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Current Trends in HR


Current Trends in HR. Kim Hester, Ph.D. Professor of Management ... Current Trends. Rising Compensation Costs. Rising cost of benefits, especially health care ... – PowerPoint PPT presentation

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Title: Current Trends in HR

Current Trends in HR
  • Kim Hester, Ph.D.
  • Professor of Management
  • Arkansas State University

Current Trends
Current Trends
Current Trends
Harnessing New Technology
Current Trends
Rising Compensation Costs
  • Rising cost of benefits, especially health care
  • Great News 2008
  • Health care costs for most employers is expected
    to be around 7, a moderate increase compared to
    previous years

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Employer Responses
  • Aggressive health care initiatives, such as
    higher deductibles, co-pays, and employee
    contribution levels.
  • 88 of employees are required to pay some of the
    insurance premium out of their own pockets.
  • The employee share rose from 14.0 in 1992 to
    22.1 in 2005.

Source Economic Policy Institute, 2008
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Employee Contributions for Health Care
Employer Responses
  • Changes or elimination of employee health care
  • Statistic Employer coverage has declined from
    61.5 in 1989 to 58.9 in 2000 and down to 55.9
    in 2004 (the latest aggregate data available)

Source Economic Policy Institute, 2008
Employer Responses
  • Focus on changing employee behaviors
  • Wellness programs
  • Smoking cessation efforts
  • Education of employees on health care options
    and associated costs

Employer Responses
  • Some employers have been holding their health
    care costs to a 1 increase.
  • They're doing it by taking a multipronged
    approach, with programs to prod employees to take
    more responsibility for their health and to make
    more informed health care decisions.
  • Source Watson Wyatt Worldwide and the National
    Business Group on Health

Employer Responses
  • Successful employers are aggressively pushing
    consumer directed health plans (CDHPs)
  • Combines a high deductible insurance policy with
    a tax advantaged health savings account
  • Firms are setting the premiums at 30 below
    traditional plans to encourage participation
  • Participation hit 15 this year, up from 10 in
    2007 and likely to hit 20 in 2008
  • Source Watson Wyatt Worldwide and the National
    Business Group on Health

Employer Responses
  • Saving money by providing free drugs and supplies
    for chronic diseases (e.g., asthma, diabetes)
    that are known to lead to costly complications.
  • Goal is to get patients to stick to their
    treatment schedules often tied to classes or
  • Upcoming survey from Hewitt Associates indicates
    nearly 20 of firms do this now, and 47 are
    considering doing so in the future
  • Source Watson Wyatt Worldwide and the National
    Business Group on Health

Employer Responses
  • Paying the full amount of common preventive
    services can also help reduce costs
  • These include annual physicals, mammograms,
    prostate screenings, flu shots, colonoscopies and
    prenatal office visits
  • Source Watson Wyatt Worldwide and the National
    Business Group on Health

Employer Responses
  • Sending the sickest employees to the best doctors
    is gaining as a strategy
  • Dubbed by some as a 20-20 approach - employers
    and their health plans use data to identify
    physicians rated in the top 20 for effective
    treatments and match them with the 20 of
    employees who most need care.
  • Employers provide financial incentives, (e.g.,
    lower copayments) as incentives to use the top
  • Eventually, firms will try predictive modeling
    to identify the sickest 20 of employees so steps
    can be taken today to "get ahead of the curve
  • Source Watson Wyatt Worldwide and the National
    Business Group on Health

Employer Responses
  • Increasing financial penalties for employees that
    poorly manage their health
  • Many companies continue to reward workers who
    take health risk assessments and participate in
    health management programs, while punishing those
    who do not
  • Employers may deny a worker access to
  • plans if worker declines participation in
    wellness programs
  • Source Watson Wyatt Worldwide and the National
    Business Group on Health

Employer Responses
  • On-site medical clinics are growing in popularity
  • Large companies staff clinics with own employees
    while smaller firms contract out to nearby
  • Help provide primary care to workers at low or no
  • On-site clinics lessen time employees spend away
    from work.
  • On-site clinics expanding to include rehab
    services, dentistry, X-ray and lab work
  • Forms inviting specialists to come on-site and
    offer their services.
  • Clinics moving into more active management of
    workers' health conditions
  • Source Watson Wyatt Worldwide and the National
    Business Group on Health

Employer Responses
  • Putting health care into employees hands
  • As health insurance costs continue to rise,
    employers are adopting a controversial new
    approach ending group coverage and giving
    employees 50 to 200 or so a month to help buy
    their own health care
  • Source USA Today, March 26, 2008

Rising Compensation Costs
  • Competitive pressure on increasing employee wages
  • Linking pay to organizational goals, employee
    productivity, and labor market norms
  • Pay-for-Performance Programs
  • Performance Management

Success of Programs
  • Pay for Performance Works When
  • It is measurable and objective
  • There are clear expectations
  • There is commitment to training and support
  • Flexibility for input
  • Source 5/05

Failure of Programs
  • Pay for Performance Falls Short When
  • It pits employees against each other
  • It pushes one outcome to the detriment of the
  • It is so subjective it opens the organization and
    managers to allegations of bias
  • Source 5/05

