HR Management Glossary

Employers have no choice but to reduce costs while increasing productivity. These factors prompt them to seek effective ways to monitor and reduce the rate of employee absences. The cost of absences represents a growing burden on employers, and many organizations are using absence managers to help them track, manage and reduce absences throughout the organization. According to CCH Inc., a Rosewood, Ill., company that provides employment law information for human resources professionals, unscheduled employee absenteeism costs an average of $755 per employee per year. Absence management is taking on more significance as employers increasingly demand that HR executives show the value they add to a business.

In the summer of 2001, Watson Wyatt Worldwide, in cooperation with the Washington Business Group on Health, conducted its sixth annual Staying@Work survey of integrated absence management. The survey explored the prevalence and effectiveness of a number of techniques that employers are using to manage and coordinate disability and sick leave programs. Watson Wyatt and The Washington Business Group on Health first began tracking integrated disability management in 1996. At that time, only a minority of surveyed employers (25 percent) engaged in the practice. Since then, the popularity of an integrated approach to disability and absence management has doubled to its current rate of 51 percent. The reason? Every year employers in the United States spend over $160 billion on disability costs, 60 percent of which are for time lost from work. In addition, 50 percent of injured employees never return to work. These statistics were cited by Susan Mullaney, senior manager, Insurance & Safety, for Dallas Area Rapid Transit, who spoke recently at the National Safety Councils Congress about the advantages of setting up an absence management program. A major benefit of creating an absence management program is reduced disability claims cost (according to Mullaney a return of from $3 to $10 on each $1 invested). Another advantage for an organization is that such a program allows fewer opportunities for malingerers or repeaters.

In The Sacramento Bee article Absenteeism Makes Business Owners See Red, it was reported that the Arlington, Virginia-based Nucleus Technologies, which consults companies in "absence management," has identified the following absence trends:

• Absences go up during periods of downsizing, productivity demands and economic downturns.
• Absence is more prevalent among young workers than older workers.
• Absences are higher on Mondays and Fridays.

Managers can curb unscheduled absences, but "Draconian policies" are the least effective method for doing it, said Michael Scofield, senior vice president of Nucleus Technologies. "At the most basic, high absence rates are an organizational issue," Scofield said in the article. Managers need to ask: "What is it about the workplace that pushes people away?" Often the answer lies in the company's failure to give workers a sense of their "importance and value to the organization," he said. Some employers have turned to absence control programs to deal with the problem of unscheduled days off. Benefits such as flexible scheduling or paid time-off banks where employees use allotted hours for whatever purpose they want -- sick days, personal time or vacation -- can help reduce unscheduled days off, human resource experts contend.

Absence Management Tools

Based on the 2001 Watson Wyatt survey, depending on an employer's circumstances, company culture, resources and absence profile, various tools may be employed and to differing degrees, to manage absenteeism in the workplace. Among the surveyed employers, the most popular programs are transitional/modified duty return-to-work, case management, behavioral health interventions and safety training. These programs are regarded as the first major "fix" as they are believed to be quite effective in managing costs.

Absence Management and Technology

The ability to implement an absence management program is becoming more available to employers due to advancements in technology. Self-service eHR portals (review IPMA HR Center's Technology Trends and the Impact on HR Management) is becoming increasingly popular to employers as they provide a single point of reference for employees to access their benefits, obtain policy information and also report absences, instead of relying solely on HR to conduct these tasks. According to the Watson Wyatt survey, in the past, HR staff used to have to process forms or enter data, creating delays in reporting absence claims or paying benefits. Some employers expect that their absence reporting environments will be entirely self-service within the near future.

Conclusion

As studies and harsh statistics have revealed, employers across the nation are being forced to implement or enhance absence management programs. The uncertainties with regard to the economy, layoffs and hiring freezes in some industries and involuntary high turnovers in others, employers have to find new ways to retain employees and keep them productive. The Watson Wyatt survey data reveals that, while progress has been made, a number of available absent management programs may be underutilized. Employers, in conjunction with HR, need to take a closer look at absentee history and the availability of data to help them better identify and manage problem areas. Investing in strategic solutions such as absence and disability management techniques will better equip you to be a competitive and successful organization.

Resources

• 2001 Watson Wyatt and The Washington Business Group on Health Survey
• University of California Absence Management Manual
• Creating an Absence Management Program - Absence Doesn't Make HR Hearts Grow Fonder: ErgoNext
• Minnesota Department of Employee Relations: Total Absence and Risk Management Risk Unit

One of the hallmarks of leading-edge organizations - be they public or private - has been the successful application of performance measurement to gain insight into, and make judgments about, the organization and the effectiveness and efficiency of its programs, processes and people. However, leading organizations do not stop at the gathering and analysis of performance data. Rather, these organizations use performance to drive improvements and successfully translate strategy into action. In other words, they use performance measurement for management. Organizations that distinguish themselves usually:

• Have agreed-upon measures that managers understand
• Balance financial and non-financial measurements of performance
• Link strategic measures to operational ones
• Update their "scorecard" regularly; and
• Clearly communicate measures and progress to all employees

A major measurement system that has gained in importance over the past few years is the Balanced Score Card (BSC). This is a tool that translates an organization's mission and strategy into a comprehensive set of performance measures that provide the framework for a strategic measurement and management system. It is basically a visual representation of an organization's strategy. The BSC is designed to focus an organization's efforts to deliver results. The BSC is a way of:

• Measuring organizational, business unit or department success
• Balancing long-term and short-term actions
• Balancing different measures of success - Financial, Customer, Internal Business Processes, Human Resources Systems & Development (learning and growth), and
• A way of tying strategy to action measures

The role human resources in a measurement organization should be to indicate how much each employee contributes to the organization, such as revenue generated minus the cost of salary, benefits and training. The HR department needs to look at the rest of the enterprise as its customer. It can achieve this by developing the human capital within the organization, which it can measure by setting up its own balanced scorecard strategy. People management is an important function of the HR Department and plays a critical role in an organizations' financial performance as well as the service it offers its customers through managing recruitment & selection, turnover issues, employee benefits and acting as an information resource in HR issues. The HR Department can also respond proactively to the organizations needs by evaluating the strategies of the different departments as well as what their goals are and evaluating how the HR Department can help the different areas meet those goals, particularly as they relate to employee issues.

There are five characteristics that distinguish truly effective approaches to measuring human performance:

• Lead from the front - Leaders exercise a kind of gravitational pull on behavior.
• Use integrated measures - A measurement approach that does not touch employees at all levels on a day-to-day basis is not likely to be effective.
• Keep it simple and personal - e.g. individual performance assessment.
• Build measurement into culture - Integrate measurement into the organization's culture.
• Be honest - Keep promises made to employees.

In implementing a balanced scorecard system an organization goes through four-phases:

• Strategic Focus - Refine and commit to the organizations' strategy
• Assessment - 4 steps are involved in this phase a) Audit measures b) Develop new measures as needed c) Apply new measures d) Analyze and report
• Change Planning and Implementation - Implement improvement plans
• Continuous Improvement - a) Track metrics b) Continue improvement c) revisit scorecard cascade

There are several barriers to establishing an effective measurement system:

• Unclear objectives
• Unjustified trust in informal feedback systems
• Entrenched management systems
• Too many measurement systems within an organization

The Balanced Scorecard system is an important tool for organizations because a strong measurement foundation, leads to a better managed, disciplined, and more successful organization.

