6. Human Resources

Human Resources

The department or function within an organisation that is focused on activities related to employees.

Human resource management (HRM)

The management of people at work to assist the organisation in achieving its objectives.

Internal influences on HR objectives

1. Corporate objectives​

2. Financial strategies​

3. Operational strategies​

4. Marketing strategies

External influences on HR objectives

1. Economic change​

2. Social change​

3. Technological change​

4. Political and legal change​

5. Market change

Effectively managing HR allows:

1. Add value through expertise and customer service​

2. Control labout costs​

3. Motivated employees​

4. Identify and develop leaders

Soft HRM focuses on the needs of employees- their roles, rewards, motivation etc.​ What are examples of this?

• Permanent work (PT/FT)​

• Acceptable remuneration​

• A nice work environment​

• Training​

• Chance for promotion

Hard HRM identify workforce needs of the business and recruit and manage accordingly. What are examples of this?

• Zero-hour contracts​

• Minimum wage​

• Lack of training​

• Financial incentives to raise productivity​

• Cheap recruitment methods

Employee engagement

The degree of commitment shown by employees to their individual work as well as towards the business objective.

Employee involvement

The amount of contribution an employee can make to their working practises and decision making.

Talent development

Identifying exceptional talent in the business and developing and promoting the talent.

Benefits of training:

1. Better productivity​

2. Improved motivation​

3. More flexibility through better skills​

4. Less supervision required​

5. Better recruitment and retention​

6. Easier to implement change in the business

Diversity

Ensuring the workforce is representative of the local area. Ie, ethnicity, gender, disability and religion.

What will an objective of diversity aim for?

To ensure that personal differences do not hinder progress in the workplace and that employees aren't discriminates against.

Protected characteristics under the Equality Act 2010:

1. Age​

2. Disability​

3. Gender reassignment​

4. Marriage/ civil partnership​

5. Pregnancy/ maternity​

6. Race​

7. Religion/ belief​

8. Sex/ sexual orientation

Alignment of values

Ensuring all employees embrace and promote the values of the organisation.

Labour productivity

Concerned with the volume of output that is obtained from each employee.

Calculation for labour productivity

Divide the out over a time period by the number of employees.​

Why does measuring and monitoring labour productivity matter?​

• Labour costs are usually a significant part of total costs.​

• Efficiency and profitability linked to productive use of labour.

Key measures of HR performance​

• Labour turnover and staff retention​- % of staff who leave during a period​

• Labour productivity- Output per employee​

• Abstenteeism- % of staff who are absent from work

Productivity

The quantity of work produced by a team, business or individual.

Efficiency

The resources used to produce that work.​

The more efficient and high- quality raw materials are... the higher level of productivity.

Why productivity matters?​

• Profits- labour costs significant part of total costs​

• Efficiency- closely linked to productive use of labour​

• Competitive advantage- keep unit costs down to remain competitive

Factors influencing labour productivity​

1. Extent and quality of fixed assets​

2. Skills, ability and motivation of the workforce​

3. Methods of production within the organisation​

4. External factors

How to improve labour productivity?​

Measure- measure performance and set targets​

Streamline- streamline production processes (remove unnecessary processes)​

Invest in- invest in capital equipment (automation and computerisation)​

Improve- improve the working conditions

Labour turnover

The proportion of a firm's workforce that leaves during the course of a year.

Internal causes of increased turnover​

1. Poor recruitment and selection process​

2. Ineffective motivation or leadership​

3. Lower wages rates than competitors

External causes of increased turnover​

1. More local vacancies arising​

2. Better transport links- making a wider geographical area accessible for workers

Positive consequences of high labour turnover

New employees= new ideas and enthusiasm​

Workers with specific skills can be hired​

New perspectives for solving problems​

Negative consequences of high labour turnover

Cost of recruitment​

Cost of training​

Time taken for new staff to settle in​

Less productivity during this time​

Ways of improving employee retention​

1. Financial incentives​

2. Non- financial incentives​

3. Improving the effectiveness of recruitment and selection process​

4. Conduct research to understand why employees are leaving (eg exit survey)

Absenteeism

The habitual non-presence of an employee at his/ her job.​

  Eg. scheduled vacations, occasional illness and family emergencies.

