CHAPTER 11

HIRING, TRAINING AND EVALUATING EMPLOYEES

INTRODUCTION

A firm’s performance is dependent highly on how its human resources are managed. A firm must manage its employees effectively in order to achieve its goals.

Many businesses or firms are performing well not just because of their business strategies but also because of their human resources.

HUMAN RESOURCE PLANNING Human Resource Planning (HRP) is both a

process and a set of plans to satisfy a firm’s needs for employees. This is how an organisation or a firm assess the future supply of and demand for human resources.

HRP consists of three distinct stages which are Forecasting demand for employees, Job analysis and Recruiting.

Forecasting demand for employees Forecasting demand for employees give

the firm more time to meet the demand. The need for new employees arises for

several reasons. Some workers are hired to replace retiring workers. Others are needed to replace workers who quit or are fired. Other workers are hired to increase the size of the firm’s labor force during periods of growth and expansion.

Forecasting demand for employees If the needs for labor are temporary, the

firm may seek to cover the need by offering overtime to existing employees or by hiring part-time or temporary workers.

Job analysis Job analysis is used by a firm to determine the tasks

that must be carried out by a worker in a particular position and the credentials a worker needs to fill for that position.

Job analysis provides answers to questions such as:

-How much time is taken to complete importance tasks?

-What kinds of behaviour are needed to perform the job?

-What kind of person (in terms of traits and experience) is best suited for the job?

-How can a job be designed or structured so that the employee’s performance can be enhanced?

Job analysis

A job specification states the credentials necessary to qualify for a specific job position.

A job description states the tasks and responsibilities of the job position.

Recruiting

Various forms of recruiting are used by firms to ensure an adequate supply of qualified candidates for employment. Some firms have a human resource manager who helps each department recruit candidates. Firms also typically maintain files of applicants who submit their applications over time. Firms may also advertise positions in newspapers or in professional journals.

Recruiting There are two methods of recruiting: Internal

and External recruiting.

1)Internal recruiting

Seeks to fill open positions by finding qualified individuals who are already within the organization. This approach can be desirable, because existing employees are already familiar with the firm and have a proven track record that can be evaluated.

Recruiting

2) External recruiting

Seeks to fill positions by attracting applicants from outside the firm. This approach gives the firm access to a much broader pool of people and may allow the firm to find more qualified candidates.

Recruiting typically includes a screening process that consists of several steps.

Screening Process Application of each candidate is assessed to

screen out candidates who lack the background, education and experience to qualify for the job.

Interview process where firms conduct an initial interview to assess the personalities of remaining candidates and obtain information not included in the application.

Check the applicant’s references. One drawback of this step is that applicants list as references only people who are likely to give them strong recommendations.

Screening Process

Sometimes employment tests is needed to measure certain job-related skills or to assess the candidate’s ability to work well with others

Physical examination also important to check whether the candidate is physically capable of doing the work and to identify and document any medical problems.

Screening Process

Drug tests is also a common screening process

The result of the screening process should be in reduction of number of applicants to a small number of qualified candidates. The firm makes the hiring decision and offers the job to the top candidate. If this candidate does not accept the offer, other qualified candidates can be considered.

PROVIDING EQUAL OPPORTUNITY

When recruiting candidates for a job position, managers should not discriminate based on factors that are unrelated to potential job performance.

First, such discrimination is illegal. Second, discrimination may reduce the efficiency of the employees in the workplace.

Diversity Incentives Diversity can benefit firms in three ways:

1) Employees who work in a more diverse workplace tend to be more innovative.

2) Employees in a diverse workplace tend to be more likely to understand different points of view and be capable of interacting with a diverse set of customers.

3) The proportion of a firm’s customer base that consists of minorities will continue to increase, meaning a larger proportion of eligible employees in the future will be minorities.

EMPLOYEE’S COMPENSATION PACKAGE Compensation is the main reason why most

individuals seek employment. It is an exchange relationship. Employees trade labor and loyalty for financial and non-financial compensation (benefits, services, recognition etc.)

The compensation package represents the total monetary compensation and benefits offered to employees.

Salary

Salary or wages is the ringgit paid for a job over a specific period. The salary can be expressed per hour, per period or per year and is fixed over a particular time period.

