4/24/2012

PRINCIPLES


The Government establishes four main principles which guide us in our work. We have adopted the following additional principles to guide departments in their Human
Resource Management work:

  • The Government should be a good employer; 
  • People are our most important asset; staff are recruited and their careers managed on the basis  of merit;
  • Staff should take their share of responsibility for developing their potential; 
  • Staff management is the responsibility of all managers;and
  • Departmental Human Resource Management plans must be guided by departmental plans and objectives.

AIMS AND PRINCIPLES


Aims

The Government exists to serve the community : it seeks to provide the services the community needs and the leadership Hong Kong needs to go on succeeding. 

Serving the Community is the Government's single most important aim, to which all civil servants should be committed.

It requires the Government to provide the services the community needs, and to provide the leadership Hong Kong needs to go on succeeding. To do so, we act in the public interest to:

·  foster stability and prosperity,
·  improve the quality of life for the whole community,
·  care for those who need help,
·  protect the rights and freedoms of the individual,
·  maintain the rule of law, and
·  encourage people to play their part in the community.

Principles
  • BEING ACCOUNTABLE
  • LIVINGWITHIN OUR MEANS
  • MANAGING FOR PERFORMANCE
  • DEVELOPING OUR CULTURE OF SERVICE 
 
AIMS

It is as true for the Government as for any other organization that we depend on our staff at all levels to achieve our aims. It is therefore important that we set these out so that staff have a clear sense of direction for their work, and know how their performance will be judged.
 
The Government's aim of Serving the Community is a simple concept, readily understood by civil servants. In support of this, departmental missions help staff focus their efforts on performing to their best in their particular area of work.
 
Human Resource Management is a planned approach to managing people effectively for performance. It aims to establish a more open, flexible and caring management style so that staff will be motivated, developed and managed in a way that they can and will give of their best to support departments' missions.

MANAGING PEOPLE BETTER


Management Framework
BEING ACCOUNTABLE
 
·  Answering to the Legislative Council
·  Keeping the Community Informed
·  Providing Access to Information


LIVINGWITHIN OUR MEANS
 
·  Applying Fiscal Guidelines
·  Assessing Community Needs
·  Planning
·  Resource Allocation
·  Reviewing Performance


MANAGING FOR PERFORMANCE
 
·  Refining Performance Measures
·  Managing by Programme
·  Improving Efficiency
·  Managing Public Finances
·  Managing Human Resources
·  Managing Support Services
·  Developing Departmental Plans
·  Reviewing Progress


DEVELOPING OUR CULTURE OF SERVICE
 
·  Making Performance Pledges
·  Using Feedback to Improve Services
·  Securing Staff Commitment


Human Resource Management is a long-established task within the Government's Management Framework. Through this task the Governmentmeets its obligation to be a good employer; seeks to secure staff commitment; and develops and manages staff to give of their best to help the Government serve the community. The need to respond to
changing community expectations means that the task of managing our staff better is more important than ever - it is the staff who deliver the service, and it is through a new
emphasis on staff management that a customer service and performance oriented culture will gradually evolve.

The Civil Service Branch carried out a review in 1993 to determine what changes were needed in implementing Human Resource Management so that it could best
complement and support the new focus on devolving authority, on customers and on raising service standards.

The outcome of the review has established the direction for Human Resource Management. First the Civil Service Branch is now concentrating more on its strategic
role, determining policy, setting guidelines and rules, and advising branches and departments on implementation. Within this, the Branch is delegating as much authority
as possible to departments, and simplifying rules and procedures. Second, the emphasis is now more on the management of people rather than the administration of rules. Third, branches and departments are expected to review and develop their own Human Resource Management plans to help them meet their operational requirements.

While the Civil Service Branch encourages the implementation of Human Resource Management initiatives, it appreciates that change cannot happen overnight, and that many effective staff management practices are already occurring. It is for departments to build upon these and show continuous improvement over time.

This booklet explains how Human Resource Management works in the Hong Kong Civil Service. It describes the core principles and values of the Government; where responsibilities lie; and the key management tasks that must be addressed.

4/23/2012

Clarifying Some Terms -- Human Resource Management, Human Resources, HRD, Talent Management


Clarifying Some Terms -- Human Resource Management, Human Resources, HRD, Talent Management


The Human Resource Management (HRM) function includes a variety of activities, and key among them is responsibility for human resources -- for deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these activities themselves because they can't yet afford part- or full-time help. However, they should always ensure that employees have -- and are aware of -- personnel policies which conform to current regulations. These policies are often in the form of employee manuals, which all employees have.

Some people distinguish a difference between HRM and Human Resource Development (HRD), a profession. Those people might include HRM in HRD, explaining that HRD includes the broader range of activities to develop personnel inside of organizations, e.g., career development, training, organization development, etc.

