######################################## #Written by David Tam, 1997. # #davidkftam@netscape.net Copyright 1999# ######################################## University of Toronto Faculty of Applied Science and Engineering HUMAN RESOURCES REPORT TERM PROJECT -- APS 313S -- Small Business Fundamentals Tuesday, April 8, 1997 By: David Tam ================================================================= Executive Summary ================= This report provides details on how SHL Systemhouse Inc. performs its human resources function. Its hiring procedures, policies, and practices are presented. The company's benefits plan, and procedures involving the departure of an employee are presented as well. Michael Palmer, who is in SHL's Global Delivery Services, provided the necessary information. SHL has a fairly small human resources department that consists of 140 staff when compared against its 8500 employees around the world. The Human Resources Function ============================ SHL has 60 recruiters around the world, which includes 10 in Canada. These recruiters are delegated divisional and regional responsibilities in fulfilling positions. To aid these recruiters, the Resumix electronic resume database is used to keep track of current employees as well as to find potential new ones. The Resumix database service also allows SHL to post positions and receive replies on the internet as well. An additional web site based in the U.S., called Monsterboard, is also used to post positions on the internet. The SHL web site at www.shl.com contains a careers section as well. In searching for someone to fill a position, the typical hiring procedure first involves looking internally for a suitable candidate. With the help of Resumix, the recruiters attempt to find a current employee who can be promoted to the new position. If no current employee can fulfill the role, the recruiters search in Resumix's external database, which contains entries from the internet as well as other electronic databases. If this is not successful alternate sources are used. Advertising electronically, via the SHL web site, is used along with traditional newspaper advertisements. If the position remains unfilled employment agencies are used, though this rarely occurs. Perhaps only one in twenty hirings are completed through agencies. In the external advertisement realm, newspaper advertisements, career fairs, and recruiting from universities, colleges, and trade schools are used. These external mediums are effective in finding technical and entry level positions. Many entry level positions are filled using graduates from the educational institutes. However, for senior positions head- hunting usually provides better results. From the pool of candidates for a particular position, usually half can be quickly eliminated. This is due to the fact that the minimum levels of education and experience are not met by the candidates. Five or more years of experience is required. From the remaining pool, between four and six candidates are usually picked by the recruiter for the first round of the interview process. This selection is made based on the amount and types of educational and past work experiences a candidate has had. The top four to six candidates who meet these criteria the closest are selected for an interview. At the first interview with the recruiter a behavioral test is conducted, along with the traditional first-interview questions being asked. This test has a grading system and is based on the reaction of the candidate to different scenarios found at work. These reactions are supposedly based on the candidate's previous knowledge and experiences, and how they have reacted in the past to a similar situation. This test also ensures that the candidate possesses the attitudes and philosophies found in SHL's corporate culture. For the recruiting of technical candidates a computer-based technical test, called TechCheck, is given as well. Typically, two candidates proceed to the second level interview. During this interview a more rigorous, technical test is given by an in-house technical person. Upon passing the test, both normally proceed to the third and final interview stage. In this stage, an interview is conducted by the manager of the department with the vacant position. A grading scheme is used by all three interviewers: the recruiter, the in-house technical person, and the manager. The three interviewers would have a discussion using mainly subjective evaluations and personal intuition. Once all three evaluators decide on the candidate, a letter of offer is usually prepared by the manager. The human resources department formally offers the position to the chosen candidate after completing reference checks and the necessary paperwork. With about 20 to 30 candidates hired every month, a fairly quick but generic orientation process has been developed. A three hour orientation is given in a presentation room at the downtown office, which is centered around a multimedia presentation. Human resources based information is presented to the new employees, along with the history of the company, its philosophies, goals and direction. Mentors are assigned if the employees are hired for consulting positions. The employee benefits plan includes extended health care, a dental plan, basic life insurance, dependent life insurance, basic accidental death and dismemberment insurance, an RRSP matching plan, and a stock-option purchase plan. The details of these benefits can be found in the accompanying SHL benefits guide. The health and insurance plans cover the employee, his or her spouse, and children under the age of 21 (or under the age of 25 if the child is a full-time student). Here is a more detailed description of the benefits plan described in the SHL booklet. Hospital expense coverage is at $120 per day. Drug coverage is at 100% for generics and 80% for others. A $2 per prescription deductible is applied. Eye-wear coverage is at $150 every two years. For the family dental plan, a $50 per year deductible is made. Coverage is at 100% for exams and x-rays, 80% for basic services, 50% for major services, and 50% for orthodontic services with a maximum lifetime limit of $1500. Life insurance of two times the annual base salary, to a maximum of $1,000,000, is provided. The same coverage applies for basic accidental