Business Management Unit 3 AOS 2 Flashcards

Business Management Unit 3 AOS 2

Human Resource management

• management of a wide range of responsibilities relating to the human function within a business in order to increase the efficiency of both employees and the business.

• The effective management of the formal relationship between the employer and employees.

Human resource managers role

• in a small or medium sized business, the HRM responsibility usually falls onto the owner.

In a large business, the task of HRM is given to a person known as the human resource manager (HR)

• ensure all employees are motivated and trained

• manage the performance of employees

• assess the performance of employees against objectives and requirements of their role

• provide advice to other managers

How are HR’s linked to business objectives

• HR is involved in determining business objectives and developing strategies for managing people that align with these objectives.

• Businesses must be able to balance the need for increased profitability with a regard for the wellbeing of employees

• Focusing on the employment relationship should increase motivation/drive among employees, and therefore assist in the achievement of key business objectives.

Motivation

• for individuals, the drive to achieve an objective

• for businesses, motivation needs to be seen as the willingness or drive to exert high levels of effort to reach business objectives, while also satisfying the individual employee’s need to achieve.

Intrinsic

Intrinsic rewards are internal motivators, stemming from the satisfaction and enjoyment derived from an activity itself, rather than external factors like pay or recognition.

Extrinsic

Extrinsic rewards are tangible incentives, like bonuses, promotions, or awards, given to an individual or employee for achieving something, acting as external motivation.

Maslow’s Hierarchy of Needs

• Was created by Abraham Maslow

• Theory that believes that within all individuals exist a hierarchy of five needs, which can be arranged based on the importance of these needs.

• It is believed that the previous levels of the needs must be satisfied before moving up to the next level.

• However, once that the level is met, it is no longer effective in motivating an employee’s behaviour

Physiological Needs

• focuses on physical requirements you need for life such as food, water, and shelter.

• When relating to business and HRM, the physiological needs of a person are things like providing them with a job and payment like wages or salary.

• These needs tend to be tangible, and are the lowest motivators of an employee with a business.

Safety Needs

• are the needs for security and protection from physical and emotional harm

• for a business, employees want job security, healthy work conditions like OH&S, policies for things like bullying and sexual harassment, superannuation and insurance and fair management that is consistent and competent.

• Employees who feel as they have a safe work environment with management that looks after them will become more motivated due to their feeling of being valued within the workplace.

Social Needs

• focuses on love, belonging, affection, affiliation, acceptance and friendship in peer groups.

• for a business, it looks at friendly work associates and organised employees events e.g. birthday celebrations, meals, parties, and sporting activities.

• Employees are motivated by this as they go to work for more than just their job, they are able to include social interactions that boost their mood and morale within the workplace and allow for social interactions within the business as well as outside.

Self-Esteem Needs

focuses on the feeling of satisfaction that someone has in themselves or their own abilities. Examples of this are things like status, recognition and attention as well as self-respect, autonomy and achievement 

for a business this will look like your job title and responsibilities, good performance management rating, promotions, merit rewards (bonuses), prestigious workplace facilities and better pay based on position

An employee is motivated by these self-esteem needs as it allows them to see that they are recognised within the business and they are being rewarded for their work and efforts, rather than feeling as though they are being used and not seen

Self-Actualisation Needs

the sense of fulfilment or highest level of human needs. This is seen as the ultimate need where you see personal growth, achieving your own potential, self fulfilment and using own creative talent

In a business: seen as giving challenging work allowing for creativity, participative decision-making and providing opportunities for personal grown and advancement.

An employee wants these needs as it shows they are capable of work independent from the manager and they are trusted by the manager to do work without continuous supervision. Also valued based on their opinions, allowing them to be included in higher decisions within the business.

Advantages of Maslow’s Hierarchy of Needs

• develops an understanding of individual needs — all individual employees are different

• employees will be at different stages of development

• theory is fairly easy to understand

Disadvantages of Maslow’s Hierarchy of Needs

• only a theory, not supported by empirical evidence and the stages in the hierarchy do not apply to all individuals.

• identify the stage at which each individual employee is

• hierarchy of needs is very simplistic

Lawrence and Nohria’s Four Drive Theory

identified four main motivational needs that shape the way in which all human beings think and behave.

Drive to Acquire

can be expanded to include achievement as a means of identifying and including the desire for non-material things, such as status and influence. Employers and managers can apply this in the workplace by:

• ensuring remuneration is compared to the other business in the same industry

• recognising good performance and trying monetary rewards to improvements in performance

• establishing high levels of performance as an expectation and providing employees with the opportunities to feel proud of their work.

