure that employees are fully informed of their benefit options.
The Benefits Strategy
The design of a benefits package should be aligned with the business’s overall compensation strategy. The benefits strategy requires making choices in three areas:
○ (1) benefits mix,
○ (2) benefits amount, and
○ (3) flexibility of benefits.
HR specialist and Manager’s roles in Managing Benefits:
● HR staff administrate and control benefits programs:
○ the use of flexible benefits mix
○ Communicating benefits to employees
● The manager should be familiar with benefits:
○ to employees (help to understand and make the best from benefits)
○ a powerful recruiting tool (use benefits advantage to recruit high-quality applicants) ○ retain talented employees (reduce turnover)
○ a part in managerial decisions and organizational processes (effectively manage work schedules)
○ to managers (to be aware of their own benefit)
5. The Legal Environment and Compensation
Labor Standards and Legal Issues
MINIMUM WAGES: minimum and average wages
OVERTIME: payment for overworking
CONTRACT: as a written document
SALARY TAXES: social insurance, pension and pay tax
others specified in Labour Law
Great Place to Work GPTW
1. When your business is a great place to work, employees give 100% in everything they do.
2. … you become an employer of choice.
3. … employees think like owners.
4. … customers notice and come back again and again.
5. … absenteeism nearly disappears
6. … turnover costs plummet
7. … collaboration and creativity thrive
8. … you’re impacting the lives of people.
Training– The process of providing employees with specific skills or helping them to correct difficulties in their performance.
Development– An effort to provide employees with the abilities the organization will need in the future.
Training not always works. To get positive results the training process should be well organized.
The challenges of the Training Process:
Identify – Real Business Impact
How can training keep pace with a changing organizational environment and companies strategy at the same time?
Analyse – Skill Gap
How to develop an adequate evaluation system?
How make it the training to be perceived positive?
Develop – Layer Training
Should training take place in a classroom setting or on the job?
How to save on training costs?
Evaluate – Managing effectiveness
Is training always the solution to the problem?
How can training be delivered so that trainees are motivated to learn?
Stages of the training process:
The NEEDS ASSESSMENT PHASE
Clarifying the Objectives of Training
The levels of needs assessment:
● Organizational needs
○ Ex. how will training help to improve performance (number of sales)?
○ Ex., the performance of which task will training help to improve (work with the software)?
○ Ex. which personal skills will the training help to improve (communication skills)?
THE DEVELOPMENT AND CONDUCTING PHASE
Types of Training:
● Skills Training
● Cross-Functional Training
● Team Training
● Creativity Training
● Diversity Training
● Ethics Training
● Risk/Crisis Training
● Slides and Videotapes
● Virtual Reality
● Classroom Instruction
On-the-job training (OJT):
“pro” relevant to the job
“con” trainees cause customer frustration
For ex., Job rotation, Apprenticeships, Internships
THE EVALUATION PHASE
Four Measurement Levels of Training:
Training should always match with the company’s objective and environmental trends. However, it also should be developed in a way to bring positive perceptions to employees and match their needs. The correctly developed training process can add extra value to the company as an employer and can be perceived as a motivation among workers. Effective training will return on the investments by the positive impact on a company’s performance.
The company can save on training costs in different ways, for example, by using online training. Or, by applying the on-job-training format when the more experienced employees train less experienced ones. Employees should be trained. However, the decision about whether to train employees in the company “make skills” or to hire already trained specialists “buy skills” will depend on the company’s strategy.
Another trainingchallenge for the company is retaining trained employees. In this situation, development programs and career opportunities can be a solution.
Every measure in the development stage aims to develop various dimensions from the company’s competency model.
What is a career? Career is an individual’s metaphorical “journey” through learning, work and other aspects development in the workplace.
Career development is an ongoing and formalized effort that focuses on developing enriched and more capable workers and working space.
A career in the company with flat and hierarchical organizational structure. What will be the difference? – For companies with hierarchical structures management-career with the possibility to be promoted in the vertical of organization chart by getting more responsibilities. In flat organizations, very common expert-careers when an employee can develop the knowledge and expertise in the specific field. However, both career paths are possible and needed in any organization. Experts very often advice top-managers.