The HRM function and HRD profession have undergone tremendous change over the past 20-30 years. Many years ago, large organizations looked to the "Personnel Department," mostly to manage the paperwork around hiring and paying people. More recently, organizations consider the "HR Department" as playing a major role in staffing, training and helping to manage people so that people and the organization are performing at maximum capability in a highly fulfilling manner. There is a long-standing argument about where HR-related functions should be organized into large organizations, eg, "should HR be in the Organization Development department or the other way around?".

Recently, the phrase "talent management" is being used to refer the activities to attract, develop and retain employees. Some people and organizations use the phrase to refer especially to talented and/or high-potential employees. The phrase often is used interchangeably with HR -- although as the field of talent management matures, it's very likely there will be an increasing number of people who will strongly disagree about the interchange of these fields.

Many people use the phrase "Human Resource Management," "Human Resource Development" and "Human Resources" interchangeably, and abbreviate Human Resources as HR -- HR has become a conventional term to refer to all of these phrases.

Thus, this Library uses the phrase "Human Resources" and the term "HR," not just for simplicity, but to help the reader to see the important, broader perspective on human resources in organizations -- what's required to maximize the capabilities and performance of people in organizations, regardless of the correct phrase or term to be applied when doing that.

Human Resource Guidelines Apply to For-Profits and Nonprofits


Human Resource Guidelines Apply to For-Profits and Nonprofits

The vast majority of resources in this topic apply to nonprofits as well as for-profits. There's a misconception that there is a big difference in managing human resources in for-profit versus nonprofit organizations. Actually, they should managed similarly. Nonprofits often have unpaid human resources (volunteers), but we're learning that volunteers should be managed much like employees -- it's just that they're not compensated with money; they're compensated in other ways. Managing volunteers is very similar to paid staff -- their roles should be carefully specified, they should be recruited carefully, they should be oriented and trained, they should be organized into appropriate teams or with suitable supervisors, they should be delegated to, their performance should be monitored, performance issues should be addressed, and they should be rewarded for their performance. Also, organizations should consider the risks and liabilities that can occur with volunteers, much like with employees. So nonprofit organizations should consider the resources in this topic as well.

Human Resources and Talent Management



Introduction

 

  • Human Resources Applies to Any Size of Organization

  • Human Resource Guidelines Apply to For-Profits and Nonprofits

  • Clarifying Some Terms -- Human Resource Management, Human Resources, HRD, Talent Management

 

 

Human Resources Applies to Any Size of Organization

All organizations have people -- they have human resources.  Regardless of the size of an organization or the extent of its resources, the organization survives -- and thrives -- because of the capabilities and performance of its people. The activities to maximize those capabilities and that performance are necessary regardless of whether the organization refers to them as Human Resource Management, Human Resource Development or Human Resources -- or has no formal name for those activities at all.

Those activities are the responsibility of all people in the organization. Thus, members of organizations, regardless of size or resources, will benefit from using the resources referenced from this topic.

 

 

4/22/2012

BUILDING EMPLOYEE TRUST AND PRODUCTIVITY


The Personnel Manager

Many small businesses cannot afford a full-time specialist to deal with human resource problems. However, as a business grows, its structure becomes more complex and personnel problems increase in number and potential cost. At a certain point in the typical small business, it becomes apparent that a full-time or part-time personnel manager is needed. Conditions that indicate the necessity of a personnel manager include

  • The firm has more than 100 employees.
  • Employees are represented by a union.
  • Turnover is very high (and costly).
  • The need for skilled or semiskilled labor creates problems in recruitment or selection.
  • Employee morale is low.
  • Competition for good personnel is especially keen in the market area.

BUILDING EMPLOYEE TRUST AND PRODUCTIVITY


The Legal Environment
 
Small businesses operate in a complex legal environment that places many constraints on recruitment, selection, placement and other personnel practices. Laws may specify what is required, what is acceptable or what is prohibited. Every personnel system must consider the statutes relating to these issues. One of the most important laws the small business owner should be aware of is the Occupational Safety and Health Act (OSHA 1970). This law is aimed at reducing the number of safety and health hazards in the American workplace. Businesses must comply with health and safety standards set by the U.S. Department of Labor for individual industries.

The past sixty years have been characterized by laws that encourage collective bargaining and that try to bring about a better balance between management and labor. Many of these laws apply to small businesses:

  • Norris-LaGuardia Act (1932) -- Protects the rights of unions to organize. It also prohibits yellow-dog contracts -- an employment practice where the firm requires employees to promise they will not join a union if hired by the company. 
  • Wagner Act (1935) -- Guarantees workers the right to engage in union activities, to organize and to bargain collectively without interference from employers. A small business manager may not prohibit employees from union activity.
See the discussion of other applicable laws in the first section under Recruiting and Compensation Issues.

BUILDING EMPLOYEE TRUST AND PRODUCTIVITY


Fairness

Fairness ranges from consistency in personnel actions and fair market practices to adherence to the various laws governing the workplace. The concept of due process requires that a small business follow its own rules and policies. Employees must be treated the same when it comes to personnel issues.

