Compensation

Written by: Catherine Pesta

Overview

Whatever your personal reasons for working, the bottom line is that almost everyone works for money. Money provides housing, gives children clothing and food, sends teens to college, and allows vacations, and eventually, retirement. To underplay the importance of money and benefits as motivation for people who work is a mistake.  Compensation and benefits plans play an important role in satisfaction of the employer and employee alike.

In order to successfully carry out a compensation system, the human resources department must create and abide by a compensation policy. The policy takes into consideration job descriptions, job analyses, job evaluations, pay structures, salary surveys (Thomson, 2012).

History

The Equal Pay Act of 1963, a federal law signed by John F. Kennedy, requires that men and women be given equal pay for equal work in the same company. The jobs do not need to be identical, but they must be substantially equal. Pay differentials are permitted when they are based on seniority, merit, quantity or quality of production, or a factor other than sex.

The Equal Pay Act was an amendment to the Fair Labor Standards Act of 1938. The Fair Labor Standards Act introduced America the forty-hour work week that is still familiar to us today (Jackson, 2009) . Also introduced by this law, was national minimum wage and requirement that all hours worked over the normal forty hours were compensated at “time and a half.”   

Bonuses

                  Bonus pay is any compensation provided by an employer that is over their specified pay (salary or hourly rate).  Employers pay out bonuses at random or regularly. Bonus pay can boost morale and increase motivation at a workplace and bonuses are rewarded for many different reasons.

At a time when the job market is on the mend, employers are focusing on hiring and retaining top talent.  Employers attract prospective employees by offering hiring bonuses and keep current talent by offering retention bonuses. In 2011 nearly two thirds (63%) of organizations reported using hiring bonuses, and 41% use or expect to implement retention bonuses. The survey included a range of employee levels including executives, directors, and managers (Hansen, 2011).

                  Some employers award “referral bonuses” to current employees who successfully refer a prospective employee. The bonus is paid after a specified period of time passes after the prospective employee is hired and determined a good fit. “Performance bonuses” are given when employees meet predetermined goals or benchmarks. Employers are not required to pay bonuses unless there is a contractual obligation. In most cases, contractual bonuses are awarded to executives and other high-level employees and are included in their negotiated compensation package.

Minimum Wage

Occupations, primarily in the service industry, are compensated at a base pay of “minimum wage” in the United States. Minimum wage is regulated on both a federal and state level.  Federal minimum wage is currently $7.25 per hour and $2.13 per hour for tipped employees. States and territories may determine their own minimum wage as long as it exceeds the federal level. Currently, Washington has the highest minimum wage in the United States at $9.13. Studies have found that the majority of workers who get hired in at minimum wage get a pay raise within one year.

During his recent inaugural address, President Obama, pushed for Congress to raise the minimum wage to $9 per hour because those that are currently working full time and being compensated minimum wage are living beneath the poverty line. Some employers and economists oppose boosting minimum wage because it increases the unemployment rate because employees are more expensive for employers to hire (Lowrey, 2013).

Other Forms of Compensation

Employee benefits are another form of compensation and typically refer to retirement plans, insurance (health, life, disability), vacation time, stock options, etc. Benefits are increasingly expensive for companies to provide to employees, so some companies are using flexible benefit plans, where the employee pays for a portion of the benefit.  Benefit plans are voluntarily established and maintained by the employer. According to a national study, employees who reported that their organization had effective benefits communications were more likely to be loyal to their organization, and more satisfied with their benefits and with their jobs (SHRM, 2008). Continuous benefits communication can make it more likely that employees will value, understand and use their benefits program.

Sources

Jackson, H. J., & Mathis, L. R. (2009). Human Resource Management, 13^th Edition. South Western: Cengage Learning.

SHRM: Society of Human Resources Management (2008). Religion and Corporate Culture. Alexandria, VA

Hanson, F. (2011). Currents in Compensation & Benefits. Compensation & Benefits Review (pp. 263-274). New York City: Sage. (Original work published 2011)

Lowrey, A. (2013, February 13). Obama Pushes for Increase in Federal Minimum Wage - NYTimes.com. The New York Times - Breaking News, World News & Multimedia. Retrieved March 31, 2013, from http://www.nytimes.com/2013/02/13/us/politics/obama-pushes-for-increase-in-federal-minimum-wage.html?_r=0

The Equal Pay Act of 1963 (EPA). (n.d.). EEOC Home Page. Retrieved March 31, 2013, from http://www.eeoc.gov/laws/statutes/epa.cfm

Thomson, D. (2012). Compensation and Benefits. From the Trenches: Projecting the Future Reality of Compensation and Benefits (pp. 66-72). New York City: Sage.

