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see file This discussion post should demonstrate you have thoughtfully considered the weeks content and be reflective in nature.  Discuss what it takes to set up an HR department or HR processes in a small company.  There are literally hundreds or thousands of resources.  Heres one of the websites with a quick overview.  But every company with any employee needs to manage employee performance, discipline, laws, and engagement.  What can a small company do? https://www.fool.com/the-blueprint/human-resources-for-small-business/  Chapter 17 Managing Global Human Resources PowerPoint Presentation by Charlie Cook The University of West Alabama Part Five | Employee Relations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* WHERE WE ARE NOW… Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* More managers and employers today find themselves managing people internationally. The purpose of this chapter is to improve your effectiveness at applying your human resource knowledge and skills when global issues are involved. The topics we’ll discuss include the internationalization of business, inter-country differences affecting HR, improving international assignments through selection, and training and maintaining international employees. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* List the HR challenges of international business. Illustrate with examples how intercountry differences affect HRM. List and briefly describe the main methods for staffing global organizations. Discuss some important issues to keep in mind in training, appraising, and compensating international employees. Explain with examples how to implement a global human resource management program. LEARNING OUTCOMES Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* HR and the Internationalization of Business The Global Challenges Coordinating market, product, and production plans on a worldwide basis Creating organization structures capable of balancing centralized home-office control with adequate local autonomy Extending HR policies and systems to service staffing needs abroad Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Taking the company global triggers various management challenges. The employer has to install all those management systems it needs to manage its overseas activities. These management systems include organization structures, managerial controls, worldwide banking relationships, and, of course, human resource management systems for recruiting, selecting, training, and appraising and compensating its workers abroad. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Challenges of International HRM Deployment Getting the right skills to where they are needed, regardless of geographic location Knowledge and Innovation Dissemination Spreading state-of-the-art knowledge and practices throughout the organization regardless of their origin Identifying and Developing Talent on a Global Basis Identifying those who can function effectively in a global organization and developing their abilities Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Taking the company global triggers various management challenges. The employer has to install all those management systems it needs to manage its overseas activities. These management systems include organization structures, managerial controls, worldwide banking relationships, and, of course, human resource management systems for recruiting, selecting, training, and appraising and compensating its workers abroad. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Intercountry Differences Affecting HRM International Human Resource Management Labor relations Political/Legal systems Economic systems Cultural factors and ethics issues Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Companies operating only within the United States generally have the luxury of dealing with a relatively limited set of economic, cultural, and legal variables. A company operating multiple units abroad doesn’t face such homogeneity. Managers have to be cognizant of and generally adapt their human resource policies and practices to cope with the cultural, political, legal, and economic differences among countries. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Global Differences and Similarities in HR Practices International HRM Training and development practices Use of pay and other incentives Purpose of performance appraisal Personnel selection procedures Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* The wide variations in human resource management practices among companies around the world impact on and create complexity in the development of international HRM practices. A practice that works in one country may not work at all in another country and may even be illegal. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Staffing the Global Organization International staffing: Home or local? Expatriates (expats) Home-country nationals Third-country nationals Offshoring Having local employees abroad do jobs that the firm’s domestic employees previously did in-house Offshoring Issues Effective local supervisory/management structure Screening and required training for locals Local compensation policies and working conditions Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Filling a company’s jobs abroad has traditionally been the heart of international human resource management. The process involves identifying and selecting the people who will fill the positions, and then placing them in those positions. Offshoring and its increasing popularity raises important international staffing issues. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Management Values and International Staffing Policy Ethnocentric Geocentric Top Management Values Polycentric Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Experts classify top executives’ values related to how international operations are staffed as ethnocentric, polycentric, or geocentric. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Selecting Expatriate Managers Adaptability Screening Assessing the assignee’s (and spouse’s) probable success in handling the foreign transfer. Overseas Assignment Inventory A test that identifies the characteristics and attitudes international assignment candidates should have. Realistic Previews Cover problems to expect in the new job, as well as the cultural benefits, problems, and idiosyncrasies of the country. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Adaptability screening aims to assess the expatriate assignees’ (and spouses’) probable success in handling the foreign transfer, and to alert the firm to issues (such as the impact on children) the move may involve and which may affect the assignee’s success in completing the international assignment. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* FIGURE 17–2 Five Factors Important in International Assignee Success and Their Components I. Job Knowledge and Motivation Managerial ability Organizational ability Imagination Creativity Administrative skills Alertness Responsibility Industriousness Initiative and energy High motivation Frankness Belief in mission and job Perseverance II. Relational Skills Respect Courtesy Display of respect Kindness Empathy Nonjudgmental Integrity Confidence III. Flexibility/Adaptability Resourcefulness Ability to deal with stress Flexibility Emotional stability Willingness to change Tolerance for ambiguity Adaptability Independence Dependability Political sensitivity Positive self-image IV. Extracultural Openness Variety of outside interests Interest in foreign cultures Openness Knowledge of local language(s) Outgoingness and extraversion Overseas experience V. Family Situation Adaptability of spouse and family Spouse’s positive opinion Willingness of spouse to live abroad Stable marriage Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Figure 17-2 shows the five items identified in one study that asked international assignees from various countries to specify which traits were important for success in a foreign assignment. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* FIGURE 17–3 Overseas Assignment Inventory Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Many firms also use tests such as the Overseas Assignment Inventory (OAI). This identifies the characteristics and attitudes international assignment candidates should have. Its publisher establishes local norms and conducts ongoing validation studies. Figure 17-3 illustrates the OAI. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Inability of spouse to adjust Inability to cope with overseas responsibilities Lack of cultural skills Why Expatriate Assignments Fail Personality of expatriate Personal intentions Family pressures Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Several factors can impact on the likelihood that an expatriate assignment will be successful. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Making Expatriate Assignments Successful Realistic previews Careful screening Cultural and language training Improved benefits package Improved orientation Helping Expatriate Assignments Succeed Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Many employers post expatriates abroad, but often assignments fail. Understanding the main potential problems and what actions to take to make a successful assignment are important management skills. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Orienting and Training Employees on International Assignment Predeparture training is needed on: The impact of cultural differences on business outcomes How attitudes (both negative and positive) are formed and how they influence behavior Factual knowledge about the target country Language and adjustment and adaptation skills Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* When it comes to the orientation and training required for success overseas, the practices of most U.S. employers reflect more talk than substance. Executives tend to agree that international assignees do best when they receive the special training (in things like language and culture) that they require. However, few companies actually provide such training. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Trends in Expatriate Training Use of returning managers as resources to cultivate the “global mind-sets” of their home-office staff. Use of software and the Internet for cross-cultural training. Rotating assignments that permit professional growth. Management development centers where executives hone their overseas skills. Classroom programs provide overseas executives with educational opportunities similar to stateside programs. Continuing, in-country cross-cultural training. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* This slide lists some of the methods that firms use to provide continuing, in-country cross-cultural training during the early stages of an overseas assignment. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Compensating Expatriates The “Balance Sheet Approach” Home-country groups of expenses—income taxes, housing, goods and services, and discretionary expenses—are the focus of attention. The employer estimates what each of these four expenses is in the expatriate’s home country, and what each will be in the host country. The employer then pays any differences such as additional income taxes or housing expenses. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* The most common approach to formulating expatriate pay is to equalize purchasing power across countries, a technique known as the balance sheet approach. Table 17-1 in the textbook illustrates the balance sheet approach for someone transferring from the U.S. to Belgium. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* TABLE 17–1 The Balance Sheet Approach (Assumes U.S. Base Salary of $80,000) Annual Expense Chicago, U.S. Brussels, Belgium (US$ Equivalent) Allowance Housing & utilities $35,000 $67,600 $32,600 Goods & services 6,000 9,500 3,500 Taxes 22,400 56,000 33,600 Discretionary income 10,000 10,000 0 Total $73,400 $143,100 $69,700 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Incentives for International Assignments Foreign Service Premiums Financial payments over and above regular base pay, and typically range between 10\% and 30\% of base pay Hardship Allowances Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations Mobility Premiums Lump-sum payments to reward employees for moving from one assignment to another Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Employers use incentives to encourage participation in international assignments. Foreign service premiums are financial payments over and above regular base pay. Hardship allowances compensate expatriates for hard living and working conditions at certain foreign locations. Mobility premiums are lump-sum payments to reward employees for moving from one assignment to another. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Steps in Establishing a Global Pay System Identify any gaps in existing rewards systems. Develop a global compensation philosophy framework. Systematize pay systems worldwide. Adapt global pay policies to local conditions. Conduct an ongoing pay policies program assessment. 