Each worker should have an equal chance to perform at his or her best. Decisions concerning rewards, promotions and advancement should always be based on performance, and good performance should be spelled out in the job description. When performance is equal among employees, seniority should be used to break ties.

The key to healthy work relations is managing communications within the firm. Most of the communication will flow as orders and instructions to employees. Nevertheless, communicating (and honesty and fairness) is a two-way process. It is difficult for employees to be intelligent and enthusiastic teamworkers if they do not know the reasons behind orders and instructions. Perhaps even more important is giving employees the opportunity to contribute ideas and opinions before the manager-owner makes a decision. This adds dignity and meaning to the job in the eyes of most employees and their families.

Communicating includes telling employees where they stand, how the business is doing and what future plans are being developed. Negative feedback may be necessary at times, but positive feedback should be the primary tool for establishing good human relations. Never forget that employees are people, and that they will quickly detect insincerity. They also will respond to honest efforts to treat them as mature, responsible adults. Some practical human relations techniques that stimulate two-way communications include

  • Periodic performance review sessions (every three months).
  • Bulletin boards.
  • Suggestion boxes.
  • Newsletters.
  • Regular open meetings.

BUILDING EMPLOYEE TRUST AND PRODUCTIVITY


The most effective way to build trust in the workplace is to work together. There are no magic gimmicks or other simple solutions. Trust cannot be created by excessive wages, great company picnics or wonderful working conditions; it can only be generated through teamwork, honesty and fairness. Although trust and productivity are complex issues and represent only part of the total fabric of interpersonal relationships in small businesses, three attributes appear to have a positive effect on trust in successful small businesses:

  • The owner-manager of the small business is open and honest about the day-to-day business operations.
  • The owner-manager of the small business is consistent and fair about personnel policies.
  • The owner-manager spends a great deal of his or her time concentrating on good communications with those working in the firm.

Honesty
 
Secrecy breeds suspicion. Whenever information is kept on close hold, the context becomes open to misinterpretation. Total quality improvement is based on the concept that workers care as much about the success of the small business as the owners do. Studies of small businesses indicate that employees tend to overestimate profits by substantial amounts. These same studies indicate that when true financial information is shared with employees, substantial cost controls are voluntarily initiated by all members of the work force.

Whenever in doubt concerning the amount of information to share with employees, experience indicates that too much is better than not enough. Never lie to workers about human relations issues. Institutional memory is long term; any deceit will be remembered for many years. Note that employees talk with each other and inconsistencies will be quickly detected and brought to the surface -- frequently to your embarrassment. The following are suggestions on how to avoid this dilemma:

  • Take time to talk with your workers.
  • Find out what they're thinking.
  • Find out what they'd like to know and tell them whenever possible.
  • Don't tell only good things.
  • Allow employees an opportunity to provide you, the owner, with information, questions and suggestions. In this way, communications are two way.

Evaluation of Training


Training should be evaluated several times during the process. Determine these milestones when you develop the training. Employees should be evaluated by comparing their newly acquired skills with the skills defined by the goals of the training program. Any discrepancies should be noted and adjustments made to the training program to enable it to meet specified goals. Many training programs fall short of their expectations simply because the administrator failed to evaluate its progress until it was too late. Timely evaluation will prevent the training from straying from its goals.


Training Administration


Having planned the training program properly, you must now administer the training to the selected employees. It is important to follow through to make sure the goals are being met. Questions to consider before training begins include:

  • Location.
  • Facilities.
  • Accessibility.
  • Comfort.
  • Equipment.
  • Timing.

Careful attention to these operational details will contribute to the success of the training program.

An effective training program administrator should follow these steps:

  • Define the organizational objectives.
  • Determine the needs of the training program.
  • Define training goals.
  • Develop training methods.
  • Decide whom to train.
  • Decide who should do the training.
  • Administer the training.
  • Evaluate the training program.

Following these steps will help an administrator develop an effective training program to ensure that the firm keeps qualified employees who are productive, happy workers. This will contribute positively to the bottom line.

Trainers


Who actually conducts the training depends on the type of training needed and who will be receiving it. On-the-job training is conducted mostly by supervisors; off-the-job training, by either in-house personnel or outside instructors.

In-house training is the daily responsibility of supervisors and employees. Supervisors are ultimately responsible for the productivity and, therefore, the training of their subordinates. 
These supervisors should be taught the techniques of good training. They must be aware of the knowledge and skills necessary to make a productive employee. Trainers should be taught to establish goals and objectives for their training and to determine how these objectives can be used to influence the productivity of their departments. They also must be aware of how adults learn and how best to communicate with adults. Small businesses need to develop their supervisors' training capabilities by sending them to courses on training methods. The investment will pay off in increased productivity.

There are several ways to select training personnel for off-the-job training programs. Many small businesses use in-house personnel to develop formal training programs to be delivered to employees off line from their normal work activities, during company meetings or individually at prearranged training sessions.

