Fundamentals of Human Resource Management Study Set 11

Aon Hewitt Wants to Help Employers Manage Health Benefits When companies around the world want help in designing HR programs or a qualified contractor for outsourcing HRM functions, many of them turn to one of the giants in the field, Aon Hewitt. For its part, Aon Hewitt is constantly scanning its business environment, looking for areas in which employers are likely to need more help. An obvious growth area in the United States in recent years is help with the cost of providing employees (and for some employers, retirees) with health insurance. For the past few decades, the usual approach to providing this employee benefit is for employers to purchase group health insurance plans and enroll full-time employees and their dependents. Some employers offer a choice of several different insurance plans, and some extend coverage to employees after they retire. This benefit is highly valued, but offering it is becoming a burden. The employers in Aon Hewitt's database are beginning to spend more than $10,000 annually per person. Aon Hewitt sees an opportunity that also plays into employees' desire for flexible benefits packages: the creation of health care exchanges for employers to offer. Aon Hewitt acts as a broker: it arranges for various insurers to make available different insurance plans with different costs and benefit levels. Aon Hewitt sets up an information site where participating employees can see choices arranged by insurance carrier, level of coverage (basic through premium), plan features, and prices. Individuals go to the exchange, review the options, and if they wish, get advice from an exchange employee. Then they select the plan they prefer, paid for with some combination of employer and employee dollars: presumably, the employer would pay up to some set level, and the employee would bear any additional cost. Because the exchange handles the enrollment and billing for the plans, the employer may pay less for administration. Also, employers' HR departments don't have to shop around for the best deals on insurance every year. Aon Hewitt's CEO, Kristi Savacool, sees a parallel with trends in retirement benefits: employers used to offer mainly defined-benefit plans, where the employer invested the funds and later made promised pension payments, but now most have switched to defined-contribution plans controlled largely by the employees themselves. The firm first introduced the health care exchanges as a retiree benefit. Employers offering health insurance to retirees were enthusiastic, and more than 2.4 million retirees have signed up. As the demand for this service grew, Aon Hewitt decided to make it available for employers to offer their current employees. In spite of the growing costs, most of the large employers served by Aon Hewitt have expressed an intention to continue offering health coverage, so they are extremely interested in ways to do so more economically. Whether or not states create the health insurance exchanges called for under the recent health care reform law, the state exchanges are meant to serve individuals and medium-sized and small businesses, leaving large companies (those with at least 1,000 full-time employees) as a wide-open market for Aon Hewitt's exchanges. Among its current clients, Aon Hewitt expects that nearly half will include its exchange in their benefits packages. Besides setting up health care exchanges, Aon Hewitt helps set up wellness programs aimed at lowering the need for expensive services. Aon Hewitt's services include designing the programs and preparing communications to employees aimed at promoting healthy behavior. How could you use information technology (for example, e-HRM and social media) to implement a health insurance exchange at your company?

Paying More, Getting Less Today's computing power lets employers crunch data about employees and their performance to find patterns that can help them make better predictions. In the academic world, researchers also are analyzing business data to detect patterns that may apply beyond a single organization. For example, at the University of Pennsylvania, Matthew Bidwell analyzed six years' worth of data from an investment bank to look for patterns in the pay and performance of its employees. Bidwell found an unfavorable pattern in the bank's hiring and pay practices: When the organization brought in an outside person to fill a vacant position, it paid 18% to 20% more than when it filled a position internally (through a promotion or transfer). But compared with internal hires for that type of position, external hires got significantly lower performance evaluations during their first two years on the job. Furthermore, the external hires were 61% more likely to leave involuntarily and 21% more likely to quit. Bidwell compared these results with pay and performance at another investment bank and at a publishing company, and he found similar patterns. In an effort to explain the mismatch between performance and pay, Bidwell noted that the external hires tended to have more education and experience than employees who were promoted or transferred. Once on the job, they need time to build relationships within the organization, and this holds back their ability to perform well for the first couple of years. Even when jobs are filled by an internal hire, initial performance tends to suffer for a while if the person taking the job comes from a different department and therefore needs time to establish new working relationships. Suppose that the bank Matthew Bidwell studied is setting up a DSS for employment decisions. In general terms, how should Bidwell's data analysis shape the results provided by the DSS?

