Corporate Human Resources functions have always been number intensive, from calculating a payroll to preparing reports on the nature of the workforce.
Hence, the Human Resources department was an "early adopter" of all kinds of technology, from tabulating machines to mainframe computers using punched cards, to the desktop PC, to today's networked systems (that ironically, have something in common with the old-style mainframe and "dumb terminals"). In addition to computer usage within the operation (or outsourcing of functions such as payroll preparation and compliance with tax reporting), computer communications are gaining importance. As discussed in this chapter, the Internet offers vast information and calculation resources for the Human Resources department.
Furthermore, a corporate intranet can be developed to communicate effectively with employees. Instead of having to print a lengthy manual, then reprint new pages as laws and corporate policies change, the material can be input into computer usable form (whether by keying it in, transferring it from disk or tape, or scanning it) then displayed on the intranet, which is a private network available only to authorised persons. (There can be various levels of security within the intranet, perhaps safeguarded by passwords, so all employees have access to basic information like the corporate policy manual, but only those who need to know have access to salary information and employee performance ratings).
Corporate intranets can also be used for training, for job postings within the organisation, and for advice about how to deal with the health plan and save the retirement.
There is nothing mysterious about the Internet: it's just a "backbone" that links millions of computers worldwide that use a common method of dividing information into "packets", then send the packets to other computers and reassemble them at the destination computer. The method of sending the information packets is a program called TCP/IP. Originally, documents sent on the Internet tended to be written in a computer language called the Hypertext mark-up Language (HTML).
The World Wide Web is a subsection of the Internet, the part that uses Graphical User Interfaces (GUI) to display rich pictorial content. To an increasing extent, sounds, and video are being added to the pictorial resources of the Web. Internet/Web technology has many advantages, it's mature enough so that many tools are available for every price range, skill level, and design objective. Many people have the computer equipment and skills to access this content and even to contribute their own interactive content.
However, there are many reasons why corporate content should not be placed on the public Internet. Some of the information is confidential, and could lead to the loss of privacy, premature revelation of corporate plans, exposure of corporate trade secrets, securities law violation etc. If it were to be generally revealed. Corporations also generate an immense amount of information that is not security-sensitive, but that is simply not interesting to anyone outside the organisation.
For a growing number of corporation, the answer is a corporate intranet: a small computer network that uses TCP/IP, HTML, and Web technology, but where access is limited (for instance, with passwords), to authorised users. There could be several levels of password protection so that for instance, everybody in the corporation would have access to the employer handbook and information about the health plans, but only HR executives would have access to the full set of salary data.
Companies that provide employees with e-mail access through modems or the network have facilitated communication because employees can zip off a message instantly, without the bother of typing a letter or getting caught up in "voice-mail hell" or endless rounds of telephone tag.
However, e-mail is not secure; it is much more like a postcard that can be read by anybody than like a sealed letter (much less a coded message). Also, the mere fact that a reader clicks a "delete" icon does not mean that the message is completely and permanently deleted from the entire computer system, network, or service such as sexually harassing or racist material) can easily be found by hostile parties including plaintiffs' lawyers.
A REASONABLE STRATEGY IS FOR COMPANIES THAT INSTALL E-MAIL CAPACITY TO ALSO INFORM EMPLOYEES OF THE COMPANY E-MAIL POLICY:
-- Restriction of e-mail to business use (special software can be used to un-install or disable games on workplace networks or office computers)
-- No forwarding of copyrighted materials (eg newspaper cartoons)
-- No use of suggestive, obscene, or racist language
-- No discussion of matters that might have adverse legal consequences (eg price fixing; industrial espionage)
-- Require employees to ask themselves before they communicate if there is anything in the message that the employee would not want publicly revealed, or that would put the employer in a bad light it were revealed.
-- Inform employees that the employer retains the right to monitor employees' e-mail messages on the company network.
In many business, and especially in service business, payroll is the largest, or at least one of the largest, corporate expenses. Increase in payroll will therefore have immense bottom-line impact. In order to succeed, the corporation must attract and retain skilled, hard-working employees, and must motivate them to do their best. Yet at the same time the company must run economically.
There are also "ripple effects" to worry about: the raise of one employee, or group of employees, is likely to enhance the expectation of other employees. They are usually skeptical if they are told that they must sacrifice raises and enhanced benefits for the overall good of the company and will be particularly skeptical if they find our that the CEO has been paid several million dollars or rials, with millions more in stock options.
If a company has many unions, negotiations with each union become nerve-racking, because the contract with the first union will trigger a demand for parity (or higher compensation) by the other unions whose contracts must be negotiated later. The temptation is to draw a very hard line with the first unions, but that creates a serious strike risk.
This difficulty is met by a secret ballot amongst various unions once in three year and in Pakistan under Industrial Relations Ordinance 2002 where one Collective Bargaining Agent (CBA) is elected with majority vote and his CBA alone is competent to represent and espouse the cause of the workers.
Salary is an important element in compensation, of course, but it must be considered in the context of an entire compensation package. Taxes must be paid by the employer, and withheld by the employer from the employee's salary, based on all or a percentage of compensation. Benefits such as group health insurance will be offered.
The employee may be entitled to participate in a qualified pension plan, a nonqualified executive only plan, or both. Perhaps the employee will be required to, or allowed to, place some of his or her compensation into a pension plan instead of receiving it immediately in cash. Top managers may receive a minor or even a major portion of their overall compensation in the form of shares of company stock or stock options rather that in case.