There are many outside training sources, including consultants, technical and vocational schools, continuing education programs, chambers of commerce and economic development groups. 

Selecting an outside source for training has advantages and disadvantages. The biggest advantage is that these organizations are well versed in training techniques, which is often not the case with in-house personnel.

The disadvantage of using outside training specialists is their limited knowledge of the company's product or service and customer needs. These trainers have a more general knowledge of customer satisfaction and needs. In many cases, the outside trainer can develop this knowledge quickly by immersing himself or herself in the company prior to training the employees. Another disadvantage of using outside trainers is the relatively high cost compared to in-house training, although the higher cost may be offset by the increased effectiveness of the training.

Whoever is selected to conduct the training, either outside or in-house trainers, it is important that the company's goals and values be carefully explained.

Training Methods


There are two broad types of training available to small businesses: on-the-job and off-the-job techniques. Individual circumstances and the who, what and why of your training program determine which method to use.

On-the-job training is delivered to employees while they perform their regular jobs. In this way, they do not lose time while they are learning. After a plan is developed for what should be taught, employees should be informed of the details. A timetable should be established with periodic evaluations to inform employees about their progress. On-the-job techniques include orientations, job instruction training, apprenticeships, internships and assistantships, job rotation and coaching.

Off-the-job techniques include lectures, special study, films, television conferences or discussions, case studies, role playing, simulation, programmed instruction and laboratory training. Most of these techniques can be used by small businesses although, some may be too costly. Box 7 shows the range of costs for different types of training. Choose the techniques that meet your needs and fit your budget.

Orientations are for new employees. The first several days on the job are crucial in the success of new employees. This point is illustrated by the fact that 60 percent of all employees who quit do so in the first ten days. Orientation training should emphasize the following topics:

  • The company's history and mission.
  • The key members in the organization.
  • The key members in the department, and how the department helps fulfill the mission of the company.
  • Personnel rules and regulations.

Some companies use verbal presentations while others have written presentations. Many small businesses convey these topics in one-on-one orientations. No matter what method is used, it is important that the newcomer understand his or her new place of employment. The importance of an employee handbook for imparting rules and culture was discussed earlier, with specific suggestions for what should be included in the employee handbook.

Lectures present training material verbally and are used when the goal is to present a great deal of material to many people. It is more cost effective to lecture to a group than to train people individually. Lecturing is one-way communication and as such may not be the most effective way to train. Also, it is hard to ensure that the entire audience understands a topic on the same level; by targeting the average attendee you may undertrain some and lose others. Despite these drawbacks, lecturing is the most cost-effective way of reaching large audiences.

Role playing and simulation are training techniques that attempt to bring realistic decision-making situations to the trainee. Likely problems and alternative solutions are presented for discussion. The adage there is no better trainer than experience is exemplified with this type of training. Experienced employees can describe real world experiences, and can help in and learn from developing the solutions to these simulations. This method is cost effective and is used in marketing and management training.

Audiovisual methods such as television, videotapes and films are the most effective means of providing real world conditions and situations in a short time. One advantage is that the presentation is the same no matter how many times it's played. This is not true with lectures, which can change as the speaker is changed or can be influenced by outside constraints. The major flaw with the audiovisual method is that it does not allow for questions and interactions with the speaker, nor does it allow for changes in the presentation for different audiences.

Job rotation involves moving an employee through a series of jobs so he or she can get a good feel for the tasks that are associated with different jobs. It is usually used in training for supervisory positions. The employee learns a little about everything. This is a good strategy for small businesses because of the many jobs an employee may be asked to do.

Apprenticeships develop employees who can do many different tasks. They usually involve several related groups of skills that allow the apprentice to practice a particular trade, and they take place over a long period of time in which the apprentice works for, and with, the senior skilled worker. Apprenticeships are especially appropriate for jobs requiring production skills.

Internships and assistantships are usually a combination of classroom and on-the-job training. They are often used to train prospective managers or marketing personnel.

Programmed learning, computer-aided instruction and interactive video all have one thing in common: they allow the trainee to learn at his or her own pace. Also, they allow material already learned to be bypassed in favor of material with which a trainee is having difficulty. After the introductory period, the instructor need not be present, and the trainee can learn as his or her time allows. These methods sound good, but may be beyond the resources of some small businesses.

Laboratory training is conducted for groups by skilled trainers. It usually is conducted at a neutral site and is used by upper-and middle-management trainees to develop a spirit of teamwork and an increased ability to deal with management and peers. It can be costly and usually is offered by larger small businesses.

Selection of Trainees


Once you have decided what training is necessary and where it is needed, the next decision is who should be trained? For a small business, this question is crucial. Training an employee is expensive, especially when he or she leaves your firm for a better job. Therefore, it is important to carefully select who will be trained.

