Introduction to Business

1. Introduction to Business Human Resources

2. Module Learning Outcomes Recognize the role of human resource management in planning, recruiting, and managing a workforce 15.1: Explain how the functions of human resource management contribute to business success 15.2: Summarize and discuss key laws affecting human resource management 15.3: Discuss how organizations can effectively recruit and hire employees 15.4: Discuss effective approaches to training, developing, and rewarding employees 15.5: Describe the different HR management options for employee termination 15.6: Discuss the challenges facing today’s HR managers

3. Human Resource Management

4. Learning Outcomes: Human Resource Management 15.1: Explain how the functions of human resource management contribute to business success 15.1.1: Describe the core functions of human resource management 15.1.2: Explain how the functions of human resource management contribute to business success

5. Human Resource Management Human resource managers are responsible for the activities needed to recruit, hire, train, develop, and retain a workforce at the employee level. Core Functions of HR • Staffing: this involved the activities of hiring new full-time and part-time employees • Training and professional development: training, providing training opportunities, and preparing management prospects • Compensation: setting compensation levels, negotiating group health insurance rates, discussing raises, ensuring compliance with legal and cultural expectations regarding compensation • Safety and health: understanding and implementing best safety and health practices • Employee and labor relations: defending employee rights and coordinating with unions

6. Why is HR Important? HR departments strive to offer benefits that will appeal to workers, thus reducing the risk of losing corporate knowledge to employee turnover. HR promotes diversity and inclusion as well as using technology to advance employee engagement.

7. Human Resources and Laws

8. Learning Outcomes: Human Resources and Laws 15.2: Summarize and discuss key laws affecting human resource management 15.2.1: Explain the function of the Equal Employment Opportunities Commission 15.2.2: Summarize key anti-discrimination legislation 15.2.3: Summarize key labor and safety legislation 15.2.4: Discuss key laws affecting human resource management

9. Human Resources and Laws Federal and state legislation has been enacted to prevent discrimination, set minimum wages, establish maximum work hours, and set standards for health and safety.

10. Equal Employment Opportunity Commission The Equal Employment Opportunity Commission (EEOC) enforces employment discrimination laws and regulations. The EEOC was established by the Civil Rights Act of 1964. The EEOC’s missions is to stop and remedy unlawful employment discrimination. Specifically, the EEOC is charged with “enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information.”[6]

11. Anti-Discrimination Legislation The intent of U.S. anti-discrimination legislation is to protect workers from unfair treatment. In brief, illegal discrimination is the practice of making employment decisions based on factors unrelated to performance. Over the years, amendments to the original Civil Rights Act of 1964 have expanded the scope of the law, and today the EEOC enforces laws that prohibit discrimination based on seven protected categories including age, disability, genetic information, national origin, pregnancy, race, color, religion, and sex.

12. The Civil Rights Act of 1964 • The Civil Rights Act of 1964 prohibits employment discrimination on the basis of race, color, religion, sex, or national origin. • Title VII of the Civil Rights act prohibits sexual harassment.

13. Other Anti-Discrimination Laws • Title VII of the Civil Rights Act of 1964: prohibits sexual harassment • Pregnancy Discrimination Act: prohibits discrimination against women based on pregnancy, childbirth, or related condition • Equal Pay Act (EPE) of 1963: prohibits discrimination on the basis of gender in compensation for substantially similar work under similar conditions • Age Discrimination in Employment Act (ADEA) of 1967: prohibits employment discrimination against individuals 40 years of age or older based on age • Title I of the Americans with Disabilities Act (ADA) of 1990: prohibits discrimination against a qualified person with a disability and requires employers to make reasonable accommodations for applicants and employees with known physical or mental limitations who are otherwise qualified unless that accomodation would pose an “undue hardship” or material impact on an employer’s business operations. • Genetic Information Nondiscrimination Act of 2008: prohibits discrimination against applicants or employees based on an individual’s genetic information or family medical history

14. Labor Legislation Important US labor legislation • National Labor Relations Act of 1935: created collective bargaining for labor-management and limited the rights of management interference in the right of employees to have a collective bargaining agent. • Fair Labor Standards Act of 1938: established a national minimum wage, forbade “oppressive” child labor, and provided overtime pay in designated occupations • Occupational Safety and Health Act of 1970 (OSHA): The OSHA act established the Occupational Safety and Health Administration, a Department of Labor agency charged with setting and enforcing standards for “safe and healthy working conditions for working men and women”.

