Chapter 2 BM

An Introduction to Human Resources

• The human resources (employees) of a business need to be managed

• Effective human resource management is important because:

  • It ensures that the organisation has the right people in the right roles, with the right support and opportunities to succeed

  • It also helps create a positive work environment

• This will lead to higher productivity, improved efficiency and a competitive advantage

Diagram: The benefits of effective human resource management 

Effective human resource management can provide a competitive advantage

Staff as an asset and a cost

• Staff are an asset to a business as they bring knowledge, skills, and expertise to the business

  • Staff can increase productivity, drive innovation and enhance customer service - all of which contribute to the success and profitability of the business

  • Staff can help to build a positive reputation for the business through their interactions with customers, suppliers, and other stakeholders
     

• Staff also generate costs for a business, and for many businesses, staffing costs are one of the largest costs they have. These costs include:

  • Hiring and training workers

  • Managing workers as managers have to be hired

  • Paying the salaries and wages staff

  • Additional benefits, such as company cars, pensions, healthcare, etc

  • Letting workers go often requires (redundancy payments)
    

Human Resources Planning

• Human resource planning focuses on identifying how many and what kind of employees are needed

  • It looks at how employees will be

    • Recruited and deployed (used)

    • Developed and trained

    • Motivated, managed and led
       

• Staff costs can make up a large proportion of a businesses costs

  • Careful planning and objective monitoring of employee performance is a key element of effective financial and operational control

  • An Introduction to Human Resources

    • The human resources (employees) of a business need to be managed

    • Effective human resource management is important because:

      • It ensures that the organisation has the right people in the right roles, with the right support and opportunities to succeed

      • It also helps create a positive work environment

    • This will lead to higher productivity, improved efficiency and a competitive advantage

    Diagram: The benefits of effective human resource management 
    

    Effective human resource management can provide a competitive advantage

    Staff as an asset and a cost

    • Staff are an asset to a business as they bring knowledge, skills, and expertise to the business

      • Staff can increase productivity, drive innovation and enhance customer service - all of which contribute to the success and profitability of the business

      • Staff can help to build a positive reputation for the business through their interactions with customers, suppliers, and other stakeholders
         

    • Staff also generate costs for a business, and for many businesses, staffing costs are one of the largest costs they have. These costs include:

      • Hiring and training workers

      • Managing workers as managers have to be hired

      • Paying the salaries and wages staff

      • Additional benefits, such as company cars, pensions, healthcare, etc

      • Letting workers go often requires (redundancy payments)
        

    Human Resources Planning

    • Human resource planning focuses on identifying how many and what kind of employees are needed

      • It looks at how employees will be

        • Recruited and deployed (used)

        • Developed and trained

        • Motivated, managed and led
           

    • Staff costs can make up a large proportion of a businesses costs

      • Careful planning and objective monitoring of employee performance is a key element of effective financial and operational control
         

    Human Resources Metrics that are Useful to a Business

    Human Resource Metric	Explanation
    Labour Productivity	Labour productivity is a measure of output per employee over a specified period of time   Businesses aim to increase the level of labour productivity to improve competitiveness
    Labour Turnover	Labour turnover measures the proportion of employees leaving a business during a specific time period   High levels of labour turnover can indicate poor motivation, ineffective recruitment procedures or attractive alternative opportunities for workers
    Labour Retention	Labour retention measures the proportion of employees remaining with a business during a specific time period   High levels of labour retention can indicate effective motivation and recruitment procedures or few alternative employment opportunities for workers
    Absenteeism	The absenteeism rate is a measure of the proportion of staff absent from work during a specific period of time (e.g. a day, week or month)   High levels of absenteeism can cause problems Sick pay and the hiring of temporary staff to cover for those absent increases costs Output is likely to be temporarily reduced  Other staff may become demotivated if they have to cover for absent workers

    
      Internal Factors that Influence Human Resource Planning

    • There are factors inside and outside of the business which can impact on the human resources planning process

    Factors Within a Business which may Impact Human Resources Planning

    Factor	Explanation
    Business objectives & strategy	The business's goals, objectives, and long-term plans influence the required workforce skills, competencies and size E.g. Entering a new market may require changes to be made to the number and type of employees required UK cafe chain Prêt à Manger plans to double the size of its business by expanding into five new markets which will require the recruitment of at least 3,000 Team Members and Baristas by the end of 2023
    Financial situation	Budget constraints may influence decisions related to hiring, training, pay and benefits Businesses in financial difficulty may struggle to offer attractive packages to attract employees To raise their salary offer, they may have to reduce spending on training and development Alphabet plans to make significant savings as a result of slowing sales growth by reducing its global workforce by 12,000 and changing how often equipment - such as laptops used by workers - is replaced
    Organisational structure	The structure of the organisation including its hierarchy, reporting relationships and departmental divisions Changes in the organisational structure may require changes to workforce planning such as redeployment, redundancy or additional recruitment For example, Consumer goods company Unilever announced its intention in January 2022 to cut 1,500 jobs as part of a restructure of its global operations
    Labour relations	The relationship between managers and workers, and whether workers are members of trade unions can have a significant impact upon the workforce planning process Where worker organisation is strong, human resources are more likely to meet the demands of employees with regards to pay and conditions In 2022 unionised workers at the Port of Felixstowe who had engaged in a series of disruptive strikes were rewarded with a pay increase of 15.5 per cent over two years Where there is little or no worker organisation, human resources are likely to have more flexibility over these changes
    Organisational culture	The organisational culture may include a strong work life balance resulting in a higher likelihood that additional workers will be recruited when the demand is there A recent study by TalentLMS of U.S. tech industry employees revealed that 45% of employees who experience a toxic work environment plan to quit their job because of it

