VCE business unit 3 aos 2

Human resource management

the responsibility for maintaining the relationship between employees and business

• small to medium businesses, responsibility of owners

• larger businesses, responsibility of HR manager

• responsible for ensuring that business is able to get the best out of employees

relationship between HR and business objectives

• Successful management of employees should contribute to meeting business objectives

• HR management area needs to have strategies to ensure decisions that affect employees are decisions that enhance the objectives of the business.

Maslow's hierarchy of needs

a motivational theory proposing that employees are driven by a sequential five-level pyramid of needs.

• important because it suggested that businesses have to create workplaces that attempt to satisfy all the needs of an employee

Physiological

• bottom of the pyramid

• refers to the need for air, food, water and health

Safety

• second in the pyramid

• need for safety, shelter and stability

• safe working conditions

• job security

Social

• third in pyramid

• need for love, belonging and inclusions

• teamwork

• supportive management

• involvement in decision-making

Esteem

• fourth in pyramid

• need for self-esteem, power, control, recognition

• responsibility

• promotion

Self-actualisation

• top of pyramid

• need for development, creativity and growth

• creative

• interesting jobs

• opportunities for advancement

Strengths of Maslow

• allows management to develop an understanding of individual needs

• allows management to be aware that employees will be at different stages of development and that they will need to be motivated using a variety of methods

• fairly easy to understand

Weaknesses of Maslow

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

• The manager making use of theory may struggle to identify the stage at which each individual employee is – making it difficult to determine an appropriate strategy to motivate each employee.

• very simplistic, and one need is required to be satisfied prior to moving to a different need

Goal-setting theory (Locke and Latham)

Employees are motivated to achieve goals they have helped to set. The goals should be clear, specific and challenging yet not overwhelming to the point that they are impossible to achieve.

Clarity (goal setting)

• Giving goals clarity means making them unambiguous and measurable

• Goals should be simple, clear and specific

• important that everyone understands what is to be expected of them

Challenge (goal setting)

• The opportunity to complete a task that is highly valued by the owner or management of a business can provide a level of challenge to motivate an employee

• no point in setting a goal that is beyond the capabilities of the employee

• The goal also shouldn't be too easy and must relate in someway to business objectives

Commitment (goal setting)

• In order to ensure the employee will actively pursue the achievement of a goal, there must be a commitment on the part of the employee

• The greater input from the employee, the more likely it is that the employee will commit to it.

Feedback (goal setting)

• Feedback provides opportunities to offer recognition for progress achieved, to make adjustments to the goal if necessary and to make expectations clear

• Feedback can be informal

• For longer-term and more complex goals, formal feedback sessions may be required to ensure important details are communicated

Task complexity (goal setting)

• Goals should be challenging but not overwhelming

• Tasks set to achieve the goal should be straight forward enough that employees feel that they are able to fulfil them

Strengths of goal-setting theory

• Setting goals that are clear and specific, challenging but not overwhelming, will motivate employees and improve their performance, thereby contributing to business objectives

• Staff will perform at a higher standard due to their clear and specific goals, leading to a higher rate of productivity

• Better relationships between management and employees will occur as managers work with each employee to collaboratively set goals and provide feedback

weaknesses of goal-setting theory

• Individual employee goals may clash with each other or with business objectives

• Employees may focus so intently on their goals that they ignore other aspects of their job

• Failing to meet a goal could be detrimental to an employees confidence

Four drive theory (Lawrence and Nohria)

identifies the 4 main drives that shape the way in which all humans think and behave

Drive to acquire

includes the desire to own material goods and encompasses the desire for status, power and influence

drive to bond

includes the strong need to form relationships with other individuals and groups

drive to learn

includes our desire to satisfy our curiosity, to learn new skills and to explore the world around us

drive to defend

the desire to remove threats to our safety and security and to protect what we regard as ‘ours’

Strengths of the 4-drive theory

• drives work independently, allowing management and employees to be flexible in the behaviours or strategies implemented

• very adaptable to complicated or intricate environments

• will improve behaviour

Weaknesses of the 4-drive theory

• Other drives beside the stated 4 may exist

• Some of the workplace applications involve competition between employees, which can have detrimental effects

Performance-related pay

means of rewarding employees through monetary compensation when they perform duties in a manner that exceeds or equals set standards

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 business

• Rewards are generally predictable and easily calculated

• will only apply when there is an actual performance improvment

disadvantages of performance-related pay

• Other employees doing similar work may expect similar rewards, even if their performance isn't as good, which can lead to conflict.

