Human Resources - business

The Strategic Role of Human Resources

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Human Resource Management (HRM):

refers to management of the total relationship between an employer and employee in order to achieve the strategic goals of the business. It may also be referred to as employment relations, industrial relations or workplace relations.

Businesses need to continually examine ways to improve competitiveness and profitability. Consequently, an increasing number of businesses take a strategic (or big picture) approach to managing employees by:

• seeing an effective workforce as an asset and a way of adding value (eg. superior customer service, greater efficiency) to their business performance;

• using human resource management strategies to retain, reward and motivate effective and skilled employees to achieve the business's objectives.

Interdependence with other Key Business Functions

1.Human resources and marketing

2.Human resources and operations

3.Finance relies on human resources

1.Human resources and marketing

• Marketing needs HR to hire staff for research, product development, sales, and customer relationship building, which helps increase customer loyalty and competitiveness.

• Human resources depend on marketing to boost product sales and business growth, which in turn increases the need to hire more employees.

2.Human resources and operations

• Operations depends on HR to hire staff, manage supply chains and quality, and ensure compliance with WHS and anti-discrimination laws. Strong employee relations can lead to higher productivity.

• Human resources relies on Operations to produce quality goods that support business growth, allowing for more hiring and training. HR also counts on Operations to follow workplace regulations like the WHS Act 2011.

3.Finance relies on human resources

• Human resources recruits finance staff who manage cash flow, allocate funds to departments, and ensure financial control. Effective HR policies can lead to higher profits, rising share prices, and long-term business growth.

• HR relies on finance to fund recruitment, training, motivation (e.g. bonuses), and separation processes like redundancy. Efficient employees across departments can give the business a competitive edge.

Outsourcing human resource functions

• Benefits: Focus on core business, cost savings, access to global talent, and improved service quality.

• Risks: Higher costs, reduced quality, coordination challenges, limited oversight, and delayed issue detection.

• Outsourcing may also reduce a business’s competitive advantage if not managed carefully.

Using contractors - domestic, global

A contractor is an external provider hired for specific tasks.

• Benefits: Offers flexibility, no long-term commitment, suitable for both process (e.g. food prep, recruitment) and project outsourcing (e.g. HR, marketing, IT).

• Risks: Can be reduced through clear contracts covering responsibilities like superannuation and insurance.

Domestic subcontracting

• Advantages:

  • Cost-effective due to flexibility and no long-term employment obligations.

  • Useful during economic downturns (e.g. 2020 recession) when businesses can cut costs easily.

  • Fixed pricing offers budget certainty.

  • Avoids overhead costs of hiring in-house staff.

  • Brings in fresh ideas and improves productivity and quality.

Global subcontracting

• Advantages:

  • Lower labour costs due to wage differences.

  • Larger talent pool and legal flexibility in different countries.

  • Helps firms understand global markets before expanding.

  • Example: Apple uses global contractors to reduce production costs.

• Risks:

  • Hard to control quality and reliability.

  • Cultural/language barriers may affect service.

  • Security risks (e.g. data leaks, client poaching).

  • Legal issues due to foreign laws.

  • High staff turnover and possible decline in service quality.

Stakeholders

any person or group that has an interest in the business or who effected by the business's activities.

Employers

• Responsibilities: Pay workers, ensure safe working conditions, follow WHS laws, provide workers' compensation.

• Goals: Maintain a good relationship with employees to boost productivity, flexibility, and profit.

Employees

• Needs: Fair wages, job security, workplace safety, input in decisions, training, and career growth.

• Concern: Without these, businesses risk losing skilled and motivated staff.

Employer Associations

• Role: Represent employers (e.g. Business Council of Australia).

• Services: Provide support with contracts, legal changes, negotiations, and discrimination cases.

• Goal: Improve workplace productivity and efficiency to lower costs and maximise profit.

Unions/Employee Association

• Role: Represent workers (e.g. Independent Education Union).

• Goals: Advocate for fair pay, safe working conditions, no discrimination, and job security for members.

Government organisations

• Roles:

  • Fair Work Commission (FWC) sets minimum wages, working conditions, and resolves disputes.

  • Safe Work Australia / SafeWork NSW ensures workplace safety.