    External Factors that Influence Human Resource Planning

    • A range of factors beyond the control of a business can also impact the human resources planning process
       

    

    External factors that affect human resources planning 

    Economic conditions

    • The state of the economy, including factors such as economic growth, inflation, and unemployment rates

      • During periods of economic growth a business may need to focus on attracting and retaining staff to meet increased demand

      • During economic downturns they may need to implement cost-cutting measures such as redundancies or hiring freezes

    Labour market

    • The supply of suitable employees and the impact of factors such as skills shortages, labour mobility and immigration
      
      

      • Spain recently changed its migration laws to recruit more foreigners from overseas for industries with labour shortages and its primary focus for 2023 is to hire carpenters, plumbers, electricians and other workers involved in construction

    Technological advancements

    • Rapid technological change can disrupt industries and job roles, affecting HR planning

      • Automation, artificial intelligence (AI), and other emerging technologies can lead to changes in job requirements, skills needed and workforce composition

      • HR planning must anticipate these shifts and consider re-skilling or up-skilling to meet future workforce needs

    Legal and regulatory environment

    • Laws and regulations related to employment, labour relations, health and safety, immigration

      • In 2021 changes to employment law in Greece provided workers with the right to flexibility to the eight-hour working day where employees are allowed to work up to 10 hours on one day and fewer on another or take time off as well as the right to not have to respond to emails after hours
        

    Social and cultural factors

    • Social and cultural factors such as societal values and demographic trends

      • Workforce diversity and inclusion, flexible work arrangements, work-life balance and employee wellbeing are examples of areas where social and cultural factors are external factors that influence workforce planning

      • French laws recognise the custom for a long lunch break and provides for five weeks paid time off for employees as well as protecting the a limit of a 35 hour working week - companies can’t force employees to work overtime  and if they do they’re well-compensated for it
        

    Political factors
    

    • Changes in government policies, political stability and geopolitical factors

      • Shifts in labour laws, changing tax regulations and immigration policies and cross-border trade agreements are often political focuses which can impact human resources planning
        

      • Australia is currently experiencing a national skills shortage in a number of occupations and its governments plan to fill this gap with a combination of training local Australians and recruiting immigrants - current in-demand skills include construction, civil engineering and nursing
        

    Industry-specific factors

    • Different industries may face unique external factors

      • Healthcare organisations need to consider factors such as changing regulations, demographic shifts, and advancements in medical technology

    Competitive landscape

    • The environment in which a business competes for labour and the actions and strategies of competitors influence workforce planning

      • HR planning should consider the organisation's position in the market and align recruitment strategies so that the pay and benefits reflect that

      • In the UK businesses recruiting hospitality, health and social care workers and professional services staff and are starting to seek talent outside traditional sources by focusing on candidates’ skills and potential rather than qualifications and industry experience to widen the pool of candidates

    Recent Trends in Workplace Change

    • Both internal and external factors have contributed to a range of developments in the working arrangements adopted by businesses around the world

      • External factors include the desire amongst workers to achieve a better work-life balance and rapid technological developments

      • Internal factors differ from business to business and may include changes in organisational structure, business objectives and attitude to meeting stakeholders' needs 

    

    Recent changes in the working environment
    

    Changes in Working Patterns

    • For many years, employees were locked into a system of working from the office for the hours of 9-5

    • Recently, a number of factors have changed the working patterns of many employees
       

    Reasons for Changes in Working Patterns

    New Trend	Explanation
    Remote, Hybrid and Flexible Working	During the Covid pandemic many organisations moved to remote work setups to ensure business continuity and the safety of employees Employees worked from home and many continue to do so   Flexible work arrangements including flextime and compressed workweeks (completing hours in 4 days instead of 5) have also become more common Employees have greater control over their schedules   Many companies have adopted hybrid work models Employees work remotely for a portion of the week and come into the office for team meetings or collaborative projects
    Gig Economy and Freelancing	More individuals are opting for freelance or contract work Digital platforms have made it easier for people to find freelance opportunities and connect with clients Workers have flexibility and autonomy in choosing projects and working hours
    Emphasis on Work-Life Balance	Employees are seeking more flexible work arrangements to better integrate their personal and professional lives Employers have implemented policies that support work-life balance, such as wellness initiatives, family-friendly policies and mental health resources
    Changes in occupations	Rapid technological change has meant that some jobs have experienced significant reductions in demand Examples include telephone operators, data and word processing roles and travel agents There is an increasing demand for software programmers and digital marketers

    Changes in Working Preferences

    • Workers are increasingly moving away from the traditional pattern of a full time, continuous career with the same employer
      