How can teamwork, empowerment, knowledge sharing, and job satisfaction contribute to high performance?

Appreciation Drives Effort In a recent survey, only about half of employees said they love their job and that their company cares about them. In spite of a slow economy, almost 4 in 10 said they intended to look for a new job. But whether or not they intend to stay, solid majorities said they would work harder if their employer better recognized and appreciated their efforts. How can employers demonstrate to employees that the organization values them and appreciates their efforts?

How Mohawk Industries' HR Practices Empower Employees Mohawk Industries produces and sells commercial and residential flooring, including carpet, wood, ceramic tile, vinyl, and more. The company started as a carpet manufacturer in the 1800s and now operates on three continents, with headquarters in Calhoun, Georgia. The company operates its own trucking fleet and distributes through its warehouses to stores and contractors. Mohawk's corporate vision for sustainability includes a "people strategy" that emphasizes fair labor practices and supports employees' involvement in their communities. The company prides itself on its commitment to employee training and development. Four years in a row, it has been named to Training magazine's list of the top 125 organizations for training. In addition, its benefits package includes benefits that reflect a commitment to learning: tuition reimbursement for employees enrolled in college, as well as a college savings plan. Mohawk has sought ways to give employees more control over their career growth at the company. It views self-service as one tool for that empowerment. The company set up a human resource information system, and to make it easily accessible to employees who aren't tied to their desks, Mohawk installed kiosks in manufacturing plants and created a version of the system for salespeople's mobile devices. With the HRIS, employees can go online anytime to update their personal information or find answers to questions about their benefits. Mohawk's human resources department is also committed to using technology to communicate with employees and deliver training. For example, the home page on every employee's computer is a myMohawk page that serves as a portal to the company's intranet. The HR team posts information about training opportunities and other messages on myMohawk. It also posts polls as a way to get employees more actively engaged with the site. The company recently added blogs aimed at encouraging employees to share ideas. It also set up a social-media application that employees can use to find help from subject-matter experts, with the hope that this will contribute to the establishment of informal mentoring relationships. Mohawk hopes to improve its training delivery by expanding the offerings that use other languages and reflect the cultural differences of the locations where it operates. To prepare employees for the choices they would be making during the annual enrollment in employee benefits, the company supplemented face-to-face meetings with e-mail reminders and links to podcasts. Most popular, though, was a company-produced nine-part video series in which actors portrayed characters making wise choices about their employee benefits to meet a variety of needs. That series, titled "Johnny's Diner," was available on the company's intranet, on YouTube, and on a DVD mailed to employees' homes. Mohawk's learning director, Amanda Arnwine, rated "Johnny's Diner" a success based on the number of employees who watched and the percentage of employees who chose their health care plan without further assistance. In addition to its commitment to learning, Mohawk is committed to employee health, which not only can boost employees' well-being and engagement, but also can reduce costs of providing health benefits. Mohawk arranged for an organization called PictureWellness to deliver a wellness plan to employees. PictureWellness offers health risk assessments, exercise classes, nutrition seminars, and more. Mohawk estimates that it saved an average of $4,000 per employee on health care costs for employees who participated in the wellness program. Besides the measures described here, what else could Mohawk do to increase employee empowerment and employee engagement?

As it has become clear that HRM can help create and maintain high-performance work systems, it appears that organizations will need two kinds of human resource professionals. One kind focuses on identifying how HRM can contribute to high performance. The other kind develops expertise in particular HRM functions, such as how to administer a benefits program that complies with legal requirements. Which aspect of HRM is more interesting to you? Why?

