VCE business management Unit 3 & 4 (notes)

Sole trader

A sole trader is a business that is run and owned by one person. The sole owner provides all financing and is responsible for decision making.

What are the advantages of being a sole trader?

Owner keeps all profits: All profits are kept and the owner doesn't have to share with partners

Low cost of entry: It doesn't cost much, so a sole trade can operate right away e.g don't have to register

Complete control of the business: owner has full control, is able to make decision based on owners terms for the business (milk bar)

What are the disadvantages of being a sole trader?

THE BILITY

Unlimited liability: the owner and business are the same and the owner is personally responsible for the business and it debts.

Responsibility: all the responsibility for making day to day decisions is all on the hands of the owner( pressure)

Inflexibility: because it is owned by one person, the owner is not allowed to have many days off because it could hurt the business (Milk bar)

Partnership

A partnership is a business owned by a minimum of 2 people to a maximum of 20 partners.

What are the advantages of being in a partnership?

Two people are better than one: There will be improved/ shared management with more than one owner (More skills, knowledge) and if an owner lacks in certain aspects then the other owner can make up for them.

More flexibility: Being in a partnership allows for more days off ,for holidays. Partnerships are more flexible in terms of management, as long as all the partners can agree.

Funds are all pooled together

Low cost of entry: It doesn't cost much, so a partnership business can operate right away e.g don't have to register

What are the disadvantages of being in a partnership?

Disputes: People will often have different ideas for how the business should be ran and this can lead to a dispute which could affect relationships.

Profit sharing - Partners share profits

Unlimited liability- the partners and the business are regarded as the same so if the business is in debt then the partners may have to be personally responsible for the business

Liability for partner debts : If a partner is in debt then the other partner has to pay for those debts, even before the partnership has begun. (e.g hot wings)

What are the legal steps required to incorporate a business?

A company name must be registered with ASIC, which will issue a certificate of incorporation and an Australian company number. ( Company becomes separate legal entity)

What are the advantages of the company form of business ownership?

Efficient management -In company form , ownership is separate from management. It allows the company to appoint expert persons for managing different business functions. (Large resources attract people with high qualifications)

Company has a long life - When a company is incorporated, it becomes a separate legal entity. It is an entity with perpetual succession. (Never ending owners following one after the other.)

Limited liability - shareholders are not legally responsible for the debts of a company only the existing value of their shares.

(Private company : Rip-curl) (Public Company = McDonald)

What are the disadvantages of the company form of business ownership?

Financial affairs are public - Companies are required to publish an annual report of a financial inspection this mean its available for all the public to see

Cost of formation: A lot of legal rules are required to be performed at the time of registration. Promotion of a company is both expensive and risky.

Double taxation: since the company is now a separate legal entity, the business itself is taxed and you personally are taxed.

(Private company : Rip-curl) (Public Company = McDonald)

What are the key differences between a private and a public company

The size: a public company is a large business with more shareholders,employees ect. Private companies are a small to medium sized business with less.

Private company: Up to 50 share holders - can buy and sell shares with permission of other shareholders usually family run.

Public company: Shares listed on stock exchange - anyone (public) can buy and sell shares

(Private company : Rip-curl) (Public Company = McDonald)

What is a social enterprise and Government business enterprise? (provide examples)

Social enterprise - Main objective may not be profit. But they run like any normal for profit business but with the goal of supporting a social cause (Some cafes , Thank you water)

Government business enterprise (GBE) - GBE is government owned with the primary goal of profit, but they still perform commercial activities under government instructions. They are large businesses which focus on financial returns. (Vic-roads, medi-bank , National broadband network)

What are the advantages of a social enterprise?

-Can benefit the community by taking down a social problem which allows for more support by individuals affected so publicity can be gained lead to increase market share.

-Marketing and promotion for these organisations is also very easy. Since a social problem is being tackled with a solution, it is easier to attract attention of the people and media.

-Social enterprises may open up a new market (e.g people with certain lifestyles, environmental friendly ,vegan ) and may attract those people that commercial businesses don't have

What are the disadvantages of a social enterprise?

- Can be difficult to focus on both social and financial objectives at the same time, which could lead to one not being achieved.