15. More Labor Legislation More important US labor legislation • Immigration Reform and Control Act of 1986: requires employers to verify and identify the employment authorization of all new hires whether they are citizens or non-citizens. • Family and Medical Leave Act of 1993: requires businesses with fifty or more employees to provide up to twelve weeks of unpaid leave per year upon the birth or adoption of an employee’s child or in the event of serious illness of a parent, spouse, or child.

16. The Top 5 Manager Mistakes that Cause Lawsuits According to the EEOC, employee lawsuits have risen 425 percent since 1995, and the trend does not appear to be diminishing. Sadly, many of these lawsuits can be avoided because manager mistakes are at the center of many of them. According to Business Management Daily, five of the top mistakes managers make in this area are: • Violating Title VII of the Civil Rights Act of 1964 • Violating the Age Discrimination in Employment Act • Violating the Americans with Disabilities Act • Violating the Fair Labor Standards Act • Violating the Family and Medical Leave Act

17. Practice Question 1 Federal anti-discrimination legislation requires employers to: • Give preference to a person with a disability, regardless of his or her qualification for the job. • Give preference to candidates and employees under the age of 40. • Allows employers to terminate individuals who file a claim with the EEOC. • Evaluate candidates and employees on factors related to performance and not protected categories such as color, disability or sex.

18. Practice Question 2 Labor and safety legislation assumes that: • Safety risks are the cost of having a job. • Workers have a right to a safe workplace. • Employees must choose between family and work. • Employees are responsible for reporting any applicants who are not citizens to an U.S. Immigration and Customs Enforcement (ICE) officer.

19. Recruitment and Hiring

20. Learning Outcomes: Recruitment and Hiring 15.3: Discuss how organizations can effectively recruit and hire employees 15.3.1: Discuss how businesses benefit from diversity in the workplace 15.3.2: Describe common recruitment strategies 15.3.3: Describe the components of the hiring process

21. Benefits of a Diverse Workforce The concepts of diversity can include age, ethnicity, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational background, geographic location, income, marital status, military experience, religious beliefs, parental status, and work experience.[1] Benefits of diversity • Innovation: diverse teams lead to more innovation. • Localization: a company that employs a diverse workforce is better able to understand the demographics of the various customer markets. • Adaptability: diversity fosters creativity and improved decision making through a deeper and more comprehensive worldview

22. The Role of Human Resource Management in Managing Organizational Diversity Human Resources should consider diversity in the following areas: • Hiring • Promotion • Compensation equality • Training • Employee policies • Legal regulations • Ensuring accessibility of important documents

23. Challenges to Diversity Some of the most common challenges to building a diverse workforce are the following: • Stereotypes: individuals in the organization may have biases about other similar or different from themselves. • Culture: managers must understand the customs and cultural norms of employees and ensure they don’t violate important cultural rules. • Communication: whether via language or cultural signals, communication can be especially challenging in the interpersonal arena. Poor cross-cultural communication can lead to employee misunderstandings or workplace inefficiencies.

24. Common Recruitment Strategies HR professionals manage the recruitment process in order to identify the pool of qualified applicants. Both internal and external candidates are selected based on job specifications, which are the result of an analysis of the job/position.

25. Internal Recruitment Internal recruitment is often the most cost-effective method of recruiting potential employees, as it uses existing company resources and talent pool to fill needs and therefore may not incur any extra costs. This is done in two principal ways: • Advertising job openings internally • Using networking: employee referrals, industry contacts and membership in professional organizations

26. External Recruitment The primary goal of external recruitment is to create diversity and expand the candidate pool. External recruitment can be done in a variety of ways: • Online recruitment • Traditional advertising • Job fairs and campus visits • Headhunters and recruitment services

27. The Hiring Process • Each job description should be associated with a list of critical skills, behaviors, or attitudes that will make or break the job performance. • When screening potential employees, managers need to select based on cultural fit and attitude as well as on technical skills and competencies. • HR Managers use interviews, screening tests, and background checks for screening. • In the U.S., the selection process is subject to the Equal Employment Opportunity guidelines, which means that companies need to be able to show their selection process is valid, reliable, related to critical aspects of the job, and nondiscriminatory

28. Interviews The best interviews follow a structured framework in which each applicant is asked the same questions and is scored with a consistent rating process. Having a common set of information about the applicants to compare after all the interviews have been conducted helps hiring managers avoid prejudice and ensure that all interviewees are given a fair chance. • Behavioral interviews ask the applicant to reflect on his or her past experiences. • Situational interviews require the applicant to explain how he or she would handle a series of hypothetical situations.