Recruitment

Written by: Christine Marah

Recruitment

Overview

One of the key aspects in any organization is its employees.  Generally, employees are hired through the human resource department or by a recruiter.  Recruitment is known as the procedure of elimination in hiring the best applicant to fit the job description (Jackson & Mathis, p. 178).   Recruiters should be viewed as a win-win to both the organization and the potential employee.  For the organization, the role of the recruiter is to search for the best applicant based on the job description.  For the potential employee, the recruiter is placing them in an organization based on their qualifications that match the job description.  A crucial function in human resource management is the recruitment process (Pfieffelmann, Wagner, & Libkuman, 2010).  

Using the job description, recruiters look for applicants that best fit the position; further, recruiters need to avoid any possible discrimination (O'Malley, 2011).  This means recruiters need to set aside the applicants’ gender, status, religion, age, race and disability and focus on how applicants carry oneself during the interviewing process and how relative their previous work experience to the job description (O'Malley, 2011). In order for an applicant to meet all the job requirements, they must fulfill the knowledge, skills, and abilities based on the job description and qualifications (Jackson & Mathis, p. 136).  The knowledge, skills, and abilities include previous work experience, education, personal, physical, mental, and work performance requirements (Jackson & Mathis, p. 136). Every job description has different job qualifications.  A study was conducted in the healthcare field, and based on the results it found that the employees in management roles did not contain the proper knowledge, skills, and abilities to perform the job to the fullest (Behling, Haefner, & Stowe 2011).  Some recruiters may not realize that they are practicing discrimination.  When a recruiter is hired by an organization, usually the organization will provide the recruiter with guidelines for finding the best applicant (Wheeler, 2004).  The guidelines that the organization provides to the recruiter can range from an average age to a particular religion the applicant must be.  

Perception

Recruiters can be viewed as a sales representative.  A recruiter is going to try to sell the organization to the potential applicant.  Also, if the potential applicant has any interest in the organization, they will also try to sell themselves during the interview.  Majority of the recruiters are paid a fee equivalent to a percentage of the applicants’ salary, if the organization decides to hire the applicant.  Some, but not all recruiters will only have the mindset of the commission they will receive if the organization hires the applicant (Wheeler 2004).  So, the recruiters may tell the applicants what want they want to hear, or tell a little white lie and make promises that they know will be broken by the organization (Wheeler 2004).  Unfortunately, if the applicant is dissatisfied with the organization because of the false advertisement from the recruiter, this will leave a poor reflection on the organization.

Recruiting may affect the applicant’s personal life (Pfieffelmann et al., 2010).  Recruiting affects an applicant’s personal life because the job that they are interviewing for may become their primary source of income.  Not only does it affect their income and how they are living their lives but also the level of stress the job includes.  If the job has a high level of stress, the employee can be more prone to health issues.  Ultimately, the applicant’s final decision depends on how well the recruiter represented the organization (Pfieffelmann et al., 2010).  We may not realize but everyone, even organizations are signaling on a daily basis (Karasek & Bryant 2012).   Applicants signal themselves during an interview because it is the way they communicate, cooperate, and carry themselves (Karasek & Bryant 2012).   The way that an organization signals is through recruiting and advertisements (Karasek & Bryant 2012).  

For example, if an organization is not widely known or their website is not incorporated user friendly, the applicant will have little to no knowledge about the organization in which they rely on the information received from the recruiter (Pfieffelmann et al., 2010).  This is an example of signaling theory because the applicant has little to no knowledge about the organization and they will rely on the information received from the recruiter to make one of the most important decisions they will have to make (Pfieffelmann et al., 2010). 

Employee Well-being

During the hard economic times, organizations had a one track mind; do whatever it takes to keep the organization alive.  This not only happens during economic hard times, but it also happens during employee shortages.  When organizations have this mindset, the well-being of employees is not taken into consideration.  For example, Africa has a shortage of nurses due to the high numbers of individuals with contagious diseases (Oulton 2001).  Since Africa has a shortage of nurses and a bad reputation caused by the rapid spread of the contagious diseases, Africa recruits for nurses all over the nation (Oulton 2001).  Expatriate nurses that work in Africa should start off with a reasonable salary because of the high risk environment they are entering, but unfortunately that is not the case (Oulton 2001).  The transformation of moving from your home country to a foreign country is not an easy adjustment.  The organization that I work for as a human resource assistant is an international corporation, whose headquarters is based out of Barcelona, Spain.  Working as a human resource assistant, I see firsthand the struggles that the expatriates face with their big move to the United States.  The expatriates struggle with the adjustments of the United States’ standard of living, applying for citizenship, building their credit etc. Whether an employee is an expatriate or a citizen of the country that they are working in, each employee should be treated equally from pay to employee performance (Oulton 2001).  It would be ethical for employees that are currently working for an organization that has a shortage of employees to treat all the new hires equally.  If employees, especially expatriates are not being treated equally in the workforce, it is only natural for their personal well-being to decline.

