Current trends in hr 4 28-08

Current Trends in HR

Kim Hester, Ph.D.Professor of ManagementArkansas State University

Current Trends

Current Trends

Current Trends

Harnessing New Technology

Current Trends

Rising Compensation Costs

1.Rising cost of benefits, especially health care

Great News: 2008

Health care costs for most employers is expected to be around 7%, a moderate increase compared to previous years

Employer Responses

Aggressive health care initiatives, such as higher deductibles, co-pays, and employee contribution levels.

• 88% of employees are required to pay some of the insurance premium out of their own pockets.

• The employee share rose from 14.0% in 1992 to 22.1% in 2005.

Source: Economic Policy Institute, 2008

Employee Contributions for Health Care

Employer Responses

Changes or elimination of employee health care coverage

Statistic: Employer coverage has declined from 61.5% in 1989 to 58.9% in 2000 and down to 55.9% in 2004 (the latest aggregate data available)

Source: Economic Policy Institute, 2008

Employer Responses

Focus on changing employee behaviors

Wellness programs Smoking cessation efforts Education of employees on health care options

and associated costs

Employer Responses

Some employers have been holding their health care costs to a 1% increase.

They're doing it by taking a multipronged approach, with programs to prod employees to take more responsibility for their health and to make more informed health care decisions.

Source: Watson Wyatt Worldwide and the National Business Group on Health

Employer ResponsesSuccessful employers are aggressively pushing

consumer directed health plans (CDHPs)

Combines a high deductible insurance policy with a tax advantaged health savings account

Firms are setting the premiums at 30% below traditional plans to encourage participation

Participation hit 15% this year, up from 10% in 2007 and likely to hit 20% in 2008


Employer Responses

Saving money by providing free drugs and supplies for chronic diseases (e.g., asthma, diabetes) that are known to lead to costly complications.

Goal is to get patients to stick to their treatment schedules; often tied to classes or coaching

Upcoming survey from Hewitt Associates indicates nearly 20% of firms do this now, and 47% are considering doing so in the future


Employer Responses

Paying the full amount of common preventive services can also help reduce costs

These include annual physicals, mammograms, prostate

screenings, flu shots, colonoscopies and prenatal office visits


Employer Responses Sending the sickest employees to the best doctors is

gaining as a strategy

Dubbed by some as a 20-20 approach - employers and their health plans use data to identify physicians rated in the top 20% for effective treatments and match them with the 20% of employees who most need care.

Employers provide financial incentives, (e.g., lower copayments) as incentives to use the top providers.

Eventually, firms will try predictive modeling to identify the sickest 20% of employees so steps can be taken today to "get ahead of the curve”


Employer Responses Increasing financial penalties for employees that poorly

manage their health

Many companies continue to reward workers who take health risk assessments and participate in health management programs, while punishing those who do not

Employers may deny a worker access to higher-benefit

plans if worker declines participation in wellness programs

Source: Watson Wyatt Worldwide and the National Business

Group on Health

Employer Responses

On-site medical clinics are growing in popularity Large companies staff clinics with own employees while

smaller firms contract out to nearby clinicsHelp provide primary care to workers at low or no cost On-site clinics lessen time employees spend away from work. On-site clinics expanding to include rehab services, dentistry,

X-ray and lab work Forms inviting specialists to come on-site and offer their

services. Clinics moving into more active management of workers'

health conditions


Employer Responses

Putting health care into employee’s hands

As health insurance costs continue to rise, employers are adopting a controversial new approach: ending group coverage and giving employees $50 to $200 or so a month to help buy their own health care

Source: USA Today, March 26, 2008

Rising Compensation Costs

2. Competitive pressure on increasing employee wages

Linking pay to organizational goals, employee productivity, and labor market normsPay-for-Performance ProgramsPerformance Management

Success of Programs

• Pay for Performance Works When:

It is measurable and objectiveThere are clear expectationsThere is commitment to training and supportFlexibility for input

Source: workforce.com 5/05

Failure of Programs

• Pay for Performance Falls Short When:

It pits employees against each otherIt pushes one outcome to the detriment of the

othersIt is so subjective it opens the organization and

managers to allegations of bias

Source: workforce.com 5/05

Key Drivers of Success

Better communication of performance standards with all levels of the organization