Drive to Bond

most commonly expressed through a sense of belonging

creating this drive can be done by managers through:

• interacting with employees in an encouraging way and caring about them or a personal way

• recognising collective achievements and encouraging a team/collaborative culture

• encouraging trusting relationships between employees and creating an environment where friends can develop

Drive to Comprehend/Learn

encompasses the need to understand the world around us, to be challenged mentally and faced with interesting and varied experiences.

Managers and satisfy this drive by:

• training employees which gives opportunities to learn new skills and qualifications, and gain new experiences.

• vary the employee tasks and duties to make them as interesting and stimulating as possible

• Value the duties of the employees and their significant contribution to the business and its objectives.

Drive to Defend

comes into play in ensuring that the work environment is safe and non- threatening, with high levels of trust between employees and management.

managers can create this environment by:

• providing OH&S training to employees so they can perform their job safely

• establish a welcoming, supportive and trusting culture by ensuring management are consistent/honest in all dealings.

• create clear systems and process established for rewarding and recognising employees for positive performance.

Advantages of Lawrence and Nohria’s Four Drive Theory

• drive works independently, allowing management and employees to be flexible in the behaviours or strategies selected or implemented.

• four drive theory is adaptable to complicated or intricate environments or situations

• four drives will convert into effort that is directed at improving behaviour, thereby improving business performance and achieving objectives.

Disadvantages of Lawrence and Nohria’s Four Drive Theory

• other drives besides the 4 outlined by lawrence and nohria may exist

• some workplace applications can involve competition between employees, which can have detrimental effects

Locke and Latham’s Goal Setting Theory

was created as they believed that setting clear goals can lead to increased effort, being tasked focused and improved motivation for employees.

Has 5 principles

Clarity

• Goals should be clear/measurable

• Vague goals create confusion around what is expected and this can limit motivation

Challenge

• Employees are motivated by goals that enable them to make a valuable contribution to the business and its objectives.

• Goals must be important and challenging enough to extend the employee, but not out of their reach

Commitment

• employees commit more to goals they have helped develop and been involved in

• Increased goal commitment allows a more challenging goals to be set, leading to higher levels of rewards and motivation.

Task Complexity

• Tasks/deadlines should not be so overwhelming that employees gives up.

• Training/support should enable skill development.

Feedback

• Feedback can be informal or formal.

• Effective feedback creates opportunities for employees to clarify the task expectations, gain recognition and making necessary accomplishment, and make necessary adjustments to goal.

Advantages of Locke and Latham’s Goal Setting Theory

• setting goals that ar clear and specific will motivate employees and improve their performance

• many studies support the theory

• staff will perform at a higher standard

• better relationships between management and employees

Disadvantages of Locke and Latham’s Goal Theory

• setting goals that are too vague can lead to poor performance

• individual employee goals may clash with each other

• employees may focus so intently on their goals

• failing to meet a goal could be detrimental to an employee’s confidence

Motivation Strategies

• managers aim to motivate their employees in the workplace as it leads to business objectives being achieved and employees wanting to stay at the company they are working for.

• Motivation strategies are the tools managers use to motivate employees.

• These strategies can provide short or long term motivations and link directly to different areas of the theories of motivation

Performance-related pay

• a financial reward to employees whose work has reached or exceeded a set standard

• can be used as a motivation strategy as people are able to see that the effort they put into work has a direct reward which allows them to clearly see their work being appreciated

Short and Long Term Effect on performance-related pay

• Short term effect on employee motivation

• Provides immediate and tangible reward for effort and/or commitment to the business

• Can be given on an annual basis through commissions, bonuses and pay increases which can provide longer-term motivation

• Share plans, profit sharing and gainsharing provide longer-term motivation as they take longer to achieve

Advantages of performance-related pay

• provides a financial reward to employees directly related to improved performance

• should improve productivity levels, consequently improving levels of engagement and commitment to the business

• rewards are generally predictable and easily calculated

• will only apply when there is actual performance improvement.

Disadvantages of performance-related pay

• other employees doing similar work may expect similar rewards, even if their performance is not a good, leading to jealousies, conflict and lower morale.

• a business may not be able to afford performance-related pay

• if the value of the reward is not maintained or increased each year, it may lead to employee dissatisfaction

• if base pay is too low, some employees may not earn enough, so many leave, resulting in high staff turnover.

• not all employees will be motivated by pay.

Career Advancement

• occurs when a person takes a on a job that carries greater responsibilities or increased opportunities to provide leadership

• motivates people as it allows them to enter a better job that may provide better pay and more challenges

• creates a wanted change, which involves new interesting jobs for the person to achieve.

• Also allows for employees to stay at a workplace, keeping loyalty and feeling valued within the company.