Conclusion

As mentioned before, employees are one of the key aspects of an organization.  In order for an employee to perform their best, each employee should have majority of the qualifications.  If an employee lacks particular job qualifications they will end up having low performance scores which will ultimately reflect poorly upon the organization.  Making sure an applicant is suitable for the job will always be a result of how well the recruiter performed their job. 

References

Behling, R. J., Haefner, J., & Stowe, M. (2011). Required Knowledge, Skills and Abilities from Healthcare Clinical Managers’ Perspectives. Academy of Health Care Management Journal, 7.2, 41.

http://go.galegroup.com.huaryu.kl.oakland.edu/ps/i.do?id=GALE|A263157554&v=2.1&u=lom_oaklandu&it=r&p=ITOF&sw=w

Jackson, H. J., & Mathis, L. R. (2009). Human Resource Management, 13^th Edition. South

                Western: Cengage Learning. 

Karasek, Ray; Bryant, Phil (2012). Signaling Theory: Past, Present, and Future. Academy of Strategic

                Management Journal, Vol. 11 (1), 9.

http://search.proquest.com.huaryu.kl.oakland.edu/docview/1037692134

Moench, E. (2009). The Business of Recruitment. Applied Clinical Trails, Vol. 18 (3), 8-10.

                http://search.proquest.com/docview/201441588

O'Malley, J. (2011). Avoiding Discrimination Pitfalls when Recruiting. Accountancy Ireland, Vol. 43 (5),

49-50. http://search.proquest.com.huaryu.kl.oakland.edu/docview/900868050

Oulton, J.A. (2001). At Issue: Ethical Recruitment.  International Nursing Review, Vol. 48 (2), 78.

http://web.ebscohost.com/ehost/detail?sid=966c0eda-e69e-4247-91de-

794dc830d678%40sessionmgr11&vid=1&hid=10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d

Pfieffelmann, B., Wagner, H. S., & Libkuman, T. (2010). Recruiting on Corporate Web Sites:  Perceptions

                of fit and attraction. International Journal of Selection and Assessment, Vol. 18 (1), 1-8.

http://onlinelibrary.wiley.com/doi/10.1111/j.1468-2389.2010.00487.x/pdf

Wheeler, K. (2004). The Ethics of Recruiting. ERE Media, Inc. http://www.ere.net/2004/04/21/the-

ethics-of-recruiting/

Issues of Outsourcing

Ethical Issues of Outsourcing

Written By: Gjergji Gega

Introduction

The controversy surrounding outsourcing has intensified in recent years. While proponents view it as improving business performance by shipping support functions overseas and thereby allowing direct employees to focus on complex and core business functions, detractors view it as robbing domestic workers of good jobs by relocating them overseas to lower paid and possibly less qualified foreign workers. In the business world where cost and efficiency matter, corporations have begun to take advantage of the benefits realized by tapping into the foreign workforce (Fisher, Wasserman, Wolf, Wears, 2008). Corporations have begun to realize the rewards of cost-savings, convenience, and efficiency through outsourcing work to foreign countries, such as India, the highly educated English-speaking country (Fisher et al., 2008). As outsourcing strategies have become increasingly popular, questions have arisen about the legal and ethical consequences of such practices (Fisher et al., 2008).

Cost

The recent downturn in the United States economy has driven numerous American corporations to begin outsourcing and off shoring work to countries such as India, China, New Zealand, South Korea, and other countries where the cost of labor is significantly lower (Ahmed, 2006). India is the number one country for Western corporate outsourcing. One of the main reasons jobs are outsourced to countries such as India and China is because they have a lower standard of living compared to other countries. This means that the wages, safety and health laws are not as strict as they are in the United States or Western Europe.

Since wages, safety and health laws are not as strict as they are in the United States; this is very attractive to American corporations. It allows corporations to cut costs and save billions of dollars without violation of Occupational Safety and Health Administrations (OSHA). Although outsourcing may be seen as a business savvy move, there are some negative consequences. A lot of people have criticized companies such as Apple, Microsoft and Sony partnering up with the controversial corporation Foxconn. In 2010 allegations that Foxconn, headquarters in China with production in southern China, is a tech sweatshop and a human rights violator (Rundle, 2012). The unfair pay and treatment of employees can have a negative effect on the products that they are assembling. For example, 300 Chinese workers who assemble Xbox counsels took to a roof and threatened bosses with mass suicide over a dispute about pay (Rundle, 2012).

