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Labor

The discussion throughout these materials has focused on economic resources, such as land, labor, and capital.  This page addresses the economic resource of labor.

Labor encompasses the physical and mental talents of individuals, including their ability to create tangible items, formulate ideas, and make decisions.

This page addresses trends in employment (labor needs), human resource management (including hiring, training and reviewing), employment laws and several concepts that impact worker productivity.

Trends in Labor Needs

Technology continues to impact how our national and global economy produces goods and services.  The following links point to discussions about trends in labor needs.  Consider why these trends are occurring and how these trends may impact us in the future.

Tomorrow's Jobs.  U.S. Department of Labor:  This site provides "projections of the labor force and occupational and industry employment"

• Fastest growing occupations (Table 1):  note the occupations under the category of "Bachelor's or higher degree, plus work experience"
• Job declines in occupations (Chart 9):  does it speak for itself or does it say "those who remain must be top-notch?"
• But also see USDA ERS. Hired Farmworkers a Major Input For Some U.S. Farm Sectors, Amber Waves, April 2008 which reports that the portion of hired production agriculture workers is increasing. At a minimum, this trend suggests that farm managers need to know how to be "employers."

Overview of Human resource management

Resources:  Kay, Chapter 21; Daft, chapter 12 (pp. 426-456)

Human resource management can be defined as building human capital.  Daft mentions recruiting, training and rewarding as components of human resource management.  An alternative list could be recruiting, explaining, training, assessing, and rewarding.

Managing human resources (generally employees, but also could include defining the roles for co-owners or unpaid family members) poses challenges for numerous reasons.  For example:

• Employment opportunities vary; there are full-time positions, part-time positions, positions offering flexible hours, and positions that can be met by telecommuting.  No one management practice will work for all employment relationships.

• Another challenge is forecasting the types and times when labor will be needed.  How would a manager describe labor needs and plan to assure those needs are met?  Can practices used to manage other economic resources, such as capital, be adapted to help manage labor?  For example, how would a labor management plan compare to a cash flow budget?  HINT -- both efforts deal with a resource (capital v. labor); both deal with the timing of need and availability.  However, unused labor cannot be stored and carried over to a subsequent time period, and one type of labor or skills cannot be used to meet another type of labor need (such as, a mechanic may not be an effective herdsman).  This is different than capital wherein a dollar can be used anytime a dollar is needed.
  • Planning or managing labor has some characteristics similar to planning the business cash needs -- consider the quantity and timing of need. 
    • Scheduling workers can be similar to planning or managing cash flow; that is, when and how much is needed.
    • Recognize difference between quantity of labor available and quantity of labor needed, especially when more labor is available than needed.
    • How is planning labor different than planning or managing cash flow? Consider variety of labor needs and variety of workers' skills.
    • Differences between labor and the other resources of land, capital, information and risk
    • Similarities between managing cash (capital) and labor?  Differences between managing cash and labor?
      • "Cash is cash" and one dollar can be substituted for another dollar; but one worker cannot necessarily be substituted for another worker with different skills.
      • How quickly can a manager find another worker or release an unneeded worker; compare this to how quickly a manager can identify an alternative use for cash (such as deposit it in a bank account) or borrow cash when needed?

• A challenge in developing an employment position is describing the responsibilities and tasks, developing a description of the employment opportunity (that is, announcement of the opening), and planning to subsequently review or assess the employee's performance.

• After planning the position, the manager will be challenged with
  • Recruiting -- where do we find workers?
  • Selecting (review application, interview, use a screening test) -- what questions can be asked, what questions cannot be asked, and what questions must be asked?
  • Training and development -- is this a one time event or an ongoing process?  Is training mandatory or voluntary?
  • Conducting performance appraisal or review -- will these be held on a regular schedule?  Will the review be an opportunity to refine responsibilities and objectives?
  • Developing a plan for compensation and benefits -- what is needed to be competitive?  what is needed to motivate?  what is needed to be fair to the employer and employee?
  • Terminating an employee; how does an employer document the steps taken leading to termination?

• The economic return to labor is a wage.
• Is labor a fixed cost or a variable cost?  Does it make a difference to the manager or the decision making process whether the cost of labor is fixed or variable?  Why?

