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

1.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

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

Employee Contributions for Health

Care

Employer Responses
Changes or elimination of
employee health care coverage
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 coaching
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 providers.
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 higher-benefit
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 clinics
Help provide primary care to workers at low or no cost
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

2. 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: workforce.com 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: workforce.com 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://danenet.wicip.org/snpo/

Challenges in Implementing PerformanceBased 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

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

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

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 functions."

Behavior-Based Approaches

Behavioral frequency scale

Desired behaviors are described and the
staff member is evaluated on how often
those behaviors occur

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 jobrelated 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 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, 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: Brunner-Rutledge.

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
continuity.

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

1.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

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, knowledge, and fit for jobs

Source: Kaihla, P. Business 2.0, 4(8), 97-104.

Developing Human Capital

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

Current Trends

Harnessing New Technology

1. Use of technology to communicate
with employees
Company intranets
E-Newsletters
Company emails

Harnessing New Technology

2. 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

3. 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
differences
Recognizing unique contributions individuals
with differences can make
Creating work environment that maximizes
potential of all employees

Managing the Changing Workforce

2. 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
positions
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 relationships.
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.

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