Short and Long term effects on career advancements

• Providing more challenging and stimulating positions can provide both short and long term motivation

• Short term usually brings pay rise and greater job security

• Long term motivation of this can be done through involvement in decision-making, gaining responsibility and providing create and interesting work

Advantages of career advancements

• can provide a means of retaining valuable employees

• can be used to reward past performance, provides opportunity to increase contribution of employees to the business in the future

• promoted employee is likely to feel that they can contribute more to the business, improving productivity, levels of engagement and commitment to the business.

• will satisfy employees who desire a sense of achievement or extra responsibility

Disadvantages of career advancements

• promotion positions cannot just be created — they must have some purpose

• employees may have to compete for a limited number of promotion positions, creating some rivalries and conflict

• promotion of an employee could cause resentment among other employees, who may feel they deserve the position more

• employees may be promoted beyond their capacity

Investment in Training

Investment in training refers to the direction of finances, or

resources such as time, into the teaching of skills to employees.

Investment in training can motivate employees as it provides them

with new skills and abilities, which can improve productivity and

achieve objectives that allows employees to see their training is

allowing them to achieve their goals

Short and long term effects of investment in training for motivation

• Short term motivation can happen because people gain more skills which can provide short term access to jobs that provide more money

• Succeeding in the completion of additional training can give people a sense of accomplishment and gaining more skills can provide long term motivation

Advantages of investment in training

• indicates to employees the business values their contribution

• benefits the business by improving the skills of employees which will make them feel confident and perform more productively.

• improving skills can satisfy more levels in Maslow’s Hierarchy

• may improve employee retention as staff loyalty and motivation are improved

Disadvantages for investment in training

• if there are sufficient jobs within the business requiring higher level skills, training may be wasted

• business may be unable to afford the costs of training

• business may pay the cost of training only to have the employee leave for a position in another business

• if a business has poor systems, poor facilities, or equipment, or if employees are performing in the wrong tasks or wrong job, training will not motivate them.

Supporting Strategies

• Support is the assistance or services provided by the business to help employees cope with difficulties that limit their work performance

• This will motivate employees as it provided them with a supportive environment where they feel valued for their contribution and are being treated fairly and with sympathy for their needs

Short and Long term effects of supporting strategies

• Overall long term effects come from this as it encourages a sense of loyalty and a willingness to remain in that work environment 

• Allows new and old employees to know that they have a good relationship with others and if there are mistakes or issues, they are able to access support and not be punished

Advantages of Supporting Strategies

• many forms of support, such as encouragement, can be provided with little to no cost.

• services such as counselling and mentoring should help employees to develop meaningful professional relationships

• support and encouragement can positively influence employee attitudes and help them to improve in confidence, improving motivation

Disadvantages of Supporting Strategies

• may be difficult to find reasons to support

Sanction Strategies

• Sanction is a penalty or form of discipline imposed on a individual 

• This is done through examples like verbal warnings, re-assignments of duties, demotion or reduction in salaries. In serious cases, employees may be terminated.

• Although this comes with negative consequences, it can motivate employees as they will avoid the sanctions that occur if they do not complete their role properly 

Short and Long term effects of Sanction strategies

• It is only likely to motivate employees short term as people will try to avoid unpleasant consequences and loss of salary 

• As sanctions do not encourage long-term commitment from employees it cannot motivate them long term

Advantages of Sanction strategies

Disadvantages of Sanction strategies

Training

• Training is the process of teaching staff how to do their job more efficiently and effectively by boosting their knowledge and skills 

• Overall training is beneficial for both employees and businesses as they help achieve objectives. The two training options that are provided are on-the-job training and off-the-job training

Benefits of Training for employees

• opportunity for promotion and self-improvement

• improved job satisfaction through better job performance

• a challenge — the chance to learn new things

• adaptability — greater ability to adapt to and cope with changes

Benefits of training for the business

• higher productivity through better job performance and more efficient use of human resources

• goals and objectives more effectively met

• reduced costs due to less labour turnover and absenteeism, and fewer errors and accidents

• more capable ‘mobile’ workforce

Development

• the process of preparing employees to take on more responsibilities in the future, acquiring better knowledge and skills, and gaining more experience.

• Although development is different to training, it is important to involve in the training process as it helps promote the importance of training and motivates employees to build their skills for their role

On the-job training

• occurs within the workplace, training tends to utilise the resources that are within the business to assist in building the skills of these employees.

Advantages of on the-job training

Disadvantages of on the-job training

Off the-job training

occurs in a location away from the workplace, employees are usually sent to special institutions to build their skills. e.g. TAFE, University, etc.