  • Australian Human Rights Commission addresses discrimination.

• Goal: Prevent major human resource (HR) problems in workplaces through laws and oversight.

Society

• Expectations:

  • Safe and healthy working environments.

  • Less offshoring of jobs (to reduce unemployment locally).

  • Fair treatment of women, Indigenous Australians, and people with disabilities in the workplace.

Legal Influences

There are a number of laws and regulations (legislation) which affect HR.

The employment contract creates obligations for both employer and employee

Laws and regulations

• Employment contracts create legal obligations between employers and employees, governed by both common law (judicial decisions) and statute law eg- FAIR WORK

• HR is regulated by laws covering:

  • Workplace conditions (Fair Work Act 2009)

  • Workplace health and safety (WHS laws)

  • Anti-discrimination and equal employment opportunity (EEO) laws

• The Fair Work Act 2009, introduced by the Rudd government, modernised industrial relations by shifting toward:

• There has been a shift from a centralised system (wages set by tribunals/government) to a decentralised system, where wages and conditions are often determined by enterprise-level bargaining (negotiated in individual workplaces).

The Current Legal Framework

1. Employment contract

2. Minimum employment standards

3. Awards/modern awards

4. minimum wage rates

5. enterprise agreements

6. Individual common law employment contracts

1. Employment contract

A legal agreement between an employer and an employee that outlines the terms and conditions of employment, such as pay, hours, duties, superannuation, bonuses and benefits, and rights.

Obligations (responsibilities) of Employers

• Duty of Care - to take reasonable

• Duty to pay agreed wage

• Duty to provide work

• Right to dismiss - for misconduct,

Obligations (responsibilities) of Employees

• duty to obey unlawful commands

• duty to work with skill

• duty to disclose relevant information

• duty to act in good faith

2. Minimum Employment Standards:

Under the Fair Work Act 2009, all Australian workers are entitled to 13 National Employment Standards (NES), which include conditions like maximum weekly hours, different types of leave, flexible work requests, and notice of termination. These standards act as a basic safety net, mainly to protect low-paid employees.

3. Awards/modern awards

Modern Awards are official documents that set minimum work conditions for specific industries or jobs. They cover the National Employment Standards (NES) and are adjusted regularly by the Fair Work Commission and the National Minimum Wage Panel. They serve as a foundation for negotiating workplace agreements and simplify previous complex awards by reducing unnecessary rules. Employees can report any violations of awards to the Fair Work Commission.

4. minimum wage rates

There is a legally set minimum wage for employees not covered by awards or enterprise agreements. The Fair Work Commission reviews and updates the minimum wage annually, effective from July 1 each year. Employers must not pay less than this minimum wage.

5. enterprise agreements

Enterprise Agreements (EAs) are agreements made between an employer and a group of employees about pay and work conditions. These usually offer better benefits than the basic rules and last up to 4 years. A union often helps employees negotiate these agreements.

Individual Common Law Contracts are agreements between an employer and a single employee about their salary and work terms. They are personal contracts usually used for professional or managerial jobs.

**Individual Flexibility Arrangements (IFA):

allow an employer and employee to come to an arrangement that varies the Modern Award or Enterprise Agreement in order to address individual circumstances.

There are 3 main EAs under the Fair Work Act (2009):

1. Single Enterprise Agreements - are between one employer and a group of employees.

2. Multi Enterprise Agreements - are between 2 or more employers and a group of employees (eg. franchise chain).

3. Greenfields Agreements - are for new business enterprises which have not yet employed workers for normal operations. he agreement may be single or multi enterprise and may involve one or more trade unions.

6. Individual common law employment contracts

These are private contracts for high-earning professionals and managers, detailing pay and benefits. They must follow basic legal workplace rules but can be different from standard industry awards.

Comparing the process of negotiating enterprise/collective agreements with the negotiation of individual contracts

An enterprise agreement is a deal made between a company and its workers (or their representatives) about pay and work conditions. This deal is usually made together by both sides and lasts up to 4 years. It includes rules about how everyone should behave, how to solve problems, and what happens if big changes come. It makes sure workers have fair conditions that are better than or equal to the basic legal standards.

