20140829084727_Topic 9 Managing Human Resource

STUDY GUIDE BMSB5103 Small Business Management

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Topic 9: Managing Human Resources

Learning Outcomes

By the end of this topic, you should be able to:

1. Explain the importance of employee recruitment and list some sources that can be useful in finding suitable applicants;

2. Identify the steps to take in evaluating job applicants;

3. Describe the roles of training and development for both managerial and non-managerial employees in a small business;

4. Explain the various types of compensation plans, including the use of incentive plans; and

5. Discuss the human resource issues of co-employment, legal protection, labour unions and the formalising of employeremployee relationships.

Topic Overview

Various resources are normally found in a small business. A unique patent, a

business money in the bank and input materials from suppliers are considered

as resources of technology, finance and inputs respectively. Employees

represent another essential resource and perhaps one of the most important

resources other than the entrepreneur himself. To enable a small business to

compete in the marketplace, an entrepreneur needs to strategically plan on how

to find and hire the best available people per given resources. This is simply due

to the fact that many strategies of the human resource management (HRM)

practised by multinational corporations (MNCs) do not necessarily work for small

business. Small businesses are found to be less likely to use professional HRM

practices related to recruitment, training, performance assessment, and other

business operations. This may contribute to less efficiency and productivity in

some small businesses, if not many. Thus, there is a clear need to present HRM

practices that work best for small business and this topic represents what it takes

to be a successful business.


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Focus Areas and Assigned Readings

Focus Areas Assigned Readings

9.1 Recruiting Personnel Explain the importance of employee

recruitment and list some sources that can be useful in finding suitable applicants.

Moore et al. (2010). Chapter 20, pp 521-528 Extra Readings: Scarborough (2012). Chapter 19, pp 651-655; Schaper et al. (2011). Chapter 13, pp 318-321.

9.2 Evaluating Prospects and Selecting Employees

Identify the steps to take in evaluating job applicants.


9.3 Training and Developing Employees Describe the roles of training and

development for both managerial and non-managerial employees in a small business.


9.4 Compensation and Incentives for Employees

Explain the various types of compensation plans.


9.5 Special Issues in Human Resource Management

Discuss the human resource issues of co-employment, legal protection, labour unions, and the formalising of employer-employee relationships.



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Other Sources1. The role of human resource

management in corporate social responsibility http://corostrandberg.com/wp-content/uploads/files/CSR_and_HR_Management1.pdf

2. Managing human resources for innovation and creativity http://utminers.utep.edu/asinghal/Reports/Gupta-Singhal-Managing%20Human%20Resources...%20%2012.12.06.pdf

3. The Human Challenge, part of the Venturing: The Entrepreneurial Challenge series produced by Vermont ETV, illustrates several creative ways in which founders of entrepreneurial companies have involved their employees in the growth and success of their ventures. When business owners understand and embrace the notion that motivated employees can make a major contribution to a companys development, they are then able to work with employees to promote structures and activities that increase employee motivation, satisfaction, and performance. The series is distributed by NIMCO, Inc. and is available at http://school-careers.nimcoinc.com

4. PriceWaterhouseCoopers provides an Internet-based video with Michael Rendell, partner and leader of Human Resource Services, talking about the challenges of managing tomorrow's people. The video and transcript are at http://www.pwcmultimedia.com/1007_hr_mgmt/1007_hr_mgmt.html

5. Small Business School video http://www.modernpostcard.com

American Society for Control http://www.asq.org


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Content Summary

9.1 Recruiting Personnel

(Explain the importance of employee recruitment and list some sources

that can be useful in finding suitable applicants).

Sources of Employees

Figure 9.1: Sources of employees

Source: Moore et al. (2010), Chapter 20

x The Need for Quality Employees (a) No substitute for high-quality employees

(b) Recruitment and selection of employees establish a foundation

(c) Most successful companies move ahead of competition because they recognise that employees are the business to customers and others

x The Lure of Entrepreneurial Firms (a) Requires small firms to identify their distinctive advantages

(b) Small firms are able to offer professional, managerial and technical personnel greater job variety and freedom than larger businesses

(c) Drawbacks such as limited employee benefits may be offset with potential advantages


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x Sources of Employees (a) Walk-ins

(b) Help wanted advertising

(c) Schools

(d) Public employment offices

(e) Private employment agencies

(f) Temporary help agencies

(g) Internet recruiting

(h) Employee referrals

(i) Executive search firms (possibly using head-hunters)

x Diversity in the Workforce (a) Workforce diversity

(b) Diversity in itself can bring innovation and have a positive effect on problem solving

x Job Descriptions (a) Personnel must fit the positions

(b) A job description needs to outline or summarise the work to be performed

(c) Job specifications are a list of skills and abilities needed to perform a specific job

9.2 Evaluating Prospects and Selecting Employees

(Identify the steps to take in evaluating job applicants) x Step 1: Using application forms x Step 2: Interviewing the applicant x Step 3: Checking references and other background information x Step 4: Testing the applicant x Step 5: Requiring physical examinations


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9.3 Training and Developing Employees