Resources

• Sample Balanced Scorecard
• Western Administrative Support Center (WASC)
• Financial Perspective

Sources

• Balanced Scorecard Report. Harvard Business School Publishing - Scorecard Collaborative. Volume 3, No. 5, September-October 2001
• Bates, S. (April, 2002) HR: Learn to measure success. HR News
• Chaudron, David, (April, 2002) Performance Improvement & the Balanced Scorecard
• City of Charlotte Balanced Score Card
• Guide to a Balanced Scorecard Performance Management Methodology: Moving from Performance Measurement to Performance Management. Performance Executives' Association. (July 1999)
• Metrus Group - Balanced Scorecard Consultants
• Schiemann, W.A. and Morgan B.S. (January, 1999). Measuring People and Performance - Closing the Gaps. Quality Progress
• Ulrich, D.(1997) Human Resource Champions: The Next Agenda for Adding Value & Delivering Results. Harvard Business School Press. ISBN: 0875847196

Competencies are the knowledge, skills, abilities, personal characteristics and other people-based attributes that help distinguish superior attributes to discern superior performance from average performance under specific circumstances.

Traditionally, employees have been rewarded with increased base pay, promotions and titles. Employers have found it is no longer prudent. Organizations are recognizing the need to change their pay philosophies, from paying for position and title, to paying for the accomplishments of people. With competency-based pay, an employee is paid for the range, depth and types of skills and knowledge he/she is capable of using in the job rather than for the position they hold. The "new pay" approach to compensation attempts to address organizational needs to motivate employees and support organizational strategies. Competencies as defined by the experts are those demonstrable characteristics of the person, including knowledge, skills, and behaviors, that excellent performers exhibit more consistently and more effectively than average performers. Hoyt W. Doyel, consultant at Effective Compensation, Incorporated (ECI), provides some sample competencies which include:

• skill sets (operating equipment)
• knowledge sets (understanding statistics)
• insightful selling ability
• ability to be direct, yet sensitive
• ability to keep the larger objective/goal active
• ability to stay calm under pressure
• ability to be an effective mentor
• creative solutions to difficult challenges
• effective negotiating abilities
• consistently demonstrates selfless team spirit
• empathetic customer service style positive mindset that makes opportunities from problems

Many variations of competency-based pay exists, including:

• Career ladders/promotions
• Skill/knowledge based pay
• Tuition reimbursement/scholarships
• Certification awards (e.g. SPHR or IPMA-CP bonus)
• Leadership pay (e.g., project management differentials or team leader premiums)

Competency-based pay has proved to be more successful when used in a wide cross section of non-exempt, professional and managerial positions.

Additional Resources

• Brown, D. (June,1998) A Practical Guide to Competency Related Pay (Financial Times Management Briefings)
• Doyel, Hoyt W. CCP, SPHR: Competency Based Pay: Can It Help Your Company? Effective Compensation, Incorporated. Lakewood, Colorado (A Presentation to Colorado Human Resource Association's Compensation Resource Group) February 2, 1995.
• Gross, Steven E. ( 1995) Compensation for Teams: How to Design and Implement Team-Based Reward Programs.
• Hofrichter, David A, Platten, Paul E , Flannery, Thomas, P. (1995) People, Performance and Pay: Dynamic Compensation for Changing Organizations.
• Marcus, Samuel H. & Szpekman, Andrew H: Compensation Strategies That Improve Employee Morale. Benefits and Compensation Solutions Magazine, September 1996
• Sahl, Robert: "Fads" vs. "Fits" When Considering A New Pay Plan Design. Benefits and Compensation Solutions Magazine, 1997
  Schuster, Jay & Zinghem, Patricia (September, 1996) The New Pay: Linking Employee and Organizational Performance.
• Wilson, Thomas B. (1994) Innovative Reward Systems for the Changing Workplace
  

Competency

Competency focuses on workplace expectations rather than on the actual learning process. It refers to skills and knowledge that can be transferred and applied to new situations and environments. One comprehensive definition of "competency" is: "A cluster of related knowledge, skills, and attitudes that affects a major part of one's job (a role or responsibility), that correlates with performance on the job, that can be measured against well-accepted standards, and that can be improved via training and development."

Competency-Based Training

Competency-based training (CBT) is concerned with training that is rooted in the skills and competencies required for acceptable job performance as determined by job and task analysis. It focuses on the skills and knowledge an individual has, rather than on how they attained them. CBT gives individuals, businesses and industries greater choice and diversity in what, where and how they learn. Whether training is undertaken in a classroom college, workshop, in the workplace or a combination of any or all of these, it can result in qualifications, which are recognizable, portable and consistent across the country. What an individual already knows is also taken into account, irrespective of how the knowledge and skills were gained. A CBT system is primarily concerned with ensuring workers are equipped with the skills needed by a particular industry/organization.

Before training can be conducted, an assessment of the knowledge and skills of candidates must be evaluated. Knowledge Assessment is conducted to:

• Determine participant knowledge of the subject at the beginning of the training
• Motivate the participant to acquire new knowledge
• Determine whether progress has been made toward achieving the training objectives

Skill Assessment

The use of competency-based skill assessments (learning guides and checklists), which measure skills or other observable behaviors relative to a predetermined standard, have made the task of determining a participant's competence much easier. While learning guides are used to facilitate learning the steps or tasks (and sequence, if necessary) integral to perform a particular skill or activity, checklists are used to evaluate performance of the skill or activity objectively.

Key Features of a CBT Approach

The key features of a CBT system are that it: (a) Is based directly on the skills and abilities required to do a job; (b) Takes account of learners existing level of competency, irrespective of how it was acquired; (c) Allows learners to enter and exit training programs at various stages; (d) Goes at the learner's pace and style of learning; (e) Allows training to take place in a variety of settings, including workplaces, simulated work environments, and training rooms; (f) Allows learners to be assessed when they are ready; and (g) Provides learners with a record of the competencies they have achieved.

A CBT system is made up of a series of linked processes including:

• The development of competency standards, based on industry and enterprise standards;
• Curriculum Development;
• Accreditation;
• Training Delivery;
• Assessment and;
• Certification.

The success of the training also depends on evaluation of the training, to determine effectiveness.

Resources

• Kerka, S. Competency-Based Education and Training. Eric Clearinghouse
• Reading Room: Evaluating Competency-Based Training
• Reading Room: The Competency-Based Approach to Training
• The Pennsylvania Child Welfare Competency-Based Training and Certification Program
  

"Defined Benefits" is the most common term used to describe retirement plans and are often regarded as traditional pensions; they come both as qualified and non-qualified plans. Non-qualified defined benefit plans are also known as Supplemental Executive Retirement Plans, or SERPs. The amount of the benefit is known in advance and is usually based on factors such as age, earnings and years of service. The plan may state this promised benefit as a percentage of salary and years of service with the company (for example, one percent of final pay times years of service), as a specific dollar amount and years of service (for example, $30 per month at retirement for every year a person has worked for the company), or as an exact dollar amount (for example, $100 per month at retirement).