• Labor efficiency -- cost of labor per unit of output -- we will not discuss at this time

• What skills are necessary to coordinate/supervise workers?  What is your answer to this question?
  • communication skills, leadership skills, understand the business, ethical values, recognize that "if it is important to others, it is important to you," patience, ????

• Employing others -- what does the manager need to consider? Recruit, interview, select, employment agreement, wages/salaries, benefits, incentives, training, motivation, communication, evaluation

• Steps in Employing Others
  • Position description and related documents -- inform employee of responsibilities and performance expectations
  • Sample position description -- NDSU
  • Another example of a position description
    • Managers need to fully understand the position (its activities and responsibilities) to prepare the position description.
    • Managers, when preparing the position description, should be anticipating subsequent responsibility reviews; the position description should provide the foundation for determining whether the employee is adequately performing the tasks.
    • A position description is not the same as a position announcement or advertisement, but a position description should be the basis from which a position announcement or advertisement is developed.
    • Use the position description as the foundation for the orientation/training process for new employees.
    • Consider including "work safely" and "professional development" as two responsibilities in each position description.  Including these as explicit responsibilities makes it clear that the employer expects the employee to meet these expectations.  It also makes it easier to discharge workers who do not work safely or who refuse to advance their skills as needed by the employer/business.
    • Distinguish between "minimum" or "required" qualifications and "preferred" or "desired" qualifications.
    • Update position descriptions as needed; do not allow a position description to limit the employee's growth or innovation. Be sure that employee and supervisor both fully understand the updated position description. 
    • Have the supervisor and employee review, sign and date the position description when the person is hired or when the description is updated. 
  • Position announcement/advertisement
  • Employer's personnel policy -- details about the employment relationship, such as work hours, leave policy, sick leave policy, responsibility review policy, ... These points could be incorporated into the position description, but it is more common that they are developed as a policy and then cross-referenced with the individual position description.  Recognize that these policies and the position description may be treated as a contract; that is, these documents set forth the obligations and responsibilities of the employer and employee.

  • What might be an advantage of having employment policies not included in individual position descriptions?  What may be a disadvantage of having the employment policies in a separate document?

   

   

  • A letter of employment (provided by the employer to the employee at the time the employee is hired) is another opportunity to clarify issues such as starting salary/wages, work hours, leave policy, benefits, etc.
    • Employment is a contract, no different than a lease is a contract. However, employment contracts often are not documented as other contracts are documented, such as a lease, a loan, or a purchase agreement. Instead, the terms of an employment relationship generally are discerned from a collection of the position description, employment policies and letter of appointment. recognize that developing these documents is laying the foundation for a legal relationship.
  • However, employment contracts, even explicit employment contracts, often are not enforced against an employee because enforcement may cause the employee to decide to stay on the job rather than face the consequences of breaking an employment contract -- and no one wants an employee who does not want to be there. Accordingly, employment contracts often are not enforced against an employee -- but often will be enforced against the employer.

     

  • Responsibility Review
    • Sample responsibility review -- NDSU
      • Note the importance of the review process and document resulting from the review. Also note the use of several channels of communication and the richness of the channels.
  • Another example of a responsibility review
    • Document the responsibility review.
    • Use the review as a time to "look backwards as well as forward; that is, "what did you accomplish and what will you accomplish in the future?"
    • Have both the supervisor and employee sign and date the review document to establish that both are aware of the document, even if they do not fully agree on the content of the document.

  • A third example of a responsibility review

  Attendance	Good	Fair	Poor
  Reprimands	No	Yes, explain
  Behavior	Good	Fair	Poor
  Cooperativeness	Good	Fair	Poor
  Care of Equipment	Good	Fair	Poor
  Initiative	Good	Fair	Poor
  Adaptability	Good	Fair	Poor
  Work Quality	Good	Fair	Poor
  Productivity	Good	Fair	Poor
  Plant Rules	Good	Fair	Poor
  Safety	Good	Fair	Poor
  Job Knowledge	Good	Fair	Poor
  Dependability	Good	Fair	Poor
  Comments (strengths, areas for improvement, etc)

   

   

  • Do not overlook the importance of orientation/training/professional development.