- If they are focused on making the community a better place. Then they may make purchasing decisions which could be costly and also ones that commercial businesses don't

-The struggle to meet financial goals can overwhelm, or change, the social order. There is also a risk that social goals can multiply and threaten to overwhelm the business goals. such increasing social responsibilities then making it more difficult to succeed in the marketplace

What are the advantages of GBE (Government business enterprise)

- Although their primary goal is profit, they still carry out community services which benefits the community

- Competition to businesses is healthy in a private sector which can lead to lower prices in the market where they are competing in.

-Government enterprises depend on the government for the initial investment so the profit of the companies are utilised for the further expansion activities.

What are the disadvantages of GBE (Government business enterprise)

-Because they are government owned, political issues/ people could interfere and affect their day-to-day operations

-Management is less effective because the government are depended on making important policy decisions, Red- tapism affects how the company works.

-Less accountability within a GBE which results in less productivity and there could be slackness in management because people are under public services

4 business objectives

All businesses need a shared purpose, that is, the 'why' behind what the business does. This is articulated through the businesses vision, mission, objectives and strategy

Vision: What it wishes to achieve

Mission: How it wishes to be perceived, what it values

A strategy is a plan or method for achieving objectives

An objective is a desired outcome (goal) that a business intends to achieve:

To make a profit(can be a businesses main goal)

To increase market share(usually a goal for large businesses)

To fulfill a market need(To meet customer expectations or provide a good or service that is not available in the market)

To fulfill a social need(Production and/or selling of goods and services for the purpose of making the world a better place)

To meet shareholder expectations(profit can be a main goal. Share holders expect to make a return. if value of company shares increase, then shareholders will have their expectations met

What does the human resources's management do?

-HR management is the effective management of the formal relationship between the employer and employees.

-It is concerned with all the activities associated with acquiring, developing, maintaining and terminating employees.

-HR aims to maintain good employee relations for optimal productivity

What does the operations management do?

-Operations management involves managing the activities associated with the production of a good or service.

-It is concerned with planning, organising, leading and controlling for a transformational process that takes inputs and produces outputs.

-The operations department is responsible for the efficiency, productivity and quality of the goods or services.

A priority of the operations function is efficiency to increase business competitiveness.

what does the Sales and marketing management do?

-Sales and marketing is about communicating the value of a good or service to customers, for the purpose of selling the good or service and for maintaining and increasing market share.

-This function of a business intends to increase the name or reputation of products, while being honest in their promotional methods in order to adhere to social responsibility principles

What does finance management do?

-Finance management involves the recording and reporting of monetary transactions, managing revenues, expenses, cash flow and budgets.

-The finance function strives to accurately assess financial performance and will conduct financial audits at given periods of time.

-The aim is to consolidate the operations of an organisation and provide for any growth or future expansions.

What does the technological support do?

-The technology support area of a business is responsible for ensuring that all computerised systems operate efficiently and as required.

-Their work means that communication and data are transferred quickly so that employees can fulfill key business objectives

What does the acronym V.I.B.E stand for? and what does it relate to

It relates to the corporate culture of the business and defines what the businesses internal environment is.

Values

Ideas

Beliefs

Expectations

What is a stakeholder?

Any individual or group who interact with a business and have a vested interest in an organisation and how it operates.

Business owner (characteristics and interests)

Owners could be heavily involved or removed from day-to-day operations depending on business size.

Maximize profits

Receive income

Profitable business

Business value to increase

Business to act ethically

Government (characteristics and interests)

Exist at 3 levels (local,state,federal). Determine laws and regulations that a business must follow.

Interests:

That businesses abide by laws set

That business pay taxes

Management (characteristics and interests)

Employees who have the responsibility of successfully running the business

Interests:

Want to maximise the profits of the organisation, as their salaries may depend on it.

CSR:

Managers should make decisions consist with CSR to set the tone for others and help the organisation preserve its image

Competitors (characteristics and interests)

A business rival, selling a similar product/service within the same market

Interests:

To ensure there is enough of a difference in their product offering

Monitor activities and performance of other businesses

Local community (characteristics and interests)

Anyone, external to the business, that may be affected by how it works

Interests in business:

That a business participates or supports the community

The business reduces its impact on the environment

Provide employment opportunities to local residents

Interest groups (characteristics and interests)

Groups who attempt to change or influence how a business operates.

