Managing Human Resources - Introduction To Business - ثاني ثانوي

4.2 Managing Human Resources Link to digital lesson www.ien.edu.sa Learning Outcomes Once you have completed this lesson, you should be able to: 4.2.1 Identify important planning and staffing activities. 4.2.2 Describe compensation and benefits plans. 4.2.3 Recognize the goals of performance management. Key Terms Job Analysis Incentive Systems Compensation Salary and Wages Promotion Transfer Termination Benefits Focus on REAL LIFE "How was your day?" Bushra asked her business partner as she dropped into a chair after a busy day. "It was fine until Sara came to see me," Layla responded as she looked up from the report she was reading. "She is going to work for a competitor." "That's a shame," said Bushra, "She is great with customers and her work is terrific. Did she say why she is leaving?" "The usual reasons: better benefits and more opportunities for advancement," Layla replied. "We need to look for a replacement right away," Bushra said. "I'll call the staffing agency tomorrow." "Maybe we should take our time and think about our needs. It might be time to plan a better hiring strategy rather than just quickly replacing people when they leave," Layla said. "Layla, you're right. We should turn this in to an opportunity for reviewing the way we manage our human resources. I bet there are things we can do to be more competitive. We especially need to focus on ways to retain our talented employees." LO 4.2.1 HUMAN RESOURCES PLANNING AND STAFFING Human resources management ensures that needed employees are available, productive, paid, and satisfied with their work. If human resources management does its job well, the company will have employees who do their jobs well. This contributes to a successful, profitable business. Planning and Job Analysis Human resources management begins by analyzing where the business currently is and where it wants to be in the future, planning the number and type of workers needed to meet the proposed business activities. The decision to hire people must be made carefully. Once an employee is hired, the person's salary must be paid whether the company is profitable or not. An employee should be hired when the work of that employee will add more to the company's profitability than it will cost. Classifying Employees The company must decide whether the person to be hired will be permanent or temporary. A permanent employee is one to whom the company makes a long-term commitment. It is expected that the employee will work for the business as long as the business is profitable and the employee's performance is satisfactory. A temporary employee is one hired for a specific time or to complete a specific assignment. وزارة التعليم Ministry of Education 2024-1446 GE44.PATHWAYS.G02.ITB.SB.PP1.indb 121 4.2 Managing Human Resources | 121 08/05/2024 09:13

Why would a business choose not to advertise a job opening outside the company? Because permanent employees feel that they are a part of the business, they are often more productive than temporary employees. On the other hand, there is more control over the company's resources when temporary employees are hired. The employee is paid only until the temporary assignment ends. Temporary employees are usually hired during a busy time for the business or when a special task needs to be done. Whether permanent or temporary, employees can be hired full-time or part-time. A full-time employee regularly works between 40 to 48 hours a week. A part-time employee has a shorter work schedule with either fewer hours each day or fewer days each week. In Saudi Arabia, the law stipulates that the maximum number of hours a person can work is 48 hours, and this is reduced to 30 hours for Muslim employees during Ramadan. Determining Job Requirements Before starting the hiring process, human resources staff studies the work that must be done in the job. Specific information about each job is needed in order to hire people with the right skills. That information is often collected by completing a job analysis. A job analysis is a specific study of a job to identify in detail the job duties and skill requirements. Human resources staff study the current job in detail by observing the work and talking with employees and managers. They identify all important job duties, as well as the knowledge and skills required to successfully complete the job. The job analysis helps determine if the needs of the business can best be met with temporary, permanent, part-time, or full-time employees. Recruiting and Hiring Once the specific need and skill requirements are determined, prospective employees meeting the requirements must be located. If this search is not done carefully, an employer may spend a great deal of time and expense and an appropriate employee may still not be found. Several good sources of prospective employees exist and are identified in Figure 4-3. Businesses should use sources that will provide an adequate number of qualified candidates for the position. The candidates should have the skills required for the job and an interest in working for the business. The Application Process Most companies ask prospective applicants to fill out an employment application. The application gathers personal information, information on education, and work experience history. It may also ask for specific skills related to the job and contact information for people who can serve as references. The applicant may be asked to submit a résumé as well. Applications are used to eliminate people who are clearly not qualified for the job and to identify those who appear to be especially qualified. Once applications have been reviewed, the remaining applicants are studied more carefully. Information is checked for accuracy. References are contacted. The employer selects a few applicants to interview. These applicants may be asked to complete special tests related to needed job knowledge and skills. During the interview, the applicant may be introduced to the work area, managers, and co-workers. The applicant will be given more detailed information about the company and the job. Finally, the applicant whose qualifications best match the job requirements will be offered the job. New Employee Orientation The final step in the hiring process is to help the new employee get a good start in the company. As a part of the orientation, the new employee will meet with human resources specialists to complete all of the forms and documents needed to receive pay P122 Chapter 4 | Human Resources, Culture, and Diversity Ministry of Education 2024-1446