• These example formats do NOT include records of dates and hours worked, salary or wage rate, amount earned, taxes withheld, taxes paid, or leave time taken.  Consider working with a professional (such as an accountant) in developing a record keeping system for such information.

Labor Laws and Regulations

Even though employment is a contract between the employer and employee, society, through labor laws, has try to assure a level of fairness between employer and employee (based on the assumption that the employer almost always has the better or stronger negotiating position).  Labor laws in the United States are a combination of federal and state laws; the law that provides the employee the most protection or benefit will apply, whether it is a federal or state law.

One legal question is whether the worker is an employee of the employer, or an independent contractor.

• Independent contractor or employee?

  • Regulatory agencies are inclined to define the relationship as employment (rather than contractor) thereby imposing more legal obligations on the "employer" than if the worker was a contractor.

• N.D.C.C. §65-01-03. Person performing service for remuneration presumed an employee. 
  Each person who performs services for another for remuneration is presumed to be an employee of the person for whom the services are performed, unless it is proven that the person is an independent contractor under the "common law" test. The person who asserts that a person is an independent contractor under the "common law" test, rather than an employee, has the burden of proving that fact.
  • N.D.A.C. §27-02-14-01(5)(b) lists 20 factors to consider in determining "whether sufficient control is present to establish an employer-employee relationship.

Laws relating to employment (that is, the worker is not an independent contractor)

• Right to work (authorized workers and I-9 Form)
  • "employers may hire only persons who may legally work in the U.S., i.e., citizens and nationals of the U.S. and aliens authorized to work in the U.S. The employer must verify the identity and employment eligibility of anyone to be hired, which includes completing the Employment Eligibility Verification Form (I-9). Employers must keep each I-9 on file for at least three years, or one year after employment ends, whichever is longer."

• Minimum wage (federal and state)

• "The federal minimum wage for covered, nonexempt employees is $5.15 per hour... In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages."
• ND brochure
• Posters are a common means of providing employees notice of their legal rights under federal and state laws; employers are mandated to post several such documents.
  • "There are nine State and Federal posters that North Dakota employers are required to post in an area or areas readily accessible to all employees." see ND Department of Labor -- Posters

Overtime (federal)

• "An employer who requires or permits an employee to work overtime is generally required to pay the employee premium pay for such overtime work. Employees covered by the [law] must receive overtime pay for hours worked in excess of 40 in a workweek of at least one and one-half times their regular rates of pay. The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest."

  Brief discussion of minimum wage and overtime

• Child labor (federal and state)
  • "Child labor provisions under FLSA are designed to protect the educational opportunities of youth and prohibit their employment in jobs that are detrimental to their health and safety. FLSA restricts the hours that youth under 16 years of age can work and lists hazardous occupations too dangerous for young workers to perform." source
  • Agricultural Employment: "In farm work, permissible jobs and hours of work vary by age... Minors of any age may be employed by their parents at any time in any occupation on a farm owned or operated by his or her parent(s)."

     

• Occupational safety (federal)

• OSHA guide sheet: "setting standards ... to ensure employers are providing safe and healthful workplaces. OSHA standards may require that employers adopt certain practices, means, methods or processes reasonably necessary and appropriate to protect workers on the job.  Employers must become familiar with the standards applicable to their establishments and eliminate hazards.  Compliance with standards may include ensuring that employees have and use personal protective equipment when required for safety or health. Employees must comply with all rules and regulations that apply to their own actions and conduct. Even in areas where OSHA has not set forth a standard addressing a specific hazard, employers are responsible for complying with the OSH Act's "general duty" clause [which] states that each employer "shall furnish ... a place of employment which is free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.""
• Agriculture regulations (29 CFR Part 1928) -- note the production ag topics addressed in the regulations:
  • Storage and handling of anhydrous ammonia
  • Slow-moving vehicles
  • Roll-over protective structures (ROPS) for tractors and employee operating instructions
  • Guarding of farm field equipment, farmstead equipment, and cotton gins.