What are the issues with absenteeism

1. Significant business cost- cover​

2. Key to understand reasons​

3. Often predictable​

4. Possibly reduces motivation​

5. May lose customers

How to decrease absenteeism​

1. Show understanding​

2. Set targets and monitor trends​

3. Have a clear sickness and absence policy​

4. Provide rewards for good attendance​

5. Consider the wider issues of employee motivation eg personal life

Why use data for HR resource decision

1. Productivity and labour turnover data provides a company with information on its performance​

2. Low productivity and high labour turnover might suggest poor management​

3. Managers analyse the figures to identify- changes overtime, benchmarking, performance against targets

Organisational structure

Shows how people and management are organised in a business.

Factors that influence organisational structure:​

1. Size of business- small business tend to have a flat structure and larger businesses have a more complex structure with different hierarchy's and departments.​

2. Type of business- how many locations does the business have? Any overseas operations? Is the workforce skilled, unskilled or semi-skilled?​

3. Management and leadership- a company with an autocratic leadership will have a very different structure to a company who likes to delegate tasks and responsibility.

Flat structure- pros

More opportunity for delegation

Flat structure- cons

1. Difficult to manage employees properly

2. Insufficient time to manage employees properly

Tall structure- pros

More opportunity for promotion

Tall structure- cons

1. Lines of communication may be slower

2. Less opportunity for delegation

Delegation

The passing down of authority through the organisation.

Delegation pros

1. Can speed up and improve the quality of decision making​

2. Can reduce the workloads of senior and middle managers, allowing them to focus on key tasks​

3. Delegation improves the skills of junior employees and prepares them for more senior roles in the organisation

Delegation cons

1. May require the business to spend more on training employees to ensure they have the necessary skill set​

2. May be inappropriate in some organisations where leadership styles are authoritarian​

3. Not a suitable strategy to adopt to manage a crisis

Job design

The process of grouping together or dividing up tasks and responsibilities to create complete jobs.

Labour productivity

Measures the output per employee per time period

Job enrichment

Occurs when employees' jobs are redesigned to provide them with more challenging and complex tasks.

Empowerment

Is a series of actions designed to give employees greater control over their working lives.

A centralised structure

Where business decisions are made at the top of the business or in a head office and distributed down the chain of command.

Centralised structure- pros

1. Rapid decision making​

2. Should ensure business objectives that are set by senior managers are pursued ​

3. Economies of scale and overhead savings are easier to achieve​

Centralised structure- cons

1. Demotivated staff, not given an opportunity to make decisions​

2. More bureaucratic​

3. Customer service often lacks flexibility​

Decentralised structure

Where a business allows decisions to be made by managers and subordinates.

Decentralised structure- pros

1. Junior employees should be more motivated and empowered​

2. Reduces workload off senior managers​

3. Good way of training and developing junior management

Decentralised structure- cons

1. More variation at different branches- flaws in customer service​

2. Decision making isn't necessarily "strategic"​
   harder to achieve tight financial control- risk of cost overruns

Internal influences on delegation, centralisation and decentralisation:​

1. Leadership and management styles​

2. The business' overall or corporate objectives​

3. The skills of the workforce

External influences​

1. The technological environment​

2. The competitive environment​

3. The economic environment

Why change the organisational structure?

1. Growth of the business means more formal structure is appropriate​

2. Reduce costs and complexity​

3. Employee motivation needs boosting​

4. Customer service and/ or quality improvements

Challenges​ of changing the organisational structure

1. Employee resistance​

2. Disruption and de motivation= potential staff retention problems​

3. Costs​

4. Negative impact on customer service or quality

Reasons a business may need to recruit​

1. Start up​

2. Increased demand​

3. Business is relocating- not all existing staff are able to move​

4. Skill shortage

Changes in employment patterns​

1. Ageing population​

2. Greater emphasis on flexible working hours​

3. Technology allows employees to communicate more effectively when apart​

4. People rarely stay in the same job for life

PT and flexible work- pros

1. Cheaper to employ as entitled to less benefits​

2. More flexible work force​

3. Wide range of potential recruits

PT and flexible work- cons

1. Employees feel less loyal to business and therefore less motivated​

2. Harder for managers to control and coordinate workforce

Internal recruitment- pros

1. Business already aware of the person’s skill set

2. Cheaper

3. Quicker

4. Can be motivating if opportunity is present

Internal recruitment- cons

1. Leaves a vacancy that needs to be filled

2. Demotivating for staff who don’t get the job

External recruitment-pros

1. New skill set

2. Someone to motivate staff if current staff is demotivated

External recruitment-cons

1. Expensive

2. Time consuming

Ways to avoid costly redundancies

1. Freeze external recruitment

2. Put a stop on voluntary overtime

3. Offer voluntary redundancies

4. Consider career breaks

5. Review employee benefits

Redeployment

The moving of an employee from one job or role to another.