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

• Not all employees will be motivated by pay

• If the value of rewards isn't maintained or increased consistently, it can lead to dissatisfaction

Career advancement

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

advantages of career advancement

• can provide a means of retaining valuable employees

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

• Promoted employees are likely to feel that they contribute more to the business which results in increased productivity

disadvantages of career advancement

• Promotion positions cannot be created and need a purpose

• Conflict can arise due to the limited number of promotion positions

• Employees may be promoted beyond their capacity

• resentment of other employees

investment in training

refers to the direction of finances or resources, such as time, into the teaching of skills to employees

advantages of investment in training

• indicates to employees that the business values their contribution and will support them

• benefits business by improving the skills of employees

• may improve employee retention and loyalty of staff

• can satisfy theories

disadvantages of investment in training

• Training can be wasteful unless it leads to something such as promotion

• The business may be unable to afford costs of training

• Training can be poor and unmotivating if not properly conducted

support strategies

the assistance or services provided by the business to help employees cope with difficulties that may impede their work performance

advantages of support strategies

• Support can be provided with little to no cost

• helps develop meaningful professional relationships

disadvantages of support strategies

• may be difficult to find reasons to support and encourage some employees

• dependence on support

• requires business to have a positive corporate culture

Sanction strategies

Sanction is a penalty on form of discipline imposed on an individual

Advantages of sanctions

• Sanctions for poor behaviour in the workplace can motivate some workers to improve their work performance

• may quickly stop inappropriate behaviour of some employees

Disadvantages of sanctions

• Excessive emphasis on sanctions can reduce employee sense of belonging

• can cause conflict between management and staff

• only a short-term motivator

On-the-job training

• occurs in the workplace and uses the equipment, machinery and documents present in that workplace

• Training may be provided by an experienced co-worker or by a leader or manager with particular or specific expertise

• Sometimes external providers may be brought into the business to provide training

advantages of on-the-job training

• cost-effective, as there are no travel expenses or other costs

• Employees can work while training

• Trainees use the actual equipment required to do the job

• familiar work environment

• immediate feedback from experienced colleagues

disadvantages of on-the-job training

• The quality of the trainer may vary (everyone can't teach)

• Bad habits of older staff may be passed to younger employees

• The learning environment may be noisy

off-the-job training

• training away from the workplace

• involves sending individuals or groups of employees to a particular specialised training institution

• Employees can gain a recognised qualification to assist them in performing more effective and efficiently

advantages of off-the-job training

• availability of a wider range of skills and qualifications than those in the workplace

• Outside experts and specialists can provide broader experiences

• usually more structured and organised, with clear assessment processes

• can provide recognised qualification

• fewer distractions

disadvantages of off-the-job training

• may be too theoretical without access to workplace tools or equipment

• more expensive, with fees charged, travel costs

• lost working time

• may not relate directly to exact skills required in the workplace

Performance management

A focus on improving both business and individual performance through relating business performance objectives to individual employee performance objectives

management by objectives

A 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.

• Each employee should be aware of the objectives of the business, as well as their own responsibilities in achieving these objectives

advantages of management by objectives

• Employees involved in setting goals and choosing a course of action to be followed to achieve those goals are more likely to work productively and fulfil their responsibilities

• Both manager and employees are likely to know what is to be expected of them, reducing ambiguity and confusion in relation to roles.

• can highlight areas where an employee has training needs which can lead to career development

• improvement in communication because of the awareness of business objectives

disadvantages of management by objectives

• can be time-consuming

• Management by objectives is not useful for all employees

• Failure to meet objectives may increase lack of motivation

• Staff who meet objectives may expect pay rises which can be expenive for business.

Appraisal

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

Advantages of performance appraisal

• facilitates communication and allows positive relationships to develop between management and employees

• Feedback can help employees improve their performance, and employees can be provided with clear areas for improvement

• Information from appraisals can assist managers when making decisions about pay increases, promotions or dismissal

disadvantages of performance appraisal

• can be time-consuming, particularly if the cycle becomes shorter

• can be stressful for both managers and employees

• Staff who meet performance standards may expect a pay rise or promotion – this can be expensive for business

Employee self-evaluation

Self-evaluation is a process whereby employees carry out self-assessment, based on a set of agreed criteria. It assumes that employees are able to assess their contribution to the business, their own strengths, weaknesses and how they can improve their performance.

advantages of employee self-evaluation

• allows employees to be actively involved in the process of performance management and assists them in understanding their role in the business

• allows employees to assess their own contribution to the business.

• can highlight the need for training and allows employees to request training opportunities to assist them to improve work performance and productivity

disadvantages of employee self-evaluation

• Employees may overstate their own performance when completing a self-evaluation

• Some employees may feel ill-equipped to undertake a self-assessment

• The provision of training will increase expenses for business

Employee observation

A 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

• allows a manager to gain a broad range of observations on an employee from a variety of different sources to provide a comprehensive picture of employee performance

• very useful in identifying strengths, weaknesses and evaluating skills such as leadership, teamwork and interpersonal abilities

• good feedback

disadvantages of employee observation

• Staff may feel stressed when they know they are being observed

• not always valuable in assessing technical skills or the achievement of objectives, as these may not always be fully understood by every participant

• Staff who receive positive feedback may expect a pay rise or promotion, which can be expensive for the business.

Termination

When an employee leaves a particular workplace, ending the employment relationship. Termination is usually managed by the human resource manager, ensuring that the employee is treated fairly and within the law.

can be either voluntary or involuntary

Retirement — voluntary

when an employee voluntarily leaves the workplace and workforce

Resignation - voluntary

Voluntary ending of employment by the employee ‘quitting’ their job.

Redundancy – Voluntary or involuntary

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

• Unless the existing employee can be redeployed (given another job or retained for another job), the employee will lose their job

• Voluntary redundancy occurs when employees are informed of the situation and given the opportunity to nominate themselves for redundancy

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

Dismissal – Involuntary

• Occurs when the behaviour of an employee is unacceptable and a business terminates their employment.

• The most serious form of dismissal is summary dismissal – when an employee commits a serious breach of the employment contract. (No notice is required for summary dismissal.)

• dismissal on notice (poor performance)

Ethical considerations when terminating

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

• can include any wages, salary owing, as well as leave entitlements such as accrued annual leave and long-service leave

Transition considerations when terminating

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

• Employers often provide advice and support to employees leaving the business. It is important that the advice and support provided are generally provided above and beyond the requirements of law.

Workplace relations

The interactions between employees and employers, 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.

• The goal of workplace relations is to achieve positive relationships in which employees are satisfied with their pay and work conditions.

Employers

• Workplace relations issues are among the responsibilities handled by business owners as the employer

• Larger businesses' work relations are dealt with HR managers

Employees

• expected to contribute through their work efforts to the achievement of business objectives

• perform duties with proper care and diligence

• following safety procedures

Human resource managers

• negotiating employment agreements with employees and their representatives

• training other managers and supervisors to facilitate the implementation of agreements within their areas of responsbility

• ensuring the implementation of all key terms of agreements

• dealing with disputes and conflict that may arise

Trade Unions

• organizations formed by employees in an industry, trade, or occupation to represent them in efforts to improve wages and the working conditions of their members

• Unions provide representation and advice to employees

• They can assist with contract bargaining

Employer associations

• organizations that represent and assist employer groups

Fair Work Commission

• Australia's national workplace tribunal that has a number of responsibilities under the Fair Work Act 2009.

• can help parties resolve workplace disputes when no agreement can be reached

• deal with applications in relation to unfair dismissal

• administer the regulation of industrial action

Awards

a legally binding document determined by Fair Work Commission that sets out minimum wages and conditions for whole industries or occupations

Advantages of Awards

• less costly for business

• less time consumed in determining appropriate terms and conditions

• less work management to complete, as allowances are already determined for each occupation

Disadvantages of awards

• provides less flexibility—cannot be customized to the needs of a workplace

• Modern awards can be complex

• Business may need to implement various different awards in the same workplace

Collective and individual agreements

workplace relations structure now in place in Australia has agreements as the means of determining the wages and conditions of most employees

Enterprise agreement

an agreement on pay and conditions of work made at the workplace level and negotiated between groups of employees and employers

Advantages of enterprise agreements

• very flexible and can be tailored to specific workplace needs

• Greater effort and contribution to productivity improvements by employees can be rewarded

• must meet the “better off overall test” (BOOT) so that employees are better off overall when conditions in the agreement are compared to the relevant award

• may be used to attract talented or highly skilled employees to the business

Disadvantages of enterprise agreements

• time-consuming to negotiate

• Conditions that are better than the relevant award may be very expensive for a business

• Varying pay or conditions of work may result in industrial action

Negotiation

a method of resolving disputes whereby discussions between the parties result in a compromise and a formal or informal agreement about a dispute

Mediation

• more formal than negotiation

• involves the assistance of a third party known as a mediator who helps parties in dispute to work towards their own agreements but does not offer suggestions or solutions

• not legally binding decison

advantages of mediation

• generally more cost-effective than other means of dispute resolution, as it usually occurs in a less formal setting

• is time effective, as disputes can be resolved within hours or a few days

• Mediation is voluntary; if both parties have agreed to it, they are both clearly willing to work towards a solution

disadvantages of mediation

• A decision made using mediation may not be legally binding on the two parties, meaning the parties do not have to conform to the decision

• not compulsory to attend mediation; therefore, parties may not attend

• One party may be stronger (most likely management); therefore, employees may feel intimidated

Arbitation

• a means of dispute resolution involving an independent third party (such as a commissioner of the FWC) hearing both arguments in a dispute and determining the outcome

• The decisions will be legally binding and will be made by the arbitator

advantages of arbitration

• A decision made by an arbitrator is legally binding and enforceable

• Arbitrations are compulsory to attend

• The arbitrator will make a final decision if the parties are unable to agree, which means the end result is not reliant on compromise between the two parties

• Disputes are solved much faster than courts

disadvantages of arbitration

• Parties have reduced control over the outcome, as the decision will be imposed by the arbitrator

• The process may be more time-consuming and more costly than other dispute resolution methods

• less effective at preserving the relationship between parties in a dispute

dispute resolution at FWC

• The FWC is the national independent workplace relations tribunal and can help parties resolve workplace disputes in a variety of ways, particularly through conciliation, mediation and sometimes arbitration

• In a conciliation at the FWC, a tribunal member brings both sides together, either in person or over the phone and attempts to help them reach an agreement

Common law action

• Legal action before the courts is open to any party involved in or affected by industrial action

• Parties may make direct claims for damages caused by the parties taking the action or for a breach of contract

• Legal action arising from employee relations issues is usually heard in the Fair Work Division of the federal court

• Legal action is ‘last resort'; businesses tend to avoid this.