HR vocabulary explained
FTE? ATS? Anonymous recruitment? Vacation compensation? OKR? Referral bonus? A hearing? Did you already get lost? This blog post explains all key HR related terms in as simply as possible.
Do you sometimes feel that the jargon jungle is oppressive and HR too complicated to approach? What does an entrepreneur actually need to know about HR as a whole? If you google, you will find at least 100 different key words and terms, but what do these terms really mean? In this blog, we translate the key terms HR into plain language.
Key HR vocabulary
*Note: This list follows HR practices and related Law in Finland. All countries have varying labor laws, so be sure to double check before applying the given info in other countries.
Anonymous recruitment: Anonymous recruitment refers to modifying the recruitment process in such a way that the identity of the applicants (such as name and gender) remains hidden from the recruiters in the initial stages of the search, often during pre-qualification. The goal is to reduce possible prejudices and improve objectivity in the recruitment process and give all applicants an equal chance to be selected for an interview.
ATS (Application Tracking System): ATS refers to a recruitment system, i.e. a tool with which you can manage the recruitment process and manage application documents securely. There are several quality application tracking systems, for example Teamtailor, Jobylon, Workable, just to name a few.
Bonus: Additional compensation that is usually paid to an employee based on performance. Many companies have, for example, an annual bonus, which is paid once a year after the end of the financial year.
Discrimination: Unfair treatment based on a person's race, gender, age or other characteristics.
Ethical Recruitment: Ethical recruitment is a process where recruitment practices are based on fairness, equality and non-discrimination. It includes, for example, equal treatment and the promotion of diversity.
Exit interview: A conversation that takes place with an employee who is leaving the company. Either conducted by the supervisor or the HR or both. This conversation or interview should not be skipped. At best, since the person is leaving, you might get really valuable feedback regarding the development of the company. This moment also offers an excellent opportunity to leave good relations with the person for the future as well.
FTE (Full-Time Equivalent): Refers to how many full-time employees (or part time employees, when hours are combined) the company has. The full-time equivalent or FTE definition refers to the number of hours considered full-time. For example, if a company considers 40 hours full time, and there are two employees working 20 hours per week, those two employees would be 1 FTE.
Employee Handbook: The employee handbook is an instruction or information bank prepared by the company about all the key practices followed in the company. Both from the areas prescribed by the law and from the jointly agreed methods of operation. It can also contain information about, for example, management practices, the core points of the culture and other jointly followed operating methods.
Labor Costs: All costs related to employees, such as salaries, fringe benefits, insurance and occupational health care. Often the most significant expense item of a growing company and the management of these expenses is an important part of financial planning.
Employee Engagement: Employee engagement in the organization is a good indicator of successful personnel management, it refers to how well the employees enjoy themselves in the organization and stay, and do not leave on their own initiative. Of course, commitment is a multidisciplinary factor and a healthy level of turnover is also good for the company.
HR Analytics: Means the analysis of personnel-related information to support decision-making. It helps to identify trends and improve the efficiency of HR functions. Personnel analytics utilizes data and statistics in order to make better decisions regarding, for example, recruitment, management, performance management and personnel development.
HR Strategy: A comprehensive long- and short-term plan on how people are managed and "personnel resources" are managed in the organization. Contains at least goals, metrics and measures in recruitment, personnel development, performance evaluation and other HR functions. Typically also includes an HR annual clock, so that different measures can be proactively prepared and not just react reactively to situations and needs that fall into one's lap.
Intranet (Intranet): a website or online platform for internal communication and information distribution within an organization. From HR's point of view, it is often used, for example, for communication about internal recruitments and as a data bank of instructions for areas of personnel management. The personnel manual is often located here.
Layoff / resignation: a process in which the employment relationship is terminated either by the employee or the employer. The procedures and deadlines defined by law are always followed when resigning or laying off. In connection with termination, the employee often receives salary or compensation for the period of notice.
Flexible Work: Flexible work refers to various working time arrangements, such as remote work, part-time work and the use of flexible working hours, which enable flexibility in employees' everyday life.
Probationary Period or Trial Period: refers to the period at the beginning of the employment relationship, when both the employee and the employer can terminate the employment relationship immediately. Within the framework of the trial period, the purpose is to find out whether the concluded employment contract meets the expectations of both the employee and the employer. The probationary period and its duration must always be agreed upon in the employment contract. Often the trial period lasts 4-6 months.
Disciplinary Hearing: If the employer terminates the employment relationship on personal grounds or terminates the employment relationship for a very serious reason, the employee must be given an opportunity to be heard. The same also applies to terminating the employment relationship during the trial period. A hearing must be organized before the employer terminates the employment relationship. A hearing can also refer more generally to a process where the employer talks to an employee who has broken the rules or behaved inappropriately. A hearing is a process in which the employer talks with an employee who has broken the rules or behaved inappropriately. This offers the employee the opportunity to explain the situation and defend him/herself before possible sanctions.
Statutory leaves: The employee's right to special leaves, such as family leave, study leave, sick leave, reserve/military training, rotation leave and absences when a child is sick.
Holiday Pay: Holiday or vacation pay is an additional bonus used in employment relationships. The payment of holiday pay is not based on the law, but on a collective agreement, a mutually agreed upon or established practice at the workplace, or an employment contract. Without a separate agreement, the employee therefore does not have a direct right to vacation pay.
Layoff (furlough, lomautus): Temporary suspension of the employment contract for economic or production related reasons. Employees can return to work after layoff when the situation improves. If the conditions defined in the Employment Contracts Act are met, the employer can suspend the work and the payment of wages of the employee, while the employment relationship otherwise remains valid.
