Current Trends in HR

CURRENT TRENDS IN HR
• EMPHASIS ON STRATEGIC PLANNING & SUCCESSION
– VP of HR is a Strategic Manager, Management Succession Planning
• EMPHASIS ON COST-RELATED ISSUES / COST CONTROL
– Global Competition, Outsourcing and Downsizing
• NEW SPECIALTIES EMERGING IN HR
– HR Planning, International HR, Employee Assistance Programs
• GROWTH OF GOVERNMENTAL REGULATIONS
– Wages (1930s), Unionization (1940s), Employment (1960s)
• PROFESSIONALIZATION OF HR MANAGEMENT
– Professional HR Societies & HRCI (Certification Institute)
• THE INTERNET REVOLUTION
– Electronic Recruiting, Records Management, and HRIS

Current Trends
Rising cost of
benefits,
especially
health care
Competitive
pressure on
increasing
employee
wages
Rising
Compensation
Costs

Current Trends
Developing
Human
Capital
Managing
talent
Labor
Shortages
Higher
Ethical
Standards

Current Trends
A move toward
single software
platforms
Use of
technology to
communicate
with employees
Evolution of new
technologies
Harnessing New Technology

Current Trends
Managing
the
Changing
Workforce
Increased
diversity in the
workforce
Work-life
balance
Increased
vulnerability of
intellectual
property
Changing work
patterns – 24/7
availability, etc.

Rising Compensation Costs
1. Rising cost of benefits, especially health
care
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.
• Changes or elimination of employee health care
coverage
• Some employers have been holding their health care
costs to a 1% increase.

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

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
Paying the full amount of common
preventive services can also help reduce
costs

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”

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

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

Employer Responses
Putting health care into employee’s 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

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

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

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

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

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

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

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

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 can’t 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