    • There are numerous ways in which employees are making changes to their working patterns 
       

    

    Examples of changes to working patterns
     

    • Job sharing involves two or more employees work at different times to complete the tasks required for one job

      • Work is typically shared on a weekly basis, with job sharers communicating regularly to ensure tasks are not missed 

      • This provides employees with flexibility whilst the employer benefits from the task being completed
         

    • Employees may take a career break where they decide to stop working for a period of time before returning to work in the same career

      • New parents often take career breaks until children are old enough to commence formal education 

      • A sabbatical is a formalised career break, frequently used by employees to study or engage in other developmental activity such as travel
        

    • Downshifting involves a senior employee relinquishing their position to move to a lower-paid position with fewer responsibilities

      • Downshifting may occur when individuals change career or as workers approach retirement

    Changes to Working Practices

    • The nature of work routines has changes significantly in recent years

      • Full-time roles with permanent contracts are in decline

      • A range of alternative work routines are growing in popularity

    

    Examples of alternative working routines
     

    • Teleworking involves working at home or from any other location away from the traditional workplace

      • Advances in communications technologies have allowed workers to work anywhere with a reliable internet connection

      • Worker may attend a workplace from time to time for meetings or other essential purposes
        

    • Flexitime allows employees to work a specific amount of hours of work at times of their own choosing

      • Workers can fit work tasks around their other responsibilities such as childcare
         

    • Part-time work is where employers work for fewer hours than those expected in a full time role
       

    • Employees on temporary contracts work for a business for a specific period of time, often through an employment agency
       

    • There are increased calls for businesses to offer the opportunity for employees to fulfil hours of work over four days of the week, rather than five

      • Between 2015 and 2019 Iceland ran a large 4-day workweek pilots with close to 2,500 people participating

      • The trial was considered an overwhelming success among researchers, with employees reporting improved well-being, work-life balance and productivity

  • Reasons for Resistance to Change in the Workplace

    • Businesses operate in a continuously changing business environment

      • Changing internal factors such as business growth, new business ownership or internal restructuring

      • Changing external factors such as changes to the market or technological advancements
        

    • Resistance to change is a common phenomenon in the workplace

      • This is especially true when employees have little say in the design and implementation of the change

      • The existing organisational culture can also play a significant role in resistance to change, e.g. if the business culture is deeply rooted in tradition, resistance to change is more likely whereas an innovative and flexible culture may mean that employees are more receptive to change

     

    Factors that contribute to employee resistance
     

    

    Factors that contribute to employees' resistance to change
     

    Fear of the unknown

    • Many individuals find comfort in familiarity and could be worried about how the change will affect their roles, responsibilities, and job security

    • New technologies, systems or processes often require employees to learn unfamiliar new skills

    • Employees may fear that existing knowledge and skills will become obsolete, making them less valuable or potentially leading to job loss
       

    Loss of control

    • Change often involves a shift in power dynamics and decision-making processes

    • Employees who are accustomed to a certain level of autonomy and control may feel threatened by the change

    • They may be concerned about how the change will impact their decision-making authority or influence within the business
       

    Disruption of routine

    • Employees may be comfortable with their current ways of working and are hesitant to adapt to new methods

    • They may perceive the change as an inconvenience or an added burden that disrupts their working life
      

    Lack of trust

    • If employees doubt the intentions behind the change or have past experiences of broken promises or inconsistent communication they may be sceptical about the benefits of the proposed change
      

    Lack of communication and inclusion

    • When employees feel excluded or uninformed about the reasons for the change, its implications or how it will be implemented they are more likely to resist it 
      

    Perceived losses

    • Even if the change brings overall benefits, employees may focus on what they feel they have lost such as reduced autonomy, changed job responsibilities or altered relationships with colleagues
       

    The Pace of Change

    • It's important to find a pace for change that is appropriate for the situation and which takes into account the needs and concerns of employees
       

      • If the pace of change is too fast

        • It can create resistance from overwhelmed workers who feel unprepared and that they don't have enough time to adjust

        • It may not be properly thought through or planned, resulting in poor execution

        • It may be difficult to communicate effectively leading to misunderstandings and confusion amongst the workforce
           

      • If the pace of change is too slow it can result in

        • A lack of adaptability and innovation

        • A loss of momentum leading to delays or even the abandonment of the change

        • Communication efforts becoming stagnant leading to disinterest and disengagement

    Change Management Strategies

    • Change management strategies refer to the approaches and methods adopted to successfully navigate and implement change in a business
        

    

    Steps in a change management process
    
    

    • There are many different types of strategies (e.g. Kotter's Change Management)

      • These strategies all have several steps in common and if a business follows these steps, then it should help to reduce resistance to change and improve the quality of the transition

