copyright © 2009 pearson education, inc. publishing as prentice hall 12-1 managing human resources...

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 12-1

Managing Human Resources in Entrepreneurial Firms

Chapter 12


The Small Business Challenge

• Entrepreneurship is important!

• More than half the people working in the U.S. work for small firms

• Small business accounts for most of the 600,000 or so new businesses created every year

• Small business accounts for most business growth

• Small firms account for about three-fourths of employment growth in the U.S. economy


How Small Business HRM Is Different

• Size: Most small businesses do not have dedicated HR staff

• Priorities: HR is usually not a high priority

• Informality: HR is not a formal process

• Nature of the entrepreneur: Entrepreneurs tend to be somewhat controlling


Implications

• Small business owners run risk that rudimentary HR practices will put them at a competitive disadvantage

• A lack of specialized HR expertise may produce legal or other problems

• Small firms are probably not adequately addressing potential workplace litigation

• Small business owners might not be fully complying with compensation regulations and laws


• Duplication and paperwork leads to inefficiencies as well as data entry errors

Implications, cont.


Why HRM Is Important to Small Business

• Successful small- and medium-sized enterprises (SMEs) place a great importance on

– Training and development

– Performance appraisals

– Recruitment packages

– Maintaining morale

– Setting competitive compensation levels


• Effective HRM can be a condition for getting and keeping big customers

• Trend toward international quality standards means even small businesses must attend to HR processes

Why HRM Is Important to Small Business, cont.


Using Internet and Government Tools

• Personality profile tools and other programs can be purchased and utilized online to help give small businesses an edge

• Accessing government tools can ensure compliance with employment law

• The Department of Labor’s (DOL’s) “First Step Employment Law Advisor” helps employers determine which laws apply to their business– www.DOL.gov/elaws/firststep/


Available “First-Step” Advisors

• Coverage and employment status advisor

• Hours worked advisor

• Overtime security advisor

• Overtime calculator advisor

• Child labor rules advisor

• Section 14(c) advisor


EEOC

• The U.S. Equal Employment Opportunity Commission (EEOC) administers Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967 (ADEA), Title I of the Americans with Disabilities Act of 1990 (ADA), and the Equal Pay Act of 1963 (EPA)

– www.EEOC.gov/employers/


The EEOC Web site

Helps employers determine the following:• What laws does the EEOC enforce and do they

apply to my business?• How I determine if my business size is covered

by EEOC laws?• Who may file a charge of discrimination with the

EEOC and when?• Can a small business resolve a charge without

undergoing an investigation or lawsuit?


The OHSA Web site

• The DOL’s Occupational Safety and Health Administration site presents a wealth of information for small business owners, including the OSHA Handbook for small Business

– www.OSHA.gov/

– Small businesses can request a free consultation or participate in the Sharp program


Using O*Net

• Free, effective DOL Web site helps you develop job descriptions and is available at http://online.onetcenter.org

• To utilize, small business owners must

– Decide on a plan and develop an organization chart

– Obtain a list of job duties and human requirements from O*Net

– Complete the job description


Web-Based Recruiting

• Small businesses can post positions on

– Internet job boards

– Professional association Web sites

– Local newspaper classifieds

– Dot-jobs domains


Employment Selection

• Convenient and available 24/7 online employment selection services allow small businesses to implement formal testing programs

– Wonderlic Personnel Test

– Predictive Index


Employment Training

• Online training resources can help even the playing ground for small businesses and can be utilized through

– Private vendors

– The Small Business Administration (SBA)

– The National Association of Manufacturers (NAM)


Employment Appraisal and Compensation

• Small businesses can use software and online programs to create highly professional performance appraisals

• Easy access to online salary surveys make it easy to determine local pay rates


Leveraging Small Size

• Familiarity with employee’s strengths, needs and family situation

• Flexibility in benefits and rewards such as– Extra time off and compressed workweeks– Provide bonuses at critical times– Help employees better themselves– Feed them– Make them feel like owners


– Make sure they have what they need to do the job

– Recognize a job well done

Leveraging Small Size, cont.


Employee Recognition

• Challenging work assignments

• Freedom to choose own work activity

• Having fun built into work

• More of preferred task

• Role as boss’s stand-in when he or she is away

• Role in presentations to top management

• Job rotation


• Encouragement of learning and continuous improvement and provided with ample encouragement

• Being allowed to set own goals

• Compliments and thank you notes

• Expression of appreciation in front of others

• Special awards

• Bigger desk or office

Employee Recognition, cont.


Simple Retirement Benefits

• The Pension Protection Act of 2006 contains a provision for employers with less than 500 employees for a new type of retirement benefit combining traditional defined benefits and 401(k) plans

• A low-cost, effective choice is a Simple (savings incentive match plan for employees) IRA plan where employers MUST contribute and employees MAY contribute


Simple Employee Selection Procedures

• Usually an informal process

• Work-sampling tests

• Interviewing candidates asking questions to reveal the following:

– Knowledge and experience

– Motivation and personality

– Intellectual capacity


Flexibility in Training

• Informal training approach focused on learning specific job-related competencies

• Small businesses can implement a four-step process to streamline training procedures

1. Write a job description

2. Develop a task analysis record form

3. Develop a job instruction sheet

4. Prepare training program for the job


Informal Training Methods

• Offer to cover tuition for special classes

• Identify online training opportunities

• Provide a library of tapes and DVDs for systematic, disciplined learning during commute times

• Encourage sharing of best practices


• Send people to seminars and association meetings for learning and networking when possible

• Create a learning ethic by having everyone teach each other what they’re learning

Informal Training Methods, cont.


Fairness and the Family Business

• Set the ground rules

• Treat people fairly

• Confront family issues

• Erase privilege


Using Professional Employer Organizations

• Vendors ranging from payroll companies to one that handle all an employer’s HRM requirements

• PEOs focus on employers with 100 or less employees

• Charge fees based on 2-4% of payroll


Why Use a PEO?

• Lack of specialized HR support

• Paperwork

• Liability

• Benefits

• Performance


PEO Caveats

• Some employers are not comfortable letting a third party become the legal employer of their employees

• Liability concerns

• Lax due diligence

• Overstating employer benefits or savings


Guidelines for Finding/Working with PEOs

• Conduct a needs analysis

• Review the sources of all PEO firms considered

• Determine if the PEO is accredited and how long it has been in business

• Check provider’s bank, credit and professional references as well as the PEO’s staff

• Understand how employee benefits are funded


• Review the service agreement carefully

• Understand how the firm will deliver services

• Ask about upfront fees

• Periodically get proof that payroll taxes and insurance premiums are being paid

Guidelines for Finding/Working with PEOs, cont.


Managing HR Systems, Procedures and Paperwork

• Basic components of Manual HR Systems

– Obtaining and organizing a set of standardized personnel forms covering each important aspect of HR

• Recruitment and selection

• Training and appraisal

• Compensation

• Safety processes


Basic Forms

• HR Kit would include:– Application– Employment

interview– Reference check– Employee record

– Performance evaluation

– Warning notice– Exit interview– Vacation request– Lawsuit-Prevention

guide


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States of America.

copyright © 2009 pearson education, inc. publishing as prentice hall 12-1 managing human resources...

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