Like any area of business, there are rules and regulations you need to follow as a part of Human Resources. These regulations will impact hiring practices, as well as influence the way benefits and compensation need to be administered to a group.
Also like any other area of business, these HR rules and regulations will vary, depending on the area in which the company operates. This section will discuss the current practices (as of 2014) in the United States, but because many states can have additional regulations and rules, as can companies, it's best to review the most current regulations before applying them.
Within the practice of HR, there are laws that have been put into place to protect the employees, as well as the integrity of the workplace. Since these are legal statutes, it means that not only is the employee protected, but the company is, as well. By ensuring a safe and fair workplace, everyone benefits.
EEO (Equal Employment Opportunity)
In order to get hired, an employee will need to submit an application or a resume to the hiring department. Ideally, the employees would be assessed based on their skill level and the talents they can bring to a particular role.
But HR employees are human, and are subject to their own biases. Even though they may not be aware of it, they might make interview decisions based on other factors the applicant presents.
In order to ensure employees are hired based only on their talents and experience, the EEO regulation was put into place. This means employees can not be judged as hireable or not, based on:
- Race, ethnicity, color
- Individuals with disabilities
- Military experience
In order to ensure judgments don't happen, hiring managers are supposed ignore these factors during the hiring and interviewing process. If an employee is able to prove that he or she was hired (or not) based on one of these traits, they can pursue action through the legal system.
EEO also applies to employees who are trying to get into higher roles within their company. For those who feel they were not chosen for a position because they are women, for example, those employees can pursue legal action.
At the same time, the HR department needs to base compensation and benefits outside of these characteristics. Thus, a woman and a man in the same role at a company would need to be paid the same, with some differences based on skills, time at the company, etc. But if all other factors are the same, the employees should be paid the same compensation.
It's also good to point out that EEO helps protect the integrity of the company. When a company is seen as having and following fair hiring practices, they are a place where talent will want to go.
One of the things you may have heard about interviews is that a hiring manager or interviewer can not ask about certain parts of the applicant's life, as this might give reason for discriminatory hiring practices.
Even though the questions might seem innocuous, they can also give a hiring manager information that might create a bias.
For example, a hiring manager can not ask:
- Do you have a family? – Some companies may not want to hire people with families as it can cost more in terms of benefits, and it might mean the person could be away to deal with family issues more often.
- Are you pregnant or do you want to become pregnant – Similar to the question about families, a woman should still be hired based on her skills and not on the time line of having a family.
- What's your religion – Since hiring managers and companies may have different religious views in relations to applicants, they should not ask about one's belief system.
- What is your sexual preference? – Again, the sexual orientation of a person is something that does not impact the ability of the worker, so it's not a question that needs to be asked.
Other questions that can lead to discrimination are about age, other work experience, and past criminal history. Applicants should only answer questions that are related to the job at hand, not about any other characteristic.
At the same time, since many companies have become aware of diversity (or lack thereof) in their offices, they may employ an affirmative action strategy. This allows for the hiring of more people of a certain race or ethnicity or gender.
While this seems in opposition to the idea of equal opportunity, companies can also see how there might be many more Caucasian applicants in the hiring pool, which might lead to companies who are mostly white.
But by opening up and encouraging more diversity, the company can have a population that is more varied.
Not all companies have this practice in place, but many more are looking at ways they can hire more workers with the proper skill set, while also including people to encourage more variety in the office.
Along with wanting to create workplaces that hire fairly and promote fairly from within, workers need to be able to feel safe in their workplace. Sometimes, benefits and compensation have been a part of this discussion, as it's been shown that woman are much more likely to make less than their male counterparts – even with the same skill set.
In addition to creating regulations and laws that prevent this from happening (or at least discourage it), sexual harassment policies are also in place. These rules protect women and men from feeling as though their jobs are dependent on how they react to the sexual advancements of others, especially those in management.
Sexual harassment laws state that a person who feels they have been harassed can talk to their supervisor and get the activities to stop. If the person continues to harass the other person, the offender can be fired. The report is fairly investigated and all sides are considered.
To ensure the best possible support during sexual harassment cases, an HR team should have a strong and easy-to-understand policy in place.