    Common Steps in a Change Management Process

    Steps in Sequence	Explanation
    1. Identify the change & communicate clearly	Clearly communicate the vision and reasons behind the change, its benefits and the expected outcomes Regularly update employees at all levels to keep them informed and address any concerns or questions they may have Provide support throughout the change process, recognising that change can be stressful for employees
    2. Plan & resource the change	Ensure that adequate resources are identified and available in order to implement the change A lack of resources is an indicator that the change has not been properly planned which may undermine employees' faith in the proposed change
    3. Provide strong leadership	Leaders should demonstrate their commitment to the change and provide a clear vision that inspires employees to embrace the change Leaders should also lead by example and be visible throughout the process
    4. Engage stakeholders	Identify key stakeholders who will be affected by the change and involve them early in the process Seek their input, address their concerns, and actively engage them in decision-making This helps build support and ownership for the change.
    5. Train & develop	Provide adequate training and development programs to equip employees with the skills and knowledge needed to adapt to the change This could include workshops, seminars, online courses, or coaching sessions   The goal is to ensure employees feel confident and competent in their new roles
    6. Appoint change agents	Appoint change agents or champions within the organisation who can help drive and facilitate the change process These individuals should be enthusiastic, influential, and capable of supporting and encouraging others during the transition
    7. Provide feedback	Gather feedback throughout the change process by regularly assessing progress, identifying any barriers or resistance and making adjustments if needed Collecting and acting on feedback from employees demonstrates that their opinions are valued and helps to reduce resistance to change
    8.Celebrate success	Recognise and celebrate milestones and achievements along the way For example, acknowledge individuals and teams for their contributions and share success stories to inspire others  This boosts morale, motivates employees, and reinforces the positive aspects of the change

    • Large-scale changes can be overwhelming so it's often beneficial to break them down into smaller, manageable phases
      

    • This allows employees to adapt gradually and build momentum as they experience early successes and can help generate support for further change

Key Terms for Organisational Structure

• An organisational structure outlines the reporting relationships, roles, and responsibilities of employees in the organisation
  
  

• Businesses must determine what the best structure is for them to effectively implement their ideas and achieve their objectives

  • They should consider how the structure may affect the management and effectiveness of operations and communications

  • A well-designed organisational structure helps to promote clarity, efficiency, and accountability
    

Key terminology used in organisational design

1. Hierarchy

• A hierarchy refers to the levels of authority within an organisation

  • It describes the ranking of positions from top to bottom

  • The higher the position in the hierarchy, the more authority and power it holds

  • The hierarchy usually includes top-level management, middle-level management, and lower-level employees
     

2. Bureaucracy

• A bureaucracy is an organisation with many levels of authority

  • This makes decision-making and communication somewhat time-consuming
     

3. Chain of command

• The chain of command is the formal line of authority that flows down from the top management to lower-level employees

  • It defines who reports to whom

  • The chain of command helps to establish a clear communication channel and helps to maintain accountability within the organisation
    

4. Span of control

• Refers to the number of employees that a manager or supervisor can effectively manage

• It is based on the principle that a manager can only effectively manage a limited number of employees

  • A narrower span of control means that there are more layers of management

  • A wider span of control means that there are fewer layers of management

The chain of command and span of control
 

5. Centralised and decentralised structures

• In a centralised structure, decision-making authority is concentrated at the top of the organisation with senior management making most of the decisions
   

• In a decentralised structure, decision-making authority is distributed throughout the organisation, with lower-level employees having more delegated decision-making power

  • Decentralisation can promote flexibility and innovation, while centralisation can promote consistency and control
     

6. Matrix structures

• In this type of structure, employees are grouped based on both their functional expertise (finance, marketing etc) and the specific projects or products they are working on

• Employees typically have two reporting lines: a functional manager and a project or product manager

  • The functional manager oversees their work in terms of their functional skills and expertise

  • The project manager is responsible for the specific project or product they are assigned to

Different Types of Organisational Structure

• Businesses typically structure their organisation in one of three ways

  • Tall organisational structure

  • Flat organisational structure

  • Organisational structure based on product, function or region
    
    

1. Tall organisational structures

• Tall or vertical structures have multiple levels of management, a more centralised decision making process and a long chain of command

• Spans of control are usually narrow and managers exert significant control

• Tall structures are common in large organisations with complex operations e.g. government agencies and universities
  

2. Flat organisational structures

• Flat or horizontal structures have fewer levels of management, a decentralised decision-making process and a short chain of command

• Spans of control are often wide and employees have some level of autonomy

• Flat structures are common in small organisations or start-ups
   

A Comparison of tall and flat Organisational Structures

3. Organisation by product

• This type of structure is usually built around specific products or projects (matrix structure)

  • E.g. KitKat has its own team within Nestlé
     

• It combines the functional areas of a business (HR, finance, marketing, sales) with a specialist team that operates inside the business

An example of a product or project-based structure
 
 
Evaluating a Matrix Structure

4. Organisation by function

• This is the most common form of organisational structure

• Employees are arranged into different functions that complete specific functions such as finance, human resources or marketing

  • Employees are arranged according to their expertise, bringing appropriate skills, experience and qualifications to a particular area of the business

  • There is a danger that functional areas focus only on their own area of responsibility and lose touch with the objectives of the business as a whole

Organisation by function
  

5. Organisation by region

• This structure is commonly found in businesses that are located in several different geographical locations

  • Regional management and structures allow a business to respond effectively to the needs of customers in diverse locations
     

The Impact of Changing External Factors on Structure

• When there is a change in external factors (market conditions, technology advancements or changes in laws) businesses may need to reassess their current structure
   