Aon Hewitt Wants to Help Employers Manage Health Benefits When companies around the world want help in designing HR programs or a qualified contractor for outsourcing HRM functions, many of them turn to one of the giants in the field, Aon Hewitt. For its part, Aon Hewitt is constantly scanning its business environment, looking for areas in which employers are likely to need more help. An obvious growth area in the United States in recent years is help with the cost of providing employees (and for some employers, retirees) with health insurance. For the past few decades, the usual approach to providing this employee benefit is for employers to purchase group health insurance plans and enroll full-time employees and their dependents. Some employers offer a choice of several different insurance plans, and some extend coverage to employees after they retire. This benefit is highly valued, but offering it is becoming a burden. The employers in Aon Hewitt's database are beginning to spend more than $10,000 annually per person. Aon Hewitt sees an opportunity that also plays into employees' desire for flexible benefits packages: the creation of health care exchanges for employers to offer. Aon Hewitt acts as a broker: it arranges for various insurers to make available different insurance plans with different costs and benefit levels. Aon Hewitt sets up an information site where participating employees can see choices arranged by insurance carrier, level of coverage (basic through premium), plan features, and prices. Individuals go to the exchange, review the options, and if they wish, get advice from an exchange employee. Then they select the plan they prefer, paid for with some combination of employer and employee dollars: presumably, the employer would pay up to some set level, and the employee would bear any additional cost. Because the exchange handles the enrollment and billing for the plans, the employer may pay less for administration. Also, employers' HR departments don't have to shop around for the best deals on insurance every year. Aon Hewitt's CEO, Kristi Savacool, sees a parallel with trends in retirement benefits: employers used to offer mainly defined-benefit plans, where the employer invested the funds and later made promised pension payments, but now most have switched to defined-contribution plans controlled largely by the employees themselves. The firm first introduced the health care exchanges as a retiree benefit. Employers offering health insurance to retirees were enthusiastic, and more than 2.4 million retirees have signed up. As the demand for this service grew, Aon Hewitt decided to make it available for employers to offer their current employees. In spite of the growing costs, most of the large employers served by Aon Hewitt have expressed an intention to continue offering health coverage, so they are extremely interested in ways to do so more economically. Whether or not states create the health insurance exchanges called for under the recent health care reform law, the state exchanges are meant to serve individuals and medium-sized and small businesses, leaving large companies (those with at least 1,000 full-time employees) as a wide-open market for Aon Hewitt's exchanges. Among its current clients, Aon Hewitt expects that nearly half will include its exchange in their benefits packages. Besides setting up health care exchanges, Aon Hewitt helps set up wellness programs aimed at lowering the need for expensive services. Aon Hewitt's services include designing the programs and preparing communications to employees aimed at promoting healthy behavior. Suppose you work for the HR department of a large company that is planning to replace its traditional two choices of health insurance with access to the health insurance exchange. How would you communicate about this change in a way that maintains the company's high performance?

HOW CAN HRM HELP MAINTAIN AN ETHICAL CULTURE? On some level, the choice to behave ethically is always a personal choice. However, there are some measures that organizations can take to promote ethical conduct. And many of those efforts can start or be supported by human resource professionals. One approach, for example, is to create a climate of trust. Businesspeople can readily see that trust provides a strong foundation for all kinds of business relationships, including purchase contracts, labor-management agreements, and employees' confidence in the fairness of supervisors' decisions. People are more likely to trust an organization, manager, or employee when they see evidence of competence, openness and honesty, concern for stakeholders including employees and the community, reliability in keeping commitments, and identification with the organization in the sense that an individual's values match up with the values expressed by the organization. HR professionals can provide performance feedback, training, coaching, and rewards to foster the development of many of these drivers of trust. Job design in which employees are empowered to deliver excellent customer care, make well-crafted products, or deliver other valued outcomes helps to align individual practices with an organization's highest values. Another way to maintain an ethical culture is to define ethical conduct and ethical abuses and to respond appropriately when these are detected. Ethical conduct should be rewarded. Employee development programs should include goals for the trust-building ethical practices of leaders, and developmental work assignments should include opportunities to try out those kinds of behavior. Ethical abuses should be punished, not ignored or hidden. When ethical violations are tolerated, employees take away the message that the organization is not actually serious about ethics. HR professionals can support these objectives with performance measures and pay policies that reward ethical conduct, never ethical lapses. Would you prefer to work at a company where the human resource department has developed and established policies to promote ethical conduct, such as the ones described here? Why or why not?