Redundancy

When you dismiss an employee because you no longer need anyone to do their job.

Benefits of redeployment

1. Maintains job security for employee

2. Business retains skills and experience

3. Labour resources are allocated more effectively

4. Reduced cost of recruitment and selection

Why do businesses need training?

1. To support new employees

2. Improve productivity

3. Increase marketing effectiveness

4. Support high standards of customer service and production quality

5. Introduction of new technology, systems, legislations

6. Support employee progression and promotion

Reasons why businesses neglect training

1. They fear employees will be poached by competitors

2. A desire to minimise short-term costs

3. They cannot make a justifiable investment case

4. Training takes time to have the desired effect

5. Sometimes the benefits of training are more intangible (eg morale) than tangible

Assuming that training is effective; then…

1. Employees feel more loyal to the firm

2. Shows that business is taking an interest in their workers

3. Provide employees with greater promotional opportunities

4. Enables employees to achieve more at work- possibly gaining financially from this

Motivation

The will to work- comes from the enjoyment of work itself and/ or the desire to achieve certain goals

Reasons why we go to work:

1. To earn money

2. Sense of achievement/ job satisfaction

3. To belong to a group

4. Sense of security

5. To obtain a feeling of self-worth

List the main financial incentives a business can offer

1. Wages

2. Salaries

3. Bonus system

4. Commission

5. Profit sharing

6. Performance related pay

7. Piece rate payment

8. Share option

9. Fringe benefits

Wages

Normally paid per hour worked and receive money at end of week

Salaries

Normally an annual salary which is paid at end of each month

Bonus system

Usually only paid when certain targets have been achieved. However, sometimes they are unachievable.

Commission

Often salespersons, partly paid according to number of products they sell

Profit sharing

A system whereby employees receive a proportion of company’s profits. Direct link between pay and performance.

Performance related pay

Paid to those employees who meet certain targets

Piece rate payment

Pay per item produced in a certain period of time

Share option

Incentive for senior managers who are given shares of the company rather than a straightforward bonus or membership of a profit sharing scheme

Fringe benefits

Items and employee receives in addition to their normal wage or salary

List the main non-financial incentives a business can offer

1. Empowerment

2. Praise

3. Promotion

4. Job enrichment

5. Job enlargement

6. Better communication

7. Working environment

8. Team working

Praise

Recognition for good work

Promotion

Promoting employees to a position of higher responsibility

Job enrichment

Giving employees more challenging and interesting tasks

Job enlargement

Giving employees more tasks of a similar level of complexity

Better communication

Employees have a chance to give feedback and advice to managers

Working environment

Providing a safe, clean, comfortable environment to work in

Team working

Offers employees an opportunity to meet their social needs and often accompanied by empowerment for team

What is the best mix of incentives?

• The “market” largely determines the base financial rewards paid for most jobs

• Offering flexibility to employees in choosing which incentives they get often works well

• Influenced by what the business can afford

What are the three classic theories of motivation?

1. Taylor- scientific management

2. Maslow- hierarchy of needs

3. Herzberg- two-factor theory

What is Taylor’s theory of motivation

• Managers should closely control their employees

• Autocratic leadership style- managers making decisions themselves

• Use piece-rate pay

What is Taylor’s approach?

1. Identify efficient methods of production

2. Spot the efficient workers

3. Train the remaining staff

   1. Pay workers based on productivity

What is Maslow’s theory of motivation?

• Softer approach than Taylor

• Five levels of human needs that need to be fulfilled

• Business should offer different incentives to workers in order to help employees fulfil each need and progress up the hierarchy

What is Herzberg’s theory of motivation?

• Two-factor theory

• Motivators- directly motivate people to work harder

• Hygiene/ maintenance factors- can demotivate if not present but do not actually motivate employees

What are some examples of motivators and hygiene factors?

Motivators- Responsibility at work, meaningful and fulfilling work, recognition

Hygiene- Pay, working conditions, appropriate supervision and policies

What was Mayo’s theory?

• Hawthorn effect

• Concluded that scientific management could not explain the importance of people’s behaviour in the workplace

• The type of job being carried out and type of supervision impacts motivation

• Group relationships and sense of worth also impacts motivation