In order to pay the benefits that workers are earning, employers are required to make contributions to the plans. These contributions are supplemented by revenues gained through the investment of the plan's assets. The employer bears the investment risk and normally the investments are made by professional money managers.

SERPs operate very much like their qualified plan counterparts, but with some crucial differences: An organization has the freedom to choose which employees will participate as well as what benefits will be provided to each participant. In general these plans have few limitations and more flexibility.

Defined benefit plans are always employer-funded.

Limitation

All participants must receive the same pre-set percentage of their final salaries, with a benefits cap based on the compensation limit ($170,000 in 2001). Thus a rank-and-file employee who retires might receive 80 percent of his final salary in retirement benefits, while a highly paid vice president might receive less than 20 percent of her final salary.

Defined benefit plans offer both workers and employers a number of distinct advantages.

Worker Advantages

• Workers can know in advance what their retirement benefits will be.
• Employers, not workers, are responsible for providing retirement benefits, and the benefits are not dependent upon an employees' ability to save.
• Employees are not subject to investment risks due to fluctuations in the stock or bond markets.
• A worker can earn a reasonable retirement benefit under a defined benefit plan, even if the worker has not been covered by a retirement plan earlier in their career.
• A retired worker receives a guaranteed pension annuity, such as a monthly benefit, for life as does the workers surviving spouse, unless both the worker and spouse elect otherwise.
• Death and disability insurance, are typically provided under defined benefit plans.
• Defined benefit plans can provide additional valuable benefits to workers, such as early retirement benefits, extra spousal benefits, disability benefits, benefits for past service, increased benefits, or cost-of-living adjustments.

Employer Advantages

• By providing a predictable, guaranteed benefit at retirement that is valued by workers, a defined benefit plan can promote worker loyalty and help retain valuable workers.
• An employer can provide a significant retirement benefit for workers, even older workers for whom no contributions have previously been made, or who did not or could not save for retirement earlier.
• Defined benefit plans are flexible and can provide additional valuable benefits to workers.
• An employer can design a defined benefit plan to accomplish organizational goals, such as offering enhanced early retirement benefits.
• Defined benefit plan assets are collectively invested, which may result in higher investment returns.
• While the employer bears the investment risks for the plan, favorable interest rates and economic conditions can reduce or eliminate an employers' contribution, or make it possible to increase worker benefits at reduced or nominal costs.

As of January 1st 2001, defined benefit plans can be coupled with Money purchase plans or Profit Sharing Plans.

Sources

• Defined Benefit vs. Defined Contribution Pension Plan
• Defined Benefit Pension Plans. Pension Benefit Guaranty Corporation
• Highlights of Defined Benefit Plans
• Fore, Douglas (June 2000) A New Way of Looking at the Risk in Defined Benefit Pension Plans. Benefits Quarterly Volume 16, Issue No. 4
• Moore, C.L. (June, 1998) The Preservation of Defined Benefit Plans, 3rd edition. National Council on Teacher Retirement's Washington Counsel
• Olsen, K. & VanDerhi, J. Defined Benefit vs. Defined Contribution
• O'Neil, T. Companies Compete for Human Capital with Non-Qualified Plans
  

Defined contribution plans are retirement plans in which employees provide most or all of the funding (sometimes with a partial employer match and/or with discretionary profit-sharing contributions) by deferring a percentage of their salary. Once they retire, they have considerable flexibility in taking cash distributions. Defined contribution plans, are often thought of as 401K plans. This type of plan tends to be more beneficial to shorter tenure and/or younger employees. Employees receive benefits based on salary, not tenure, which may encourage employees to change jobs in order to receive access to lump-sum distribution from retirement accounts. Defined contribution plans masquerade under many confusing aliases, including money purchase plans, profit sharing plans and employee stock ownership plans.

Limitation

• In a defined contribution plan, all employees are subject to the same annual contribution limit, which is set at 15 percent of their salaries. Furthermore, these plans are subject to the Sec. 401(k) annual cap (currently $10,500) on employee contributions, regardless of the level of compensation. Thus a CFO or CEO's contribution may be limited to 5 percent of their salary (or even less).
• Under defined contribution plans, employers contribute a specified percentage of workers' salary to an individual investment account, to be invested at the discretion of the individual worker -- a system favored in the private sector. Upon retirement, your defined contribution plan will typically permit you to take a lump-sum payment.
• Pension plans in the public sector are still predominantly defined benefit. However, a transition to defined contribution pension plans appears to be beginning. Many enterprises that have sponsored defined benefit programs have recently switched to defined contribution plans, and of the organizations that are setting up new plans, the overwhelming majority are choosing defined contribution programs.

Analysts favor defined contribution plans for a number of reasons including:

• Defined contribution plans are portable between jobs, workers are immediately vested and become sole proprietors of their own accounts, and benefits favor long-term and older workers and tend to be higher.
• Such plans maximize workers' freedom of choice in making investments, choosing strategies, hiring managers and structuring benefits.
• Taxpayers benefit by avoiding being charged for politically adjusted benefits resulting from poor investment performance under defined benefit plans - as well as escaping high administrative costs.

Negative Aspects

• Employees may invest too conservatively on their own leading to loss due to inflation.
• Lower-income workers and workers facing declining income lose twice under defined contribution plans, where employer contributions are often tied to employee savings.
• Defined contribution plans do not provide for insurance in case of an employees' death or disability. Employees must purchase this coverage at additional cost.
• Employers face higher costs when switching to defined contribution plans.
• Valuable employees who would earn a higher salary in the private sector, may opt to stay in public service because of the guarantee of income security when they retire.

Sources

• Childs, Paul D, Fore,Douglas, Ott, Steven H & Lilly III, Claude C. (2000) Defined Benefit vs. Defined Contribution? Determining the Optimal Benefit Plan Choice Using a Real Options Framework.
• Ferrara, P.J. (August 1997) "Pension Liberation," State Factor, American Legislative Exchange Council.
• Managing Your Retirement - Defined Contribution Plans.
• O'Neil, T. Companies Compete for Human Capital with Non-Qualified Plans.
• Rajnes, D. (September, 2002). An Evolving Pension System: Trends in Defined Benefit and Defined Contribution Plans. Employee Benefit Research Institute (EBRI) Issue Brief Number 249.
  

Despite the slowed-down economy, and the state of the job market, the best employees are always in demand and employers need to keep the "sourcing" part of their recruiting machine going. There is a battle being waged to recruit and retain talented workers and employers must "declare war" on their competitors to emerge victorious. According to John Sullivan, former chief talent officer for Agilent Technologies, "Employers sometimes tend to overlook their most effective and top recruiting resource…their own employees, which they can tap for prospective candidates by having a viable and effective Employee Referral Program (ERP) in place."