• An adaptive organisation is able to change its structure in response to external factors
   

Evaluating Organisational Structures in the face of Uncertainty

• The appropriateness of an organisational structure depends on the context and unique characteristics of each business
  

• Factors such as organisational culture, leadership style and employee capabilities should also be taken into account when selecting and implementing a new organisational structure

Changes in Organisational Structures

• Some businesses choose to adapt their organisation structure to allow them to respond flexibly to changes in the external environment
  

• Two examples of this are

  • Project-based organisation structures

  • Shamrock organisation structures
     

Project-based Organisation Structures

• In a project-based structure employees are assigned to projects full-time

• Project teams are led by project managers who have authority and decision-making power
   

Diagram of a Project-based Organisation Chart

A Project-based organisation chart showing human resources organised around two projects

• Project-based structures are said to improve collaboration, communication and make use of specialised skills across different projects 

• Employees often report to both a functional manager and a project manager or team leader

• These structures are commonly found in industries such as engineering, software development and construction
   

The Advantages and Disadvantages of Project-based Organisation Structures

Shamrock Organisational Structures

• Charles Handy's "Shamrock organisation" is based on the belief that workers are the most important business resource

  • Shamrock organisation structures provide flexibility and adaptability

  • They allow businesses to concentrate on their core functions

  • They can respond to changing market conditions and vary workloads without a large permanent workforce
     

• Handy believes that:

  • Businesses should focus on meeting employees' needs for enrichment and flexibility

  • The organisational structures should be dynamic

  • Businesses should move away from the traditional employment hierarchy where they offer 'jobs for life'
     

Diagram Showing the Three Parts of a Shamrock Structure

The Shamrock Organisation consists of core, peripheral and flexible employees
 

• Core Staff are the small group of individuals who are directly employed by the business

  • They typically hold key positions 

  • They are responsible for strategic decision-making and managing the businesses overall direction

  • They are well-paid and have job security
    
    

• Flexible Workers are individuals who work for the business on a part-time, temporary, contractual or ad-hoc basis
  

  • They provide flexibility to the business and can be scaled up or down based on the workload

  • They tend to be lower-paid for short periods of employment
    
    

• Outsourced Services involves giving control over certain functions or services to external third-party providers that handle specific tasks

  • Example include IT support, human resources or facilities management

  • These are specialist functions and these services may therefore be expensive

  • By outsourcing these services the business can focus on its core competencies

The Distinction Between Management & Leadership

• Leadership is about having a vision, sharing that vision with others and providing direction

• Management is the day-to-day organisation of the business, its resources and its staffing
    

The different characteristics of leaders and managers

Key differences between leadership and management

Vision vs. Execution

• Leadership focuses on creating a vision, setting direction, and inspiring others to follow

• Management focuses on executing plans, organising resources and ensuring tasks are completed on time
  

Influence vs. Control

Leadership focuses on influencing others to achieve a common goal by inspiring and motivating
Management focuses on controlling resources and processes to ensure that objectives are met

People vs. Processes

• Leadership focuses on people, their needs, and their motivation

• Management focuses on processes, structures and systems
  

Long-term vs. Short-term

• Leadership focuses on the long-term vision and strategy

• Management focuses on short-term goals and targets
  

Creativity vs. Efficiency

• Leadership encourages creativity and innovation

• Management focuses more on efficiency and productivity

An Introduction to Leadership Styles

• Leadership styles are different approaches to leading and managing a team or business

• They reflect the behaviours and attitudes of a leader towards their team members and influence the organisational culture, productivity and performance

• A successful leader will be able to use a variety of leadership styles depending on the situation to achieve the best results for their business

• Four common leadership styles include:
   

Four commonly used types of leadership styles
 

• The choice of leadership style can be influenced by the business circumstances, as well as the nature and size of the business

Autocratic Leadership

• An autocratic leader is a type of leader who holds absolute power and authority over a business

  • The leader makes decisions without seeking input or agreement from others

  • They typically expect strict obedience and compliance from their subordinates
    

• Autocratic leaders often have complete control over the decision-making process

  • They set the direction and goals of the business

  • They do not usually consider the opinions, ideas, or expertise of their team members

  • Their decisions are generally not open to discussion or debate
    

Situations when Autocratic Leadership is Especially Effective

• Whilst autocratic leadership may be suitable in certain situations it can also have drawbacks including 

• Reduced employee morale as workers have no input into decision-making

  • Limited creativity as employees are required to follow strict instructions and are closely monitored

  • Lack of input from team members restricts an important source of problem-solving ideas and innovation

Paternalistic Leadership

• Paternalistic leadership is where a leader assumes a 'fatherly' role towards their subordinates, acting in a protective and authoritarian manner

  • The leader makes decisions for employees while also showing concern for the well-being and development of  subordinates

  • The leader takes on responsibility for the welfare of their employees

    • They may provide guidance, support, and resources to ensure the success of their employees

    • Huawei’s Ren Zhengfei is viewed as a paternalistic leader who has shaped the businesses culture with well-defined goals, employee devotion and absolute obedience in return for highly competitive pay and opportunities for staff to buy shares in the company
       

• Paternalistic leadership can create a sense of security and support among employees, increasing their loyalty and reducing staff turnover
  