Interests:

Trade unions:

That workers receive entitlements in accordance with workplace agreements

Consumer groups:

That businesses provide products that are fit for use by the consumer

Specific interest groups:

That businesses reduce their environmental impact or support workplace diversity

Suppliers (Characteristics and interests)

External individuals and businesses that provide resources to the business

Interests:

Developing a healthy relationship with the business

Interested in getting fair pay

Supplying high quality products at the right time

Customer (Characteristics and interests)

Anyone who purchases goods from the business, the reason a business exists

Interests:

Value for their money

Product does what its suppose to do

Wants to purchase from a ethical/socially responsible business

Employees

Staff working for the business, where their contributions are exchanged for a wage

Interests:

Successful organisation

Safe work environment

Wants to be paid fairly

Valued as a member

Trained properly

Shareholder

The owners of private and public companies

Interests:

Want the business to succeed in order to earn high dividends.

How would you describe conflicts between stakeholders

The vested interests of stakeholders will often come into conflict. Stakeholders often want different outcomes and thus the organisation must be socially responsible by dealing with all interests equally

Owners want to MAXIMIZE their profits

Customers want the highest quality product for the CHEAPEST price

To maximize profits the owner may raise the price of a product which will upset customers who expect a reasonable price.

If the customer wants the cheapest thing for the highest quality then the owner will not be able to maximize his/her profits.

Management styles

Management styles refers to the nature of the relationship that a manager establishes with their subordinates in order to achieve organisational objectives and relates to the managers attitude and behavior

AUTOCRATIC

PERSUASIVE

CONSULTATIVE (first real shift in communication/task orientation)

PARTICIPATIVE

LAISSEZ-FAIR(lazy)

Most controlling to least controlling

What are the key features of the AUTOCRATIC STYLE and what are the advantages and disadvantages

(DO IT THE WAY U TELL YOU)

Autocratic: Manager tells staff what decisions have been made

-Best used in emergency situations or when making a minor decision Less experienced staff, Lot of work need to be done

Key features:

-Communication in this management is one-way (top down)

-Authority, control and responsibility is held by 1 person

-Decision is centralized (Rests with one person)

-No employee participation, follow managements decision

Advantages:

-Control is centralised so time is used efficiently and problems responded to swiftly

-Employees' roles and expectations are clear, making it easier for management to monitor performance

Disadvantages

High chance that staff will experience low morale from being told what to do with no input

Control being centralised means that employees feel excluded and miss out on development opportunities

Communication, delegation, leadership, decision making, planning, time management

What are the key features of the PERSUASIVE STYLE and what are the advantages and disadvantages?

(I think its best to do it this way)

Persuasive: Manager attempts to convince staff that the decisions that have been made are the best course of action

-Best suits situations where decisions do not require a discussion. Experienced staff and not a lot of time

Key features:

-Communication remains top-to-bottom

-Authority, control and responsibility is still centralised (held by one person)

- Decision making is centralised but the manager will try to persuade employees that it is the right thing to do

-No employee participation, follow managements decisions

Advantages:

-Managers can gain some trust and support through persuasion

-Some acceptance of negative situations can occur when reasons behind management decisions are explained

Disadvantages:

-Employees may disagree with the reasons behind why decisions are made and resist changes

-Employees may feel frustrated that their viewpoints are still not being considered

Communication, delegation, leading, planning, decision making

What are the key features of the CONSULTATIVE STYLE and what are the advantages and disadvantages?

(What do you think we should do?)

Consultative: Where manager invites input of staff into decision making process but still makes the decision alone

-Best suits medium to large scale organisations where decisions affect the whole business. Lot of time available

key features:

-Communication is two-way : manager to employees and employees to managers.

-Authority, control, responsibility and decision making is still centralized(ran by one person) but the ideas and suggestions of employees are taken into consideration.

-Employee input is valued and used to improve management decisions

Advantages:

-Employee ideas/suggestions are listened to and valued by management leading to better decisions

-Employees will experience higher levels of motivation and job satisfaction leading to increased productivity as they may feel a sense of ownership

Disadvantages:

-The consultative management style can be time consuming.