VS

In contrast, every employee also has an individual contract with their employer, which must meet legal minimum standards like the National Employment Standards and minimum wage. This contract sets the specific rights and duties for each employee.

The process of making an enterprise agreement

Other types of Employment Contracts

1. Independent contractors

2. Permanent

3. Part time (work < 38 hours per week)

4. Casual

1. Independent contractors

They work on specific jobs for a set time (like 3 months). They aren’t employees and handle their own taxes, superannuation, insurance, and leave. Employers like them because the contractor takes the risk, like if they get sick.

2. Permanent

They work full-time with regular hours and ongoing employment.

3. Part time (work < 38 hours per week)

They work less than full-time hours but regularly, and get leave and benefits based on how much they work compared to full-time.

4. Casual

They work short-term or seasonal jobs, paid hourly with a higher rate to make up for no leave or job security. Many casuals are students or young workers. Employers like casuals because they cost less overall. If casuals work regularly for a long time, they may get some benefits like superannuation or parental leave.

WHS laws and regulations

refer to promotion of a safe and healthy workplace for all employees.

• Employers must:

  • Provide a safe work environment and system.

  • Take out workers compensation insurance.

  • Ensure visitors and non-employees are not at risk.

  • Create a health and safety committee if there are 20+ employees and it’s requested or ordered.

  • Report serious injuries or deaths to SafeWork NSW.

• Employees must:

  • Take reasonable care for their own and others' safety.

  • Follow safety rules and cooperate with WHS procedures.

• SafeWork NSW:

  • Can inspect workplaces and stop work if needed.

• Penalties:

  • Up to $3.5 million fine for companies.

  • Up to $50,000 fine and/or jail for individuals.

Workers' compensation

refers to the money a worker receives for injury or illness that follows a work accident. It is also provided to families of injured employees when the injury/disease was caused by, or related to their work.

Anti-Discrimination:

• Discrimination is treating someone unfairly because of things like:

  • Race

  • Gender (sex)

  • Disability (physical or mental)

  • Age

  • Marital status

  • Sexual orientation

• It is illegal to discriminate for any of these reasons.

• Key laws that prevent discrimination include:

  • Racial Discrimination Act 1975

  • Sex Discrimination Act 1984

  • Disability Discrimination Act 1992

  • Age Discrimination Act 2004

  • Workplace Gender Equality Act 2012

• Australian Human Rights Commission (AHRC) helps enforce these laws.

Equal employment opportunity

• EEO means everyone should be treated fairly in hiring, training, promotions, and pay.

• The Workplace Gender Equality Act 2012 promotes equal outcomes for men and women at work.

• Affirmative action refers to steps businesses take to:

  • Remove discrimination

  • Improve opportunities for disadvantaged groups (e.g. women)

Legislation/law affecting employment

Economic Influences

During a Boom (Strong Economy):

• More jobs available due to high production and sales.

• Job security increases.

• Employees have stronger bargaining power – can ask for higher wages and benefits.

• Employers offer rewards to motivate staff → boosts productivity.

• More money available for training and career development.

• Businesses may invest in technology, replacing workers (with redundancy payouts if needed).

During a Recession (Weak Economy):

• Businesses may cut staff (downsizing/redundancies) to reduce costs.

• Stricter control over wages and benefits.

• Less job security and limited opportunities for wage increases or promotions.

Structural change

Structural change occurring in the economy has led to a rapid employment growth in the services sector (including property, business, retailing, trades, tourism, educational services, hospitality, and community and personal services) which accounts for 86% of total employment.

In manufacturing, removal of protective tariffs (taxes on imported goods to Australia) has Ted business exposure to international competition, causing a fall in employment due to rapid technological change (separation).

Globalisation

• Increased global competition has led businesses to:

  • Restructure operations.

  • Outsource or subcontract non-core tasks.

  • Relocate production overseas to reduce labour and compliance costs (separation strategy).

• To stay competitive, businesses must:

  • Attract and retain skilled staff.

  • Improve productivity, training, and customer service.

  • Support multicultural workforces.

  • Focus on innovation and quality (acquisition, development, and maintenance strategies).

Technological influences

• Changes in products and production methods have:

  • Created new jobs and made others redundant (→ separation).

