What is Human Resources?

Human Resources is all about people (as you might have assumed from the name). It asks questions like, How do we recruit people? How do we motivate people? How do we keep people on task? What type of person works best in which situations? Because of HR’s close alignment with personal matters, professionals in Human Resources benefit greatly from training in psychology.  

There are several definitive indicators that provide insight into the HR contribution to a thriving business – ways to check on and measure how Human Resource work is strengthening organizational activities. Of the indicators, one is essential, several are recommended, and others are still valuable but considered additional.

Creating an Ethical Workplace

Another important factor in the field of HR is ethics (read the SHRM code of ethics here).

“The values in most ethics programs include respecting the customs and rituals of others and considering their welfare as well.”

While some companies might operate on certain religious principles, they must always be respectful and considerate of others in matters of personal faith, customs, and rituals. Programs that promote ethical maturity and practice amongst leadership and staff generally emphasize the four tenants depicted below. Want to read more about ethics? Read our blog post on ethical maturity.

Want more human resources content? Get the full course and earn recertification credit with your professional organizations. 

Building a Healthy Work Culture

Group dynamics and teamwork may sound like a fluffy topic, but it’s very important. One of the most notable ways in which work is changing is the shift from individual jobs to teams and teamwork.

“Teams are one of the major forces behind today’s revolutionary changes in contemporary organizations.”

Managing Workgroups

A workgroup can be portrayed as an open system that transforms resource input into product outputs.

As organizations expand, managers can be expected to shift from managing individual employees to managing teams, or groups of employees. In some ways, these are similar, but in many, they’re not. Amid all the changes and adjustments, lines of communication between you and your employees can break down. If this happens, you’ll have problems with member satisfaction and organizational structure (read more on that here). Whether your employee group is a team of plant workers all operating the same machine or several engineers working together to invent some breakthrough technology, your members need to feel valued and believe their participation and experiences are positive.

This isn’t just about fulfilling employee needs. High levels of member satisfaction lead to successful task performance, which means reaching performance goals in terms of quantity, quality, and timeliness of work results. For a manager, this means meeting your overall goals and measurable objectives in a timely fashion.

The bottom line is, people are your most important resource. If they feel mistreated or neglected, business suffers. If you lose synergy, you don’t have a chance of realizing your potential.

It’s important to realize the implications of the term just used: “synergy”. It means that the creation and operation of a whole is greater than the sum of the parts. Sometimes, you’ll hear group synergy called “bonding” or “cohesion”. What’s important about this concept is the idea that your department’s productivity is not measured by totaling every individual employee’s work.

Your group productivity should be greater than the total of the individuals’ work output, because your department works better as a team than you would in isolation. This only happens when people enjoy working together - team viability.

Group Involvement

Two main dimensions of teams in the current marketplace have been summarized by Schermerhorn, Hunt, and Osborn. New approaches to business teamwork include the central items of empowerment, participation, and involvement.

Participation is making sure every member is contributing his or her perspective and is actively involved in seeing through the plans they made. The contexts of teams are increasingly described as lateral or horizontal rather than vertical. Some of the most common types of teams include functional teams, cross-functional teams, multifunctional teams, quality circles, virtual teams, and self-managing teams. Here are some of the differences:

▪ Functional teams are usually made up of employees within a definable unit, such as a department or operating level, and work on specific assignments or goals. These may include the members of specific departments like marketing or production.

▪ Cross-functional teams usually include members from two or more areas who are brought together to work on a common task. Sometimes called a process improvement team or a product launch team, these groups usually work to integrate multiple functions or entities.

▪ Management teams often fall somewhere between cross-functional and multi-functional teams.

▪ Multi-functional teams may include members from all levels of the organization and may be charged to address organizational issues, make policy, define philosophy, or work on other broadly-based organizational agendas. The management team has a wide scope but only includes members from the management level.

▪ Quality circles are often temporary teams or teams that meet periodically to work on specific quality productivity, service, or cost-issues.

▪ Virtual teams include one or more members who utilize computer and other technologies rather than meeting face-to-face. They are often used to overcome physical distance barriers and can be highly cost-effective for those working from home.

▪ Self-managing teams are usually small groups empowered to make the decisions needed to manage themselves on a day-to-day basis, sometimes called autonomous work groups (AWGs). Members of this type of team assume duties that would be performed by a manager or first-line supervisor. It can be beneficial for some employees to have autonomy at work.