EFFECTIVE SOURCES FOR RECRUITING PROSPECTIVE EMPLOYEES Company employment office Company websites Employment agencies, public and private Online recruiting websites such as Linkedln Newspaper advertising and print Placement offices in school and college Radio and television advertising Referrals by employees Social networking Executive recruiters Industry publications Job search and career websites FIGURE 4-3 Why do employers often use multiple sources when recruiting new employees? Upskilling the Workforce Business Insight One of the most important aspects of Saudi Vision 2030 is the people responsible for making it a success. This includes not only those Saudi citizens and others who are currently working to realize its objectives, but also, crucially, the future generations who will one day enter the workforce. Any project can only succeed with the right level of determination, skills, and organization behind it. As such, Saudi Arabia is not just investing in its infrastructure, but also its people, with a range of initiatives aimed at training and developing workers, and equipping them with the necessary attributes to act competitively on a global scale. The Human Capability Development Program is one such example. According to Saudi Vision 2030, the program is nurturing these core capabilities, "by instilling values and developing basic and future skills, as well as enhancing knowledge. The program focuses on developing a solid educational base for everyone to instill values from an early age, while preparing the youth for the future local and global labor market." There is an emphasis "on upskilling citizens by providing lifelong learning opportunities, supporting innovation and entrepreneurship culture." Another related initiative is the Tamheer Program, which, according to the official government website, provides training in the workplace, "to develop the graduates of Saudi and foreign universities, institutes and colleges' skills." The program caters for both recent graduates and employees with existing experience, by providing training placements in private sector businesses and government agencies. Think Critically 1. How can a training placement with a government agency help a young graduate start their career? 2. Why is training in the workplace important in addition to formal education? وزارة التعليم Ministry of Education 2024-1446 4.2 Managing Human Resources | 123

and benefits. This will also allow the company to develop a complete employee record. There will usually be several days of training. The employee may be paired with an experienced co-worker, or mentor. The mentor answers questions and helps the new employee solve problems and build confidence for the new job. The company may have a probationary period of several weeks to several months. During that time, the new employee is evaluated to ensure job performance is meeting the company's expectations. mix Work as a TEAM Automobile dealerships have traditionally paid their salespeople with a straight commission. Some dealerships now pay each salesperson a salary and add a bonus based on customer satisfaction surveys. As a team, discuss how this change might affect the performance of the salespeople and why the dealerships may have chosen to make the change. CHECKPOINT Why do human resources personnel need to study jobs before beginning the hiring process? LO 4.2.2 COMPENSATION AND BENEFITS One of the reasons people work is to earn money. Compensation is the amount of money paid to an employee for work performed. Compensation is made up of two parts. Salary and wages are direct payment of money to an employee for work completed. Compensation in forms other than direct payment is known as benefits. Examples of benefits are insurance, vacations, retirement plans, and health and fitness programs. Compensation Methods A time wage pays the employee a specific amount of money for each hour worked. A straight salary pays a specific amount of money for each week or month worked. Neither of these types of compensation are based directly on the amount or quality of work done, but are determined by the amount of time spent on the job. For that reason, it is a simple system to manage. The business just has to keep records on the amount of time each employee works. If you were a telemarketer, would you rather be paid commission on your sales or an hourly wage rate? Explain your answer. Incentive systems connect the amount of compensation to the quality or quantity of an employee's performance. Some businesses pay a commission to their employees in which an employee is paid a percentage of sales for which he or she is responsible. Salespeople are often compensated with commissions. Another pay-for-performance plan is known as a piece rate. An employee receives a specific amount for each unit of work produced. Piece rates are commonly used in manufacturing, agriculture, and service centers. For example, workers might be paid a piece rate for each seam they sew, each call they answer, or each claim they process. P124 Chapter 4 | Human Resources, Culture, and Diversity Ministry of Education 2024-1446