Summarize how each of the following HR functions can contribute to high performance. a. Job design b. Recruitment and selection c. Training and development d. Performance management e. Compensation

How can an organization promote ethical behavior among its employees?

How Mohawk Industries' HR Practices Empower Employees Mohawk Industries produces and sells commercial and residential flooring, including carpet, wood, ceramic tile, vinyl, and more. The company started as a carpet manufacturer in the 1800s and now operates on three continents, with headquarters in Calhoun, Georgia. The company operates its own trucking fleet and distributes through its warehouses to stores and contractors. Mohawk's corporate vision for sustainability includes a "people strategy" that emphasizes fair labor practices and supports employees' involvement in their communities. The company prides itself on its commitment to employee training and development. Four years in a row, it has been named to Training magazine's list of the top 125 organizations for training. In addition, its benefits package includes benefits that reflect a commitment to learning: tuition reimbursement for employees enrolled in college, as well as a college savings plan. Mohawk has sought ways to give employees more control over their career growth at the company. It views self-service as one tool for that empowerment. The company set up a human resource information system, and to make it easily accessible to employees who aren't tied to their desks, Mohawk installed kiosks in manufacturing plants and created a version of the system for salespeople's mobile devices. With the HRIS, employees can go online anytime to update their personal information or find answers to questions about their benefits. Mohawk's human resources department is also committed to using technology to communicate with employees and deliver training. For example, the home page on every employee's computer is a myMohawk page that serves as a portal to the company's intranet. The HR team posts information about training opportunities and other messages on myMohawk. It also posts polls as a way to get employees more actively engaged with the site. The company recently added blogs aimed at encouraging employees to share ideas. It also set up a social-media application that employees can use to find help from subject-matter experts, with the hope that this will contribute to the establishment of informal mentoring relationships. Mohawk hopes to improve its training delivery by expanding the offerings that use other languages and reflect the cultural differences of the locations where it operates. To prepare employees for the choices they would be making during the annual enrollment in employee benefits, the company supplemented face-to-face meetings with e-mail reminders and links to podcasts. Most popular, though, was a company-produced nine-part video series in which actors portrayed characters making wise choices about their employee benefits to meet a variety of needs. That series, titled "Johnny's Diner," was available on the company's intranet, on YouTube, and on a DVD mailed to employees' homes. Mohawk's learning director, Amanda Arnwine, rated "Johnny's Diner" a success based on the number of employees who watched and the percentage of employees who chose their health care plan without further assistance. In addition to its commitment to learning, Mohawk is committed to employee health, which not only can boost employees' well-being and engagement, but also can reduce costs of providing health benefits. Mohawk arranged for an organization called PictureWellness to deliver a wellness plan to employees. PictureWellness offers health risk assessments, exercise classes, nutrition seminars, and more. Mohawk estimates that it saved an average of $4,000 per employee on health care costs for employees who participated in the wellness program. Would you describe Mohawk as a learning organization? Why or why not? What else could it do to promote continuous learning and knowledge sharing?

If an organization can win customers, employees, or investors through deception, why would ethical behavior contribute to high performance?