The labor market has been tight for a number of years and despite some recent increases in unemployment rates, it is anticipated that the labor shortage will continue to be a major concern for HR professionals. In fact, recent analyses of U.S. Census data indicate that there will be a shortage of at least six million workers by the year 2008 (Hudson Institute, 2001), particularly with a lot of baby boomers retiring or looking to retire from their positions in the next five to ten years.

A Formal ERP consistently ranks as a very cost-effective method of recruiting. This is supported by a Mercer/SHRM survey conducted in 2001, where out of 586 participants, 69% of the HR professionals indicated that it is one of the most cost-effective recruiting methods available. Eighty percent said ERPs are more cost-effective than job-search agencies. Further, 70% of the 586 HR professionals responding to the Mercer/SHRM survey said referral plans are the most cost-effective way to recruit employees.

In the Mercer/SHRM survey 65% of the respondents said their organizations have either a formal or informal ERP. Also, in a recent AMA Management Studies survey of 344 respondents, results showed that employee referrals ranked third amongst respondents for being an effective recruitment tool.

Using an ERP program for recruitment and hiring offers some advantages:

• Cost effectiveness: Sometimes the cost of paying an employee a reward can turn out to be cheaper than paying for print ads, or paying employment agencies and executive recruiters to find a possibly suitable candidate. The Mercer/SHRM survey indicated that an ERP costs an organization approximately $1,000 in incentive and rewards for exempt employees and each nonexempt hire costs approximately $500.
• High quality candidates: Current employees know the company's culture, and are likely to present candidates that they believe will "fit in." As outstanding referrals reflect well on the referring employee, employees will strive to identify top candidates and avoid poor performers. A survey conducted in Fall 2002 by Hewitt Corporation showed that the most common source for hot-skill candidates was employee referrals (96%), followed by the Internet (92%) and Internal transfers (85%). Employers that believe it will get easier to find high-quality job candidates in the wake of major corporate layoffs may be in for a rude awakening, according to Jane Paradiso, business leader for recruiting solutions at Watson Wyatt Worldwide.
• Speed of hire: Employees begin the process of "selling" the company to the candidate even before the interview, and candidates referred are generally ready to make a move. As a result, the company spends less time selling itself and the position, and has more time available to handle other pressing issues.
• Improved morale: Employees understand that their opinion is valued, and appreciate the opportunity to contribute to the success of the company.

Employees hired through ERPs tend to have higher job satisfaction and longer tenure.

Tips when setting up or implementing an ERP program:

• Keep the program simple
• Avoid limiting referrals to certain employees or job categories
• Publicize the program amongst your employees on an ongoing basis. It is not enough to just have an ERP, employers must keep employees thinking about prospective candidates. Promote the details of the plan consistently and often, through as many channels as possible, including orientation, the employee handbook, newsletters, paycheck stuffers and e-mail
• When determining the amount of the bonus, consider the level of the position and the fees you might have paid to an employment agency or a headhunter
• Be sure your employees understand what information (resume, employment application, referral card and so on) must accompany each referral
• Follow up every referral with a written response that lets the employee know the referral was received and appreciated. Your organization can also publicly recognize individuals who make referrals, whether or not the referrals result in an actual hire
• Contact the referred candidate in a timely manner.

It is not enough for a company to merely give lip service to its ERP. The organization's executives must commit to the success of the program, and continually reinforce the principles that the strength of the organization lies with the quality of its workforce, and that recruiting is everyone's responsibility. Even the most well designed ERP will fail to be effective if the organization does not consistently make hiring the best people a priority.

Sources

• Referral Programs Cheapest Way to Find Talent: Survey (June 26, 2001) CFO Magazine CFO Publishing Corporation 2003
• Hiring and Retention Tools Probed in New AMA Survey. The Bureau of National Affairs.
• Micco, L. (2003). Finding and keeping Top-of-the-Line Employees. The Bureau of National Affairs.
• Smith, S. Employee Referral Programs: Tapping your Internal Recruiting Force.
  

An employment contract is usually a written agreement outlining the services and pay arrangements for employees or independent contractors. The focus of a contract is usually the employer's promise to hire and the employee's promise to perform services. Written employment contracts are usually in non-traditional employment relationships--the hiring of an independent contractor, subcontractor, attorney, consultant or the use of a temporary employee. Employment contracts are also common when hiring executives, professionals, academics, sales representatives and those with special skills. The reasons for using employment contracts vary according to the position being filled. The most common reasons include:

• The need to establish a term of employment;
• Establishing compensation and benefits;
• Clarifying duties and expectations;
• Protecting trade secrets and confidential information; and
• Limiting competition during and after the agreement

Employment contracts may contain a provision on how disputes are handled. For example, some contracts contain a binding arbitration agreement for all employment related disputes. Some jurisdictions allow employers to require arbitration as the sole method of resolving disputes while others require employees to agree to arbitrate disputes.

Independent Contractors

In the past the IRS used the "factor test" to determine whether a worker is considered an "employee" or an "independent contractor." This test, however has been losing ground in the courts and in Congress. In response, the IRS published new guidelines to assist auditors and employers in determining worker classification. The focus is now on the following three categories of evidence that the agency considers to be most important in making a determination:

• Behavioral Control - If the employer has the right to control or direct how the work is performed then the individual is an employee and not an independent contractor. Consider the need for approval before performing tasks. Employees are generally subject to the instructions of the employer to specify when, where, and how to work- independent contractors are not. In addition, employees are usually trained by employers, while independent contractors must supply their own training.
• Financial Control - If the employer controls the business aspects of the worker's job duties, then the individual is an employee. Factors to consider:
  • a. If the worker can realize a profit or incur a loss then he/she is a contractor.
  • b. If the worker has a significant investment in the equipment or facilities he utilizes in performing services for others then he is classified as an independent contractor. Evidence that can be used to support this is: the amount of un-reimbursed expenses, payment of business and/or travel expenses, furnishing of tools and materials, and analysis of lease arrangements between worker and business.
  • c. When the worker makes his/her services available to the general public. If the worker uses yellow page advertising and works for more than one firm, this is evidence to support independent contractor status.
  • d. The method of payment. Generally an employee is paid by the hour, week or month, but an independent contractor is generally paid a flat fee or by the job.
• Relationship Between Parties - If the organization provides the worker with benefits such as a pension plan, insurance, vacation pay, or sick pay then an employer?employee relationship likely exists. Employee benefits are paid only to employees. Another indicator of employee status is if the parties perceive a permanent and indefinite relationship. Employees are generally hired for an on?going, indefinite period. Contractors can have a long?lasting relationship, but they are usually terminated when the job is completed. Also, when the success of an organization or department is dependent to a certain degree on the employee's performance, then an employer-employee relationship exists.

Developing Written Employment Contracts

Employers and employees are free to agree on the different terms of an employment contract, but the courts hold that ambiguities or provisions deemed illegal are held against the employer. Employers therefore must have a working knowledge of the various federal and state laws dealing with the employment relationship.