• It can also be perceived as controlling and limits creativity and innovation within a business
  
  

• It may create a dependency on the leader which restricts personal growth and professional development among employees

Democratic Leadership

• Democratic leaders actively involve employees in the decision-making process and encourage discussion, though they have the final say

  • Consultation, collaboration, delegation and teamwork are common features of democratic leadership
    

• This leadership style is most effective in organisations with skilled, experienced and creative employees
  
  

The Advantages and Disadvantages of Democratic Leadership

Laissez-faire Leadership

• Laissez-faire leaders play a minimal role in managing their business team
  
  

• Leaders provide little guidance, direction, or supervision to employees, allowing them significant autonomy and freedom in making decisions and completing tasks
  
  

• Laissez-faire leadership is most appropriate where leaders are working with a highly skilled and self-motivated team that requires minimal supervision
    

Advantages and Disadvantages of Laissez-faire Leadership

Situational Leadership

• Hersey and Blanchard's Situational Leadership Model suggests there is no one-size-fits-all approach to leading a business organisation and effective leadership depends on adapting leadership style to the specific situation and the needs of the employees being led
   

• Leaders must assess the readiness of employees to perform a particular task or achieve a specific goal

  • Readiness is determined by two factors

    • competence (knowledge, skills, and experience)

    • commitment (motivation and confidence)
       

• Based on this assessment, leaders can adopt different leadership styles to match the situation
   

Hersey & Blanchard's situational leadership model
 

• The situational leadership model emphasises that effective leaders should be flexible and able to adapt their leadership style based on the needs of their team members
   

• It encourages leaders to consider the situation carefully and assess the readiness of their followers before adopting the most appropriate leadership approach to maximise performance and development

The Importance of Employee Motivation

• Motivation refers to the inner desire or willingness that propels a person to take action and achieve a specific goal or outcome

  • Motivation can be intrinsic, coming from within a person (values, beliefs etc)

  • Motivation can be extrinsic, coming from external factors (rewards or punishments)
     

• Motivation plays a critical role in a business's success and can have a significant impact on productivity, reliability and loyalty of the workers, and labour turnover rates
   

1. The impact of motivation on productivity

• Motivated employees are more productive and efficient as they are more likely to be engaged in their work and take initiative to meet or exceed their goals

• They will generate higher levels of output and quality

• Increased productivity results in higher profits for the business
    

2. The impact of motivation on the reliability of workers

• Motivated employees are more likely to be reliable and dependable

• They take pride in their job, show up on time, meet deadlines, and take fewer sick days

• This leads to increased trust between the business and its employees and higher productivity
  

3. The impact of motivation on turnover rates

• Motivated employees are more likely to stay with the company long-term which reduces the turnover rate

• Lower turnover rates reduce the need for costly recruitment and training

Taylor's Scientific Management

• Developed by Frederick Winslow Taylor in the early 20th century

• It focuses on breaking down complex tasks into simpler ones, standardising work processes, and providing workers with clear instructions and training to achieve maximum efficiency

• Many manufacturing businesses use Taylor's principles to structure their staff benefits e.g. piece rate pay

  • Production lines involving human labour are often set up based on these principles
    

Taylor's method starts with a scientific analysis of what is involved in a job and then breaks it down into parts for which employees can be trained

1. Study and analyse the work process

• Carefully analyse each step of the work process

• Break down complex tasks into simpler ones and identify the most efficient and effective way to perform each task
   

2. Standardise the work process

• This involves creating detailed procedures and instructions for each task so that workers can follow these procedures consistently
   

3. Select and train the workers

• Workers should be carefully selected based on their skills and abilities

• Train workers to perform their tasks efficiently and effectively

  • This training includes both technical skills and the proper attitudes/behaviours required to be successful (e.g patience in a repetitive task)
     

4. Provide incentives for performance

• Scientific management emphasises the use of incentives to motivate workers

  • This may include bonuses or piece-rate pay
     

Ways in which Businesses use Taylor's Scientific Management
 

Maslow's Hierarchy of Needs

• Maslow's Hierarchy of Needs is a theory of human motivation that outlines five tiers of human needs that must be met for individuals to reach their full potential

Maslow's hierarchy of needs

Maslow's hierarchy of needs applied to business

Physiological Needs

• Businesses can provide necessities for their employees e.g comfortable work environment, access to clean water and food, and adequate rest breaks
  

Safety Needs

• Businesses can provide job security, fair pay, benefits, and safe working conditions for their employees
  

Love and Belonging Needs

• Businesses can encourage teamwork and generate a sense of community and belonging within the workplace
  

Esteem Needs

• Businesses can provide recognition for employees' accomplishments, and provide a positive work culture that values individual contributions
  

Self-Actualisation Needs

• Businesses can help employees achieve this need by offering opportunities for employees to pursue their passions and interests e.g Barclay's was known for supporting elite sportspeople by allowing them time off work in the day to continue their training (the focus was on getting the job done, not having to be in at a certain time)
   

The Advantages & Disadvantages to Business of Applying Maslow's Hierarchy

Herzberg's Motivation-Hygiene Theory

• Herzberg's theory suggests that there are two types of factors that affect employee motivation and job satisfaction - hygiene factors and motivators