How Mohawk Industries' HR Practices Empower Employees Mohawk Industries produces and sells commercial and residential flooring, including carpet, wood, ceramic tile, vinyl, and more. The company started as a carpet manufacturer in the 1800s and now operates on three continents, with headquarters in Calhoun, Georgia. The company operates its own trucking fleet and distributes through its warehouses to stores and contractors. Mohawk's corporate vision for sustainability includes a "people strategy" that emphasizes fair labor practices and supports employees' involvement in their communities. The company prides itself on its commitment to employee training and development. Four years in a row, it has been named to Training magazine's list of the top 125 organizations for training. In addition, its benefits package includes benefits that reflect a commitment to learning: tuition reimbursement for employees enrolled in college, as well as a college savings plan. Mohawk has sought ways to give employees more control over their career growth at the company. It views self-service as one tool for that empowerment. The company set up a human resource information system, and to make it easily accessible to employees who aren't tied to their desks, Mohawk installed kiosks in manufacturing plants and created a version of the system for salespeople's mobile devices. With the HRIS, employees can go online anytime to update their personal information or find answers to questions about their benefits. Mohawk's human resources department is also committed to using technology to communicate with employees and deliver training. For example, the home page on every employee's computer is a myMohawk page that serves as a portal to the company's intranet. The HR team posts information about training opportunities and other messages on myMohawk. It also posts polls as a way to get employees more actively engaged with the site. The company recently added blogs aimed at encouraging employees to share ideas. It also set up a social-media application that employees can use to find help from subject-matter experts, with the hope that this will contribute to the establishment of informal mentoring relationships. Mohawk hopes to improve its training delivery by expanding the offerings that use other languages and reflect the cultural differences of the locations where it operates. To prepare employees for the choices they would be making during the annual enrollment in employee benefits, the company supplemented face-to-face meetings with e-mail reminders and links to podcasts. Most popular, though, was a company-produced nine-part video series in which actors portrayed characters making wise choices about their employee benefits to meet a variety of needs. That series, titled "Johnny's Diner," was available on the company's intranet, on YouTube, and on a DVD mailed to employees' homes. Mohawk's learning director, Amanda Arnwine, rated "Johnny's Diner" a success based on the number of employees who watched and the percentage of employees who chose their health care plan without further assistance. In addition to its commitment to learning, Mohawk is committed to employee health, which not only can boost employees' well-being and engagement, but also can reduce costs of providing health benefits. Mohawk arranged for an organization called PictureWellness to deliver a wellness plan to employees. PictureWellness offers health risk assessments, exercise classes, nutrition seminars, and more. Mohawk estimates that it saved an average of $4,000 per employee on health care costs for employees who participated in the wellness program. Based on the information given, what conditions at Mohawk Industries are those of a high-performance organization?

What is a high-performance work system? What are its elements? Which of these elements involve human resource management?

Why should human resource departments measure their effectiveness? What are some ways they can go about measuring effectiveness?

Paying More, Getting Less Today's computing power lets employers crunch data about employees and their performance to find patterns that can help them make better predictions. In the academic world, researchers also are analyzing business data to detect patterns that may apply beyond a single organization. For example, at the University of Pennsylvania, Matthew Bidwell analyzed six years' worth of data from an investment bank to look for patterns in the pay and performance of its employees. Bidwell found an unfavorable pattern in the bank's hiring and pay practices: When the organization brought in an outside person to fill a vacant position, it paid 18% to 20% more than when it filled a position internally (through a promotion or transfer). But compared with internal hires for that type of position, external hires got significantly lower performance evaluations during their first two years on the job. Furthermore, the external hires were 61% more likely to leave involuntarily and 21% more likely to quit. Bidwell compared these results with pay and performance at another investment bank and at a publishing company, and he found similar patterns. In an effort to explain the mismatch between performance and pay, Bidwell noted that the external hires tended to have more education and experience than employees who were promoted or transferred. Once on the job, they need time to build relationships within the organization, and this holds back their ability to perform well for the first couple of years. Even when jobs are filled by an internal hire, initial performance tends to suffer for a while if the person taking the job comes from a different department and therefore needs time to establish new working relationships. How might a decision support system improve an organization's hiring and compensation decisions?