• Remote work has increased with better tech access:

  • Allows work anytime, anywhere, but may affect work-life balance (→ maintenance).

• Employees need retraining to use new technology:

  • Training can be costly and resisted, but improves productivity and profits (→ development).

Social (changes in society) Influences

1. Social influences come from attitudes, values and beliefs in communities/societies.

   1. Changing work patterns

   2. Living standards

1. Changing work patterns

• Rise in casual, contract, and part-time work reduces costs.

• Flexible hours and more women in the workforce require supportive, discrimination-free workplaces.

• Growth in service industries, decline in unskilled jobs → need for retraining.

• Greater job mobility, career flexibility, and multiculturalism → need for inclusive HR policies.

• Deskilling/multiskilling → workforce downsizing.

• Early retirement and ageing workforce → need for flexibility, training, and anti-discrimination.

2. Living standards

Australians expect jobs that:

• Are safe and secure (→ WHS).

• Offer regular wages for a good standard of living.

• Include leave entitlements and superannuation for retirement.

• Support a good work-life balance.

Ethics and Corporate Social Responsibility

refers to the responsibility of businesses to act in a morally right and socially responsible way.

An ethical employer will:

• Provide a safe, positive work environment to motivate and retain staff.

• Offer job security and fair rewards to boost performance.

• Promote teamwork and good relationships.

• Create a Code of Conduct to support ethical behaviour.

• Support the community, building trust with both employees and customers.

ethical issues in the workplace

The four main elements of the human resource cycle

1. Acquisition

the process of attracting and recruiting the right employees for roles in a business.

what does it involve

• Job analvsis: determines the skills and attributes an employee would need to do the job effectively.

• Job design (job description): shows a potential (possible) applicant how the job will be done.

• Recruitment: is the process of locating and attracting the right quantity and quality employees to apply for employment vacancies.

• Emplovee selection: involves gathering information about each applicant and using that information to choose the most appropriate applicant.

• Emplovee placement: involves locating the employee in a position that best utilises the skills of the individual to meet the need of the business.

2. Development

concerned with improving employee skills and knowledge.

The development of emplovees (human resources) involves:

1. Induction Programs:
Help new employees settle into their job by introducing them to their role, co-workers, the business, and its culture. This builds confidence, positive attitudes, and strong workplace relationships.

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2. Training:
Improves employee skills to adapt to changes, increase productivity, and meet business goals. It boosts job satisfaction and flexibility, but can be expensive and disruptive. If businesses don’t train staff, it can lead to higher turnover, absenteeism, and accidents.

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3. Organisational Development:
Modern businesses use flatter, team-based structures with fewer management layers. These improve communication, idea-sharing, responsiveness, autonomy, and efficiency. However, they may reduce opportunities for promotion.

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4.. Mentoring and Coaching:

• Mentoring transfers knowledge and skills from experienced staff to potential future leaders.

• Coaching focuses on improving job performance and addressing weaknesses.

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5. Performance Appraisal:
A formal process to evaluate employee strengths, weaknesses, and potential. It helps identify training needs, promotion suitability, and can signal if recruitment or training processes need improvement.

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3. Maintenance

concerned with building a long - term relationship with employees using strategies such as reward management, performance appraisal, work health and safetv.

The maintenance of emplovees (human resources) involves:

1. Reward (Benefits) Management:
Offering competitive pay and benefits (both financial and non-financial) helps attract and retain quality employees. Poor rewards can lead staff to leave for better opportunities. Some benefits may be taxed (Fringe Benefits Tax).

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2. Performance Appraisal:
Provides feedback on employee performance, recognizing good work and identifying areas for improvement. It's also used to assess readiness for promotion and guide professional development.

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3. Effective Communication Systems:
Using tools like meetings, newsletters, surveys, and emails improves communication, prevents conflict, and builds a positive workplace culture.

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4. Legal Compliance & CSR:
Businesses must ensure a safe, fair workplace free from discrimination and harassment, aligning with legal and ethical responsibilities.

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5. Family-Friendly Workplaces:
Allowing flexible hours or remote work supports employees in balancing work and family life.

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6. Employee Participation:
Involving employees in decision-making boosts motivation, improves service, and enhances business competitiveness.