Key Drivers of Success
  • Better communication of performance standards
    with all levels of the organization
  • Clearly Specify Incentive Measures
  • Organizational measures
  • service quality
  • teamwork
  • income growth
  • cost savings
  • Individual measures
  • based on established performance goals within
    individual areas of responsibility
  • Source JE Rocco. http//

Challenges in Implementing Performance-Based Pay
  • Pervading Attitude of Equality
  • Custom of Cost of Living Approach
  • Challenge of Performance Measurement
  • Discomfort with Judging Performance
  • Weaknesses in Data Collection
  • Inadequacy of Funding Resources
  • Source Performance-Based Pay Plans Family
    Services of Western Pennsylvania Marc Andrews
    Kathy Yarzebinski Catherine GreenoChristopher
    Gjesfjeld 2006

Employee Productivity and Performance Management
  • Phase 1
  • Business strategyincluding its mission, vision
    and objectives, and specific outcomes required to
    achieve the overall strategyare defined.
  • Goals and plans for how to measure achievement
    must be identified.
  • Outputs and measures are defined
  • Data collection and analysis processes and
    procedures are developed and implemented
  • Most importantlyemployees come to understand
    their individual roles and responsibilities with
    respect to performance measurement
  • Employees are given the fundamental information,
    resources, competencies, and motivation to ensure
    their successful execution.

Employee Productivity and Performance
  • Phase 2
  • Data that informs areas of success and challenge
    for the organization are collected and analyzed
  • Specific elements and factors that contribute to
    successes or challenges along with new and/or
    modified information needs and lessons learned
    are identified

Employee Productivity and Performance Management
  • Phase 3
  • Solutions to address identified challenges are
    developed and implemented, along with mechanisms
    to ensure the continuation of program or
    organizational successes
  • Performance measurement systems and processes may
    be modified as needed to ensure that information
    collected through the performance measurement
    process is timely, relevant, and sufficientsteps
    that cycle back to performance planning
  • According to the U.S. Government Accountability
    Office (GAO), federal managers reported having
    more performance measures in 2003 than in 1997,
    but they also reported that use of performance
    data for program management activities has
    essentially remained unchanged

Employee Productivity and Performance Management
  • Phase 4
  • Several commonly used methodologies for
    performance measurement
  • Behavior-Based Approaches - These approaches
    tend to use specific performance factors to
    evaluate staff.
  • 1. Quantitative -- use of numbers or
    frequencies of specific behaviors observed
    or reported
  • 2. Qualitative -- use of subjective
    impressions of
  • raters

Behavior-Based Approaches
  • Behaviorally anchored scales
  • Broad categories of practice are identified,
    ideally through collaborations between
    supervisors and staff.
  • Specific job behaviors are then linked to the
    categories. Measures of staff member behavior are
    rated on a scale in relation to specific behavior
    items, such as "understands department

Behavior-Based Approaches
  • Behavioral frequency scale
  • Desired behaviors are described and the staff
    member is evaluated on how often those behaviors

Behavior-Based Approaches
  • Weighted checklist - method provides a list of
    performance related statements that are weighted
  • Staff members are judged on a scale indicating
    the degree to which the statement accurately
    describes performance

Behavior-Based Approaches
  • Forced-choice method - list of performance
    related statements about job performance are
    evaluated on how well they discriminate among
    staff and how important they are to unit or
    institutional performance

Other Approaches to Measuring Performance
  • Results-Focused Approaches
  • Management by Objectives (MBO) and
    Accountabilities and Measures
  • Source Grote, D. (1996). The complete guide to
    performance appraisal. New York American
    Management Association.

Core Elements in MBO
  • Formation of trusting and open communication
    throughout the organization
  • Mutual problem solving and negotiations in the
    establishment of objectives
  • Creation of win-win relationships
  • Organizational rewards and punishments based on
    job-related performance and achievement
  • Minimal uses of political games, forces, and fear
  • Development of a positive, proactive, and
    challenging organizational climate
  • Source Grote, D. (1996). The complete guide to
    performance appraisal. New York American
    Management Association.

Steps in MBO Process
  • Formulate long-range goals and strategic plans
  • Develop overall organizational objectives
  • Establish derivative objectives for major
    operating units
  • Set realistic and challenging objectives and
    standards of performance for members of the
  • Formulate action plans for achieving the stated
  • Implement the action plans and take corrective
    action when required to ensure the attainment of
  • Periodically review performance against
    established goals and objectives
  • Appraise overall performance, reinforce behavior,
    and strengthen motivation. Begin the cycle again
  • Source Grote, D. (1996). The complete guide to
    performance appraisal. New York American
    Management Association.