Advantages of off the-job training

Disadvantages of off the-job training

Performance management

• aims on focusing on improving both business and individual performance through relating business performance objectives to individual employee performance objectives.

• completed through 4 strategies

Management by objectives

• process by which management and employees agree on a set of goals for each employee, with these goals all contributing to the objectives of the business as a whole.

• important for goals to be clear, and follow a structure so employees and management are aware of what is being achieved without confusion.

Advantages of management by objectives

Disadvantages of management by objectives

Performance Appraisals

appraisals are the formal assessment of how effectively and efficiently an employee is performing in their role in the business, they can be completed every 4,6, or 12 months and should be as objective and unbiased as possible.

Purpose for Appraisals

• provide feedback to employee about their work performance

• used to measure possible promotions and pay rises

• helps monitor employee performance

• identify employees training and development needs

• identify new objectives for employees and create a plan to improve future performance

• review employee objectives in line with business objectives

Advantages of performance appraisals

Disadvantages of performance appraisals

Employee self-evaluation

process whereby employees carry out self-assessment, based on a set of agreed criteria

the self-evaluation usually ask questions regarding the following topics 

• What their strengths are

• What their weaknesses are and how they overcome or reduce them

• What have they improved during their review period

• What initiatives they can take to improve themselves further

• What their current role is and how it may change

• What their greatest responsibilities are and possible leadership they can take on

Advantages of employee self-evaluation

Disadvantages of employee self-evaluation

Employee observation

strategy where a variety of opinions on the performance of employees is sought with the aim of arriving at a more comprehensive picture of past and current performance.

Advantages of employee observation

Disadvantages of employee observation

Termination

ending of employment of an employee within the business

Transition issues

issues relating to the process of changing from one job to another or from one set of circumstances

Entitlement

rights to benefits that employees have when leaving the workplace, either on a voluntary or an involuntary basis.

Involuntary vs Voluntary

involuntary termination is where employees have not chosen to leave the business whereas voluntary termination is when an employee has made the decision to leave.

Retirement

occurs when an employee voluntary decides to give up full-time or part time work and no longer be part of the labour force.

Current retirement age in Australia is 67, however you can retire well before if you wish.

Entitlements and transition issues of retirement

• entitlements of retirement include any pay and accrued benefits for their time and work, e.g. any long-service leave they have accumulated must be paid out to them.

• Transition issues that occur are usually towards the decreased amounts of the pay they receive

• superannuation can help but does not usually support them as consistent pay

Resignation

• the voluntary ending of employment by the employee “quitting” their job, people can resign for a wide variety of reasons, and if the business is curious they may conduct an exit interview to find out.

• people need to provide notice of resignation based on the agreement they signed when they begun working at the business.

Entitlement and transition issues for resignation

entitlements of resigning are employees receive pay for any work they have completed, as this is voluntary, the transition issues are not as common. Employees may feel tension during their final periods of work from managers due to their resignation.

Redundancy

• redundancy occurs when a person’s job no longer exists, usually due to technological changes, a business restructure, or a merge or acquisition.

• redundancy can be voluntary or involuntary, voluntary redundancy is when employees are informed of the situation and given an opportunity to nominate themselves for redundancy

• involuntary redundancy is when an employee is asked to leave the business against his or her will because their job no longer exists.

Entitlements and transition issues of redundancy

• entitlements of redundancy include a financial package that is based on how long the employee has been at the business

• transition issues that occur are a person losing their job and not having a plan for this. Companies can support this by offering counselling, career counselling and even finding other employment opportunities

Dismissal

occurs when the behaviour of an employee is unacceptable and a business terminates their employment

2 types of dismissal:

• summary: the employer can dismiss the employee without notice or warning when the employee had had a serious breach of conduct e.g. theft, harassment, fraud

• on notice dismissal: due to underperformance or breach of policy, an employee can be dismissed on notice. They have been given a warning and and had time to improve however have not and therefore are being dismissed.

• Unfair dismissal can also occur, when an employee is dismissed because the employer has discriminated against them in some way e.g. becoming pregnant.

Entitlements and transition issues of dismissal

• entitlements of dismissal are employees are entitled to notice a period of payout and their annual leave they have not used, if an employees feels they are dismissed unfairly, they can report it and lead to the business having a variety of consequences.

• transition issues that a business must be aware of is that they are not in breach of unfair dismissal laws. The employee who has been dismissed is impacted as they may not be able to use their employer for a reference at a new job, or again lose the support from this employment.

Workplace relations

• interactions between employers and employees, or their representatives, to achieve a set of working conditions that will meet the needs of employees, as well as allowing the business to achieve its objectives.