-It is also not appropriate in situations when widespread consultation is not necessary for decision making e.g emergencies, bad PR events, Minor issues

Communication, negotiation, decision making, planning, leading

What are the key features of the PARTICIPATION STYLE and what are the advantages and disadvantages?

(Together we can achieve our objectives)

Participative: Manager works alongside staff in the decision making process. Makes decisions together

-Best suits decisions that impact middle/lower level employees. Employees who are directly impacted by the problem are the best people to come up with a solution.

Key features:

-Communication is two way.

-Authority, control, responsibility is shared among-st the team.

-Decision making is decentralised (together) with employees encouraged to take ownership of decisions made.

-High level of employee participation

Advantages:

-Good working relationship between management and staff, high level of trust

-Greater empowerment of employees leading to higher productivity and efficiency and opportunites to obtain new skills

Disadvantages:

-Loss of control of management, Employees may have too much power or not all employees may wish to contribute

-Slower process, as more views must be considered, with so may views conflicts could occur

Communication, Interpersonal, Planning, leading

What are the key features of the LAISSEZ- FAIRE STYLE (lazy) and what are the advantages and disadvantages?

-Employees take total control over their work and ability to make decisions

-Best suits workplaces where creative freedom is important e.g website design company

-Requires skilled workers

Key features:

-Budgets and time frames are set, then it is the employees responsibility to determine how to best complete set tasks.

-Communication: Can vary, but often very little occurs as employees complete activities independently

-Authority, control and responsibility is spread across the organisation.

-The majority of decision making and business operating are left to employees

-High level of employee participation

Advantages:

-High motivation, empowerment and job satisfaction as employees are encouraged to be creative and innovative

-Employees feel a sense of ownership which can lead to outstanding performance

Disadvantages:

-Lack of management guidance could be problematic for unskilled or unmotivated employees

-There is potential for employees to take advantage of their freedom regarding time, money and business resources

Planning, leading, interpersonal, decisions making, communication

List the 6 management skills

An effective manager requires a person to be equiped with these skills:

Interpersonal skills

Decision making

Communication

Planning

Leading

Delegation

IDCPLD (idcpleasedie)

Explain the management skill communication

Is a process of creating and exchanging information between two people that produces understanding and a required response.

Sender sends a message to a receiver where they give feedback to show that they understand or that they need clarification

Used for all management styles. Clear instructions so employees know what to do and to communicate mission/vision statements so employees know what they're working towards

Negotiation

Negotiation is the process of resolving a dispute or producing a satisfactory agreement on a course of action through a combination of discussion and bargaining.

Time management

Time management is the ability to prioritise and delegate tasks, set deadlines and periodically review progress.

Delegation

Transferring authority and responsibility from a manager to an employee to carry out a specific task

Delegation allows the manager to do more important tasks and to allow employees to learn new skills. i.e contributes to employees skill development and job satisfaction

Explain planning

Process of sorting/setting objectives and deciding on the methods and strategies to achieve them. LEVELS OF PLANNING:

Strategic planning:

Time: 2-5 yrs

People: Senior managers

What it involves: Deciding on future direction of organisation and overall objectives EG identifying and implementing business expansion opportunities.

Tactical planning:

Time: 1-2 Yrs

People: Middle managers

What it involves: Planning how to best implement the vision of the organisation EG ensuring the correct allocation of resources occurs to achieve business object.

Operational planning:

Time: daily, weekly, monthly, up to one year

People: Front - line management

What it involves: A detailed level of planning that implements strategies to achieve the objectives of the business by higher levels of staff management EG completion of staff rosters and work schedules.