Aon Hewitt Wants to Help Employers Manage Health Benefits When companies around the world want help in designing HR programs or a qualified contractor for outsourcing HRM functions, many of them turn to one of the giants in the field, Aon Hewitt. For its part, Aon Hewitt is constantly scanning its business environment, looking for areas in which employers are likely to need more help. An obvious growth area in the United States in recent years is help with the cost of providing employees (and for some employers, retirees) with health insurance. For the past few decades, the usual approach to providing this employee benefit is for employers to purchase group health insurance plans and enroll full-time employees and their dependents. Some employers offer a choice of several different insurance plans, and some extend coverage to employees after they retire. This benefit is highly valued, but offering it is becoming a burden. The employers in Aon Hewitt's database are beginning to spend more than $10,000 annually per person. Aon Hewitt sees an opportunity that also plays into employees' desire for flexible benefits packages: the creation of health care exchanges for employers to offer. Aon Hewitt acts as a broker: it arranges for various insurers to make available different insurance plans with different costs and benefit levels. Aon Hewitt sets up an information site where participating employees can see choices arranged by insurance carrier, level of coverage (basic through premium), plan features, and prices. Individuals go to the exchange, review the options, and if they wish, get advice from an exchange employee. Then they select the plan they prefer, paid for with some combination of employer and employee dollars: presumably, the employer would pay up to some set level, and the employee would bear any additional cost. Because the exchange handles the enrollment and billing for the plans, the employer may pay less for administration. Also, employers' HR departments don't have to shop around for the best deals on insurance every year. Aon Hewitt's CEO, Kristi Savacool, sees a parallel with trends in retirement benefits: employers used to offer mainly defined-benefit plans, where the employer invested the funds and later made promised pension payments, but now most have switched to defined-contribution plans controlled largely by the employees themselves. The firm first introduced the health care exchanges as a retiree benefit. Employers offering health insurance to retirees were enthusiastic, and more than 2.4 million retirees have signed up. As the demand for this service grew, Aon Hewitt decided to make it available for employers to offer their current employees. In spite of the growing costs, most of the large employers served by Aon Hewitt have expressed an intention to continue offering health coverage, so they are extremely interested in ways to do so more economically. Whether or not states create the health insurance exchanges called for under the recent health care reform law, the state exchanges are meant to serve individuals and medium-sized and small businesses, leaving large companies (those with at least 1,000 full-time employees) as a wide-open market for Aon Hewitt's exchanges. Among its current clients, Aon Hewitt expects that nearly half will include its exchange in their benefits packages. Besides setting up health care exchanges, Aon Hewitt helps set up wellness programs aimed at lowering the need for expensive services. Aon Hewitt's services include designing the programs and preparing communications to employees aimed at promoting healthy behavior. How compatible would Aon Hewitt's health insurance exchange be with the elements of a high-performance work system? Explain.

HOW CAN HRM HELP MAINTAIN AN ETHICAL CULTURE? On some level, the choice to behave ethically is always a personal choice. However, there are some measures that organizations can take to promote ethical conduct. And many of those efforts can start or be supported by human resource professionals. One approach, for example, is to create a climate of trust. Businesspeople can readily see that trust provides a strong foundation for all kinds of business relationships, including purchase contracts, labor-management agreements, and employees' confidence in the fairness of supervisors' decisions. People are more likely to trust an organization, manager, or employee when they see evidence of competence, openness and honesty, concern for stakeholders including employees and the community, reliability in keeping commitments, and identification with the organization in the sense that an individual's values match up with the values expressed by the organization. HR professionals can provide performance feedback, training, coaching, and rewards to foster the development of many of these drivers of trust. Job design in which employees are empowered to deliver excellent customer care, make well-crafted products, or deliver other valued outcomes helps to align individual practices with an organization's highest values. Another way to maintain an ethical culture is to define ethical conduct and ethical abuses and to respond appropriately when these are detected. Ethical conduct should be rewarded. Employee development programs should include goals for the trust-building ethical practices of leaders, and developmental work assignments should include opportunities to try out those kinds of behavior. Ethical abuses should be punished, not ignored or hidden. When ethical violations are tolerated, employees take away the message that the organization is not actually serious about ethics. HR professionals can support these objectives with performance measures and pay policies that reward ethical conduct, never ethical lapses. Imagine that you work in the human resource department of a company that sells medical equipment. One of the salespeople, who has an enormous amount of student loans, is tempted to misrepresent the uses of the equipment in order to increase his sales and therefore the commissions he earns. As an HR professional, how much can you do to shape a salesperson's conduct so that it remains ethical (and legal)?

How can HRM technology make a human resource department more productive? How can technology improve the quality of HRM decisions?