29. More Components of the Hiring Process Selections Tests: Understanding the applicant’s personality, values, and motivation for wanting the job can be a critical part of the hiring process. Some companies use behavioral assessments and personality profiles to predicts how individuals will interact with their coworkers, customers, and supervisors. Background Checks: Background checks are a way for employers to verify the accuracy of information provided by applicants resumes and applications. Employers must obtain written consent from an applicant before conducting a background check. Evaluation: Employers may choose to use just one or a combination of the screening methods to predict future job performance. It is important for companies to use metrics to assess the effectiveness of their selective hiring process to provide a benchmark for future performance as well as a means for evaluating the success of a particular method.

30. Class Discussion: Wording Your Job Advertisement While this advertisement is entertaining, it might create a legal problem. Why might an HR professional advise against using this ad?

31. Training, Development, and Rewards

32. Learning Outcomes: Training, Development, and Rewards 15.4: Discuss effective approaches to training, developing, and rewarding employees 15.4.1: Describe different approaches to employee training 15.4.2: Describe different approaches to professional development 15.4.3: Describe different approaches to performance appraisals 15.4.4: Summarize different forms of employee compensation

33. Approaches to Employee Training Training is teaching or developing in oneself or others, any skills and knowledges that relate to specific useful competencies. A well-trained employee acquires and advantage for themselves. By participating in training, employees can deepen or expand their existing skill set and increase their understanding of an organization

34. Benefits of Training Benefits of training include: • Increased job satisfaction and morale • Increased employee motivation • Increased efficiencies in processes, resulting in financial gain • Increased capacity to adopt new technologies • Increased innovation in strategies and products • Reduced employee turnover • Enhanced company image • Risk management

35. Needs for Training The need for training exists in every business. The nature of training varies depending on the type of business and operations involved. A company uses a training needs assessment to determine what sort of training is needed. Generally, training needs assessments follow three steps: • Identify the need • Perform a gap analysis • Assess training options

36. Types of Training • On-the-job training takes place in a normal working situation, usual actual tools, equipment, documents, or materials that trainees will use once they are fully trained. • Off-the-jobtraining takes place away from normal work situations, so the employee is not a directly productive worker while such training takes place • Advantage of allowing people to get away from work and concentrate more thoroughly on the training itself.

37. Class Discussion: Training Think about any training or professional development you have received in the past. Was the training: • one-on-one in the workplace? • in a classroom or conference room? • online through a web conference? Discuss the positives and negatives of each of the above settings. Which was the most effective in transferring knowledge? Which was the least effective? How would you design an effective training program for employees?

38. Approaches to Professional Development Professional development refers to skills and knowledge attained for both personal development and career advancement. Individuals may pursue professional development because of an interest in lifelong learning, a sense of moral obligation, to maintain and improve professional competence, enhance career progression, keep abreast of new technology and practice, or to comply with professional regulatory organizations. There are a variety of approaches to professional development including consultation, coaching, communities of practice, lesson study, mentoring, reflective supervision, and technical assistance. The 21st century has seen a significant growth in online professional development partially due to easy customization and low cost.

39. Approaches to Performance Appraisals A performance appraisal (PA) or performance evaluation is a systematic and periodic process that assesses an individual employee’s job performance and productivity, in relation to certain pre-established criteria and organizational objectives. A PA is typically conducted annually though the frequency and policies concerning PAs vary widely between workplaces.