Team Performance Measurements
  • Team appraisal matrix - team members are listed
    on a vertical dimension, and specific tasks on
    the horizontal
  • Such an arrangement reflects individual
    performance, and collectively reflects the
    overall team performance
  • Source Creamer, D.G., Janosik, S. M.
    Performance appraisal Accountability that leads
    to professional development. In S. M. Janosik, D.
    G. Creamer, J. B. Hirt, R. B. Winston, Jr., S.
    Saunders, D. Cooper (Eds.), Supervising new
    professionals in student affairs. New York

Success Factors in Performance Management Systems
  • Success in obtaining meaningful performance data
    and using this data to manage, and
    institutionalizing these practices so that they
    become ingrained in the organization
  • This depends on several factors
  • 1. Presence of a culture of accountability
    within the organization
  • 2. Leadership demonstrates commitment to
    managing for results.
  • 3. Staff engages and invests in the process,
    which leads to feelings of empowerment and

Points to Remember
  • Before implementing a performance measurement or
    management system, see if other areas of your
    organization have implemented their own system
  • Anticipate and consider unintended consequences
    of measuring performance
  • Reinforced behavior will be repeated, so
    carefully consider what behaviors should be
    emphasized (e.g., individual achievements versus
    team achievements)
  • Communication of performance information among
    relevant stakeholders crucial to the success of
    any performance measurement or management system

Current Trends
  • Developing Human Capital
  • Managing talent recruitment, development, and
    retention of the best workers
  • Employers need to find innovative ways to brand
    themselves, setting them apart from competitors
    and becoming an employer of choice
  • As talent becomes scarce, development of current
    employees for promotional opportunities

Developing Human Capital
  • Labor shortage finding the right talent
  • Statistic By 2020, gap between available and
    required skilled workers is projected to be 14
  • Use of e-recruiting and non-traditional labor
  • Establishing selection system geared to
    retention better skills assessment, knowledge,
    and fit for jobs
  • Source Kaihla, P. Business 2.0, 4(8), 97-104.

Developing Human Capital
  • Higher ethical standards
  • Greater focus on trust and integrity at all
  • Regulatory compliance issues (i.e.,
    Sarbanes-Oxley Act)

Current Trends
  • Harnessing New Technology
  • Use of technology to communicate with employees
  • Company intranets
  • E-Newsletters
  • Company emails

Harnessing New Technology
  • A move toward single software platforms
  • Integrated HRIS
  • PeopleSoft
  • SAP
  • Oracle

Harnessing New Technology
  • Specialized applications
  • Succession planning
  • Applicant tracking
  • Job evaluation
  • Employee performance evaluation
  • Grievance handling

Harnessing New Technology
  • Perhaps most significant development is the use
    of organizational intranets
  • An intranet is internal network that makes use of
    World Wide Web technology (browsers, servers,
    etc.) to gather and disseminate information
    within the firm
  • Intranets may be linked to the external Internet,
    but are secured so that only authorized users can
    access information on internal components

Harnessing New Technology
  • Evolution of new technologies
  • Employee Self-Service and Data Exchange
  • Capability to maintain personal data
  • View context-specific information
  • Initiate benefits transactions
  • Internet-based tools are quickly becoming the
    preferred method for employees to execute
    benefits transactions

Benefits of Automated Benefit Administration
  • Reducing and eliminating extensive manual efforts
    formerly needed to
  • Distribute, collect, and process forms
  • Test programming required to export/import data
  • Administer the periodic data exchanges
  • Reconcile data
  • Resolve employees problems resulting from the
    time lag between data collection and processing
  • Source Benefits Perspectives Current Issues in
    Employee Winter 2002-2003 Milliman USA

Current Trends
  • Managing the Changing Workforce
  • 1. Increased diversity in the workforce
  • Creating workplace that respects and includes
  • Recognizing unique contributions individuals with
    differences can make
  • Creating work environment that maximizes
    potential of all employees

Managing the Changing Workforce
  • Work-life balance
  • Employees experiencing burnout due to overwork
    and increased stress in nearly all occupations
  • Rise in workplace violence, increase in levels of
    absenteeism as well as rising workers
    compensation claims
  • Causes range from personal ambition and the
    pressure of family obligations to the
    accelerating pace of technology
  • Source Center for Work Life Policy

Work-Life Balance
  • According to study by Center for Work-Life
    Policy, 1.7 million people consider their jobs
    and work hours excessive
  • 50 of top corporate executives leaving current
  • 64 of workers feel work pressures are
    self-inflicted, and taking a toll
  • In the US, 70, and globally, 81, say jobs are
    affecting their health.
  • Between 46 and 59 of workers feel stress is
    affecting their interpersonal and sexual
  • Males feel there is stigma associated with
    saying I cant do this

Managing the Changing Workforce
  • 3. Structural shift from the manufacturing to
    the service sector
  • Growth in part-time employment
  • Rising prominence of women in the workforce
  • Gradual ageing of labor force with fewer young
    people entering workforce and participation rates
    among older workers increasing
  • Growing importance of temporary employment and
    self employment
  • Adoption of flexible working practices, such as
    job sharing and the increasing opportunity to
    work from home.

  • Exciting time for HR professionals
  • More emphasis on cost containment and control
  • Focus on employee responsibility and involvement
    at work
  • Greater use of technology in communication with
  • More flexible patterns of work