Clearly Specify Incentive Measures

Organizational measures: • service quality • teamwork • income growth • cost savings

Individual measures: • based on established performance goals within

individual areas of responsibility

Source: JE Rocco. http://danenet.wicip.org/snpo/

Challenges in Implementing Performance-Based Pay

• Pervading Attitude of Equality• Custom of Cost of Living Approach• Challenge of Performance Measurement• Discomfort with Judging Performance• Weaknesses in Data Collection• Inadequacy of Funding Resources

Source: Performance-Based Pay Plans Family Services of Western Pennsylvania; Marc Andrews Kathy Yarzebinski; Catherine Greeno;Christopher Gjesfjeld; 2006

Employee Productivity and Performance ManagementPhase 1

• Business strategy—including its mission, vision and objectives, and specific outcomes required to achieve the overall strategy—are defined.

Goals and plans for how to measure achievement must be identified.

Outputs and measures are defined

Data collection and analysis processes and procedures are developed and implemented

Most importantly—employees come to understand their individual roles and responsibilities with respect to performance measurement

Employees are given the fundamental information, resources, competencies, and motivation to ensure their successful execution.

Employee Productivity and Performance Management

Phase 2

Data that informs areas of success and challenge for the organization are collected and analyzed

Specific elements and factors that contribute to successes or challenges along with new and/or modified information needs and lessons learned are identified


Phase 3

Solutions to address identified challenges are developed and implemented, along with mechanisms to ensure the continuation of program or organizational successes

Performance measurement systems and processes may be modified as needed to ensure that information collected through the performance measurement process is timely, relevant, and sufficient—steps that cycle back to performance planning

According to the U.S. Government Accountability Office (GAO), federal managers reported having more performance measures in 2003 than in 1997, but they also reported that use of performance data for program management activities has essentially remained unchanged


Phase 4• Several commonly used methodologies for performance

measurement

Behavior-Based Approaches - These approaches tend to use specific performance factors to evaluate staff.

1. Quantitative -- use of numbers or frequencies of specific behaviors observed or reported

2. Qualitative -- use of subjective impressions of raters

Behavior-Based Approaches

Behaviorally anchored scalesBroad categories of practice are identified, ideally

through collaborations between supervisors and staff.

Specific job behaviors are then linked to the categories. Measures of staff member behavior are rated on a scale in relation to specific behavior items, such as "understands department functions."


Behavioral frequency scale

Desired behaviors are described and the staff member is evaluated on how often those behaviors occur

http://filebox.vt.edu/users/dgc2/staffinghandbook/perfappraisaltables.htm


Weighted checklist - method provides a list of performance related statements that are weighted

Staff members are judged on a scale indicating the degree to which the statement accurately describes performance


Forced-choice method - list of performance related statements about job performance are evaluated on how well they discriminate among staff and how important they are to unit or institutional performance

Other Approaches to Measuring Performance

Results-Focused Approaches

Management by Objectives (MBO) and Accountabilities and Measures

Source: Grote, D. (1996). The complete guide to performance appraisal. New York: American Management Association.

Core Elements in MBO

Formation of trusting and open communication throughout the organization

Mutual problem solving and negotiations in the establishment of objectives

Creation of win-win relationships Organizational rewards and punishments based on job-related

performance and achievement Minimal uses of political games, forces, and fear Development of a positive, proactive, and challenging

organizational climate


Steps in MBO Process

Formulate long-range goals and strategic plans Develop overall organizational objectives Establish derivative objectives for major operating units Set realistic and challenging objectives and standards of performance for

members of the organization Formulate action plans for achieving the stated objectives Implement the action plans and take corrective action when required to

ensure the attainment of objectives Periodically review performance against established goals and objectives Appraise overall performance, reinforce behavior, and strengthen motivation.

Begin the cycle again


Team Performance Measurements

Team appraisal matrix - team members are listed on a vertical dimension, and specific tasks on the horizontal

• Such an arrangement reflects individual performance, and collectively reflects the overall team performance

Source: Creamer, D.G., & Janosik, S. M. Performance appraisal: Accountability that leads to professional development. In S. M. Janosik, D. G. Creamer, J. B. Hirt, R. B. Winston, Jr., S. Saunders, & D. Cooper (Eds.), Supervising new professionals in student affairs. New York: Brunner-Rutledge.