• This term can also be substituted for ‘employee relations’ or industrial relations’

• Aim in workplace relations is to achieve an optimum working relationship between employees and employers.

Workplace relations focus

• Main focus on workplace relations relates to the contract outlining the terms or conditions of employment which include

  • Length of employment

  • wages

  • hours

  • flexibility

  • leave are spoken and decided in this area

    • Participants in the workplace:

    • Human resource managers

    • employees

    • employer associations

    • unions

    • fair work commisions

Human Resource Manager’s Role

HRM has 4 roles:

• Negotiating employment agreements looks at being aware of all legal issues, awards and national employment standards so agreements can satisfy the requirements within these. The HR manager needs to consider objectives of the business as well, and create a fair and reasonable outcome for all parties

• Training other managers allows for them to be fully formed of the details of agreements so they can achieve productivity improvements and any other KPIs

• Implementing agreements link to wages, hours, entitlements and flexibility arrangements. Each of these have to be in line with Fair Work Information Statement

• Dealing with disputes focuses on resolving any disputes that may arise under enterprise agreements

Each of these factors is impacted by the corporate culture, objectives and management style within the business, as well as legal requirements

Employees

• role in workplace relation is to complete their work at an acceptable standard where they are achieving objectives and completing allocated work with set deadlines.

• they expect to be paid fairly and have safe working conditions as well as interesting work

• if an employee is part of a union, they may be involved in negotiating a new agreement and having a vote for or against in the new agreement

• if employees do not agree to new terms, they may be involved in industrial action, where they can go on strike for example to attempt to force employer for better agreement and more negotiations.

Unions

• union is an organisation that provides advice, support and representation to its members (employees) in the area of workplace relations

  Role of unions

  • Represent their members in the development of new or changed employee agreements, with the aim of getting the best possible deal. 

  • Work with management to resolve workplace issues, acting as an advocate for employees

  • Investigate suspected breaches of workplace laws, discrimination laws and workplace safety laws

Unions and employees

Employees can decide if they want to join a union.

Employees who choose to join a union pay an annual subscription fee which then allows the union to:

• Negotiative and bargain on behalf during enterprise bargaining process

• Argues employees’ case during hearings that determine awards

• Provide assistance and support to individual workers

• Offer services and facilities to members, such as credit unions and health insurance

• Provides information to members on matters relevant to their workplace situation

• Act as an official spokesperson to the media on behalf of union members

Unions normally have representatives working in each business - known as a ‘union rep’

Employer associations

• Employer associations are groups that represent and assist employers. They provide advice and support in the area of workplace relations.

• They are like a union but for employers and help employers understand their obligations in the workplace. 

• They assist an employer in negotiating agreements, offer support in disputes and terminations, as well as offering advice to changes in legislation

Fair Work Commission

The Fair Work Commission is Australia’s national workplace tribunal that has a number of responsibilities under the Fair Work Act 2009. It is a government body that tends to deal with the resolution of industrial.workplace disputes

Their role is to 

• Make a variety of Awards in the national workplace relations system

• Approves agreements reached between employers and employees and makes sure all parties comply to these terms

• Helps parties resolve workplace disputes when
  no agreement can be reached through conciliation,
  mediation and arbitration

• Deal with applications in relation to unfair dismissal

• Administer the regulation of industrial action

• Review and set a minimum wage level for the lowest
  paid workers 

Award

• An award is applied when someone does not have an enterprise or individual agreement. They are the minimum requirements a business needs to apply for an employee. 

• An award is applied when someone does not have an enterprise or individual agreement. They are the minimum requirements a business needs to apply for an employee. 

Award

Awards are reviewed by the Fair Work Commission every 4 years. FWC are in charge of this as they work to keep employment fair for employees and make sure employees are not being treated unfairly by their employers. 

Advantages of awards

Disadvantages for awards

Agreements

Enterprise agreements are an agreement on pay and conditions of work made at the workplace level and negotiated between groups of employees (or represented by their union) and employers 

In addition to the 10 National Employment Standards, enterprise agreements must also include:

• A date of expiry

• Procedures for settling any disputes that may arise about the agreement

• Terms that allow for individual flexibility, so arrangements can be made between employer and employee

• Provisions for consultation with employees on major workplace change

Fair work and Enterprise Agreements

Once an agreement has been agreed upon by both the employer and employees, the FWC will review to give it a stamp of approval once they ensure the following criteria is met:

• Employees are better off overall than under the relevant modern award

• No unlawful terms are included

• Individual flexibility arrangements are included to meet the genuine needs of employees

• The agreement runs for a specified time of up to four years

• A dispute settlement procedure is included