Features of a family friendly workplace

4. Separation

the process where an employee leaves the business, either voluntary (eg. resignation, retirement or voluntary redundancy) or involuntarily (involuntary redundancy or dismissal).

The separation of emplovees (human resources) involves:

1. Redundancy and Retrenchment:
Occurs when a job is no longer needed due to technology, restructuring (redundancy), or reduced demand (retrenchment). Employees are usually entitled to notice and redundancy pay under awards and agreements.

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2. Dismissal:
Happens due to poor performance or misconduct. Employers must give warnings, chances to improve, and clear reasons. Unfair dismissal is not allowed—employees can appeal through the Fair Work Commission.

Unfair dismissal occurs where the Fair Work Commission finds that:

• the employee was dismissed, and

• the dismissal was harsh, unjust or unreasonable, and

• the dismissal was not a case of genuine redundancy.

Employees are able to claim unfair dismissal if:

• the business has > 15 employees, either full-time or the equivalent, who have been employed for more than six months. This includes casuals with six months service.

• the processes for dismissal have not been carried out correctly.

strategies in human resource management

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Leadership style:

refers to the way managers interact with others and it directly influences employment absenteeism and efficiency.

Leadership style continuum

Leadership styles

1.Autocratic leadership (linked to classical management approach)

2.Participative leadership (linked to behavioural management approach)

1.Autocratic leadership (linked to classical management approach)

• Managers make all decisions with little to no input from employees.

• Best suited to unskilled or repetitive work (e.g., factory jobs or the military).

• Can lead to higher absenteeism and staff turnover due to lack of flexibility.

• Often linked with transactional leadership, where compliance is rewarded financially.

• Suitable for environments where quick, top-down decisions are needed.

2.Participative leadership (linked to behavioural management approach)

• Managers consult and involve employees in decision-making.

• Encourages open communication and teamwork.

• Increases job satisfaction, productivity, and employee ownership of outcomes.

• Works best with skilled, motivated employees and when quality is a priority.

• Not ideal when staff are inexperienced or disengaged; can slow decision-making.

• Helps reduce staff turnover and supports long-term employee relationships.

Job design - general or specific tasks

Job design is a process where a set number and variety of tasks are combined to make up a job. For example, if you and your friend were to work in a hamburger restaurant would you be responsible for preparing the food, taking orders from customers, packaging the food and taking the customer's money (general tasks) or would it be better for one person to specialise in food preparation and the other specialise in customer service (specific tasks)?

-The job design depends on the business - in a factory producing mobile phones and computers it is better for employees to specialise in specific tasks.

Methods of job design

1. Job rotation

2. Job enlargement

3. Job enrichment (vertical concept)

4. Self - managing teams

1.Job rotation

where employees move from one task to another so that there is some variation and a task doesn't become boring.

Advantages of Job Rotation:

• Multiskilling: Employees gain a wider range of skills, reducing the need to hire more staff (cost-saving).

• On-the-job training: Cuts training costs.

• Reduced boredom: More variety increases motivation and productivity.

• Greater flexibility: Easier to manage staff absences or turnover.

• Lower theft risk: Regular movement reduces opportunity for misconduct.

• Improved problem-solving: Employees understand how different tasks affect each other, enabling better issue resolution.

Disadvantages of Job Rotation:

• Lower productivity initially: Employees may struggle with unfamiliar tasks.

• Short-term disruption: Rotation can interrupt workflow.

• Employee resistance: Some may be unwilling to learn new skills.

2. Job enlargement

adds more tasks at the same level of responsibility to a role. This increases variety, helps prevent boredom, and keeps employees more engaged and productive without increasing the complexity of the job.

3. job enrichment

gives employees more challenging tasks, along with greater responsibility and freedom. It boosts motivation by allowing workers to make decisions and use creativity, leading to higher satisfaction and performance.

4. Self - managing teams

work with little supervision and decide how and when to complete tasks. This participative approach makes employees feel trusted and valued, improving teamwork, motivation, and productivity.

Recruitment

is the process of locating and attracting the right quantity and quality employees to apply for employment vacancies. Businesses recruit employees through email, social networking sites (eg. Facebook), company websites, radio, television and word of mouth.