Federal and State Non-discrimination Laws

• Title VII of the Civil Rights Act of 1964, as amended, prohibits discrimination based on race, color, religion, sex, and national origin for employers employing fifteen or more employees.
• The Americans With Disabilities Act (ADA) prohibits discrimination against those with physical or mental disabilities.
• The Age Discrimination in Employment Act (ADEA) prohibits discrimination against those forty years and older (for employers with 20 or more employees)
• The Immigration Reform and Control Act, (IRCA) requires employers to verify the eligibility of employees to work in the United States.
• The Uniform Services Employment and Reemployment Rights Act (USERRA) prohibits discrimination against veterans and grants reemployment rights to those serving in the military.
• Executive Order 11246 requires federal contractors to take affirmative action to increase employment of minorities and women and to refrain from discrimination based on race, color, sex, religion, and national origin.

Some state laws go even further than federal law, barring discrimination based on marital status, arrest records, sexual orientation and legal behaviors engaged in while off duty, e.g. smoking. Some of these laws and regulations overlap with various pre-employment testing programs, the requirement of medical examinations and drug testing, as well as the insurability of a new employee. The Fair Labor Standards Act (FLSA) governing compensation, minimum wage, and the hiring of minors is another important statute to consider when entering into an employment contract.

Some employees are hourly/non-exempt, making them entitled to overtime when working over forty hours in a work week. Other categories of employees, which include professionals, executives, administrative employees and outside sales persons may be classified as "salaried exempt" and not due overtime compensation when working over forty hours per week.

FLSA also restricts the employment of minors under the age of 18 by limiting employment in any hazardous job. Minors aged fourteen and fifteen are restricted by the hours they are permitted to work, only 3 hours per day, with no more than 18 hours per week when school is in session.

A number of state laws also affect employment contracts. Various states have some form of minimum wage law for those job areas not covered by the Fair Labor Standards Act. In addition some states restrict an employer's right to terminate an employment contract without showing just cause. Public employers must also consider employees' due process rights.

Employment Contract Content

Include a preliminary statement showing intent to enter into an employment contract.

Establish the term or length of the agreement. Consider whether the employer wants a short term agreement (one year or less) or a continuous relationship where the agreement is automatically renewed. Include a probationary period if there is to be one.

Although public employers generally must provide due process prior to terminating an employee, a provision stating that the employment is for an indefinite amount of time and is terminable at will may be included. For independent contractors or temporary employees, the contract should specify when the relationship will end; will the contract end at the completion of a project or on a specified date.

The agreement should include the duties of the employee as set forth in the contract. Additional language may require an employee to carry out his/her duties industriously and observe all rules and regulations.

Depending on the organizational culture, you may want to include a confidentiality provision. The confidentiality provision should prohibit the disclosure of any secrets or confidential information while employed or for a period of time after employment ends. Make reference to the fact that the employee understands and agrees that the confidentiality obligations go beyond the termination of the employment agreement. An alternative is a non-compete clause. Basically, a non-compete agreement limits the employee's ability to obtain employment of a similar nature within a geographical limitation for a set time frame, e.g. 12 months. Geographical limitations usually include restrictions on the employee calling on clients/customers of the employer whom he/she called while employed. Non-compete agreements are strictly scrutinized by the courts and should be carefully crafted.

Compensation and benefits are usually included in the terms of the contract; and include annual salary, hourly wage, or the flat fee, as well as any health insurance or retirement benefits.

A provision on the use of arbitration may be included but be aware that the Equal Employment Opportunity Commission (EEOC) has taken the position that mandatory arbitration of employment discrimination claims as a condition of employment is contrary to the purpose of the civil rights laws. However, the courts have been willing to uphold clearly worded and specific arbitration agreements.

Miscellaneous provisions, such as which state's laws are applicable in case of a dispute and the effect of a waiver on any remaining provisions may be included. Employers also may want to include language as to how the agreement may be modified.

Sample Employment Contracts

• Town Administrator Employment Agreement, Town of Alton, NH
• Independent Contract Agreement, City of Phoenix
• City Manager Employee Agreement
• Memorandum Of Understanding
• Employment Agreement Merrimak, NH
• Employment Contract, St. Mary's County, MD

References

• Obdyke, Louis K Esq., Society for Human Resource Management, "Written Employment Contracts - When? Why? How?" White Paper, June 1998.
• Yenerall, Paul, M., Radack, David, V., & Myers, John, J., "Making the Most of Employment Contracts," HR Magazine, August, 1998.
  

Flexible benefit or cafeteria plans generally allow employees to choose between cash compensation and tax-exempt benefits. Under such a plan, employers may provide employees with an additional benefit package at virtually no extra cost while reducing both the employer's and the employees' tax bills. Flex plans thus allow employers to upgrade and customize the array of benefits offered while keeping a handle on total benefit costs. Flex plans range from the most simple (that merely pay group insurance premiums with pretax dollars) to the most complex (that provide benefit credits and a choice of types and levels of benefits that may be chosen and paid for on either pre- or post-tax basis). Flexibility can be achieved with pre-tax premiums, flexible spending accounts, or full cafeteria style plans. Flex or cafeteria plans are authorized by Internal Revenue Code (IRC) Sec. 125 and are often referred to as Section 125 plans. A section 125 cafeteria plan overrides the constructive receipt doctrine--only the cash actually elected is included in the employee's income. An employee may also elect to have his or her earnings reduced to pay for tax-free benefits over and above the amount the employer is willing to contribute. Indeed, many cafeteria plans are designed so an employee's pay is reduced to cover the entire cost of tax-free benefits--the employer contributes nothing. Employees must sign a consent agreement if any money is withheld from their paychecks to fund their account. The payroll system has to be able to calculate and maintain contributions to the employee's account.

Not all flex plans qualify as cafeteria plans under Section 125, because employers often mix qualified and non-qualified benefits in their offerings to employees, and thus create umbrella plans. In reality, there are two separate plans, one that includes benefits that qualify for Section 125 treatment, and one that offers benefits that do not qualify for such treatment. To the employee, the difference is usually not apparent. However, it is important to the plan sponsor because the requirements for record keeping and reporting are different. According to section 125's requirements, no more than 25% of tax-free benefits under a cafeteria plan may go to key employees. (Key employees are generally certain owners--even small-percentage owners if they are highly paid--and certain high-paid officers.) This means that for every $3 in tax-free benefits non-key employees receive as a group under a cafeteria plan, key employees together may receive $1 in tax-free benefits.

Advantages of Flexible Plans

• Can be less expensive than traditional benefits programs; employers can save money on benefits and on taxes.
• Employees save money by buying pre-tax benefits.
• Benefits can be tailored to the needs of individual workers; useful in diverse demographic groups.
• Flexibility in funding; can be funded with employer-provided and/or voluntary employee pre-tax contributions.
• Umbrella plans can include both qualified and non-qualified benefits.
• Provides one more tool in an employer's arsenal of compensation-related programs to attract workers.
• Aids in retention.

Disadvantages of Flexible Plans

• Employers may have less control over the quality of voluntary benefits.
• Administration is more difficult than one-size-fits-all plans; getting the right system may require initial costly outlay.