Stock Options Stock options allow employees to buy the

firm’s stock at a specified price, even if the price is lower than the actual market value. This gives employees an incentive to work to improve the value of the firm’s stock.

Stock options, however, can cause conflicts of interest when company managers manipulate financial statements or otherwise take actions that are detrimental to the company and cause the public to lose confidence in its stock.

Commissions

A commission is compensation based on a percentage of sales in units or ringgits. Commissions provide salespeople with direct incentives to increase sales, but are not feasible in areas where employee performance cannot be easily quantified.

Bonus

A bonus is an extra one-time payment at the end of a period in which employee performance is measured. Bonuses may be paid for efforts that increase revenues, reduce expenses, or improve customer satisfaction. Bonuses usually are not determined by formula, and the amount of money available for bonuses may depend on the firm’s profits.

Profit Sharing

Profit sharing motivates employees to perform in a way that enhances the profits of the firm by returning a portion of those profits back to the employees. Many firms provide stock to their employees so that they become part owners. But some firms provide cash bonuses to share their profit with their employees.

Employee Benefits

Firms typically provide a variety of benefits to employees such as paid vacations, health and life insurance, and pension programs. These benefits are attractive to employees in part because, unlike salaries and other monetary payments, they are not taxed.

Perquisites

Perquisites (or “perks”) are special privileges or benefits that beyond the compensation payments and employee benefits which normally provided to high-level employees. These might include a company car, free parking, membership at clubs, and an expense account.

DEVELOPMENT OF EMPLOYEE’S SKILL 1) Technical Skills

Firms provide workers with training in the technical skills they need to carry out the tasks they perform daily. Examples include training on how to work with specialized tools or machinery or how to use a specific software package.

DEVELOPMENT OF EMPLOYEE’S SKILL Decision-Making Skills

Firms provide employees with decision-making skills so that they can make better decisions and generate new ideas.

Customer Service Skills

Firms recognize the importance of satisfying customers, so they train workers who have frequent contact with customers to develop customer service skills.

DEVELOPMENT OF EMPLOYEE’S SKILL Safety Skills

Firms also educate employees about safety in the work environment in order to reduce the risk of accidents and injuries. Emphasis on safety reassures employees that the firm is interested in their welfare and also reduces medical and legal expenses.

Human Relations Skills

Firms also often provide training seminars for managers that emphasize human relations skills. Not only do workers deserve to be treated fairly and with respect, but their job performance is generally better when they are treated properly.

EVALUATION OF EMPLOYEE PERFORMANCE Employee evaluations are useful for a

number of purposes. They can be used to help allocate raises and bonuses.

Performance evaluation should be segmented into different criteria

Some of the criteria used to evaluate employees are objective, or measurable. Other criteria are subjective and represent the opinion of the supervisor.

EVALUATION OF EMPLOYEE PERFORMANCE Supervisors typically complete an evaluation

form for their employees at the end of each year. This form rates the employee’s performance with respect to several criteria on a specified scale.

Some firms use a weighted average of an employee’s performance on various criteria to assign an overall rating. The weights are assigned to reflect the relative importance of each criterion.

EVALUATION OF EMPLOYEE PERFORMANCE Firms can follow certain steps to assure

employees that evaluations are done fairly and to satisfy legal guidelines with respect to employee rights:

- Clearly communicate job responsibilities to employees when they are hired and should explain any changes in employee responsibilities over time.

EVALUATION OF EMPLOYEE PERFORMANCE- Supervisors should notify employees when

they notice deficiencies. The employee should be given an opportunity to respond to the supervisor’s criticism and should be given a specified period to correct the deficiency.

- Supervisors should be consistent in their treatment of employees.

EVALUATION OF EMPLOYEE PERFORMANCE Sometimes supervisors must take action due to

performance evaluations. Employees with favorable evaluations should be

recognized in some way. Employees with poor evaluations must also receive

attention. The supervisor must first determine the cause of the poor evaluation. The appropriate action depends on the reason for the problem and the willingness and ability of the employee to correct it.

If an employee is unwilling or unable to correct the deficiency, the supervisor may have to reassign, suspend, or even fire the worker.