Suggested planning process

S- setting objectives ( what do we want to achieve)

A- Analyse (the present situation and future opportunities)

- SWOT analysis ( Strengths,Weaknesses,Opportunities,

Threats) - SW internal to business OT External to business

D- Develop (and Evaluate planning alternatives) e.g Plan b

I- Implement ( the strategy that has been agreed upon put in place

M- Monitor ( and review/ are the objectives being achieved if yes good continue to monitor if not, change the strategy)

Leading

Leading is the ability of a manager to influence and motivate staff to achieve a business' objectives

Qualities:

Good communication

Intelligent and knowledgeable

Fair and just decisions

Ability to inspire others

Decision making and the decision making process

Process of identifying/assessing all options and then choosing a specific course of action to take.

process:

Identify problem that needs solution

Gather info relating to issue

Develop possible solutions to the problem

Analyse the solutions by assessing their respective strengths and weaknesses.

Choose the most appropriate solution and implement it

Evaluate whether the decision made has been effective in solving the issue

Interpersonal skills

Refers to the ability of a manager to communicate with a range of people and develop positive relationships with staff

Official corporate culture WHAT THEY SAY

Official corporate culture reflects the image a business wants to portray to the wider community and is often expressed in mission statements and company slogans.

Real corporate culture WHAT ACTUALLY HAPPENS

Real corporate culture reflects the actual behaviors of both managers and employees and the degree to which employees are genuinely committed to corporate objectives.

Can often be identified in the way people behave, treat each other (employees and customers), dress and communicate with one another

Developing a positive corporate culture

Embracing and valuing hard work, honesty, team work, innovation; sets tone for organisation

Organising employee activities outside of work; increases motivation e.g

Friday night drinks

Exercise groups

Book/movie clubs

Celebrating employee achievements

Providing/encouraging employees to participate in training and development opportunities

Analyse the relationship between human resource management and the achievement of the business objectives.

Human resource management involves managing the formal relationship between the employees and the employer and ensuring that staff members are adequately trained, motivated to work hard and satisfied with work conditions.

The human resources (employees) of an organisation are critical to the achievement of a business's desired outcome and are the ones carrying out key responsibilities and activities.

Human resources, being responsible for employees, need to ensure that staff are motivated, satisfied and well trained.

By doing this the likelihood of goals and objectives being met is increased as employees are used to achieve those objectives.

What is motivation

Motivation is the driving force behind a person applying effort over a sustained period of time

3 THEORIES OF MOTIVATION

1. Maslow's Hierarchy of needs

2. Locke and Lathams's Goal Setting theory

3. Lawrence and Nohira's Four-Drive theory

Maslow's Heirarchy of needs

- Maslow's hierarchy of needs is based on the concept of a hierarchy of needs, with basic physiological needs at one end, and high-level self actualization needs at the other.

- the level of needs are ranked in order from their importance, with the lowest being the easiest to achieve and the top being the hardest.

5 areas of needs

1. Physiological needs

2. Safety needs

3. Social needs

4. Self - esteem needs

5. Self- actualisation needs

-It suggests that organisations should aim to create workplaces that satisfy all the needs of an employee.

-Otherwise employees will not be motivated, and may become discouraged.

-This theory states that once a particular need is satisfied, it is no longer a motivator and employees move up the hierarchy

Maslow's Hierarchy of needs (5 areas of needs)

1. Physiological needs

All employees have base level needs:

Food, water, shelter

In order to satisfy these needs we need to go to work and earn an income

Physiological needs: Satisfactory pay for survival

2. Safety needs

We can be driven by a need to feel safe - both physically and emotionally

If a business is:

- Free of bullying and harassment

- OH & S compliant

- And provides employees with a degree of job security

It will be a motivating force for employees

3. Social needs

Employees will seek out a sense of belonging

A workplace that fosters good working relationships and embraces teamwork will provide this to employees.

This in turn will create a motivated workforce where employees will want to work hard for their organisation

4. Self-esteem needs

Feeling that sense of pride or satisfaction that the work you are doing is appreciated

This is aided by receiving:

-Recognition for hard work or doing a good job

-Gaining greater responsibility within your organisation

5. Self - actualisation needs:

Occurs when an employee is seeking to reach their full potential

To satisfy these needs a business must provide a workplace that includes:

-Creative and interesting work

-Opportunities for career advancement

-Personal growth and development opportunities

Locke's Goal setting theory

Is based on the idea that employees are motivated by clear goals and appropriate feedback about their achievement. Lock believed that working towards a goal provides motivation to reach it, thus improving performance

When goals are set it is important that they are in line with these 5 principals:

1. CLARITY

2. CHALLENGE

3. COMMITMENT

4. FEEDBACK

5. TASK COMPLEXITY

Locke's goal setting theory (clarity)

CLARITY

clarity refers to setting clear, achievable and specific goals that remain unambiguous and have a time frame.