• Workers compensation (state)
  • N.D.C.C. §65-01-01.  ...for workers injured in hazardous employments ... [workers compensation provides] sure and certain relief ... regardless of questions of fault ...
    • Employers pay an insurance premium
  • Exception for agricultural workers -- N.D.C.C. §65-01-02 (21). "Hazardous employment" means any employment ... except: a. Agricultural or domestic service...
    • Liability insurance for firms that do not carry workers compensation.

• Discrimination, affirmative action, civil rights, EEO,
  • Discrimination - Age
  • Discrimination - Disability
  • Discrimination - Ethnic/national origin; Gender, Race, Religion
  • American Disabilities Act "prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities."
  • Interview questions

     

• Family and medical leave

• Withholding taxes (federal)
  • FICA (social security and medicare)
  • Income tax
  • Federal unemployment tax
  • For example, see Employment Taxes for Businesses and Employment Tax Forms

   

• Wage garnishment (state)

• N.D.C.C. §32-09.1-02. Any creditor is entitled to proceed by garnishment ... to execute on earnings of a debtor while those earnings are held by [an] employer.
  • The court is ordering an employer to retain a portion of the employee's wages and pay them to the employee's creditors.
• N.D.C.C. §32-09.1-14. If [an employer] willfully fails to [comply], the court ... may render judgment against the [employer] for an amount not exceeding the [creditor's claim against the employee].
• N.D.C.C. §32-09.1-18. No employer may discharge any employee [because] earnings have been [garnished].

• Termination -- end the employment contract
  • comply with state law (N.D.C.C. 34-03)
    • N.D.C.C. 34-03-05 "willful breach of duty by the employee .., habitual neglect of duty, or ... continued incapacity to perform the employee's duty."
  • comply with employment agreement (if there is one) and employer's employment policy
  • specify conditions that will lead to termination -- importance of employer's employment policy
  • anticipate using responsibility reviews to support a decision to terminate an employee

Several specific topics to consider

Communicating with employees

Resource:  Daft chapter 17 (review)

Also review communication, especially channels of communication and their levels of richness, and the steps in the communication process.. 

Leading employees

How is leading employees similar to and different from leading peers?

Motivating employees

Resource:  Daft chapter 16 (pp. 586 et seq.)

• Concept of motivation -- internal or external forces that arouse enthusiasm and persistence to pursue a course of action.
  • How does one balance between patience and the drive to accomplish?

• One motivation is providing something that meets the needs of the person being motivated; e.g., one motivation is receiving a reward that meets the person's needs.
  • There are various levels of needs, and a variety of economic and non-economic ways to fulfill those needs.
    • rewards range from personal satisfaction to pay and promotions.
  • These range from meeting physical and safety needs to a desire to be recognized and challenged.

 

• Reinforcement or feedback
  • Types of reinforcement
  • Process for providing reinforcement
    • regular process at set intervals of time

 

• Job design for motivation -- simplify, vary, expand (new challenges/growth opportunities), empower
  • importance of professional development opportunities
  • importance of clear understanding of goals and tasks

 

Teamwork within the business

Resource:  Daft chapter 18 (pp. 658 et seq)

• Why teamwork?
  • Because the quantity of labor and combination of skills/knowledge/abilities/interests necessary to the complete the task is more than one person can provide.

   

• Role of team members

• Stages of team development
  • common goal/shared mission and collective responsibility
  • forming, storming, norming, performing, adjourning

 

• Managing a team

• communication
• team leader -- single leader or rotating responsibility?
• causes of "team breakdown" -- communication breakdown, scarce resources, unclear authority, unclear or differing goals, personality clashes, imbalance among respective status levels

 

Summary of Key Points

• A position description (not the position advertisement), employment policies, training opportunities, and periodic responsibility reviews are critical tools to successfully direct employees.
• Managers need to address the concerns of communication, motivation, leadership, teamwork, and regulatory mandates when directing employees.

Last Updated August 15, 2010

Email: David.Saxowsky@ndsu.edu

This material is intended for educational purposes only. It is not a substitute for competent professional advice. Seek appropriate advice for answers to your specific questions.

E-Mail:sswandal@ndsuext.nodak.edu
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