Current Trends in HR

Kim Hester, Ph.D. Professor of Management Arkansas State University

Current Trends
Rising cost of benefits, especially health care

Rising Compensation Costs
Competitive pressure on increasing employee wages

Current Trends
Managing talent

Developing Human Capital
Higher Ethical Standards

Labor Shortages

Current Trends
Use of technology to communicate with employees

Evolution of new technologies

A move toward single software platforms

Harnessing New Technology

Current Trends
Increased diversity in the workforce

Changing work patterns – 24/7 availability, etc.

Managing the Changing Workforce
Increased vulnerability of intellectual property

Work-life balance

a moderate increase compared to previous years . Rising cost of benefits.Rising Compensation Costs 1. especially health care Great News: 2008 Health care costs for most employers is expected to be around 7%.



• 88% of employees are required to pay some of the insurance premium out of their own pockets. • The employee share rose from 14.1% in 2005. Source: Economic Policy Institute. such as higher deductibles. co-pays.0% in 1992 to 22.Employer Responses Aggressive health care initiatives. and employee contribution levels. 2008 .


Employee Contributions for Health Care .

2008 .5% in 1989 to 58.9% in 2000 and down to 55.9% in 2004 (the latest aggregate data available) Source: Economic Policy Institute.Employer Responses Changes or elimination of employee health care coverage Statistic: Employer coverage has declined from 61.

Employer Responses Focus on changing employee behaviors  Wellness programs  Smoking cessation efforts  Education of employees on health care options and associated costs .

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

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 .

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

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

(e.Employer Responses  Sending the sickest employees to the best doctors is gaining as a strategy  Dubbed by some as a 20-20 approach .. lower copayments) as incentives to use the top providers.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.  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 .g.  Employers provide financial incentives.

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 higher-benefit plans if worker declines participation in wellness programs Source: Watson Wyatt Worldwide and the National Business Group on Health .

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

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. 2008 .Employer Responses Putting health care into employee’s hands As health insurance costs continue to rise. March 26.

Rising Compensation Costs 2. Competitive pressure on increasing employee wages Linking pay to organizational goals. and labor market norms Pay-for-Performance Programs Performance Management . employee productivity.

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 others It is so subjective it opens the organization and managers to allegations of bias Source: 5/05 .

http://danenet.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 .

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 Greeno.Christopher Gjesfjeld. 2006 .

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

Employee Productivity and Performance Management 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 .

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. Government Accountability Office (GAO).Employee Productivity and Performance Management Phase 3  Solutions to address identified challenges are developed and implemented. relevant. federal managers reported having more performance measures in 2003 than in 1997.S. and sufficient—steps that cycle back to performance planning  According to the U. but they also reported that use of performance data for program management activities has essentially remained unchanged .

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

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

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

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  Weighted checklist .

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 .Behavior-Based Approaches  Forced-choice method .

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

New York: American Management Association. proactive.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. D. forces. and challenging organizational climate Source: Grote. . The complete guide to performance appraisal. and fear  Development of a positive. (1996).

(1996). Begin the cycle again Source: Grote. and strengthen motivation.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 organization Formulate action plans for achieving the stated objectives Implement the action plans and take corrective action when required to ensure the attainment of objectives Periodically review performance against established goals and objectives Appraise overall performance. New York: American Management Association. . D. reinforce behavior. The complete guide to performance appraisal.

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

.  3.Success Factors in Performance Management Systems  Success in obtaining meaningful performance data and using this data to manage. which leads to feelings of empowerment and continuity. Leadership demonstrates commitment to managing for results. Staff engages and invests in the process. 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.

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..Points to Remember  Before implementing a performance measurement or management system. individual achievements versus team achievements)  Communication of performance information among relevant stakeholders crucial to the success of any performance measurement or management system .g. so carefully consider what behaviors should be emphasized (e.

Current Trends Developing Human Capital 1. and retention of the best workers  Employers need to find innovative ways to “brand” themselves. Managing talent – recruitment. setting them apart from competitors and becoming an “employer of choice”  As talent becomes scarce. development. development of current employees for promotional opportunities .

P. 4(8). .0.Developing Human Capital 2. knowledge. 97-104. Business 2. Labor shortage – finding the right talent  Statistic: By 2020. gap between available and required skilled workers is projected to be 14 million  Use of e-recruiting and non-traditional labor pools  Establishing selection system geared to retention: better skills assessment. and fit for jobs  Source: Kaihla.

e. Higher ethical standards  Greater focus on trust and integrity at all levels  Regulatory compliance issues (i.. SarbanesOxley Act) .Developing Human Capital 3.

Use of technology to communicate with employees  Company intranets  E-Newsletters  Company emails .Current Trends • Harnessing New Technology 1.

A move toward single software platforms  Integrated HRIS  PeopleSoft  SAP  Oracle .Harnessing New Technology 2.

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. but are secured so that only authorized users can access information on internal components . etc.) to gather and disseminate information within the firm Intranets may be linked to the external Internet. servers.

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 .Harnessing New Technology 3.

collect.Benefits of Automated Benefit Administration • Reducing and eliminating extensive manual efforts formerly needed to:  Distribute. Milliman USA . 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 20022003.

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

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 .Managing the Changing Workforce 2.

and taking a toll  In the US. and globally.  Between 46% and 59% of workers feel stress is affecting their interpersonal and sexual relationships. say jobs are affecting their health. 70%.  Males feel there is stigma associated with saying “I can’t do this” .Work-Life Balance  According to study by Center for Work-Life Policy. 81%. 1.7 million people consider their jobs and work hours excessive  50% of top corporate executives leaving current positions  64% of workers feel work pressures are “self-inflicted”.

. 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.Managing the Changing Workforce 3.

Conclusions 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 employees More flexible patterns of work .

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