Training programs should be designed to consider the ability of the employee to learn the material and to use it effectively, and to make the most efficient use of resources possible. It is also important that employees be motivated by the training experience. Employee failure in the program is not only damaging to the employee but a waste of money as well. Selecting the right trainees is important to the success of the program.

Training Goals

The goals of the training program should relate directly to the needs determined by the assessment process outlined above. Course objectives should clearly state what behavior or skill will be changed as a result of the training and should relate to the mission and strategic plan of the company. Goals should include milestones to help take the employee from where he or she is today to where the firm wants him or her in the future. Setting goals helps to evaluate the training program and also to motivate employees. Allowing employees to participate in setting goals
increases the probability of success.

Identifying Training Needs


Training needs can be assessed by analyzing three major human resource areas: the organization as a whole, the job characteristics and the needs of the individuals. This analysis will provide answers to the following questions:

  • Where is training needed?
  • What specifically must an employee learn in order to be more productive?
  • Who needs to be trained?

Begin by assessing the current status of the company -- how it does what it does best and the abilities of your employees to do these tasks. This analysis will provide some benchmarks against which the effectiveness of a training program can be evaluated. Your firm should know where it wants to be in five years from its long-range strategic plan. What you need is a training program to take your firm from here to there.


Second, consider whether the organization is financially committed to supporting the training efforts. If not, any attempt to develop a solid training program will fail.


Next, determine exactly where training is needed. It is foolish to implement a company-wide training effort without concentrating resources where they are needed most. An internal audit will help point out areas that may benefit from training. Also, a skills inventory can help determine the skills possessed by the employees in general. This inventory will help the organization determine what skills are available now and what skills are needed for future development.

Also, in today's market-driven economy, you would be remiss not to ask your customers what they like about your business and what areas they think should be improved. In summary, the analysis should focus on the total organization and should tell you (1) where training is needed and (2) where it will work within the organization.

Once you have determined where training is needed, concentrate on the content of the program. Analyze the characteristics of the job based on its description, the written narrative of what the employee actually does. Training based on job descriptions should go into detail about how the job is performed on a task-by-task basis. Actually doing the job will enable you to get a better feel for what is done.


Individual employees can be evaluated by comparing their current skill levels or performance to the organization's performance standards or anticipated needs. Any discrepancies between actual and anticipated skill levels identifies a training need.

The Training Process


The model in Chart 1 traces the steps necessary in the training
process.




Chart 1 - Steps in the Training Process
Organizational Objectives
|
|
Needs Assessment
Is there a gap?
|
|
Training Objectives
|
Select the Trainees---
|
Select the Training Methods & Mode
|
_____
 Choose a Means of
Evaluating
|
|
Administer Training
|
|
Evaluate the Training

Your business should have a clearly defined strategy and set of objectives that direct and drive all the decisions made -- especially training decisions. Firms that plan their training process are more successful than those that do not. Most business owners want to succeed, but do not engage in training designs that promise to improve their chances of success. Why? The five reasons most often identified are
 
  • Time -- Small businesses managers find that time demands do not allow them to train employees.
  • Getting started -- Most small business managers have not practiced training employees. The training process is unfamiliar.
  • Broad expertise -- Managers tend to have broad expertise rather than the specialized skills needed for training and development activities.
  • Lack of trust and openness -- Many managers prefer to keep information to themselves. By doing so they keep information from subordinates and others who could be useful in the training and development process.
  • Skepticism as to the value of the training -- Some small business owners believe the future cannot be predicted or controlled and their efforts, therefore, are best centered on current activities -- i.e., making money today.
 
A well-conceived training program can help your firm succeed. A program structured with the company's strategy and objectives in mind has a high probability of improving productivity and other goals that are set in the training mission.
 
For any business, formulating a training strategy requires addressing a series of questions.
  
  • Who are your customers? Why do they buy from you?
  • Who are your competitors? How do they serve the market? What competitive advantages do they enjoy? What parts of the market have they ignored?
  • What strengths does the company have? What weaknesses? 
  • What social trends are emerging that will affect the firm?  

The purpose of formulating a training strategy is to answer two relatively simple but vitally important questions: (1) What is our business? and (2) What should our business be? Armed with the answers to these questions and a clear vision of its mission, strategy and objectives, a company can identify its training needs.

4/21/2012

EMPLOYEE TRAINING AND DEVELOPMENT


An Effective Training Program

The quality of employees and their development through training and education are major factors in determining long-term profitability of a small business. Hiring and keeping good employees is the key to the first factor. (Hiring has been discussed in the first section and retaining employees will be discussed in the third section.) If you hire and keep good employees, it is good policy to invest in the development of their skills, so they can increase their productivity.

Training often is considered for new employees only. This is a mistake because ongoing training for current employees helps them adjust to rapidly changing job requirements.
 