Locke's goal setting theory (challenge)

CHALLENGE

A goal should extend the employee but still be achievable. A goal too easy or a goal that the employee has already achieved will not provide high levels of motivation. Challenging goals offer high levels of motivation because it is highly valued by management.

Locke's goal setting theory (Commitment)

In order for a goal to be achieved there must be some commitment. A goal into which the employee has had some input is more likely to serve as motivation. The greater the input the more an employee will commit to it

a participative/ consultative style allows the employee to be more involved when setting objectives. therefore leading to higher levels of motivation

Locke's goal setting theory (Feedback)

A good goal must include opportunities for feedback. feedback provide the chance to offer recognition for progress(review) , make any adjustments and to ensure that expectations are clear and realistic

Locke's goal setting theory (Task complexity)

Goals should be challenging enough but not overwhelm the employee. Any additional training is provided for development and deadlines/ completion dates are appropriate for the skill level of the employee.

The four drives theory

This theory attempts to identify the four main drivers that dictate ALL human behaviours and relate this to the motivation of employees in the workplace

THE FOUR DRIVING FACTORS ARE:

1. The drive to ACQUIRE

2.The drive to BOND

3.The drive to COMPREHEND

4.The drive to DEFEND

The drive to ACQUIRE (FOUR DRIVE THEORY)

This can include both material and non-material things such as:

-Levels of pay and monetary reward are comparable as competing business

- Recognition of good performance

-Establishing high levels of performance as the norm

By providing these examples to employees it can act as a source of motivation

The drive to BOND (FOUR DRIVE THEORY)

Most commonly associated with employees seeking a sense of BELONGING in a workplace

Achieved through:

-Managers showing an interest in employees outside of the workplace

-Encouraging teamwork and collaboration

-Having managers who are people orientated and demonstrate good interpersonal skills.

The drive to COMPREHEND (FOUR DRIVE THEORY)

This drive exists in our continued desire to LEARN, our want to ACQUIRE NEW SKILLS and BE CHALLENGED.

fulfilled in the workplace through:

-Training and development opportunities

-Variety and change in our work activities

-Being assigned challenging and interesting work task

The drive to DEFEND (FOUR DRIVE THEORY)

The drive to defend is only activated when we feel we are in a position of vulnerability(exposed).

Removing any potential threats is how this drive motivates and is achieved through:

-Creating a welcoming and supportive work environment

-Treating all employees equally and fairly

-Encouraging employees to voice any concerns with out fear of reprisal(retaliation)

Motivation strategies - Financial

Pay increase

Bonus

Commission

Profit sharing

Share plans

Gain sharing

I.E PBCPSG

Pay increase

Employees receive a pay rise on an ongoing basis

Advantages:

- The pay rise can be tied to levels in an award, and so can be predictable and easily calculated

-When more experienced employees are on the higher level of pay, it provides the newer employee with a clear target to aim for in a pay rise

Disadvantages:

-Once the employee is receiving the higher level of pay it is difficult to cut pay if the employees performance declines

-Other employees doing the same work may expect a similar level of pay even if their performance is not as good, leading to jealousies and lower moral

Bonus

A one-off payment given as a reward for meeting particular targets.

Advantages:

-Can be varied from employee to employee, depending on level of performance, as each employees bonus is confidential

-Only have to be paid when there is actual performance improvement

Disadvantages:

-If confidentiality is not maintained, different levels of bonus can lead to conflict between employees

-If the value of the bonus is not maintained or increased each year, it may lead to employee dissatisfaction

Commissions

A fixed percentage of a sale and is paid to the sales person. It can be their main source of income so it becomes an incentive to make more sales.

Advantages:

-Only apply when sales take place, so a relatively low cost for the employer

-Can motivate sales staff to work harder to close a deal, so genuinely rewards effort.

Disadvantages:

-If base pay is too low then this could cause employees to leave increasing staff turnover.