1 2 3 4 5 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Balancing global consistency in compensation with local considerations starts with establishing a rewards program that supports the employer’s strategic needs. In practice, doing so involves five steps (probably over several years). Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Appraising Expatriate Managers Challenges Determining who should appraise the manager. Deciding on which factors to base the appraisal. Improving the Expatriate Appraisal Process Stipulate the assignment’s difficulty level, and adapt the performance criteria to the situation. Weigh evaluation more toward on-site manager’s appraisal than toward that of the home-site manager. If home-office manager does appraisal, use a former expatriate from same overseas location for advice. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Several things complicate the task of appraising an expatriate’s performance. The questions of who will appraise the expatriate and which performance measures to use are crucial. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* International Labor Relations Industry-wide centralization Content and scope of bargaining Employer organization Multiple union recognition Characteristics of European Labor Relations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Firms opening subsidiaries abroad will find substantial differences in labor relations practices among countries and regions. This is important, because, while union membership is dropping in the United States, it is still relatively high abroad, and unions abroad therefore tend to be more influential. Union-employer relations vary markedly across different European countries. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Terrorism, Safety, and Global HR Taking Protective Measures Crisis management teams Intelligence services Kidnapping and Ransom (K&R) Insurance Crisis situations Kidnapping: employee is a hostage until employer pays a ransom Extortion: threatening bodily harm Detention: holding employee without any ransom demand Threats to property or products unless employer makes a payment Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* The increased threat of terrorism is affecting human resource activities in many ways. Prospective expatriates are increasingly reluctant to take their families abroad, and those who do are demanding more compensation. Travel between countries is becoming more difficult. And for employees and facilities abroad, employers have had to institute more comprehensive safety plans, as well as other measures. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Repatriation: Problems and Solutions Problem Making sure that the expatriate and his or her family don’t feel that the company has left them adrift. Solutions Match the expat and his or her family with a psychologist trained in repatriation issues. Make sure the expat always feels “in the loop” with what’s happening back at the home office. Provide formal repatriation services when the expat returns home. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* A worrisome fact about sending employees abroad is that 40\% to 60\% of them will probably quit within 3 years of returning home. Given the investment in training and sending these high-potential people abroad, it makes sense to do everything possible to make sure they stay with the firm. For this, formal repatriation programs can be quite useful. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* How to Implement a Global HR System Best practices in developing worldwide human resource policies and practices: Form global HR networks that make local HR managers a part of global teams. Remember that it’s more important to standardize ends and competencies than specific methods. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* With employers increasingly relying on local rather than expatriate employees, transferring one’s selection, training, appraisal, pay, and other human resource management practices abroad is a top priority. Employers who successfully implement global HR systems do so by applying several best practices. This enables them to install uniform global human resource policies and practices around the world. The basic idea is to develop systems that are acceptable to employees in units around the world, and ones that the employers can implement more effectively. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Making the Global HR System More Acceptable Best practices for making a global HR system more acceptable to local managers: Remember that global systems are more accepted in truly global organizations. Investigate pressures to differentiate and determine their legitimacy. Try to work within the context of a strong corporate culture. Implementing the global HR system: Constant contact: “You can’t communicate enough.” Dedicate adequate resources for a global HR effort. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Employers engage in three best practices so that the global human resource systems they develop will be acceptable to local managers around the world. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* TABLE 17–2 Summary of Best Global HR Practices Work within existing local systems—integrate global tools into local systems Create a strong corporate culture Create a global network for system development— global input is critical Treat local people as equal partners in system development Assess common elements across geographies Focus on what to measure and allow flexibility in how to measure Allow for local additions beyond core elements Differentiate when necessary Train local people to make good decisions about which tools to use and how to do so Communicate, communicate, communicate! Dedicate resources for global HR efforts Know, or have access to someone who knows, the legal requirements in each country Do . . . Try to do everything the same way everywhere Yield to every claim that “we’re different”—make them prove it Force a global system on local people Use local people just for implementation Use the same tools globally, unless you can show that they really work and are culturally appropriate Ignore cultural differences Let technology drive your system design—you can’t assume every location has the same level of technology investment and access Assume that “if we build it they will come”—you need to market your tools or system and put change management strategies in place Don’t . . . Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Table 17-2 below summarizes best practices for instituting global HR systems. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* K E Y T E R M S codetermination expatriates (expats) home-country nationals third-country nationals ethnocentric polycentric geocentric adaptability screening foreign service premiums hardship allowances mobility premiums Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–* All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson … PowerPoint Presentation by Charlie Cook The University of West Alabama Chapter 18 Managing Human Resources in Entrepreneurial Firms Part Five | Employee Relations Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* WHERE WE ARE NOW… Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* The main purpose of this chapter is to help you apply what you know about human resource management to running a small business. The main topics we’ll address include the small business challenge; using Internet and government tools to support the HR effort; leveraging small size with familiarity, flexibility, fairness, and informality; using professional employer organizations; and managing HR systems, procedures, and paperwork. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Explain why human resource management in small companies is different from that in larger companies. Give at least five specific examples of how you would use the Internet and government tools to support the HR effort in a small business. Answer the question, “Why are familiarity, flexibility, and informality important tools that entrepreneurs can use to improve human resource management practices in their small businesses?” Explain what professional employers’ organizations are and how entrepreneurs can use them. Describe how HR systems traditionally evolve in a small business and give examples of how small businesses can use human resource management information systems. LEARNING OUTCOMES Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* The Small Business Challenge Why Entrepreneurship Is Important Over one-half of the U.S. labor force works for small firms. Over 600,000 small businesses are created annually. Three-fourths of employment growth comes from small firms. Why Is HRM Important to Small Businesses? Growth of any small business depends on effective HR activities. Getting and keeping large customers requires compliance with international quality (HR) standards. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Anyone interested in small businesses (or human resource management) needs to understand how managing human resources in small firms is different from doing so in larger firms. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Size of HR staff Priority of HR issues Informality of HR practices How Small Business Human Resource Management Is Different Entrepreneur’s effect on HRM Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Managing human resources in small firms is different for four main reasons: size, priorities, informality, and the nature of the entrepreneur. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* The Entrepreneur’s Risky Human Resource Management Situation Underdeveloped HRM creates competitive disadvantage Lack of specialized HR expertise Compliance with compensation regulations and laws Lack of HRIS systems creates inefficiencies and data entry errors Increased potential for workplace litigation not addressed HR Risks in Small Businesses Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* The lack of attention of HRM matters and lack of expertise means that entrepreneurs face at least five HR-type risks in managing a small business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Why HRM Is Important to Small Businesses Effective HRM: Is a competitive necessity for small firms. Makes small firms more successful . Helps small firms get and keep large customers. Is necessary to meet ISO-9000 requirements for competing internationally. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Smart entrepreneurs take these risks to heart. Small firms need all the advantages they can get, and for them effective human resource management is both a competitive necessity and a requirement for competing in global markets. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Complying with Employment Laws: DOL: www.DOL.gov/elaws/firststep www.dol.gov/esa/whd/flsa EEOC: wwww.EEOC.gov/employers/smallbusinesses.html OSHA: www.OSHA.gov www.OSHA.gov/dcsp/smallbusiness/index.html Employment Planning and Recruiting: DOL: http://online.onetcenter.org Employment Selection Wonderlic: www.wonderlic.com Employment Training AMA: www.amanet.org SHRM: www.shrm.org SBA: www.SBA.gov/training NAM: wwwnamvu.com Using Internet and Government Tools To Support The HR Effort Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Entrepreneurs can use the Internet sites and government tools listed in this slide to support the HR effort in a small business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* FIGURE 18–1 FirstStep Employment Law Advisor Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Figure 18-1 shows the U.S. Department of Labor’s “FirstStep Employment Law Advisor,” which helps small employers determine which laws apply to their business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* FIGURE 18–2 Sample DOL elaws Advisors The Coverage and Employment Status Advisor helps identify which workers are employees covered by the FLSA. The Hours Worked Advisor provides information to help determine which hours spent in work-related activities are considered FLSA “hours worked” and, therefore, must be paid. The Overtime Security Advisor helps determine which employees are exempt from the FLSA minimum wage and overtime pay requirements under the Part 541 overtime regulations. The Overtime Calculator Advisor computes the amount of overtime pay due in a sample pay period based on information from the user. The Child Labor Rules Advisor answers questions about the FLSA’s youth employment provisions, including at what age young people can work and the jobs they can perform. The Section 14(c) Advisor helps users understand the special minimum wage requirements for workers with disabilities. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* FIGURE 18-2 presents a sampling of the DOL elaws Advisors Web tools available to entrepreneurs. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* FIGURE 18–3 OSHA Web Site Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Figure 18-3 shows OSHA’s Web site which provides, among other things, easy access to the OSHA Small Business Handbook, which contains practical information for small business owners, including industry-specific safety and accident checklists. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* FIGURE 18–4 Wonderlic Personnel Test: Part of a Sample Report Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* FIGURE 18-4 shows partial results of a sample report of the Wonderlic Personnel Test. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Employment Training Private vendors Small Business Administration (SBA) Training Resources for Small Businesses National Association of Manufacturers (NAM) Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* FIGURE 18–5 Part of Small Business Administration’s Virtual Campus for Small Business Training Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Figure 18-5 shows the federal government’s Small Business Administration (www.SBA.gov/training) virtual campus that offers online courses, workshops, publications, and learning tools aimed toward supporting entrepreneurs. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Having flexibility in providing work-life benefits and rewards Using simple, informal employee selection procedures Treating nonfamily employees fairly and equitably Maintaining effective communications with employees Providing flexibility in employee training procedures Leveraging the Small Firm Size Advantage Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Small businesses need to capitalize on their strengths, so in dealing with employees they should capitalize on their smallness. Smallness should translate into personal familiarity with each employee’s strengths, needs, and family situation. And it should translate into the luxury of being able to be relatively flexible and informal in the human resource management policies and practices the company follows. Smaller businesses often need to adapt quickly to environmental realities like competitive challenges. This means that entrepreneurs tend to conduct matters on an informal, reactive basis with a short time horizon. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Building Communication Online reporting Newsletters Online information Building Effective Communications in Small Businesses The Huddle Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Effective communications are important for any manager, but especially for those managing small businesses. In a small restaurant or retail shop, one or two disgruntled employees can destroy the business’ quality service. Yet small business owners generally don’t have the means to implement expensive communications programs. That’s why simple programs like these are important. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Using Professional Employer Organizations (PEO) Dedicated HR support Group benefits Paperwork reduction Reasons for Employers To Use a PEO Decreased liability Higher performance Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Employers turn to PEOs for the reasons listed in this slide. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Guidelines for Finding and Working with PEOs Conduct a needs analysis. Review the services of all PEO firms you’re considering. Determine if the PEO is accredited. Check the provider’s bank, credit, and professional references. Understand how the employee benefits are funded. See if the provider contract assumes the employment law compliance liabilities in the applicable states. Review the service agreement carefully. Investigate how long the PEO has been in business. Check out the prospective PEO’s staff. Ask how will the firm deliver its services. Ask about upfront fees and how these are determined. Periodically get proof that payroll taxes and insurance premiums are being paid properly and that any legal issues are handled correctly. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Small business managers need to choose and manage the PEO relationship carefully. Suggestions for doing so are listed in this slide. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Managing HR Systems, Procedures, And Paperwork Employee records are compiled on forms from office supply companies and maintained in physical files Manual HRM system One or more packaged systems for automating individual HR tasks, such as applicant tracking and performance appraisal Computerized HRM system Interrelated components collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization of an organization’s HRM activities Human Resource Management Information System (HRIS) Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* As the small business grows, it becomes increasingly unwieldy and uncompetitive to rely on manual HR systems. Most small- to medium-sized firms begin computerizing individual human resource management tasks. As companies continue to grow, they turn to integrated human resource information systems (HRIS). Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* TABLE 18–1 Some Important Employment Forms New Employee Forms Current Employee Forms Employee Separation Forms Application New Employee Checklist Employment Interview Reference Check Telephone Reference Report Employee Manual Acknowledgement Employment Agreement Employee Application Disclaimer Probationary Evaluation Employee Status Change Request Employee Record Performance Evaluation Warning Notice Vacation Request Probation Notice Job Description Direct Deposit Acknowledgement Absence Report Disciplinary Notice Employee Secrecy Agreement Grievance Form Expense Report 401(k) Choices Acknowledgement Injury Report Retirement Checklist Termination Checklist COBRA Acknowledgement Unemployment Claim Employee Exit Interview Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Table 18-1 lists some the many forms you could conceivably need even for a small business. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Human Resource Management Information Systems (HRIS) Levels of Information Systems Transaction processing systems Management information systems (MIS) Executive support systems Benefits of HRIS Improved transaction processing Online self-processing Improved reporting capability HR systems integration HR intranets Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Companies need information systems to get their work done. The term information system refers to the interrelated people, data, technology, and organizational procedures a company uses to collect, process, store, and disseminate information. Of course, as the company grows, it makes sense to computerize its information systems. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Human Resources Management 12e Gary Dessler Human Resources Management 12e Gary Dessler Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 18–* Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall