Business Management - Topic 2

What is HR/workforce planning?

A systematic process that assesses current and future needs of an organization’s workforce

What does workforce planning do?

Sets out necessary actions to meet HR needs

What does short-term workforce planning address?

Immediate needs of the org

Eg. Replaces workers on maternity leave, going into retirement, or suddenly dismissed and plans on covering absent employees

What does long-term workforce planning address?

Supports the strategic plan of the organization

Eg. Expansion of the business into new locations or different countries

What does HR do?

Recruitment, induction, retention, appraisals, dismissals, redundancies, training and development, performance appraisals, absenteeism

What is recruitment?

Hiring the right number of appropriately qualified and suitable workers at the right time

What is retention?

Retaining and keeping workers at the organization by meeting the needs of employees

What are appraisals?

The formal procedure of assessing the performance and effectiveness of employees

What is absenteeism?

Dealing with issues that arise when employees are unable to attend work

What is dismissal?

Letting go of workers no longer needed due to underperformance or misconduct

What are redundancies?

Letting go of workers when when their jobs are no longer needed

What is training and development?

Improving the competencies, productivity, and skills of workers

What are performance appraisals?

Holding workers accountable for their performance and conduct at work

What are internal factors that affect workforce planning?

• Size of an organization

  • Larger firms need more HR planning, more workers = more recruitment, training, appraisals, etc.

• Strategic direction of the organization

  • Different objectives have different needs

• Organizational structure

• Finances

• Motivation in the workplace

  • More motivation = more productivity and lower labor turnover

• Corporate culture

What are external factors that affect workforce planning?

• Demographic changes (change in working population, death rate, birth rate, education, average income)

• Change in labor mobility (willingness to move between geographical locations or occupations)

• Immigration

• Flexi-time

• Gig economy

What is occupational mobility?

The ability and willingness to find another job/pursue a different career

What allows for occupational mobility?

Having the necessary qualifications, experiences, and skills

What is geographical mobility?

The ability and willingness to relocate

What do businesses offer to make geographical mobility attractive?

International packages tend to have more remuneration (Expats)

Why would employees not want to relocate?

Moving away from family, relocation costs, lower pay, less benefits, higher cost of living

What is the effect of labor mobility on HR?

Increasing and maintaining labor mobility makes allocation of HR more efficient, greater labor productivity

How does labor mobility benefit workers?

Can find better paying jobs to improve their standard of living

Who are migrant workers?

People who move to other locations or countries in search of job opportunities

What are benefits for business of having more migrant workers?

• Can hire skilled migrant workers to fill skill shortages and keep wage costs down

• More flexible work structures

  • Can be open for longer

  • Adds to supply of staff willing to work part-time or shift jobs

• Can have a more flexible and dynamic workforce

• May bring new ideas, experiences, and ways of thinking

• Migrant workers are a threat to domestic workers, competition increases the standard of skills

• A majority of migrants are working age who will pay taxes and spend income on goods and services, benefits the economy

What is flexi-time?

Flexible work practice that allows employees to work a set number of core hours per week at the office or during peak hours and choosing where to work the rest of the week as long as work gets done

What are the benefits of flexi-time?

• Encourages a good work-life balance

• Empowers workers by giving them autonomy and flexibility in personal schedules

• Can improve moral and labor productivity

What are disadvantages of flexi-time?

• Potential lack of productivity and accountability

• Costs implications if managers need to check and approve the hours staff claim to have worked

What is the gig economy?

Workers are on-call, independent contractors who enter into formal agreements with on-demand businesses (Grab, Uber, Postmates, freelance writing, graphic design, tutoring, babysitting, gardeners, cleaners)

What are advantages of gig economy?

• Workers enjoy freedom and flexibility to choose the job and how long they work

• Workers have the potential to earn more

• Businesses reduce costs from full-time workers and office space

• Lower costs of production can lead to more price-competitive goods and services

What are disadvantages of gig economy?

• Reduces the need for full-time workers, can limit people’s potential for career development

• Gig workers may lack job security and a stable income

• Increased competition for gigs pressures workers to always look for their next job

• Gig workers have set-up costs (bikes and vehicles needed for delivery services)

• Gig workers don’t have employee rights and benefits

• Gig workers don’t have the social aspects of traditional work

• People who don’t know how to use online services may be left out

What are reasons for resistance to change?

• Self-interest: employees place their own interest above the organization, occurs when change is a threat to person’s job security, status/rank, or financial position

• Low tolerance: people don’t like disruptions and uncertianty

• Misinformation and misunderstandings: may arise from gossip, makes workers feel like change is unnecessary

• Interpretation of circumstances (different assessment of the situation): employees and employers may disagree on the rationale for and benefits of change, may feel that business isn’t acting in the best interest of the workers

What is change management?

Processes and techniques used to plan, implement, and evaluate changes in business operations

What are strategies to reduce impact and resistance to change?

• Inform and educate employees and stakeholders beforehand to reduce any unsubstantiated claims or rumors and limit misinformation and misunderstanding

• Involving employees in decision-making gives them ownership, motivates them, and improves morale

• Provide authentic support so that people have skills and resources to cope with change

• Use incentives to remove or limit change, can make amendments to contracts

• Gaslight a representative’s thinking so that the advantages of change can be communicated to those resisting

• Threaten disciplinary action, dismissals, job losses, redeployment, or no promotion

What is delegation?

Line manager gives subordinates authority to successfully complete a task, project, or role

Who has authority in delegation?

Authority and decision-making is passed on, but responsibility for the outcome remains on the line manager

What are advantages of delegation?

• Can motivate employees, make them feel valued, empowered, and recognized

• Can improve quality and speed of decision-making as they are made by employees who understand the job and customers better

• Reduces the workload of senior managers, allows them to focus on strategic direction of a business

• Improves skills and qualities of employees

• Prepares employees for more senior roles

• Boosts morale and staff retention

What are limitations of delegation?

• Usually comes with additional pay or remuneration, increases costs

• Must invest in prior training and development to ensure employees have skills and qualifications to do the task

• Employees may not want to do the work of managers

• Not suitable for work that is low-skilled, manual workers who require supervision or during a major crisis

What is span of control?

How many workers are directly accountable to or under th authority of a particular line manager

What is a narrow span of control?

Each manager has less people

What are features of a business with narrow span of control?

• Organization likes to have a tighter control on decision-making

• Managers can keep closer control over activities and operations

• Tends to be less delegation

What is a wide span of control?

Line manager has responsibility for many subordinates

What are features of a business with a wide span of control?

• May have challenges with communication and control unless they can delegate effectively

• Workers have more independence

• Can reduce costs as there are less levels of management

• Strong leadership required

Factors to consider when choosing wide or narrow span of control

• Skills, qualifications, training, and experience of employees, more competent employees will allow for wider spans of control

• The attitude and beliefs of managers, if they believe freedom makes employees efficient they are likely to use wide spans of control

• Nature of an organization, the market they are in, and activities under consideration, MNCs will have wider span of control while smaller businesses will have narrower spans of control

What are levels or hierarchy

Number of layers of formal authority

What is a tall or vertical structure?

Structure with many levels of hierarchy

What are characteristics of a tall structure?

• Likely to have a narrow span of control

• Decision-making tends to be centralized and quick

• Can benefit from delegation

• Can be costly due to many managerial structures

What is a flat or horizontal structure?

Structure with few layers of hierarchy

What are characteristics of a flat structure?

• Wide span of control

• Decision-making is decentralized and takes longer

• Faster communication due to less layers

• Less promotion opportunities

• Can overburden managers

What is chain of command?

The formal lines of authority

What is the difference in chain of command of a tall structure vs. a flat structure?

A tall structure tends to have longer chains of commands, flat structures tend to have shorter chains

What is bureaucracy?

Administrative systems within an organization (formal policies and procedures)

What are characteristics of a bureaucratic organization?

Has a lot of rules, regulations, and procedures, lacks flexibility (a lot of paperwork to get tasks approved and done), slow in responding to external changes, creativity and innovation is discouraged, slow decision-making due to operational inefficiencies

What is centralization?

Decision-making is mostly made by a small group of senior managers at the top

What businesses are likely to be centralized?

Tall structures with narrow spans of control with a autocratic or paternalistic leadership style

What are characteristics of a centralized organization?

• Decision-making is fast

• Managers maintain better command and control

• Delegation rarely happens, may lower morale and productivity

• Inflexibility can be demotivating

• Unsuitable for creative and autonomous industries

When does centralization work well?

• Rapid decision-making required, major cirsis

• Organizations with mostly low-skilled workers

• When need to save costs, less managers

What is decentralization?

Decision-making authority is delegated throughout

What businesses are likely to be decentralized?

• Flatter hierarchy with wider spans of control

• Democratic leadership

What are characteristics of decentralized businesses?

• Can improve morale and productivity as workers feel valued and empowered

• Flexible and fast decision-making

• Reduced workload on senior managers

• Less control

What is delayering?

Removing 1 or more layers in its hierarchical structure, making it flatter

What is the purpose of delayering?

Cut costs or reduce bureaucratic inefficiencies

What is the effect of delayering?

• Can result in reduction in wage costs

• Widens span of control

• Improves communication

• Increases flexibility

• Adds work to existing workforce

• Can cause anxiety, stress, resentment, and conflict

• May threaten security needs

• Demotivation in employees that lose out

• Lowers productivity

• Loss of institutional knowledge and internal expertise as past managers no longer make decisions

What is a matrix structure?

A flexible, task-oriented structure designed to allow firms to be more responsive to changes in the market and the needs of the business

How does a matrix structure work?

Employees are assigned to multiple roles and have multiple reporting lines, promotes cross-functional collaboration, may need to report to multiple managers

What is the effect of having a matrix structure?

• More efficient decision-making and faster response times due to improved communication

• Can be confusing and lead to conflict due to complex reporting lines and people holding multiple roles

• Using experts from across the organization can help generate new, creative ideas and improve productivity

• Can isolate members who are out of their comfort zone

• May have difficulty in prioritizing different tasks

• Expensive, additional resources and finances needed to fund different teams

• May feel demoralized due to more work and pressure

What are organizational charts?

Diagrammatic representation of an organization’s formal structure that shows roles of responsibilities of people in the organization

What are flat organizational charts?

Has few layers, wide span of control, short chain of command

What is the effect of having a flat organization?

• Open and informal

• Increased opportunities due to more delegation

• Improved communication, less layers

• Cheaper to operate

• Reduces power distance between juniors and seniors

What organizations are typically flat?

Start-ups and small businesses that value creativity and flexibility

What are tall organizational charts?

Narrow span of control, many layers long chains of command

What is the effect of having a tall organization?

• Formal, inflexible, and bureaucratic with clear lines of seniority

• Changes don’t happen easily

• More opportunities for promotion

• Quicker and effective communication due to narrow span of control

• Increased efficiency and productivity due to specialization of labor

• Potential for miscommunication due to long chain of command

What businesses are usually tall?

Large

What is organization by product?

Structure the workforce according to goods and services sold, each department focuses on a different product in portfolio

When is organization by product suitable?

Large organization with a broad product portfolio

What is the benefit of having an organization by product?

• Each team has its own internal structure, enables specialization on a market segment

• Improves product knowledge and marketing activities

• Encourages healthy internal competition between departments

What are disadvantages of having an organization by product?

• Functions may duplicate, multiple finance, marketing people, etc. for each product

• Associated with decentralized decision-making, difficult for senior executives to maintain control over separate divisions

What is organization by function?

Structuring according to business functions (operations, marketing, finance, HR)

When does organization by product work well?

Organizations with 1 or a small number of related goods and services

What are advantages of organization by function?

• Roles and tasks are done by experts

• Higher productivity and output

What is a disadvantage of organization by function?

Departments tend to work in isolation, only focus on their area

What is organization by region?

Structuring by geographical areas where firm’s operations are

When is organization by region suitable?

Large organizations, MNCs, likely used with with other structures

What are advantages of organization by region?

• Focus on specific needs of a regional market

• Adapts to regional differences and exploit local knowledge

What are disadvantages of organization by region?

• Difficult to control

• Decentralized

What is considered when choosing the structure (centralized, hierarchical, bureaucratic, decentralized, etc.) that a regional office will use?

Corporate culture, size of workforce, skills, qualifications, experiences, and talent of workforce, nature of decisions (strategic vs. routine)

How do external factors cause organizational structure to change?

• Pandemic caused more tech and work from home options to be integrated

• Tech increased the popularity of gig economy, businesses hire and retain less employees leading to a flatter structure

• Tech reduces in-house market researchers, flatter structure

• Need for social media marketing increases the number of jobs

• More competition may require changes in prices, cut costs and employees

• Growth can make a structure more complicated

What is a project-based organizational structure?

Experts are put together for short-term/temporary projects and disband after its completion

What are project-based organization used for?

Critical and urgent projects

What is the role of a project manager (PM)?

Responsible for the entire project, may create appraisals for each member of the project

Who are the members of a project?

Members come from any part of the organization and are often self-selected volunteers

What are the advantages of project-based organization?

• More responsive to market changes

• Using experts from across the org can create new ideas and improve productivity

• Good for highly complex and strategic projects

What are disadvantages of project-based organization?

• Can end up isolating members who work outside of normal area

• Differences in culture between members

• Difficulties in prioritizing work

• Feel demotivated due to more work and pressure

What is a shamrock organization?

An organization with 3 types of workforce, profession core/core workers, contingent workers/peripheral workers, and outsourced vendors/contractual fringe

Who are professional core/core workers?

Full-time experts that are essential for businesses to meet objectives, mission, and vision

Who are contingent workers/peripheral workers?

Part-time staff, seasonal workers, flexitime workers, or portfolio workers who do routine jobs

Who are outsourced vendors/contractual fringe?

Individuals or other organizations hired on a contract to carry out specific, non-core roles (security guards, cleaners, catering, accounting, or marketing)

How can a shamrock structure make a business more competitive?

• Use peripheral workers to avoid stress and cost of redundancies

• Only have core workers for core business activities

• Outsource for non-core functions

What is scientific management?

Making decisions and problem solve by gathering necessary info/data and analyzing it

What does scientific management answer?

“Where are we now?”, “Where do we want to be?”, and “How do we get there?”

What is the benefits of scientific management?

Objective, rational, logical, minimizes risks