Resources for Establishing Cafeteria Plans

• Benefit Consulting, Inc., Third-party administrators of flexible benefit plans.
• Benefit Street.com, Online benefits administration, including cafeteria plans.
• BusinessPlans, Inc., Employee benefit plan solutions.
• Flex-Plan Services, Inc., Third-party administrator of cafeteria and other benefit plans.
• Group Dynamic, Assistance for employers with the setup and administration of flexible benefit plans.
• National Benefit Services, Design, implementation and administration of employee benefit plans.
• Paychex, Provider of payroll and other services including section 125 plan administration.
• Priselac & Associates, www.padmin.com. Help for employers with the design and administration of employee benefit plans, including cafeteria plans.

Sources

• Advantages and Disadvantages of Flexible benefits.
• Cafeteria Plans and Filing Requirements.
• Simmons, J.G. (March, 2001). Flexible benefits for small employers. (cafeteria benefit plans). Journal of Accountancy.
  

Conceptually, human capital management (HCM) - the strategy of attracting, retaining, and leveraging the skills and knowledge of the workforce - is now more than ever in the spotlight of many organizations' agendas. While HCM is not the exclusive domain of the HR professional - it is an organization-wide discipline that must be embraced and driven by line-of-business managers - with the HR department acting as a key influencer. HR has the physical and intellectual tools to bring effective people management to the heart of organizational strategy.

HR professionals must align their management goals and the goals of employees with organizational strategic goals--delivering strategic plans with measurable results. HR should reappraise its role, moving from a "control" philosophy to a provider of vision and support. Above all, HR professionals need to demonstrate HR's benefit to the bottom line by managing the knowledge, skills and attitudes that create winning organizations. As HR functions evolve, your organization expects you to:

• Attract, retain and motivate the best employees.
• Partner with managers to understand their needs, then develop a sound strategy that supports organizational goals.
• Act as thought leaders and strategic advisers, delivering a plan based on real knowledge, not guesswork.
• Plan for changing market conditions instead of reacting to them.

Building an HCM strategy does not require sea change, it requires a commitment to a philosophy, and a realistic approach to delivering results. Effective organizations integrate human capital approaches as strategies for accomplishing their mission. The effectiveness of this integration is judged by how well it helps achieve organizational goals. High performing organizations stay alert to emerging demands and challenges and remain open to reevaluating their human capital practices in light of demonstrated successes or failures.

HR professionals can assist their organizations to evaluate the extent to which human capital approaches support the accomplishment of programmatic goals, through the use of workforce planning. Workforce planning efforts, including succession planning, linked to strategic goals and objectives, can enable an agency to remain aware of and be prepared for its current and future needs as an organization, such as the size of the workforce; its deployment across the organization; and the knowledge, skills, and abilities needed for the agency to pursue its mission. This planning will entail the collection of valid and reliable data on such indicators as distribution of employee skills and competencies, attrition rates, or projected retirement rates and retirement eligibility by occupation and organizational unit.

You can use an organization-wide knowledge and skills inventory and industry benchmarks to identify current problems and plan for future improvements. To begin assessing how well existing human capital approaches support their organizational needs, agencies can use GAO's human capital framework, Human Capital: A Self-Assessment Checklist for Agency Leaders (GAO/OCG-00-14G). This assessment tool identifies human capital elements and underlying values common to high-performing organizations. The planning requirements of the Government Performance and Results Act (GPRA) provide a useful framework for agencies to integrate their human capital strategies with their strategic and programmatic planning. Other tools available, including the International Public Management Association for Human Resources' ( IPMA-HR) Workforce Planning Guide and OPM's five-step workforce planning model, may provide additional guidance.

The appropriate geographic and organizational deployment of employees can further support organizational goals and strategies, enabling an organization to have the right people, with the right skills, doing the right jobs, in the right place, at the right time by making flexible use of its internal workforce and appropriately using contractors. The use of contractors will require decisions based upon strategic planning efforts, about what types of work are best done by the agency orcontracted out. While reviewing outsourcing options, it is also important to consider whether or not the agency has the expertise available to manage the cost and quality of contractor activities.

The role of HR professionals should focus on:

• Developing, implementing, and continually assessing human capital policies and practices that will help the agency achieve its mission.
• Leading or assisting in the agency's workforce planning efforts.
• Participating as partners with line managers.
• Reaching out to other organizational functions and components through facilitation, coordination, and counseling.
• Providing integrated mission support.

HR professionals functioning in this role can serve as an important source of information for strategic workforce planning, continuous learning, and knowledge management initiatives. Moreover, they can provide agency leaders with an interpretation of agency data in areas such as retirement eligibility and projection numbers, retention rates, or skills assessments that can allow agency leaders to more effectively pursue strategic human capital management and organizational alignment. High-performing organizations also recognize the need for leveraging the internal human capital function with external expertise, such as consultants, professional associations, and other organizations, as needed.

For HR professionals to start acting in this new capacity, agency leaders must ensure that they have the competencies and experience to effectively take on the expected role. One tool available to agencies for identifying the appropriate competencies is IPMA-HR's Human Resource Competency Model. The new role of the human capital function will require agencies to recruit new professionals and train existing professionals in the competencies to help align human capital management with the specific needs and circumstances of each agency. It will also require agencies to constantly reevaluate their internal procedures so that fewer staff resources are required for processing transactions and more resources can be dedicated to meeting the strategic needs of the organization. Streamlining personnel transactions in conjunction with the greater use of technology to automate paper-based personnel processes is critical to making this shift.

The HR function must also provide the metrics that drive improvement across the organization. These range from top-level strategic analysis, including modeling and planning, to operational data.

HCM indices should include:

• The effectiveness of HR-related activities (such as recruitment)
• Employee satisfaction
• Customer satisfaction (in relation to employee or departmental performance)
• Employee attrition analysis
• Employee and departmental performance measurement
• Employee competency assessment

Summary

To succeed, organizations must wisely manage the assets within their control: capital, technology, and people. Traditionally, organizations focus heavily on their capital and technology, neglecting both the fraction of resources that should be devoted to people and the impact people processes have on the success of the business. HCM show organizations how to distribute resources more effectively among capital, technology, and people, then helps focus human energies on organizational goals.

Primary Objectives of HCM

• Align people processes with business needs.
• Manage and maximize the productivity of people as an asset.
• Make people a source of competitive advantage in delivering superior customer value.
• Achieve increased profitability and success for the business.
• Benefits Faster realization of business strategies, and
• Improved organizational design, roles, staffing/development plans, evaluation and reward systems, and organizational culture.

Resources

• Office of Personnel Management's (OPM) Strategic Management of Human Capital Plan
• U.S. Department of Interior's Strategic Human Capital Plan: FY 2003-2007
• US Department of Energy Human Capital Management web site
• U.S. General Accounting Office: A Model of Strategic Human Capital Management
  

Information is the ultimate organizational resource; the ability to use it is the ultimate competitive advantage. The sum of both is knowledge management (KM), or the acquisition and sharing of information and experiences. It is the application of that knowledge to fulfill the organization's mission. KM focuses on organizing information and data, combined with the potential of people's skills, competencies and ideas that help organizations adapt to change and achieve desired strategies and objectives.