In a very small corporation (especially a family-owned business), the ownership group will represent a noticeable percentage of all the employees, and the ownership group's compensation will be a significant part of the overall payroll. In the larger corporation, such as the one that is the target audience for this book, there will be many more rank-and file employees than top executives, although the compensation package for atop executive may be many times that of the average employee.
Written contracts, such as collective bargaining settlement and contracts negotiated by executives, do obligate the company to pay particular wage rates or to calculate compensation in particular ways. But for companies that do not have such written contracts, pay planning is usually a tradition-oriented, seat-of-the-pants process.
There is no requirement that the old practices be continued; and today, some companies are innovative in ways to calculate compensation. The responsibility of the Human Resources department are many and varied. They usually include pay planning and compliance, setting work schedules for employees, keeping tract of hours worked, and handling payroll matters. This latter responsibility comprises preparing paychecks that reflect both work (at the appropriate salary or hourly rate).
Employees have a private right of action (ie, they can sue the employer) for unpaid minimum wages and/or overtime, plus liquidated damages, attorneys' fees, and court costs. Courts have the power under Payment of Wages Act 1936 in Pakistan and Industrial Relations Ordinance 2002 to order legal and equitable relief against employers who discharge their employees, or who otherwise discriminate or retaliate against them for making false complaint etc or wrongful termination or dismissal from service.
Given the extremely high cost of employee benefits, and the risk that even a person hired as an at-will employee may have a degree of protection against termination, the appeal of part-time, contingent, contract, temporary, and other non-full-time workers is evident.
In fact, a number of employers follow a downsizing process under which full-time jobs are eliminated, but the former holders of those jobs are re-hired, this time at a lower pay rate and with fewer or no benefits; almost twenty five percent of workers provided by independent contractors.
Yet employers must step cautiously: if they are not careful, they may achieve a short-term saving that is very costly in the long run. They may be forced to "make up" for wages, benefits, taxes, and penalties that should have been paid in the past but were not because of an incorrect characterisation of the status of particular workers. Such mischaracterization can render the company liable to the worker, to tax and regulatory authorities, or both.
Experience in Pakistan has shown the recent trend of the superior judiciary, like Supreme Court and High Court to give decisions that tend to discharge engagement of workers by contractors to execute the work.
There is no simple alignment of interest; sometimes the individual seeks to be treated as an employee in order to qualify for benefits (and in order to avoid the heavy burden of paying both the employer and employee shares of the Cess or tax) under the labour laws.
At other times, the worker prefers independent contractor characterisation in order to receive a check that is not diminished by deductions. (This is particularly true if the individual does not intend to make the tax payments on a current basis, or at all.)
An individual who performs services but is not a conventional employee of the company might actually be a common-law employee, albeit of some other company (such as a temporary personnel service or leasing company). In other situations, the worker is not an employee at all, but an independent contractor, and thus personally responsible for making tax payments and for securing insurance and other benefits.
The real test of employee or independent contractor status is supervision and control; the more discretion the individual has in deciding how and when to perform services to reach an agreed upon result, the more likely it is that he or she will be an independent contractor and the workers so engaged by the contractor shall be deemed to be employee of the contractor and not the company.
In 1996 in USA the IRS provided some help in IR-96-44, "Independent Contractor or Employee?" It permits relief from federal employment taxes if a business consistently treats a group of similarly situated workers as independent contractors, has a reasonable basis (and not just wishful thinking) to support this characterisation, and files information returns (Form 1099) with the IRS on a consistent basis. Characterising sales staff can be difficult.
A person who sells big ticket equipment can have a high degree of independence and earn over $1 million a year, a store clerk can earn a low wages for highly supervised tasks like re-stocking store shelves. The clerk is clearly an employee; the salesperson is not. There are special rules in various areas of law (such as tax compliance and unemployment insurance) for sales staff in USA.
It is quite relevant whether the individual works at the business location of the employer, whether he or she receives a salary irrespective of the amount sold, or whether commission are a significant factor in compensation.
Given the high cost of medical care, very few people would be willing to pay out of pocket for all the care they and their families require. And, given the high cost of health insurance, employees consider health insurance furnished under an employee group health plan one of the fundamental and most valued components of the compensation package.
Although many small companies refrain from providing such coverage for their employees, health insurance of some sort is virtually universal for employees of larger companies (including those with 100 or more employees) as is evident under Provincial Employees Social Security Ordinance 1965 in Pakistan.
Of course, employers are not unaffected by the high cost of health insurance, and there has been an increasing trend to limit the scope of coverage, limit coverage of dependents, require employees to pay (or pay more) for insurance, and increase deductible and coinsurance amounts so that employees undertake a high or proportion of the costs themselves.
There has also been a shift from indemnity insurance to managed care, so that virtually all employees who are covered by employee group health plan either have managed care as an option or as the sole health care coverage mechanism in the plan.
The major factors in employee compensation are current compensation, pension plans and other deferred compensation, and health benefits. However, there are additional benefits provided by some or all employers. The fringe benefits raise questions of state law, taxation. Within limits, the benefit plan can determine who is eligible for participation. However, the employer's characterisation of workers is not necessarily the last word.
(Concluded)
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