40. Developing an Appropriate Appraisal Process Peter Drucker suggests using S.M.A.R.T Objectives in the appraisal process: Specific Measurable Achievable Realistic Time-related Employee evaluations include: • An assessment of how well the employee is doing   • Employee goals with deadlines • Feedback from coworkers and supervisors • Details about workplace standing, promotions, and pay raises

41. Methods of Performance Appraisal Some of the more commonly used methods for gauging employee’s performance are: • Graphic rating scales: assigning some form of rating system to pertinent traits. Ratings can have numerical ranges (1-5) descriptive categories (below average, average, above average), or scales between desirable and undesirable traits. • Behavioral methods: these methods identify to what extent an employee displays certain behaviors, such as asking a customer to identify the usefulness of a sales representative’s recommendation. • 2+2: The 2+2 feedback system demonstrates how appraisals can be used primarily for improvement purposes. The approach suggests offering two compliments and two suggestions for improvement focused around high-priority areas

42. Form of Employee Compensation Employee compensation is the cost of acquiring human resources for running operations Forms of employee compensation include: • Salary • Wage Systems • Hybrid wage systems • Benefits • Fringe benefits

43. Salary • Form of compensation paid periodically by an employer to an employee, the amount and frequency of which may be specified in an employment contract. • Employees work however many hours are necessary to accomplish organizational goals and objectives. • Calculated in terms of annual, monthly, or weekly earnings instead of hourly pay. • Employee stock options (ESO) sometimes part of employee compensation package. The objective is to give employees an incentive to behave in ways that will boost the company’s stock price.

44. Wage Systems Based on hours worked or some other measure of production including: • Time rate: under this system a worker is paid by the hour for time worked. Time worked beyond a set amount is paid as “overtime” • Differential time rate: different hourly rates are fixed for different shifts or different assignments • Payment by piecework: The worker’s wages depend on his or her output and the rate of each unit of output; it is in fact independent of the time taken by the worker. For every “piece” a worker produces, they are paid a set amount.

45. Hybrid Wage Systems Hybrid wages – most common in sales and management • Straight commission: The employee receives not compensation from their employer unless they close a sale or a transaction. • Salary plus commission: Only a portion of an employee’s compensation comes from the commission. While the employer pays the employee when they make a sale, they also pay some level of wages every pay period. • Salary plus bonus: When an employee is paid salary plus bonus, the bonus is not paid unless sale-volume or production goals are met or exceeded.

46. Common Benefits • Relocation assistance • Medical, prescription, vision, and dental • Dependent care • Retirement benefit • Group term life and long-term care insurance • Legal assistance • Child care benefits • Transportation benefits • Paid time off (PTO) in the form of vacation and sick pay

47. Fringe Benefits The term fringe benefits was coined by the War Labor Board during World War II to describe the various indirect benefits that industry had devised to attract and retain labor when direct wage increases were prohibited. The term perks (from “perquisites”) is often used colloquially to refer to those benefits of a more discretionary nature. Perks are often given to employees who are doing notably well or have seniority or particularly high-value skills. Common perks are hotel stays, free refreshments, leisure activities on work time, stationery, allowances for lunch, and use of a company vehicle. Companies that offer these types of work-life perks seek to increase employee satisfaction, boost loyalty and minimize turnover by providing valued benefits that go beyond a base salary.

48. Practice Question 3 It’s your first day on the job and the Human Resource manager is walking you through the new employee paperwork and explaining company benefits and incentives. She mentions that one of the upsides of strong performance is a $3,000 annual training bonus that can be used to take business courses at the local community college or attend relevant conferences or seminars. This bonus will enable you to engage in: A. personal development B. professional development C. off-the-job training D. on-the-job training

49. Practice Question 4 Performance appraisal is a process of assessing an individual employee’s job performance relative to pre-established criteria and organizational objectives. Which of the following is an effective approach to performance appraisal? A. Subjective evaluation by a supervisor or manager. B. Using a personality assessment to determine role/culture fit. C. Using a standard set of criteria for all employees. D. Using a 2+2 (complement plus constructive feedback) method.

50. Practice Question 5 Employee compensation is the cost of acquiring human resources and may take the following forms: A. An annualized salary or hourly wage B. Annualized salary, wage or incentive payment structures and a range of benefits. C. An annualized salary; hourly workers are not considered employees. D. Employee compensation consists of an annualized salary and health and retirement benefits.