Some companies use a base plus incentive compensation system. This system combines a wage or salary with an additional amount based on the employee's performance. One type of base plus incentive plan is profit sharing. With profit sharing, employees receive their regular compensation plus a share of the profits earned by a company. This system encourages commitment, teamwork, and effective job performance so that profits will be high. Employee Benefits For many businesses around the world, the cost of providing employee benefits amounts to an extra 20-40% on top of the cost of the employee's wages. If an employee earns SAR 100 an hour, 30% added for benefits increases the hourly cost to SAR 130. If the employee works 40 hours a week, his gross salary can be over SAR 249,000 per year. In most countries, employment laws require some benefits. Most businesses must offer and pay the cost of these required benefits. Benefits include compensation for overtime hours worked, social security, and contributions to funds to compensate injured employees and unemployed workers. In some parts of the world, full-time employees may expect their employer to offer insurance plans such as health, dental, and disability insurance. In Saudi Arabia, private sector companies are required by law to provide health insurance for their employees, including their families. Time away for vacations is another popular benefit for employees. According to What kinds of benefits are important to you? Saudi Labor Law, workers have a right to 21 days of paid annual vacation. Paid vacations are a costly benefit because employees are paid for time when they are not working. On the other hand, the time off may result in a more satisfied and productive employee. Other benefits offered by businesses include retirement savings plans, personal or sick days, and flexible work schedules. LO 4.2.3 PERFORMANCE MANAGEMENT CHECKPOINT List three types of incentive systems for employee compensation. Managers work closely with their employees to make sure work goals are accomplished as planned. Every employee is expected to meet quality standards as well as work efficiently. In addition, employees must demonstrate effective working relationships with co-workers, managers, and customers. As jobs change, new equipment and procedures will be introduced. Employees must upgrade their skills to meet the changing job requirements. Most companies offer training and development programs to help employees perform their work well. Employee Evaluation Managers should evaluate the work of each of their employees on a regular basis. The human resources department is in charge of developing the evaluation procedures and forms. Managers are trained to complete objective evaluations and hold effective evaluation meetings with employees. Human resources maintains the records of employee evaluations in each employee's personnel file. وزارة التعليم Ministry of Education 2024-1446 4.2 Managing Human Resources 125

The Evaluation Process Performance evaluations focus on the specific job duties of each employee. They also review the important work qualities expected of all employees. Those qualities include factors such as communication, interpersonal relationships, quality and quantity of work, and ethical behavior. Managers are given evaluation forms to complete. Evaluation decisions are based on observations of the employee's performance and review of the quantity and quality of the work. When teamwork is involved, co-workers may be asked to provide feedback as well. Using the evaluation form, the manager rates specific skills and identifies each employee's strengths and areas that need improvement. The outcomes of the evaluation appraisal are communicated to the employee in the form of oral or written feedback. Promotions, Transfers, and Terminations Employees expect that if they work for a company for a long time and perform well, they should be rewarded with increased pay and the chance of promotion. A promotion is the advancement of an employee to a position with greater responsibility. Companies want to keep good employees. They want to place good employees in positions where they can provide the most benefit to the company. Depending on the number of available positions, the company should fill openings by promoting current employees. High-performing employees should then be motivated to stay with the company and continue to work effectively. In some cases, a promotional opportunity may not exist, but employees want to change jobs. Is earning a good wage or salary enough for you to be satisfied with your work? What else do you expect? Some jobs in a company may be eliminated while others are being created. Employees may be able to accept a job transfer. A transfer is the assignment of an employee to another job in the company with a similar level of responsibility. A job transfer may provide a new challenge for an employee or offer a better match for a person's skills. If performance does not meet the company's expectations or if jobs are being reduced, the company may have to terminate employees. A termination ends the employment relationship between a company and an employee. The termination may be a discharge that ends employment due to inappropriate work behavior. Another type of termination is a layoff, which is a temporary or permanent reduction in the number of employees due to changing business conditions. The company should complete all terminations carefully. The company must be as helpful as possible to terminations must meet legal requirements and the the employees who are asked to leave the business. 126 Chapter 4 | Human Resources, Culture, and Diversity Ministry of Education 2024-1446 CHECKPOINT What is the purpose of an evaluation meeting?

4.2 ASSESSMENT Key Concepts Determine the best answer. 1. An employee to whom a company makes a long-term commitment is considered to be a. full-time b. part-time c. permanent d. temporary 2. True or False. Companies should interview all prospective employees who apply for a job. 3. For most businesses around the world, the percentage of employees' compensation spent on benefits is a. less than 5% b. 10%-20% c. 20%-40% d. more than 50% 4. The employment relationship between a company and an employee is ended with a(n) a. termination b. interview c. evaluation d. lawsuit Make Academic Connections 5. Math Halima is paid SAR 3,100 a month and a commission of 2% on all sales. She also is given a yearly bonus of SAR 4,500. If Halima's sales for the year are SAR 186,200, what is her total compensation for the year? وزارة التعليم Ministry of Education 2024-1446 4.2 Managing Human Resources | 127

6. Research Use the Internet to locate four different sources of current job opportunities. Develop a table that compares the sites in terms of their effectiveness in providing information about the job, the company, and the procedure applicants should follow in applying for a job. 7. Critical Thinking You are a human resources specialist giving advice to a new supervisor on how to conduct a performance evaluation meeting with an employee. List three recommendations you would make to the supervisor that will contribute to an effective meeting. 128 Chapter 4 | Human Resources, Culture, and Diversity Ministry of Education 2024-1446