KM is a discipline that promotes an integrated approach to identify, manage, share and leverage an organization's knowledge and information assets through policies, organizational structures, procedures, applications and technologies. Knowledge needs to be shared; employees need to be ready, willing and able to share it and the organization needs a culture that promotes knowledge-sharing in a climate of trust and openness.

The spirit of KM is:

• Knowing individually what we know collectively and applying it;
• Knowing collectively what we know individually and making it (re)usable;
• Knowing what we don't know and learning it.

HR, as a business partner needs to either lead or be an active KM partner. Government can use KM as a business advantage to help meet objectives and serve the public in the most effective way with the funds available. Benefits include, but are not limited to:

• Just-in-time knowledge sharing
• Competency management
• Staff tracking
• Distance learning

Knowledge Management and Technology

Here are a list of features that can assist organizations to effectively support knowledge management projects concerned with the processes of creating, identifying, collecting, adapting, organising, applying and sharing knowledge. The technologies employed may use some or all of the following components:

• Databases to store and link disparate clusters if information.
• Workflow software to describe and monitor processes in action.
• Collaborative technologies connecting one-to-one, one-to-many, and many-to-many conversations via email and threaded newsgroups.
• Searching tools for efficient, powerful, and themed inquiry.
• Online learning to support just-in-time, just-enough skill acquisition.
• Embedded security architecture mapping information to people and communities.
• Links to foreign systems to bring information from the external environment.
• A World Wide Web browser that creates a personal an manageable view of the information landscape to bind it all together.

Much of what is collected and organized within this integrated set of technologies can be categorized as explicit knowledge - i.e. information capable of being codified and shared. But information alone represents half of the knowledge equation. The "knower" is the other half, as it by his/her actions that information transmutes into knowledge.

Bjornberg also identifies three KM challenges: As you expand the ability of the individual members of the organization, you expand the ability of the organization. As you change the power of the individual, you change the power of the organization. People have taught themselves to hoard knowledge over the years to achieve power, wealth and security; today, the most powerful individuals will be those that become a source of knowledge by proactively sharing what they have or can get their hands on.

How do we deal with this? The answer is not easy. This isn't just about information, or knowledge, or people; it's about aligning all of what we do to support the organization's vision. It's about a framework with many components to manage people and knowledge.

Other Resources

• Knowledge Management Metrics
• Bukowitz, Wendi R. & Ruth L. Williams. Knowledge Managers Guide. HR Magazine. January, 1997.
• Greengard, Samuel. Storing, Shaping and Sharing Collective Wisdom. Workforce, October 1998, Vol. 77, No. 10, pp. 82-88.
• Greengard, Samuel. How to Make Knowledge Management a Reality. Workforce, October 1998, Vol. 77, No. 10, pp. 90-91.
• Greengard, Samuel. Will Your Culture Support Knowledge Management? Workforce, October 1998, Vol. 77, No. 10, pp.93-94.
• Newcombe, Tod & Noel, Andrew. Knowledge Management. Government Technology, June 1999, pp. 18- 32.
  

The term "progressive discipline", signifies an approach to modifying undesirable employee behavior through the use of a range of disciplinary consequences, that are applied depending upon the nature and history of the particular employee's misconduct. Progressive discipline is a series of increasingly serious responses to repeat or performance problems by employees. It lets employees know:

• What they have done wrong,
• How they can correct it,
• Have a reasonable period of time to fix the problem, and
• What will happen if they fail to make changes

Progressive discipline can be an involved process, but if implemented properly, can correct and improve employee behavior and performance.

Steps in Progressive Discipline

• Informal meetings and oral reprimands
• Written deficiency notices
• Formal evaluation conferences documented by written records
• Unsatisfactory performance evaluations
• Suspension without pay
• Termination

Advantages of a Progressive Discipline Standard in an Organization

• Communicates standards to workers
• Reinforces the rules
• Makes sure the punishment fits the offense
• Helps prevent misunderstandings or over-reactions
• Establishes the importance of facts in a record, not hearsay or rumors
• Helps nip problems in the bud
• Helps employees improve their performance and/or behavior
• Provides a clear warning system for those with serious problems
• Establishes documentation in case of dismissal
• Improves morale and productivity

Disadvantages of Progressive Discipline

• A progressive discipline system requires that everyone with discipline authority be trained, fully knowledgeable of the policy and willing to assume responsibility for administering the discipline steps.
• There may be a lot of documentation and follow-up work necessary to administer the plan.
• You need to have a formal, written policy, which should be consistently applied.
• Depending on the areas of employee conduct covered by a progressive discipline system, generally the at-will status of employees is altered. For example, if it states in the system that an at-will employee will not be subject to immediate termination for infractions included in the progressive discipline policy then at-will employee status is changed.
• In a small business, it can be a hardship to keep a problem employee around and even more of a problem to a business to suspend an employee rather than being able to just replace an employee.
• Employees may not be discharged for covered infractions until the entire process is complete.

Resources

• CCH Business Owner's Toolkit - Progressive Discipline Disadvantages.
• Johnson, B. Implementing Progressive Discipline Policies to Minimize Liability and Improve Employee Performance.
• Progressive Discipline Guidelines - San Francisco State University.
• Progressive Discipline.
• Progressive Discipline Memos.
• Progressive Steps to Discipline.
• Progressive Discipline - FAQ.
• IPMA's Disciplinary Procedures informational guide, with sample polices. Contact IPMA's Publication Department at (703) 549-7100 for more information.
  

Watson Wyatt, a global consulting firm focused on human capital and financial management, defines shared services as the "standardization of common administrative functions and transactional processes within an organization," e.g. call centers, and intranets. Implementing a shared services center (SSC) should be made on a case-by-case basis looking at the organizations needs, structure and culture and whether it can support shared services. A shared service practice is multifaceted and has become a new vision for internal support services. Shared services essentially leverages the quality of services delivered to all defined internal customers while streamlining costs. Organizations choose shared services for a number of reasons, including lower costs, improvements in productivity and customer service. The first step in setting up a shared services center, according to Kaiser Permanente, is to "launch a data-gathering effort called a base case development to measure internal customers satisfaction."

Keys to Success of Shared Services include:

• Developing a compelling vision and business case. Understand what you are trying to accomplish and why.
• Defining your services delivery architecture and building a robust technology platform. Make sure your technology can handle the shared services, now and in the future.
• Do the process work. Understand your core processes and redefine them to fit your new services delivery model.
• Take an integrated approach. A shared services model will impact your organization in three areas: People, process, and technology. The role of each must be addressed.
• Manage and meet expectations. HR needs to measure and communicate results. Keep a scorecard of progress made.

Shared services should not report directly to a centralized source but rather to a customer board so there's a direct means for internal customers to let their preferences or needs to be known.

Cons

• Creates possible cost savings through economies of scale
• There is a cost in transitioning to shared services both in terms of expense and employee morale
• Provides better control of staff functions
• Risk of higher costs as a centralized department lobbies for more resources
• In creating shared services, there is a risk that centralization will make the operation become aloof and out of touch with the real needs of employees

How are SSC Costs Managed?