Diversity, Equity & Inclusion, DE&I: refers to the effort to create a workplace where all employees, regardless of their background, are truly valued and equal.
OKR (Objectives and Key Results): Refers to a target management model where the company's operations are controlled from the strategy level to the team and individual level. Through monitoring the most concrete and clear goals, metrics and results.
Compensation: All compensation received by employees for their work. There are a variety of compensation models and the salary or compensation model can include various commissions or bonuses as well as other benefits in addition to or as part of a fixed monthly or hourly or yearly salary.
Onboarding: refers to the process of welcoming and integrating new employees into the organization. Often includes induction, such as teaching the company's culture and practices. The orientation must cover all the measures with which the new employee gets to know the job, the workplace, its customs, people and related expectations. The employee's direct supervisor is often primarily responsible for orientation, and support can be provided by, for example, an HR expert. Peer support for induction can often also come from colleagues who work in similar positions in the company.
Recruitment: Finding, attracting and hiring new employees for the company. Recruitment means the acquisition of new employees for the organization and includes everything from building an employer image to preparing job advertisements, conducting interviews and finally selecting a suitable candidate and contract negotiations. The trial period can also be considered part of the recruitment process.
Performance Appraisal: Evaluation of the employee's work performance. Performance appraisal is a process in which an employee's work performance and achievements are evaluated, often either quarterly, semi-annually or once a year. This helps to determine development targets, salary increases and possible career development opportunities.
Time Tracking: Time tracking means accurately recording the working hours of employees. The Working Hours Act determines that every employer is obliged to monitor the amount of work of employees, i.e. the hours worked and the compensation to be paid for them. This can happen manually or with the help of automated systems and is important in terms of payroll and compliance with statutory working hours.
Collective Agreement: An agreement that defines the working conditions, wages and benefits of employees in a particular field. Collective agreements are often extensively negotiated between trade unions and employers. Local agreements and companies' own collective agreements have also become more common in recent years.
Employee Well-being: The physical and mental health of employees at the workplace. Focusing on well-being at work is of primary importance, and as tools this can include, for example, training, health programs, support for managing workload or stress, or working time arrangements.
Employment Law: Laws, regulations and statutes governing the rights of employees and the obligations of employers. Labor legislation varies from country to country, but it defines, for example, the minimum wage, working time regulations, protection against dismissal and prohibitions of discrimination. In Finland, the most important laws are e.g. The Employment Contracts Act, the Annual Leave Act, the Working Time Act and the Co-operation Act.
Employer Brand: refers primarily to the image that outsiders have of the organization as an employer. Focusing on employer image and building it can play a critical role in the company's recruitment success. To put it bluntly, one could say that if the company has a great employer image, recruitment is easy and the company is an attractive employer. If it isn't, on the contrary.
Employment Contract: An employment contract is an agreement entered into by the employer and the employee about what work the employee will do, under what conditions and for what compensation. The employment contract is concluded before the start of the employment relationship. The employment contract is free form, it can be either oral or written. However, the recommendation is always to make the employment contract in writing and give both parties a signed version of the contract.
Occupational health and safety committee: An occupational health and safety committee (or a similar cooperative body) must be established in a company where at least 20 employees work regularly. Typically, the occupational health and safety committee has 1 employer representative and 2-3 employee representatives. The main responsibilities are to make proposals regarding occupational safety and occupational health to the employer, monitor the implementation of the occupational health and safety action program and occupational health care, and also make development proposals for the employer. (*In Finland)
Workplace Bullying: Repeated and intentional inappropriate behavior in the workplace. Workplace bullying can manifest itself in different forms, and at its most serious it can for example include threats, belittling or discrimination. However, bullying at all levels must be dealt with strictly in organizations and models and methods of action must be created to prevent any type of bullying.
Duration of the employment relationship (Tenure): The time the employee has been employed in the same company. Long-term employees bring stability and experience to the organization, while new employees bring fresh ways of thinking. Both important.
Referral Bonus: An incentive program where current employees are encouraged to recommend potential employees from their networks for open positions in the organization. Often structured in such a way that if the recommended person ends up being hired and this person stays in the job for a certain period of time, for example through the trial period, the referral fee is paid to the recommender. A good way to also financially encourage the current personnel to tip about open positions and to utilize the power of networks. Good people often know good people.
Co-operation: The rules and guidelines for co-operation are based on the Co-operation Act. The purpose of the Cooperation Act (YT Laki), is to promote mutual relations between the employer and the personnel and the opportunities for the personnel to influence their work and the affairs of their workplace. The Co-operation Act applies to companies that regularly employ at least 20 employees.
Overtime: Working time that exceeds normal working hours or weekly working hours. Additional and overtime work requires the initiative of the employer. If flexible working hours or flexible working hours are used, additional and overtime work must be expressly agreed upon. Additional and overtime compensation and their amounts are regulated in the Working Time Act.
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Skilla's HR services covers a wide range of solutions related to building, developing and growing the team of a growth company. Sometimes you might just need mental support and then sometimes specific help with internal communication, conflict situations, recruitment, choosing the right tools, drawing up contracts, coordinating payroll or even interpreting and applying labor legislation.
A growth company rarely needs a full-time HR specialist right away, but that doesn't mean that there are no HR needs at all. Skilla can help and at the core of our services is this: we support you in exactly the matters you need and as much as you need. No need to commit to longterm contracts. Sometimes you might only need support for a day, sometimes for six months, 10 hours a week.
If you need help with HR and People Operations, get in touch - send me a message and we'll talk more about your specific situation!
Best,
Outi