Organizational HR Strategies
While compensation and benefits are a part of the HR focus for an organization, it's important to keep in mind these pieces are also a part of the overall organizational strategy. These are parts of how the company itself will function, how well it will function, and how it will be prepared (or not) for the coming years.
Though decisions can be made instantly in some cases, it's better to have a wider strategy, so that decisions can be made that impact the company in a positive way and in a way that is in alignment with the current goals and desired outcomes.
The Importance of Strategy
Just as with any plan, you need to know where you want to go in order to make decisions that will get you there. A company that simply makes decisions because they seem appropriate at the time, may also be making decisions that don't support long-term growth and effectiveness.
Strategy allows companies to:
- See the bigger picture – When you have an overall strategy for your compensation and benefits, you will be able to make decisions that are in context with the company's entire history, not just what's happening right now. If the strategy, for example, is to have a greater group of talented workers, you might begin today with better compensation and benefits packages, even if they cost more.
- Know what's important – The more you can define the strategy that you want, the more easily you will remember what is important and what is not. Many companies have trouble deciding what's important since they don't know their direction. But by creating the strategy, you can review what you want to do, see if it's in alignment, and move forward (or not).
- Have a starting point for innovation – What companies also need to remember is that while a strategy might seem like a hard and fast rule, it is not. It becomes an outline for progress, but an outline that can also be adjusted to suit new ideas and new directions.
You need to have a plan in order to end up where you want to go, and that means figuring out what's important today and what's important tomorrow.
There are two ways in which you can look at HR strategy, as it relates to compensation and benefits, as well as in other areas. You can look at the short-term and the long-term goals.
Short-term goals are those goals you want to see happen in the immediate or near immediate future. You can uncover these by starting with a review of the current systems, what's working and what is not.
- The turnover rate
- Labor costs
- Employee morale
Some HR departments will start with surveys of employees and management to determine what employees are feeling in the present moment, as well as to find out what they want from their workplace right now.
In doing so, the HR team can begin to set up short-term strategies that will bring the company into alignment sooner, rather than later.
Short-term goals might include these examples:
- Hire XX people.
- Hire more technical staff members.
- Increase benefits for employees (if it's clear the staff isn't happy with what they have).
Now, not all of these can be achieved in one day, or even one week, but their results will have an immediate impact on the overall organization.
When you really want to see the bigger picture, you need to think about what is going to happen in five or 10 years, or even 15 years. What is the direction of the company?
You can begin to sort out long-term plans by thinking about:
- What the organizational structure should look like in the future
- What the overall productivity levels should look like
- Where the company is headed in the future, and who the team should include
The longer-term strategy needs to be one that will guide the company in the direction of what happens down the road. These are the bigger dreams the company has, knowing that the company may change its mind – or it may not reach these goals for other reasons.
What are the bigger things that should happen in order to foster growth and in order to create a profitable future?
Examples of longer-term plans might include:
- Our company will have XX workers.
- Our company will have a certain management structure and promotional structure.
- Our company will produce XX percent more than it did in the last five years.
How to Define an HR Compensation and Benefits Strategy
When you hear the word "strategy," you should think about action. Instead of thinking about the abstract, think about what steps the company can take in order to reach its goals.
As mentioned before, you need to start with an assessment of what the structures look like right now.
- What are the compensation packages?
- What are the benefits packages?
- What do the employees want?
- What do other companies offer?
- What are the costs now? What will the costs be in the future?
When you can look to see where you want the company to go in relation to what it has to offer employees, then you will begin to see what is missing. From there, you can take steps to create the end results.
You might, for example, start researching to see what is out there in terms of better benefits plans. Or you might recommend to management to adjust the budget to allow for higher levels of compensation.
Or you might begin to negotiate with the benefit companies to see if they can offer better deals, because you have more employees, etc. The more information you have, the more you will be able to use it to your advantage.
Strategy is not just about the singular employee; it's about the larger organization. And when you start with the employee and their needs, everyone will benefit.
When creating an organizational strategy for your compensation and benefits packages, you need to think small and you need to think big. By taking the time to review the systems, see what others are doing, and creating a larger direction for the organization, you will be able to make better decisions and increase the overall happiness of your staff.