  • Hygiene factors are elements that do not necessarily lead to job satisfaction, but their absence can cause dissatisfaction which decreases motivation e.g poor teamwork in the workplace

  • Motivators are elements that lead to job satisfaction and motivation e.g. increased responsibility
     

An explanation of how the lack of hygiene factors causes dissatisfaction while addressing the motivators increases satisfaction. Increased satisfaction leads to increased productivity and profitability

How businesses can use hygiene factors to decrease dissatisfaction

Pay fair wages/salaries

• If an employee is not paid a fair wage for their work, they may become dissatisfied and demotivated
  

Offer excellent working conditions

• If the workplace is dirty, unsafe, or uncomfortable, employees may become dissatisfied and demotivated e.g Google has a reputation for providing amazing workplaces which include gourmet restaurants, laundry services and dog care
  

Offer employment contracts which provide job security

• If employees feel that their job is not secure, they may become anxious and demotivated and contribute less to the business goals

How businesses can use motivating factors to increase satisfaction

Build a recognition and rewards culture

• When employees are recognised and rewarded for their hard work, they are motivated to continue performing well e.g. Sales person of the month award
   

Offer opportunities for growth and development

• When employees are given opportunities to learn new skills and advance in their careers, they are motivated to continue working for the company e.g. set in place a 3 year growth plan which helps the worker move towards a reach job role
  

Provide challenging work which requires problem solving

• When employees are given challenging work that allows them to use their skills and abilities, they are motivated to continue performing well

McClelland’s Acquired Needs Theory

• McClelland's Acquired Needs Theory focuses on the needs that individuals develop over time

  • It explains how these needs influence their motivations and behaviour
     

• People have three acquired needs that drive their actions and choices in the workplace and in life
   

A Summary of McLelland's Acquired Needs

• The relative strength of these needs varies among individuals

• They can be developed over time through life experiences, upbringing and cultural influences

• Understanding individuals' dominant need can help employers tailor their approach to employee motivation and management

Strengths of McLelland's Acquired Needs Theory

• The model is easy to understand & apply
  

  • Helps managers to motivate employees in various situations
     

• Recognises that people have varying needs & motivations
  

  • Managers can create more effective motivational strategies
    
    

• Based on extensive research
  

  • McClelland's research was conducted in various cultural contexts so it can be applied in different settings

Weaknesses of McLelland's Acquired Needs Theory

• Does not account for the complexity of human behaviour

  • Can be influenced by a wide range of personal and environmental factors
     

• The model may oversimplify workers' motivations

  • People often have a combination of the three needs
      

• Limited evidence supports the specific needs identified in the theory

  • Achievement, affiliation and power are not universally agreed upon as the primary drivers of behaviour

Deci and Ryan’s Self-determination Theory

• Deci and Ryan's theory describes why people do what they do

  • It is concerned with understanding human motivation and the factors that drive individuals to engage in activities

  • Humans have three basic psychological needs that allow them to achieve personal growth
     

Deci & Ryan's 3 Basic Psychological Needs

• These three needs are crucial for intrinsic motivation because they allow people to feel valued and fulfilled

  • This leads to greater well-being and sustained engagement both within and outside of the workplace

  • If employers understand these needs they can develop staff effectively

  • They may also be able to encourage staff to make positive changes for themselves 

Strengths of Deci & Ryan's Self-Determination Theory

1. Adaptability

   • Recognises that not all individuals are motivated in the same way

   • Can be adapted to account for variations in motivation across different cultures
      

2. Can be applied to different situations

   • It has been used widely in business, education management, sports coaching and healthcare
      

3. Backed by research

   • Numerous studies have demonstrated its validity and relevance

Weaknesses of Deci & Ryan's Self-Determination Theory

1. Potential cultural bias

   • Its origins are in Western psychology

   • May not fully account for cultural variations in motivation between regions
      

2. Overemphasis on intrinsic motivation

   • Downplays the significance of extrinsic motivators such as financial incentives
      

3. Lack of clear measurement tools

   • Difficult to assess what motivates individual employees as the three psychological needs are internal

Equity Theory

• John Adams's equity theory explains how people perceive and react to fairness in their personal and working relationships
    

Diagram Which Explains Adams' Equity Theory in the Workplace

Equity is achieved when employees perceive that their inputs are equal to their outputs and are comparable with those of colleagues

• In the workplace Individuals strive to maintain a sense of fairness and balance

  • They do this by comparing their inputs (contributions made by the employee) to their outputs (rewards they receive)

  • Employees want this ratio to be fair

    • Contributions and rewards should be roughly equal to those of colleagues

    • Rewards should fully compensate the efforts the employee makes
       

• There are three possible scenarios in equity theory

Restoring Equity in the Workplace

• To restore equity in the workplace individuals may take various actions

  • Renegotiate terms and conditions of employment

  • Adjust their contributions by making more/less effort

  • Seek new opportunities that provide a fairer balance of inputs and outcomes
     

• Businesses may take steps to ensure workers perceive business systems as fair by