According to Gartner Group, the total IT outsourcing market totaled over 70 billion dollars in 2001 and projected to grow over 160 billion dollars in 2005 More than 70 percent of Fortune 500 Companies use outsourcing at various levels of their IT activities, including software development (Ahmed, 2006). With the vast amount of profit that corporations such as Microsoft, Apple and Sony make, they have a responsibility to see that the workers that are manufacturing their products are treated equally.

Advantages of Outsourcing

The many advantages outsourcing provides to the business world make it an attractive option to many companies. Are the reasons for outsourcing justifiable for North American and Western Europe corporations to exploit a country’s human resource? Corporations that outsource to undeveloped countries say it is the government’s duty to enforce laws to protect workers (Ahmed,2006). Looking at all the advantages of outsourcing below you can see why these benefits, the countries that jobs are being outsourced to but also corporations.

·         Core activities of the business take center stage. Outsourcing non-core activities such as administration and back-office operations helps to put the focus back on the core functions of the business, such as sales and marketing.

·         One of the biggest advantages of outsourcing to India (or any other location) is cost savings. The lower cost of operation and labor makes it attractive to outsource.

·         Outsourcing frees an organization from investments in technology, infrastructure and people that make up the bulk of a back-end process capital expenditure.

·         Outsourcing gives business flexibility in staffing and manpower management. Since the service provider is responsible for managing the workforce, you save costs and can also pick up the nest people to run your core functions.

(Bucky, 2012)

Disadvantages of Outsourcing

There are a lot of benefits to outsourcing, such as less time and resources spent on employee training. Also there is a down side to outsourcing that may have a great impact on the company. Exploiting an undeveloped country’s work force can have a negative effect on the image of your company. This might lead to lower sales, bad public image and also bad business.

·         Problems with quality can arise if the outsourcing provider does not have proper processes and/or is inexperienced in working in an outsourcing relationship.

·         Since the outsourcing provider may work with other customers, they may not give 100% time and attention to a single company. This may result in delays inaccuracies in the work output.

·         If important functions are being outsourced, an organization is mightily dependent on the outsourcing provider. Risks such as bankruptcy and financial loss cannot be controlled.

·         Not understanding the culture of the outsourcing provider and the location where you outsource to, may lead to poor communication and lower productivity.

(Bucky, 2012)

Conclusion

Outsourcing is not a new phenomenon; it has been a business practice for corporations since the 1970s. During the past decade, it has gained momentum and negative attention from the international community. With the economy still trying to recover, corporations are finding new ways to save, cut costs and time. Only in recent years has the public been showed to what horrible conditions that workers from where all these jobs are being deported have to endure daily. Their rights as human beings and workers are being exploited not only by corporations but their own government. There will always be countries that will not be as developed as others, but that does not mean that corporation can exploit that vulnerability.

Reference

Rano Ejaz Ahmed (2006). Software Maintenance outsourcing: Issues and Strategies.

-          November 2006, Volume 32, Issue 6, Pages 449-453.

-          Retrieved from http://www.sciencedirect.com.huaryu.kl.oakland.edu/science/article/pii/S0045790606000474

Teri L. Caraway (2004). Protective Repression, International Pressure, and Institutional Design: Explaining Labor Reform in Indonesia.

-          Fall 2004 Studies in Comparative International Development.

-          Retrieved from http://download.springer.com/static/pdf/365/art%253A10.1007%252FBF02686281.pdf?auth66=1365190922_8f60b3d637ff78ab817c80f7c05f015f&ext=.pdf

Sandra L. Fisher, Michael E. Wasserman, Paige P. Wolf, Katherine Hannan Wears (2008). Special Issues: With Breaking Barriers for Purposes of Inclusiveness.

-          Autumn (fall) 2008, Volume 47, Issue 3, Pages 501-503.

-          Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/hrm.20229/abstract

Bucki James (Fall 2012). Outsourcing Advantages. About.com

-          Retrieved March 10, 2013, From http://operationstech.about.com/od/officestaffingandmanagem/a/OutSrcAdvantg.htm

Rundle Michael (October 1, 2010). 300 Chinese Foxconn Workers ‘Threaten Mass Suicide’ At Xbox Plant, Reports Claim. Huffpost Tech. Retrieved March 14^, 2013, from http://www.huffingtonpost.co.uk/2012/01/10/300-chinese-foxconn-workers-threaten-mass-suicide_n_1196345.html

Performance Reviews

By: Ido Saltarelli

     Performance reviews are used in almost every industry and it is virtually guaranteed that you will be the reviewer and the reviewed at one time or another. Often times performance appraisals fall on the shoulders of Human Resource professionals, but supervisors sometimes administer them. Misiak, (2010) states that an “Appraisal is one of the most important tools in the management of human resources. However, made in an inappropriate way, it can be harmful rather than useful.” My goal is to shed some light on the importance of well managed and ethical performance reviews.