Purpose of Training and Development

Reasons for emphasizing the growth and development of personnel include
 
  • Creating a pool of readily available and adequate replacements for personnel who may leave or move up in the organization.
  • Enhancing the company's ability to adopt and use advances in technology because ofa sufficiently knowledgeable staff.
  • Building a more efficient, effective and highly motivated team, which enhances the company's competitive position and improves employee morale.
  • Ensuring adequate human resources for expansion into new programs.
Research has shown specific benefits that a small business receives from training and developing its workers, including:
 
  • Increased productivity.
  • Reduced employee turnover.
  • Increased efficiency resulting in financial gains.
  • Decreased need for supervision.
Employees frequently develop a greater sense of self-worth, dignity and well-being as they become more valuable to the firm and to society. Generally they will receive a greater share of the material gains that result from their increased productivity. These factors give them a sense of satisfaction through the achievement of personal and company goals.

Screening

Compensation Issues
 
Compensation takes two forms: (1) direct compensation (wages and salaries) and (2) indirect compensation (fringe benefits).
 
Direct Compensation
 
Wages and salaries are the compensation people receive on a regular basis (monthly, biweekly or weekly). Workers are paid on the basis of time (by the hour, day, week or month) or on the basis of output (an incentive plan).

Some of the legal issues regarding wage and salary compensation include
 
  • Wages and hours -- The Fair Labor Standards Act of 1938 introduced the minimum wage and the 40-hour work week. As of April 1, 1991, the minimum wage is $4.25 an hour. The law also specifies that workers must receive time-and-a-half pay for time spent on the job in excess of 40 hours. (Not all employees are covered by this act; managers, professionals and sales personnel may be excluded.)
  • Eligibility to work -- The Immigration Reform Control Act of 1986 was intended to reduce the number of illegal immigrants seeking jobs in the United States. Under the law, employees hired after November 6, 1986, must show proof of their identity and eligibility to work. There are sanctions against employers who do not comply withthis act.
  • Child labor -- The minimum age for children in most jobs is 16 years old. Fourteen- and 15-year-olds are restricted to a few jobs, such as filing and sales. Persons under 14 years of age may work only under certain conditions.
  • Social Security -- The Social Security Act passed in 1935 provides a minimum guaranteed income to retired and disabled persons. This system is funded by a tax on both employees and employers. In 1990 employees were required to pay the system an amount equal to 7.65 percent of the first $51,300 earned. Employers are required to match that amount.
  • Unemployment benefits -- Each state has a program for providing protection for those who lose their jobs (usually through no fault of their own). While programs vary from state to state, each program must comply with certain federal guidelines. Employers pay a tax to the state, which maintains these funds for use by the unemployed.
Indirect Compensation
 
Fringe benefits are an important part of the overall compensation package in most small businesses. Employee benefits now account for about 40 percent of payroll costs. The profitability of the small firm is one of the primary determinants of what benefits are offered by the firm.

 Cafeteria Planning
 
One successful approach to providing benefits to employees of a small business is to allocate a certain amount of money per employee for benefits. Each employee then chooses the package of benefits that suits his or her current needs. This approach is called cafeteria planning because it is similar to going down a cafeteria line, where each customer chooses what he or she wants to eat. It has been suggested that employees perceive this approach as highly equitable because it (1) allows freedom of choice and (2) does not impose a single package of benefits on all employees.

For example, a young employee with several small children may be interested in dental insurance for his family. He is not really interested in or motivated by a pension plan at this time in his life. Another employee in this same company is in her late forties, has no dependent children and is planning for retirement. To force the same benefit on these two employees is not an effective use of benefit money. To allow some choice on the part of participants is a major advantage of the cafeteria approach to benefit planning.

Small businesses face difficult challenges when they try to match benefits with big firms. Nevertheless, the small firm can enjoy the benefits of greater flexibility and innovativeness by offering a cafeteria plan.

Screening

Selecting and Hiring
 
If the screening process is thorough, selecting the best applicants for the job is easy. However, before making the final selection, one last step should be taken: the top candidate's references should be checked for accuracy and input. You should be aware of the tendency of references to give a rose-colored picture of applicant's character and ability. Despite this potential bias, a careful check with former employers, schools and other references can be most constructive. At a minimum, checking can determine whether or not the applicant was truthful about his or her employment history.

Orienting New Employees to Your Business
 
An employee handbook communicates important information about the company to the employee. The handbook should cover topics such as company expectations, pay policies, working conditions, fringe
benefits and the company philosophy toward customers

Once an individual is hired, he or she should receive a comprehensive orientation on the general policies of the company and on the specific nature of the job. Rules should be explained in detail, job expectations agreed upon and any questions answered before the new employee begins work. New employees should be introduced to other employees and made to feel welcome.

 

Screening


Box 3 - Interviews

  • Review the job description before the interview.
  • Break the ice -- establish a friendly atmosphere.
  • Develop an interview time plan and stick to it.
  • Keep an open mind, i.e., don't form an opinion too early.
  • Give the candidate time to tell his or her story; don't talk too much.
  • Present a truthful picture of the company and the job.
  • Listen carefully, concentrate and take notes.
  • Avoid detailed discussion of salary too early in the interview.
  • Be courteous.
  • Don't leave the candidate hanging -- discuss the next step in the hiring process and the timing.