-Can lead to differences in staff pay, with possible morale issues

Share plans

Companies offer shares to employees. if a business is profitable then the employee will earn more income from their contribution.

Advantages:

-All employees have an interest in increasing profits and improving the share price

- Employees feel a sense of ownership in the business as they are shareholders.

Disadvantages:

-Share prices can go up and down regardless of performance so it may not be a secure investment

-Employees are usually not permitted to sell their shares until they leave the company

Profit sharing

A company can offer a percentage of the profits to its employees instead of shares. this is an incentive to work hard and raise profits

Advantages:

-Tied to levels of profit, so genuinely rewards improvements regarding profit

-Is relatively easily calculated, and the percentage can be determined in advance, so is very transparent

Disadvantages:

-Usually does not vary between employees so does not always identify individual effort of performance

-If profit drops because of external factors, employees may feel unfairly treated when their share declines

Gain sharing

Employees offer suggestions to improve productivity. the savings to the business from these improvements are distributed

Advantages:

-Involves employees in improving productivity, so improves level of engagement and commitment

-Paid according to measurable improvements, so has a readily calculated value

Disadvantages:

-Employees who have made suggestions for improvement may have to share the benefits with those who have not made a contribution.

Motivational strategies - Non fianancial

Career advancement

Investment in training

Support

Sanctions

Career advancement (i.e promotion)

An employee is given the opportunity to take on a higher position and greater levels of responsibility in a business

Advantages:

-Helps the business retain talented employees

-Often comes with a pay-rise for the employee

-Acts as a reward for past performance

-Business is aware of values, skills and work ethic of person getting promoted

Disadvantages:

-Can cause dissatisfaction from those employees who were overlooked for the promotion

-There is a lack of outside perspective being brought into higher positions within the business

Investment in training

A business invests in the development of employees to improve their skill set through training

Advantages:

-Demonstrates that employers value their employees

-By acquiring new skills employees can gain a sense of job security

-Invest in training helps build a culture of learning and self- improvement

Disadvantages:

-Can be expensive, so a clear connection needs to be drawn between the training and how it will help improve the business

-Often held during work hours and can interrupt the productivity

-No guarantee that the employee that receives training will stay at the business.

Support

Being encouraging and supportive even when a mistake has been made can motivate employees to do better in the workplace

Advantages:

-Supportive work environment can help build a positive corporate culture

-Can improve the mental well-being of employees

Disadvantages:

-For some employees, it can be hard to find reasons to support them when their actions remain unchanged

Sanctions

Penalties are given for poor performance or disobeying instructions/policies

Advantages:

-For some employees, they may respond positively to the threat of receiving a sanction

Disadvantages:

-In the majority of cases sanctions will only provide short-term motivation

-Excessive sanctions can reduce an employees sense of belonging.

What is training

Training refers to the process of teaching staff how to do their job more efficiently by offering employees with a greater set of skills and knowledge to prepare them for certain tasks

Why is training beneficial to a business?

-Training increases the employees skills, knowledge and improves their performance. meaning objectives can be achieved

-Training could lead to a potential career advancement that allows employees to reach their full potential and likely increases motivation

-Allows employee to be more adaptable to change which creates a more capable workforce.

why it is important for the HR manager to plan for training relating to the introduction of new technology?

Training needs to be identified in advanced of any new tech development to ensure that when change does occur, the business is well aware and can account for tech developments meaning that the business doesn't have to retrain their employees.

What is on the job training

On the job training refers to employees learning a specific set of skills to perform particular tasks usually within the working environment, while the employee is performing their regular activities

Can be conducted by an internal factor such as a manager, experienced staff and they will generally ensure that the culture and strategies are passed on

Another way is external providers can provide training when there is new equipment or software

On the job training Advantages and disadvantages

Advantages:

-Immediate feedback from more experienced collegues or coworkers is available, questions can be asked

-Employees are more likely to embrace the training as they are with more familiar people

-Inexpensive to conduct as the training is held on site

Disadvantages:

-The trainer may have to leave their own duties to carry out the training program

-Quality of the trainer may vary through out the business i.e not everyone can be a good trainer

What is off the job training

Off the job training refers to training away from the business and usually involves sending individuals or groups of employees to a particular special training institution

Off the job training could be conducted at a university or TAFE college where employees can gain a recognised qualification.