death and dismemberment insurance. Under the life insurance plan, the spouse is insured $5000 and each child is insured $2000. Additional benefits may be purchased as well. Other restrictions and limitations can be found in the accompanying booklet. In the RRSP matching plan, 50 % of an annual contribution is made by the company and 50 % is made by the employee. The stock option purchase plan allows employees to purchase MCI shares at a 15 % discount (SHL is a wholly-owned subsidiary of MCI). A tuition plan reimburses every employee for any training or educational courses taken, up to a maximum of $2500 annually. As well, this program is augmented by SHL's internal training group, where certain relevant courses are available within the company, such Novell Netware Certification and Microsoft Network Certification. None monetary-related benefits include a standard three weeks of vacation annually for all employees. In addition to the nine statutory holidays in Ontario, four floating holidays are allowed annually. These floating holidays may be taken at any time, such as a Monday after a long weekend, giving an employee a four-day weekend. A flexible benefits program is not implemented because it would require too much administration. Moderately flexible work schedules are offered where employees are expected to work eight hour days. During the core business hours of 9am to 4pm, employees should be available. They are free to choose hours outside of this period to fulfill the eight hour requirement. Depending on the nature of certain positions, work hours may be quite rigid, such as for technical support and inside sales desk. The tasks of motivating employees and maintaining high morale are delegated to department managers. They are budgeted a certain amount for team development purposes. There are company wide programs as well. A recognition program and a customer excellence program is in place. For instance, last year under the recognition program, SHL sent 400 employees for a 2 week vacation in Hawaii. As mentioned previously, the stock-option purchase plan also provides employees with motivation. In addition, training motivates employees by keeping them up to date. Approximately 4% of SHL's revenue is budgeted for employee training. This portion of revenue is necessary for the ISO-9002 certification that SHL is attempting to achieve. The impact of this certification is that it will verify SHL's reputation for high competency and quality of service. Unfortunately, employee evaluations are done only once a year and they are fairly generic. Only the supervisor of the employee performs the evaluation. Salary increases are made every year, with standard increases across the board. For a particular position, there is a uniform increase given every year. The short-coming of this method is that it is not merit based. The human resources department is currently working on improvements to the evaluation system, such as including a peer evaluation component. However, performance bonuses are given starting at the J5 level. This level is consists of the project managers. Although no team-based bonuses are given, team recognition is implemented as mentioned previously. Also, no company wide bonus based on performance is given. SHL believes this short-coming is covered by the stock-option purchase plan, which motivates employees. Very few employee conflicts and problems occur because expectations are very clear among managers and employees. Conflicts and problems are encouraged to be resolved locally and informally. If this can not be done, the issue is resolved by the human resources department. For major conflicts, the issue goes to the divisional manager for resolution. To deal with marginal performers, managers are given training to address this problem. Performance is discussed between the manager and the employee and the employee is given opportunities to improve. In the Toronto location, only three to four employees are fired every year due to performance problems. When an employee is fired, there is usually a consensus amongst fellow employees that he or she was a problem. This is because the termination is done fairly late into the problem. The problematic employee is not made to leave immediately. A severance package is only offered to employees who are laid off. The policy for this type of termination is that they will receive one month of compensation for each year of service. Otherwise, no compensation is given. Lawsuits for wrongful dismissal are avoided because the reasons for firing are well- documented. A history of an employee's performance is kept. Managers are given training on how to conduct the termination process. To ensure the proper procedure, they must go through a predefined checklist when firing an employee. A human resources person is usually present in the final meeting between the manager and employee. SHL has very little problem in retaining employees even though this problem is prevalent in the high technology industry. Perhaps it is due to the size of the company, its international coverage, and the fact that it has offices in the United States. The current "brain drain" problem is not noticeable at SHL. Incentives such as heavy investment in training, relatively high salaries, and career growth and advancement are offered. If a highly valuable employee is resigning, SHL may try to persuade him or her to stay by improving their compensation. When an employee does resign, the hiring process is initiated once again and the recruiters at SHL have an additional position to fill. In conclusion, SHL has a well-established hiring procedure that often selects the right candidate. Its benefits plan is fairly comprehensive, with a standard level set for all employees. Although it does not implement a flex benefits plan, it does give the employee options to increase coverage in certain areas. Employee termination is conducted smoothly because managers are given training and as well as a set of procedures to follow. Proper documentation supporting the action is accumulated beforehand to avoid lawsuits. Termination does not happen very often nor does it have a dramatic negative effect on the workforce. This is due, perhaps, to the nature of the bustling working environment. Employees are occupied with other concerns and tasks such as reaching performance targets.