The Employee Lifecycle

A healthy employer/employee relationship is ultimately beneficial to the customer (and therefore, the profitability of the business) because it creates an atmosphere where employees can pursue excellence. A clear mission, proper motivation, and even social stimulation are all important factors in reducing work stress and creating a healthy, functioning workforce.

There are three main stages in the employment lifecycle which are typical for most employees.

Knowing how long an employee is going to need to settle in, how much attention and support they’ll need along the way, and how you’ll facilitate their leaving (whether retiring, quitting, or even being let go) are major topics that affect every business and require a great deal of attention.

In the hiring process, it’s vital to do everything possible to offer an accurate job description to potential recruits, which is why setting the parameters of the job is the best first step in beginning a hiring process.

No matter how well recruiting is done, an employee’s initial experiences contribute significantly to their contentment with the position and value to the company over time. Giving recruits an honest idea of what it’s like to work at your company ensures you eventually hire people that really want to be there, because those who are less likely to fit in well would opt out before taking the time to accept a position that isn’t right for them. If you lead someone to believe they’ll be working in Candyland, they’re not going to be satisfied with an everyday office job.

“According to Bersin, in the U.S. today, losing and replacing an employee costs approximately 1.5 to 2 times the salary of the person being replaced.”

A company of five hundred can spend up to a million dollars just by replacing fifty of their employees. It is always better to find and keep the right hires to start with. And, as a good employee is an appreciating asset, the longer they stay, the more value they add. Ideally, they are always considering how to get promoted. How best to increase the chances of that?

Job Descriptions

A solid first step is solidifying the job description (JD), which outlines where the individual employee fits into the greater business. Employees need to be able to visualize their piece of the whole, and a good JD helps ensure the people you employ are aligned with the goals, vision, and mission. “Job descriptions tell candidates what you’re looking for. This helps you in the selection process, and it also helps when you are addressing questions from those who are not selected”, says Heathfield.

A well-formatted Job Description should always include the following:

1. The position’s official title
2. The job’s purpose, or goal
3. Key responsibilities and accountabilities

Benefits of Strong Job Descriptions

Job Descriptions (JDs)  play a much larger role than just recruitment and hiring. JDs are objective and impersonal. That makes it far easier for parties to have productive discussions of shortcomings or to overcome misunderstandings -- you need only look at the description to find neutral ground. The first step in getting people to do what you want them to do is to make sure that people know your expectations -- and that starts with the job description.

In the grander business scheme, solid job descriptions can also:

Employee or Contractor?

Another important hurdle in setting the parameters of a job is whether the position is the best fit as an employee or a contractor. Changing business conditions and worker preferences for flexibility in hours and location mean this is an ever-growing question for Human Resource departments. So, what makes someone an employee, rather than a contractor?

Here are some of the most basic differences:

Being a full-time employee can give peace of mind, because the company is fully behind the employee with an understood long-term commitment, and taking care of their needs. Contractors must fend for themselves when it comes to insurance and other benefits, as well as sorting out their own withholdings. Employees also have more job security and legal protection from being laid off than contractors.

Temp agencies hire out contractors to companies that just need work during growth phases, or companies might want contractors for one-time projects that are outside of the scope of expertise of their regular teams and departments, or to outsource a specific business function.

However, several large companies have received court judgments against them for allegedly misclassifying employees as contractors to avoid paying benefits – and this is a common occurrence especially in smaller enterprises.

When attempting to discern whether a person should be classified as an employee or a contractor, the IRS’ Revenue Ruling 87-41 offers the full list of rules for determining each. It is also important to note that states (especially California) have additional and more specific rules on worker classification.

Recruiting 

Once a job is set, it’s time to start recruiting for it. Hard data on recruitment strategies is limited, but there are four general approaches to recruitment (though there is generous overlap), and each has its acknowledged benefits and disadvantages.

Performance Appraisal

The performance appraisal process typically consists of four interrelated steps as follows.

Helping Sustain Success

People who are natural motivators can see the employee needs of each individual under their management and relate to them in a way that makes them want to excel. Most managers in any field have a good grasp of this skill, but the best managers can make any piece (or employee, in this case) fit the puzzle.

So, what exactly is motivation? Some define it as “the things which drive a person to do anything.” It’s a sort of carrot at the end of a stick. But a more in-depth definition would be that motivation is the forces that account for the direction, level, and persistence of a person’s effort expended at work.