It can also be a specialist provider with knowledge relevant to a particular industry, type of equipment or product

Off the job advantages and disadvantages

Advantages

-Availability of a wider range of skills and qualifications than those in the workplace

-Will often result in a formally recognised qualification

Disadvantage

-More expensive than on the job training with more travel costs and fees charged

-Lost working time while the employee/s is away or absent from the workplace

Performance management

Is the process used to improve both organisational and employee performance, by relating the organisations objectives to individual objectives.

e.g

Organisational goals: increase profit by 10%

Employee goal: Increase sales by 10%

By doing this process it allows an organisation to measure and monitor their ability to successfully achieve their objectives/

Management by objectives

- Where the employer and employee agree on the objectives to be evaluated, progress is reviewed periodically and corrective measures are implemented if necessary.

Performance appraisal

Is the formal assessment of how efficiently and effectively an employee is performing their role in the business.

It will occur throughout the course of a set period of time, often though a one-on-one meeting with a manager

The importance of performance appraisal

1. An opportunity for managers to provide feedback to employees regarding work performance

2. A measurement for determining pay rises and promotions.

3. A way of identifying training and development needs for employees

4. An opportunity to set new objectives and put a plan in place to improve future performance.

Methods of appraisal 1. Essay method

-A manager undertakes an independent evaluation of an employee.

-Keeping a journal on specific aspects of job performance such as:

>The ability to work in a team

>Personal presentation

>Punctuality

-Positive and negative aspects are then discussed in an effort to improve performance

Methods of appraisal 2. Critical incident method

-A manager records notes on exceptionally good or bad aspects of employee performance

e.g 10:30AM Tuesday 17th March - " simon demonstrated excellent customer service and problem solving skills to resolve a customer complaint"

3:00PM Friday 22nd July -"Simon was observed leaving the office without seeking approval and did not return for the remainder of the day"

Methods of appraisal 3. Comparison method

-Through observation by a manager, an employee is ranked on a scale (e.g 1-5) according to a set of performance indicators

e.g

Customer service 1 2 3 4 5

Sales ability 1 2 3 4 5

Work place safety 1 2 3 4 5

-Results are then compared against benchmark and the performance of fellow employees

Methods of appraisal 4. Management by objectives (MDO)

-The employer and employee jointly agree on objectives to be evaluated at the start of the appraisal period

-All objectives agreed upon need to link back to improving the business as a whole

-Progress is reviewed periodically to address any issues(feedback)

-At the end of the review period, performance is measured against the objectives set

Methods of appraisal 5. Employee self-evaluation

-Employee performs a self-assessment based on a pre-determined set of criteria. Involves questions such as:

>What are my strengths?

>What are my weaknesses and how can i overcome these?

>What could i have done better during the review period

-it helps to highlight short falls in employee training and enables a focused approach on employee improvement

Methods of appraisal 6. Employee obersvation

-A variety of fellow employees complete confidential evaluation forms to help identify strengths and weaknesses across a broad range of skills covering leadership, teamwork and interpersonal skills of a particular employee.

-Then these forms are delivered to an employee giving them feedback (360 degree feedback)

-This is used to appraise performance of managers with feedback obtained from their supervisors and also their subordinates.

What is termination?

-Termination of employment is when an employee leaves a particular workplace, ending the employment relationship

It can be both voluntary and involuntary

Voluntary (employee chooses to leave) Retirement and resignation

Retirement:

-When an employee decides to leave the paid workforce PERMANENTLY

Resignation:

-When an employee voluntarily ends the employment relationship

This can occur due to:

>To take up a new position elsewhere

>Start their own business

>Change of lifestyle

>Boredom with their current job

Entitlement and transition issue (Voluntary)

-Mainly the responsibility of the employee

-Common courtesy is to provide as much notice as possible that you will be leaving. This ranges from days to weeks to months depending on the role occupied in the business

-This is to ensure the business has time to find new recruits to fill in the void left.

Note that the notice is generally 2 weeks or a month but this of course depends on your position