     Employees should be viewed as an investment for the company rather than an expense. (Schraeder, Jordan 2011) This means that an organization should care for its employees. Money, time and intangible resources have been used to acquire an employee, so the employee should be given clear guidance on what is expected of them and guidance on how to further their career. This will in turn benefit the company. The company holds the obligation of employment and leadership of an individual that works for them. (Priest, 1998)

     The way reviews are approached should be determined by management and HR professionals, in order to determine the objective of the reviews. Reviews should have an appraisal system so the employee can see how he/she is preforming. For example a numeric system 1-5, 1 being out standing 5 needs improvement.(Misiak, 2010) Appraisals should be managed by a set of rules that are outlined for everyone to know. Employees should have input in the appraising system. Doing this allows employees to know what to expect and have a say in their review. (Misiak, 2010) A worker should know what is expected of them. Not just in daily tasks but as an overall view of how they are preforming. The Reviewer can, if there are short comings in performance that need to be corrected, convey what is not being done up to standard. Also supervisors should outline, and guide employees on actions that will help resolve the issue. Reviews are can be a meaningful tool for acknowledging positive aspects, work habits or tasks that an employee has accomplished. 

     A Performance review should be scheduled in advance, at least a week. The time and location of the meeting are important. It is not good to schedule a review for 4:45 Friday afternoon. The reviewer should be well prepared, review the employees performance prior to the review. A Performance review should have a clear objective, be 2 sided, and have an open positive atmosphere. (Misiak, 2010) The ethical manager will deal honestly and directly with employees, advising them where they are falling short, how to correct the problem, and the consequence of not correcting it. When appraising an employee’s performance identify any areas of improvement without attacking the employee. It is important to allow the employee to talk about the performance being addressed. (Schraeder, Jordan 2011) For instance if goals were not stated clearly the employee may have had different objectives than managers over the period in review. When conducting a review never compare an individual to another individual. (I.E. “you should try to be more like Mr. Smith”) This would be unethical even if “Mr. Smith” is doing a good job comparing employees may cause resentment.  Instead state the issue and what is expected of the employee in the future. As the review progresses it is important to outline accomplishments and give positive reinforcement. Make sure to outline future goals. Guide employees through this process so that they have expectations in line with the expectations of management. Corporate ethical conduct should be addressed in performance reviews to reinforce the company’s ethical conduct policies. (Schraeder, Jordan 2011) Document appraisals so that they can be reviewed on later appraisals to see if progress has been made and goals have been met. Also the documentation can serve as a written warning in the future if poor performance is not resolved. The review should be conducted to include ways for the employee to manage their career and resolve issues if there are any. As the review comes to an end it is important that both parties are in agreement with the review and the goals that have been laid out.

     Appraisals are an important tool for managers. Reviews are a way for managers to inform workers of how they are performing in the eyes of the management team. Management can reinforce company policies, goals, objectives, and future tasks through this process; Employees can bring grievances, issues, or ideas to the table as well. As documentation is collected from reviews management can use a longitudinal approach to identify and track individuals that strive to continually improve or individuals that are not improving. (Misiak, 2010) These metrics can be used to identify individuals that may not be a right fit for the origination and need to be let go. It is important to have these reviews so the individual has knowledge of short comings and has time to try to remedy them, so that being let go is not a surprise. Employees that perform well can be identified for increased roles of responsibility or promotion. Reviews are an important tool for managers and employees for 2-way communication, and performance metrics. They should be conducted regularly for the benefit for the organization and the employee.

References

Misiak, S. (2010). Ethical system for employee performance appraisal in practice. Economics & Sociology, 3(2), 101-113,139. Retrieved from http://search.proquest.com/docview/1039084806?accountid=12924

Schraeder, M., & Jordan, M. (2011). Managing performance: A practical perspective on managing employee performance.The Journal for Quality and Participation, 34(2), 4-10. Retrieved from http://search.proquest.com/docview/884214960?accountid=12924

Priest, J. T. (1998, Oct 30). Ethical terminations. Journal Record. Retrieved from http://search.proquest.com/docview/259390920?accountid=12924