On a work analysis survey, it’s important to keep watch for whether an evaluator consistently rates higher or lower than others. This is called “rater bias” and should be noted.

Hierarchy of Needs Theory

Abraham Maslow developed the Hierarchy of Needs Theory, a perspective which describes five basic needs of the individual and are arranged in hierarchical order.

Research indicates that the various levels of need are probably not as closely aligned with the order of satisfaction that Maslow described. A level of need can even be intentionally violated. For example, the hunger strikes of Mahatma Gandhi and others show how a lower-level need can be purposefully neglected for a higher-level purpose, and vice-versa.

Cultural differences are a factor on the social level and above, but depending on various factors, such as the type of work a person performs, cultural factors play a larger or smaller role. For example, in many manufacturing facilities, safety concerns are cut and dry and are not affected as much by culture.

Leaving the Workplace

There’s no single explanation for workforce reduction, but some of the more common occurrences are poor management, corporate restructuring and departmental reorganization. But there are also reasons which aren’t the direct fault of the organization, such as economic downturn. Much of the time, workforce reduction does result in the permanent termination of employees in the form of layoffs, but this isn’t true in every situation. There exist other methods of handling workforce reduction, some of which are listed below.

Of course, these methods won’t benefit every organization, and certainly not in every situation. Sometimes it will simply make more sense to implement work-sharing programs than to have massive layoffs, and at other times, the opposite could prove true. The Worker Adjustment and Retraining Notification Act (WARN) requires employers to give affected employees sixty-days’ written notice when a plant will close, or when massive layoffs are anticipated. But organizational and economic issues aren’t always the reason for reduction in the workforce. Termination is an equally valid possibility.

Termination

Termination is when an employee’s tenure is ended by an organization. This occurs most frequently in response to poor performance and/or misconduct. No good company should fire people without reason. But there does come a point at any organization where, no matter how much they care, an individual’s actions hurt the company and it’s in everyone’s best interest to terminate the relationship.

Alternative options to organization-led termination do exist, including resignation, retirement, and voluntary turnover. People get older, become dissatisfied, or even get better offers from other companies. For voluntary turnover, two of the most common tools are the exit interview and the post-employment survey.

These techniques can yield particularly valuable insights and information, since the employee has little or nothing to lose at that point and may provide more honest and accurate responses. If nothing else, these procedures can be very therapeutic for the party leaving as well as informative for the company.

Retirement

Retirement has been defined as an “exit from an organizational position or career path of considerable duration taken by individuals after middle age and taken with the intention of reduced physiological commitment to work thereafter.” Numerous options have been developed to benefit both the company and the employee by keeping the retiring individual with the company at a reduced level. Some of the most popular current options include part-time work, unlimited PTO and sabbaticals, narrowing the job description, (positive) demotion, and use as volunteers or ambassadors.

Benefits and Eligibility Requirements

UC provides benefits at rates of 50% - 80% of normal pay to out-of-work employees who have been laid off and who are actively seeking work. Those seeking benefits are required to register with the state employment office in their area and are expected to accept work that reasonably matches their qualifications. The benefit period is a function of the length of prior employment. The maximum number of weeks an employee can receive UC has traditionally been 26 weeks. However, a 1970 amendment permitted an extension of UC benefits during times of economic downturn, usually for a period of 13 additional weeks. President George W. Bush approved three additional 13-week extensions during his term in office, allowing UC recipients to receive a total maximum of 65 weeks of benefits.

An individual’s eligibility for UC varies from state to state, but generally includes three factors: the amount of recent employment and earnings, the demonstrated ability and willingness to seek and accept suitable employment, and the lack of certain disqualifications to the person’s most recent job termination or job offer refusal (including voluntary resignation and/or misconduct by the employee).

Compensation & Benefits

Despite the numerous, altruistic reasons people often provide for doing their job, the main motivator in most cases is simply compensation.

“Perhaps Jane Doe wants to change the world for the better, and truly believes the company she works for has the ability to fulfill that hope – but if she’s not paid for her time and labor, there’s a good chance she’ll eventually seek out other work.”

That’s why the issue of monetary compensation is such a pressing one, and why one of the jobs of the HR department is to ensure the workforce is being appropriately compensated in exchange for their hard work and dedication.

But as straightforward as this concept might appear – exchanging money for labor – it isn’t always as simple as one might expect. While not all human resource professionals need to be experts in compensation, they should have some experience managing payroll.