Success Factors in Performance Management Systems

Success in obtaining meaningful performance data and using this data to manage, and institutionalizing these practices so that they become ingrained in the organization

This depends on several factors:

1. Presence of a culture of accountability within the organization

2. Leadership demonstrates commitment to managing for results.

3. Staff engages and invests in the process, which leads to feelings of empowerment and continuity.

Points to Remember

Before implementing a performance measurement or management system, see if other areas of your organization have implemented their own system

Anticipate and consider unintended consequences of measuring performance

Reinforced behavior will be repeated, so carefully consider what behaviors should be emphasized (e.g., individual achievements versus team achievements)

Communication of performance information among relevant stakeholders crucial to the success of any performance measurement or management system

Current Trends

Developing Human Capital

1. Managing talent – recruitment, development, and retention of the best workers

Employers need to find innovative ways to “brand” themselves, setting them apart from competitors and becoming an “employer of choice”

As talent becomes scarce, development of current employees for promotional opportunities


2. Labor shortage – finding the right talent

Statistic: By 2020, gap between available and required skilled workers is projected to be 14 million

Use of e-recruiting and non-traditional labor pools

Establishing selection system geared to retention: better skills assessment, knowledge, and fit for jobs

Source: Kaihla, P. Business 2.0, 4(8), 97-104.


3. Higher ethical standards

Greater focus on trust and integrity at all levels

Regulatory compliance issues (i.e., Sarbanes-Oxley Act)

Current Trends

• Harnessing New Technology1. Use of technology to communicate with

employees

Company intranets

E-Newsletters

Company emails


2. A move toward single software platforms

Integrated HRIS

PeopleSoft

SAP

Oracle

Harnessing New Technology Specialized applications

Succession planning

Applicant tracking

Job evaluation

Employee performance evaluation

Grievance handling


Perhaps most significant development is the use of organizational intranets

An intranet is internal network that makes use of World Wide Web technology (browsers, servers, etc.) to gather and disseminate information within the firm

Intranets may be linked to the external Internet, but are

secured so that only authorized users can access information on internal components


3. Evolution of new technologies

• Employee Self-Service and Data Exchange

Capability to maintain personal data

View context-specific information

Initiate benefits transactions

Internet-based tools are quickly becoming the preferred method for employees to execute benefits transactions

Benefits of Automated Benefit Administration

• Reducing and eliminating extensive manual efforts formerly needed to:

Distribute, collect, and process forms Test programming required to export/import data Administer the periodic data exchanges Reconcile data Resolve employees’ problems resulting from the time lag between

data collection and processing

Source: Benefits Perspectives: Current Issues in Employee – Winter 2002-2003; Milliman USA

Current Trends

Managing the Changing Workforce1. Increased diversity in the workforce

Creating workplace that respects and includes differencesRecognizing unique contributions individuals with

differences can makeCreating work environment that maximizes potential of all

employees

Managing the Changing Workforce

2. Work-life balance

Employees experiencing burnout due to overwork and increased stress – in nearly all occupations

Rise in workplace violence, increase in levels of absenteeism as well as rising workers’ compensation claims

Causes range from personal ambition and the pressure of family obligations to the accelerating pace of technology

Source: Center for Work Life Policy

Work-Life Balance

According to study by Center for Work-Life Policy, 1.7 million people consider their jobs and work hours excessive

50% of top corporate executives leaving current positions 64% of workers feel work pressures are “self-inflicted”, and

taking a toll In the US, 70%, and globally, 81%, say jobs are affecting their

health. Between 46% and 59% of workers feel stress is affecting

their interpersonal and sexual relationships. Males feel there is stigma associated with saying “I can’t do

this”

Managing the Changing Workforce3. Structural shift from the manufacturing to the

service sector Growth in part-time employment Rising prominence of women in the workforce Gradual ageing of labor force with fewer young

people entering workforce and participation rates among older workers increasing

Growing importance of temporary employment and self employment

Adoption of flexible working practices, such as job sharing and the increasing opportunity to work from home.

ConclusionsExciting time for HR professionalsMore emphasis on cost containment and controlFocus on employee responsibility and

involvement at workGreater use of technology in communication with

employeesMore flexible patterns of work