Critical to the success of any shared services center, is a thorough understanding of costs and the ability to impact those costs, since most SSCs are founded on the premise of saving money for the organization. Cost management is therefore key - possibly more so than any other part of the business. An organization, in operating a shared service center, should continually strive to reduce the cost of existing services and free resources to provide other services that customers, may want.

Additional Resources

• Creelman, D. Shared Services.
• Senyshen, M. Learn to Share. CGA Magazine.
• Personnel Journal. (February, 1996) Vol 75, No 2, pp. 58-69.
• Shared Services in Human Resources. (1999). Watson Wyatt
• Triplett, A. & Scheumann, J. (February, 2000) Managing Shared Services with ABM.
• Walker, A.J. How the Web Will Change the Structure of HR. McGraw-Hill Companies, Inc.
• Kaiser, Tyson B. (2002) HR Services Get a Shot in the Arm. Workforce Online
  

The process of identifying long-range needs and cultivating a supply of internal talent to meet those future needs. Used to anticipate the future needs of the organization and assist in finding, assessing and developing the human capital necessary to the strategy of the organization. Succession Planning allows organizations to plan for and eventually fill senior-level openings. Often times the goal is to fill a specific position but it can also be used to identify employees who have the potential to excel as high-level managers.

Most succession planning programs are comprised of three steps:

• The agency makes an organizational projection in which it anticipates management needs based on planned contraction or expansion factors, as well as workforce trends.
• Existing management talent is identified and management replacement charts are drawn up to summarize potential candidates for each of the available slots, as well as each person's training and development needs.
• Candidates are given the necessary training required for them to perform the job that needs to be filled.

The succession planning policy of promoting from within can help your organization when faced with issues such as the death, resignation or retirement of a key employee. Effective succession planning provides for an immediate replacement should such circumstances ever arise. Valuable employees are less likely to leave the organization, if they know they have an opportunity to advance.

Teleworking is any form of substitution of information technologies (such as telecommunications and/or computers) for normal work-related travel; moving the work to the workers instead of moving the workers to work. It allows employees to work in a community work center equipped with computers, modems, fax, and other state-of-the-art equipment. By teleworking, people will no longer have to commute to every day. They'll be able to send their work along "electronic highways" to their organization's main office. Teleworking closes the gap between where people live and work. It provides jobs near homes.

What's the difference between "telecommuting" and "telework"? The term "telework" tends to be used more in Europe and some other countries, while "telecommuting" is used more in the United States. Some people prefer the word "telework" because it's a more accurate description of the concept - the "tele" prefix means "distance", so "telework" means "work at a distance." Telecommuting, while not a new concept is enjoying new found popularity. High-speed access technologies are coming down in price, integrated voice and data solutions is making it easier to work off-site; and with service providers offering managed technology solutions, organizations of all sizes can enjoy the benefits of teleworking/telecommuting.

Benefits of Teleworking/Telecommuting

Employer Benefits

• Increased productivity, stimulated by lower absenteeism, higher employee concentration on work, fewer distractions
• Less travel times, and better use of employees' peak efficiency times
• Decreased turnover because employee morale is higher and work options, such as job or office sharing, become possible once long commutes are eliminated
• Telework as a hiring incentive for new employees
• An opportunity to tap new labor pools such as parents with young children, persons with disabilities, and others
• Lower overhead because of the lower cost of suburban space, and parking

Employee Benefits

• They save money on parking, fuel, car maintenance, insurance, and even the need for a second car
• A large reduction of stress
• More time for their families, participate more in their communities
• Fewer distractions on the job, greater work autonomy, and more relaxed work environment
• They are closer to their workplaces and can save two hours each day on their commute to work

For more information on developing a telecommuting/telework policy for your organization, including employer and employee obligations, review IPMA’s HR Center Series: Telecommuting.

Additional Resources

• Telework Government Resource Links/Sites
• Implementation Tips for Government Employers
• Telecommuting Toolkit
• California Department of Personnel Administration Telework
• Studies: Some interesting reports on telecommuting have been issued by the GartnerGroup: The Top 10 Nontechnical Reasons Telecommuting Programs Fail; Should Home Computers Be Used for Telecommuting? and 50% Failure Rate Predicted.
• Arizona Adopts a New Way to Work: The Valley Metro Regional Public Transportation Authority, representing communities in the greater Phoenix area, has developed an innovative program to make it easier for Arizona businesses who want to start or expand a telecommuting program.

Most Recent Surveys on Telecommuting

• Most Teleworkers Foot Working-at-Home Costs
• Radcliffe College/Fleet Financial Group Study
• Flexible Work Arrangements on the Upswing
  

Any organization's strategic plan has to deal with resource requirements to ensure that the appropriate workforce mix will be available when needed to accomplish organizational goals and objectives. Workforce Planning is the process of formulating plans to fill future employment openings, based on projecting: The positions that are expected to be open, and whether these will be filled by inside or outside applicants. It refers to plans to fill any or all of an organization's future positions, from the mail-room clerk to the Chief Personnel Officer.

Effective workforce planning is a necessary component of an organization's strategic plan, and provides a flexible and proficient workforce able to adapt to the changing needs of your organization. It is important that HR partners with management as a workforce strategist with a system for dealing with the ongoing issues involved in workforce planning. Unless the right number of suitably qualified professionals are available at the right time and in the right place, the achievement of organization goals and objectives will simply not occur.

In conducting workforce planning, an organization conducts a systematic assessment of workforce content and composition factors and determines what actions to take to respond to future needs. The actions taken may depend on external factors(e.g. skill availability), as well as internal factors (e.g., age of the workforce). Examining these factors will determine whether future skills needs will be met by training, recruiting, or by outsourcing the work.

Workforce planning involves working through four issues:

• The composition and content of the workforce that will be needed to strategically position the organization to deal with its possible future and business objectives.
• The gaps that exist between the future "model" organization(s) and the existing organization, including any special skills required by possible futures.
• The recruiting and training plans for permanent and temporary staff that must be put in place to deal with those gaps.
• The determination of the outside forces that will be able to meet the skill needs for functions or processes that are to be outsourced.

Other issues and actions HR and management need to get involved in:

• The development and understanding of the full range of future demands on the current workforce.
• Using this assessment to predict the shape of the whole workforce making links across professions.
• Reviewing the links between the above and local and national factors determining workforce supply, e.g. trends in turnover or shortages in key skills area.
• Reviewing the effectiveness of current plans, e.g. for investment in new employee trainees, recruitment of new staff.
• Assessing potential courses of action for making the transition from the current profile to the future configuration.
• Determining which of these options will be the most cost-effective.

Using this information to guide and inform future investment in:

• succession planning
• skill mix reviews
• education and training
• continuing professional development
• staff retention
• career development

Additional Resources

• Kansas Department of Administration Division of Personnel Services; Workforce Planning & Management
• Natural Resources Conservation Service; Workforce Planning
• Department of Health and Human Services; Workforce Planning Resource Guide
• Workforce Planning in the Federal Government