(Describe the roles of training and development for both managerial and non-managerial employees in a small business)

x Basic Components of Training and Development (a) Employee training

(b) Management development

x Orientation for New Personnel (a) New employee introduction to the job

(b) Recognise employee sensitivity

x Training to Improve Quality (a) Training designed to promote high-quality workmanship

(b) Ongoing supervision with special classes and seminars helpful to all employees

x Training of Non-Managerial Employees x From Training to Implementation

Barriers to implementation of training based in human nature

x Features of T&D programme (a) Put it on paper

(b) Measure results

(c) Get peers to help

(d) Involve supportive superiors

(e) Provide access to experts

x Development of Managerial and Professional Employees Management development programmes require serious consideration

of the following factors:

(a) The need for development

(b) A plan for development

(c) A timetable for development

(d) Employee counselling


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9.4 Compensation and Incentives for Employees

(Explain the various types of compensation plans, including the use of

incentive plans)

x Wage and Salary Levels (a) Small firms must be competitive in order to attract well-qualified

personnel

(b) Payments based on increments of time or vary with the output of the employees (commission basis)

x Financial Incentives (a) Designed to motivate employees to increase their productivity

(b) Piecework is pay based on number of units products

(c) Keys to developing effective bonus plans

(d) Set attainable goals

(e) Include employees in planning

(f) Keep updating goals

x Stock Incentives (a) Sometimes used to attract and hold key personnel

(b) ESOPs may provide employees a share of ownership in the business which should result in improvements in productivity

x Employee Benefits (a) Supplements to compensation

(b) May include such things as vacation time, holidays, health insurance, retirement compensation

9.5 Special Issues in Human Resource Management

(Discuss the human resource issues of co-employment, legal protection,

labour unions, and the formalising of employer-employee relationships)

x Co-Employment Agreements (a) An alternative to direct hiring

(b) Professional employer organisations (PEOs)


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x Legal Protection of Employees (a) Civil Rights Act

(b) Occupational Safety and Health Act

(c) Fair Labour Standards Act (FLSA)

(d) Family and Medical Leave Act

x Labour Unions (a) Unionisation less common in service businesses

(b) Labour unions complicate the relationship between the small

company and its employees

x Formalising Employer-Employee Relationships (a) As employees are added, the benefits of informality decline and

the costs increase

(b) Goals must be specific, measurable, achievable, realistic and time-bound

x The Need for a Human Resource Manager (a) Small firms may not be able to afford a full-time specialist

(b) Certain conditions favour the appointment of a human resource manager in a small business

(c) Substantial number of employees (100 or more suggested as a guideline)

(d) Employees are represented by a union

(e) Labour turnover rate is high

(f) Need for skilled or professional personnel creates problems in recruitment or selection

(g) Supervisors or operative employees require considerable training

(h) Employee morale is unsatisfactory

(i) Competition for personnel is keen

(j) Owner typically functions as human resource manager in small business


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Study Questions

1. Why is it so important for small companies to hire the right employees? What can small business owners do to avoid making hiring mistakes?

2. Explain the differences among job simplification, job enlargement, job rotation and job enrichment. What impact do these different job designs have on workers?

3. In what ways is the workforce becoming more diverse and how do these changes affect recruitment by small companies?

4. What are the positive and negative features of background checks? How important are these checks to the selection of high-quality employees?

5. What problems are involved in using incentive plans in a small company? How would the nature of the work affect managements decision concerning the use of such a plan?

6. Based on this case study, answer the questions that follow.

ZAMAN ENTERPRISE SDN BHD

Zaman Enterprise Sdn Bhd, is a clothing manufacturer which supplies branded mens clothes to supermarkets across the country. It distributes 15 percent of its profits quarterly to its eight employees. This money is invested for their benefit in a retirement plan and is fully vested after five years. An employee, therefore, has a claim to the retirement fund even if he leaves the company after five years of service. The employees range in age from 25 to 59 and have worked for the company from three to 27 years. They seem to have recognised the value of the programme. However, younger employees sometimes express a preference for cash over retirement benefits.

Source: Adapted from Moore (2010), Chapter 20

(a) What are the most important reasons for structuring the profit-sharing

plan as a retirement programme?

(b) What is the probable motivational impact of this compensation

system?

(c) How will an employees age affect the appeal of this plan? What other

factors are likely to strengthen or lessen its motivational value?

Should it be changed in any way?


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6. Based on this case study, answer the questions that follow.

NEW JOB

The following is an account of one employees introduction to a new job:

It was my first job out of high school. After receiving a physical exam and a pamphlet on benefits, I was told by the manager about the dangers involved in the job. But it was the old-timers who explained what was really expected of me. The company management never told me about the work environment or the unspoken rules. The old-timers let me know where to sleep and which supervisors to avoid. They told me how much work I was supposed to do and which shop steward to see if I had a problem.

Source: Adapted from Moore (2010), Chapter 20

(a) To what extent should a small firm use old-timers to help introduce

new employees to the workplace? Is it inevitable that newcomers will

look to old-timers to find out how things really work?

(b) How would you rate this firms orientation effort? What are its

strengths and weaknesses?

(c) Assume that this firm has fewer than 75 employees and no human

resource manager. Could it possibly provide more extensive

orientation than that described here? How? What low-cost

improvements, if any, would you recommend?

Documents

20140829084727_Topic 9 Managing Human Resource