A large part of this process includes determining what type of compensation is considered appropriate, a task which is made easier through job evaluation. Simply put, this is a systematic way of determining which jobs in an organization merit higher compensation and which don’t. Those job positions which require more specialized talents and skills will generally require better compensation, because getting and keeping employees in those positions will be much more difficult than doing the same for a position which anyone could fill effectively.

But the job alone shouldn’t determine appropriate compensation for the duration of that job holder’s employee lifecycle. Sometimes, an organization will want to reward an employee who functions especially well within their given position, and compensation can be increased. How well an individual fulfills their respective tasks can influence their payment, and job evaluation plays a critical role in determining whether an employee is excelling and deserving of higher compensation.

What’s the role of the government in compensation?

You might be surprised how many businesses get themselves in trouble over issues of pay and compensation. It’s better to be safe than sorry – and in this case, safe means having a basic understanding of the legislation that governs it.

Benefits

Benefits consist of any non-wage forms of compensation provided to employees in addition to their salaries or hourly rates. Though some are required by law, most benefits are provided as a means of enhancing the appeal of a specific position or, in some organizations, as a way of ensuring employees are well taken care of.

Some of the more prominent benefits include paid time off, various forms of health insurance, and retirement funds, but there are many other types, such as tuition reimbursement and gym memberships. Some employers also include an Employee Wellness or Employee Fitness program as a benefit. The focus is typically on prevention, and often utilizes incentives to stay well and create a healthy work life balance. They’re generally cost effective for organizations when done properly. In many cases, corporate wellness programs have also decreased the frequency and seriousness of doctor visits. One example of a company with a broad health-intensive program for their employees is Lincoln Industries. Their routine to improve employee health includes daily stretches, warm-ups, and massages -- as a result, their costs are half the regional average, which is quite an accomplishment.

With the increasing diversity of the workforce and the growing availability of options, more companies are offering flexible, or “cafeteria-style” benefit plans where the employee can select various benefit offerings from a list of choices. Although employees tend to prefer having various benefit options available to them, cafeteria-style benefit programs are more difficult for the organization to administer.

What is the role of the government in regulating healthcare plans and other fringe benefits?

Pension plans are benefits policies that provide participants with money when they retire or one that defers income until or beyond employment.

Under ERISA, a welfare plan is a benefit plan that provides health benefits, disability benefits, vacation benefits, daycare, education, scholarships, training benefits, death benefits, prepaid legal services, and other benefits services. ERISA requires that all persons participating in a retirement plan be notified in writing and in understandable language. 

The federal government doesn’t mandate pension plans, which is why medium to large organizations are one and a half times more likely to have a pension program than small organizations. However, the government does provide regulations for pension plans once an organization has one in place.

This is a big issue since most employees underestimate the cost of indirect benefits to the organization. Plus, with the projected bankruptcy of Social Security, and increasing loans against 401(k) plans, there’s not an easy solution.

Some of the arguments for a Family and Medical Leave policy are that the company can use the vacated position to develop other employees. Such a policy shows organizational support, which can increase trust, and reduces stress for the employee since they will be guaranteed the same or a comparable position upon return.

Compliance

Human Resources departments must work with balancing internal forces -- the things a company can control about how it runs -- with the external forces of law and public policy. Regulation and litigation have increased in the U.S. and are gaining momentum around the world, as employees begin to better understand their rights and power in the marketplace. In fact, the number of federal lawsuits regarding labor laws in the U.S. are growing. Thus, the effort to maintain legal compliance is of utmost importance to Human Resource professionals.

“Proliferation of laws, regulations, executive orders, and rules have had major effects on HR. A surprising effect of this has been the elevation of the status of HR’s role in business as a whole.”

Laws are always subject to change, depending on who is in power and who is on the judge’s bench, which is why it’s important for human resource professionals to maintain a working knowledge of workplace law. Employment laws affect almost every aspect of Human Resources, including personnel selection, admissions, work assignments, transfers, compensation, layoffs, punishments, dismissals, and work atmosphere. In fact, training in Equal Employment Opportunity (EEO) legislation and application is often required for business liability insurance, which is expensive but is becoming more and more necessary.

Human Resources departments are responsible for enforcing compliance issues which, in most cases, means ensuring the organization treats all people fairly and avoids legal trouble. It is in their best interest to comply in areas where federal legislation exists, and with the increasing complexity of such laws (e.g. employment drug testing), doing so isn’t always a simple matter.