Other screening techniques include employment tests and physical examinations. Some employment tests measure aptitude, achievement, intelligence, personality and honesty. A physical examination determines if the applicant meets the health standards and physical demands of the job.

Screening


The screening process provides information about an individual's skills, knowledge and attitudes, enabling a potential employer to determine whether that person is suited to, and qualified for, the position. Experience has shown that hiring an overqualified person can be as harmful as hiring an underqualified person. The application form is the place to begin screening candidates for a job. It provides information on the person's background and training and is the first means of comparing the applicant with the job description. This will ensure that you don't waste time on applicants who clearly do not meet the minimum requirements for the job.

Generally, the following information is asked on an employment application form: name, address, telephone number, social security number, kind of work desired, work experience, military service, education and references. See the sample application form in Box 2.

Box 2 -- Sample Application Form



Date _____________________
 
Name _________________________________________________
 
Social Security Number _________________________________________________
 
Address__________________________________________
 
Telephone Number_________________________________
 
Position desired____________________________________
 
EDUCATION
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
 
EMPLOYMENT RECORD:
Name and address of company, position, dates employed and reason for leaving:
_________________________________________________
_________________________________________________
_________________________________________________
 
MILITARY SERVICE:
Branch________________________ from ______________ to ______________
Rank Achieved __________________ Type of discharge ___________________
 
REFERENCES:
________________________________________________
________________________________________________
________________________________________________
________________________________________________



The personal interview is the second step in the screening process. During the interview, the manager learns more about the applicant through face-to-face contact, including observation of personal appearance. The interview should be guided, but not dominated, by the manager as it is important to let the candidate speak freely. Whenever possible, the interviewer should ask questions that are directly related to the job. Devise a list of questions that will adequately assess the applicant's qualifications while meeting the specifications for the job. Three major errors often committed in the personal interview are
 
  • Failure to analyze the requirements of the job in sufficient detail to generate valid questions.
  • Failure to ask candidates the right questions to determine their strengths and weaknesses, and their fit with the job.
  • Too much reliance on gut reaction instead of objective evaluation of candidates based on criteria established in the job specification.
 
Interviewing makes the selection process more personal and gives the interviewer an overall idea of whether the applicant is appropriate for the job. The following list of techniques in Box 3 will help you select the right applicant for the job.

Sources of Employees


Effective recruiting requires that you know where and how to obtain qualified applicants. It is difficult to generalize about the best source for each business, but a description of the major sources follows.

  • Present employees -- Promotion from within tends to keep employee morale high. Whenever possible, current employees should be given first consideration for any job openings. This practice signals your support of current employees.
  • Unsolicited applicants -- Small businesses receive many unsolicited applications from qualified and unqualified individuals. The former should be kept on file for future reference. Good business practice suggests that all applicants be treated courteously whether or not they are offered jobs.
  • Schools -- High schools, trade schools, vocational schools, colleges and universities are sources for certain types of employees, especially if prior work experience is not a major factor in the job specification. Schools also are excellent sources for part-time employees.
  • Public employment offices -- The Employment Service of the U.S. Department of Labor works with state employment offices to provide no-cost brokerage of applicants who are seeking employment. Local offices will provide small businesses with applicants who have been screened on the basis of work experience, education and some psychological testing. They also have an up-to-date file on potential employees who possess a wide range of skills.
  • Private employment agencies -- These firms provide a service for employers and applicants by matching people to jobs in exchange for a fee. Some fees are paid by the applicants, and there is no cost to the employer; for highly qualified applicants in short supply, the employer sometimes pays the fee.
  • Employee referrals -- References by current employees may provide excellent prospects for the business. Evidence suggests that current employees hesitate to recommend applicants with below average ability. Word of mouth is one of the most commonly used recruiting sources in the small business community.
  • Help Wanted advertising -- Letting people know that the business is hiring is a key element in gaining access to the pool of potential employees. At its simplest, this type of advertising may take the form of a Help Wanted sign in the window. More sophisticated methods involve using local media, primarily print sources such as daily and weekly newspapers. The classified pages of newspapers are frequently consulted by active job seekers, including currently employed individuals who may be tempted by a more attractive position. Other advertising media include radio and television. These tend to have a wider appeal than the newspaper; however, the price of an advertisement is correspondingly higher.

Specialty media publications, such as trade association magazines and newsletters, may also produce quality job applicants. There are efforts in some parts of the country to offer small business employers access to cable television community bulletin boards. Another high-tech opportunity is to list positions on computer network bulletin boards.

Prices for help wanted advertising vary and the small business owner approaches them with caution. A well-placed, high-quality advertisement will attract good people, whereas, an expensive advertisement in the wrong medium may get no results. Some experimentation is worthwhile to most small businesses. Another suggestion is to ask other small business people in the area about their success with help wanted advertising. Learn from others' successes and mistakes.