Internal recruitment

involves filling job vacancies with people from within the business. Existing employees may be invited to apply through intranet postings, staff records, promotion lists, word of mouth, email, employee referrals.

External recruitment:

involves filling job vacancies with people from outside the business through newspaper advertisements, online advertisements and referrals through recruitment agencies, company websites, trade unions, trade shows, management networks, professional associations, schools, radio and television.

Advantages and disadvantages of internal and external recruitment

General or specific skills

• General skills: flexibility, teamwork, motivation, leadership, ability to work independently, and work under pressure.

• Important because many jobs require varied tasks and independent work.

• Specific skills: specialized knowledge needed for certain fields (e.g., medicine, accounting).

• Specialists may also need general skills for broader roles (e.g., executives).

• HR must decide whether to recruit for general or specific skills based on the job.

Training and Development – Current or Future Skills

• Training: improves current skills to enhance job performance.

• Development: builds skills for future business needs and career growth.

• Helps retain experienced employees and keeps the business competitive.

• Businesses must evaluate skill needs and decide which skills to develop internally.

Performance management

is a process of evaluating and managing the performance of the employee, or the team, to achieve the best outcomes for the business.

Developmental performance management:

• Helps employees struggling with specific work aspects through training and coaching.

• Focuses on using data to develop employee skills and abilities.

• Aims to improve effectiveness, overcome weaknesses, and prepare for promotion.

• Achieved through ongoing, empathetic feedback and open discussions.

Administrative performance management:

• Involves collecting data and keeping records on employee performance.

• Helps manage HR functions more efficiently aligned with business goals.

• Provides information after appraisals for decisions on training, rewards, pay, and improvements.

• Large businesses often link salaries to performance, rewarding high performers more.

Rewards - monetary and non - monetary

Many businesses use a combination of financial and non - financial rewards to motivate and recognise work performance. The total remuneration (payment or rewards) package a worker receives is made up of:

Financial rewards (monetary/S)

wage, salary, sales commission, health insurance, allowances (for car, mobile, housing, uniform, travel etc).

Non - financial rewards (non - monetary)

other extra benefits such as company car (fringe benefits), larger office (status related benefits), flexible work schedules, job variety (intrinsic rewards important to an individual), social activities etc.

Other

legal entitlements such as superannuation (retirement fund) contribution, sick and holiday leave.

Individual or group

Rewards are often related to individual performance, however, this can lead to conflict and rivalry between employees.

-Increasing use of group - and team - based structures encourage cooperation between employees but have made it difficult to distinguish (determine, decide) the performance of individuals working in teams.

Performance pay

is a means of motivating and rewarding employees through monetary compensation when they perform their duties in a manner that equals or exceeds a set of pre-determined goals.

Global - costs, skills, supply

• Businesses must decide whether to hire locally or globally, based on cost and skills.

• Lower labour costs overseas (e.g. in Vietnam and China) make them attractive for manufacturing.

• Services like call centres, accounting, and legal processing are often outsourced to India due to its highly educated, English-speaking workforce.

• Skill shortages (e.g. in accounting and trades) occur both domestically and globally.

• Some businesses retrain existing employees from other fields to fill high-demand skill areas.

Staffing Approaches

• Polycentric Staffing

• Geocentric Staffing

• Ethnocentric Staffing

• Polycentric Staffing:

• Hires locals for positions in foreign subsidiaries while keeping home-country staff in corporate HQ.
  Pros: Cost-effective, good local market understanding, supports local jobs.
  Cons: Limits international experience for local staff.

• Geocentric Staffing

• Hires the best person for the job, regardless of nationality.
  Pros: Builds a globally experienced management team.
  Cons: High costs due to relocation, training, and legal barriers.

• Ethnocentric Staffing

• Fills positions in foreign branches with staff from the home country.
  Pros: Ensures control and consistency with the parent company’s values.
  Cons: Can hinder cultural understanding and local adaptation.

Workplace disputes

• Wage Demands

• Working Conditions

• Management Policy

• Political/Social Issues

• Wage Demands

Disputes arise from disagreements over pay increases or how wages are determined

• Working Conditions

Issues related to health, safety, comfort (e.g. poor equipment, lack of aircon or amenities) can cause conflict.