Box 1 - Often Asked (but Illegal)


Questions in the Recruitment Process

  • How old are you?
  • Are you married?
  • Do you have any children?
  • How will you care for your children during work hours?
  • Where do you attend church/synagogue?
  • How old are your children?
  • Do you receive alimony or child support?
  • Are you Puerto Rican? (etc.)
  • Are you pregnant?
  • Send in a picture with your job application.
  • How much do you weigh?
  • What is your maiden name?
  • What is your father's surname?
  • Where were you born?
  • What clubs to you belong to?

Assessing Personnel Needs

Job Specification
 
The job specification describes the person expected to fill a job. It details the knowledge (both educational and
experiential), qualities, skills and abilities needed to perform the job satisfactorily. The job specification provides a standard against which to measure how well an applicant matches a job opening and should be used as the basis for recruiting.

Recruiting
 
As a small business owner-manager, you should be aware of the legal environment in which you operate. This is especially true when it comes to recruitment. Being aware of legislation that will affect your business is extremely important to efficient recruiting.

Congress has passed several laws that deal with discrimination in the workplace. The Civil Rights Act of 1964 and the Equal Employment Act of 1972 are two that small businesses owners should be especially aware of. The Equal Employment Opportunity Commission (EEOC), is charged with enforcing federal law against discrimination based on

  • Race.
  • Color.
  • National origin.
  • Sex.
  • Age (between 40 and 70).
  • Disability.
  • Veteran status.
  • Handicap.
  • Religion.

Another law to be aware of is the 1963 Equal Pay Act, which requires that men and women receive equal pay for equal work.

Box 1 is a list of illegal questions that are often asked during the recruitment process. Review them carefully to ensure that you avoid asking them when interviewing applicants.

Assessing Personnel Needs

Job Description

The job analysis is used to generate a job description, which defines the duties of each task, and other responsibilities of the position. The description covers the various task requirements, such as mental or physical activities; working conditions and job hazards. The approximate percentage of time the employee should spend on each activity is also specified. Job descriptions focus on the what, why, where and how of the job.

There are two excellent resources the small business owner can use to develop job descriptions. First, ask employees themselves to describe their jobs. A good employee may know more about the job than anyone else. Second, consult the Dictionary of Occupational Titles, published by the Government Printing Office, which contains over 20,000 job descriptions.

Assessing Personnel Needs

Job Analysis
 
Job analysis is a systematic investigation that collects all information pertinent to each task performed by an employee. From this analysis, you identify the skills, knowledge and abilities required of that employee, and determine the duties, responsibilities and requirements of each job. Job analysis should provide information such as

  • Job title.
  • Department.
  • Supervision required.
  • Job description -- major and implied duties and responsibilities.
  • Unique characteristics of the job including location and physical setting.
  • Types of material used.
  • Types of equipment used.
  • Qualifications.
  • Experience requirements.
  • Education requirements.
  • Mental and physical requirements.
  • Manual dexterity required.
  • Working conditions (inside, outside, hot, cold, dry, wet, noisy, dirty, etc.).

DEVELOPING A RESPONSIVE PERSONNEL SYSTEM


Assessing Personnel Needs

The small business owner should base the firm's personnel policies on explicit, well-proven principles. Small businesses that follow these principles have higher performance and growth rates than those that do not follow them. The most important of these principles are

  • All positions should be filled with people who are both willing and able to do the job.  

  • The more accurate and realistic the specifications of and skill requirements for each job, the more likely it is that workers will be matched to the right job and, therefore, be more competent in that job.
 
  • A written job description and definition are the keys to communicating job expectations to people. Do the best job you can! is terrible job guidance.

  • Employees chosen on the basis of the best person available are more effective than those chosen on the basis of friendship or expediency.

  • If specific job expectations are clearly spelled out, and if performance appraisals are based on these expectations, performance is higher. Also, employee training results in higher performance if it is based on measurable learning objectives.

The first step in assessing personnel needs for the small business is to conduct an audit of future personnel needs. Ask yourself

  • Can the workload you visualize be accomplished by the present work force? Will more or fewer employees be needed? Consider seasonal patterns of demand and probable turnover rates.

  • Can any jobs be eliminated to free people for other work?

  • What balance of full-time or part-time, temporary or permanent, hourly or salaried personnel do you need?

  • What does the labor supply look like in the future?

  • Will you be able to fill some of the jobs you've identified?How easily?

  • What qualifications are needed in your personnel?

Develop a method to forecast labor demand based on your answers to these questions. Once your needs are estimated, determine strategies to meet them.

The process of selecting a competent person for each position is best accomplished through a systematic definition of the requirements for each job, including the skills, knowledge and other qualifications that employees must possess to perform each task. To guarantee that personnel needs are adequately specified, (1) conduct a job analysis, (2) develop a written job description and (3) prepare a job specification.