  • Communicating better in recruitment and promotion policies

  • Clarifying pay and reward systems

  • Providing training and development opportunities
    

Strengths of Adams's Equity Theory

1. Easy to understand

   • Most people have an inherent sense of fairness and grasp the concept of equity
     

2. Recognises individual differences 

   • What one person perceives as equitable may not be the same for another

3. Highlights the importance of social comparisons

   • People often compare their situation to others
      

Weaknesses of Adams's Equity Theory

1. It is subjective

   • What one person considers fair may differ from another's perspective

2. Ignores other influences on behaviour

   • Factors such as personal values, intrinsic motivation and organisational culture also influence behaviour

3. Over-simplification

   • Real-life working scenarios often involve variables and factors that Equity Theory does not consider

Expectancy Theory

• Vroom's Expectancy theory seeks to explain why people make choices and behave in specific ways

• It suggests that motivation depends on these three factors working together

  • Expectancy is the belief that effort leads to performance

  • Instrumentality is the belief that performance leads to outcomes

  • Valence is the value or desirability of those outcomes

Diagram which illustrates Vrooms Expectancy Theory 

 Vroom suggests that motivation depends on the three factors of expectancy, instrumentality and valence
 

The Three Components of Vroom's Expectancy Theory

• Where low motivation is identified, managers may take steps to improve one or more of the components for individuals

• These steps may include 

  • Improve training and development to increase the expectancy score

  • Increase trust between management and workers by ensuring that promises are kept - this may increase the instrumentality score

  • Widen the package of rewards available for good performance to improve the valence score
     

Strengths of Expectancy Theory

• The theory takes into account personal differences and considers them when explaining motivation

• A clear and logical framework for understanding motivation by breaking it down into three key components

• It emphasises the importance of involving employees in the goal-setting process
   

Weaknesses of Expectancy Theory

• The theory is based on subjective perceptions and beliefs so it may not always accurately predict behaviour

• Individuals' perceptions and values can vary

• It provides a framework for understanding motivation rather than precise predictions

Labour Turnover

• Labour turnover measures the proportion of employees leaving a business during a specific time period

• It is expressed as a percentage and is calculated using the formula
   
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 Internal and External Factors that Affect Labour Turnover

• A rising rate of labour turnover can signal internal human resource management problems such as

• Poor management leading to workers losing commitment

  • A poor recruitment and selection approach leading to staff leaving soon after starting their job

  • Low wage levels compared to those that could be earned elsewhere

• External factors can also increase labour turnover in a business

  • A buoyant local economy where workers are attracted to employment opportunities elsewhere 

  • Improved transport links that provide an opportunity for workers to seek work across a wider geographical area

The Consequences of high Labour Turnover

Worked example

In 2022 Domus Construction Ltd employed 7,200 workers, six per cent of whom worked at the head office.

During 2022 fifty-four head office employees left the business.

Calculate the labour turnover of Domus Construction's head office in 2022.  (3 marks)

LaLabour Retention

• Labour retention measures the proportion of employees remaining with a business during a specific time period

• It is expressed as a percentage and is calculated using the formula
   
  

• A high level of labour retention means that few staff are leaving the business during a given period

Worked example

In 2022 Westington College employed 4,240 employees, 265 of whom left the college during the year

Calculate Westington College's staff retention rate in 2022     (2 marks)

Step 1: Calculate the number of employees not leaving

4,240 - 265   =   3,975      (1 mark)

Step 2: Calculate the retention rate using the formula

An Introduction to Employee Appraisals

• Staff appraisal is a process where a manager or supervisor assesses an employee's job performance

Diagram: Discussion Points in Employee Appraisals

Appraisal discussions reflect on employee performance and establish goals for the future
 

• Performance is measured against the tasks and responsibilities stated in the employee's job description

• Constructive feedback is given and there is a discussion of goals and development opportunities
   

Advantages and Disadvantages of Employee Appraisals

Formative Appraisal

• A formative appraisal involves gathering ongoing information and feedback on employee performance

  • Managers and workers have regular performance management conversations

  • Prompt adjustments can be made to improve performance

  • Methods used to gather information for formative appraisal may include

    • employee observations

    • aptitude tests

    • skills tests

    • feedback from peers

  • Formative appraisal is commonly used during training or probation periods
      

Characteristics of Formative Appraisal

Summative Appraisal

• Summative appraisal is typically conducted yearly or at the end of a work assignment

• Its main purpose is to assess and measure the overall performance, achievement or outcomes of employees

• Summative appraisals are often used to make decisions related to pay or promotion
   

Key Characteristics of Summative Appraisal Include

360 Degree Feedback

• 360 Degree feedback provides employees with feedback from within and outside their organisation

  • Feedback comes from multiple stakeholders who have direct contact with the employee

  • Stakeholders may include line managers, colleagues, suppliers and customers
     

Diagram: The 360 Degree Appraisal Process

360-degree feedback can be collected from a range of internal and external sources
 

• Feedback can be gathered from a range of internal and external sources

  • Feedback is typically gathered through surveys or questionnaires

  • Responses are usually anonymised to encourage honest feedback

  • After feedback is collected, it is shared with the employee in the appraisal process
     

• It is considered to provide a comprehensive assessment of an individual's strengths, weaknesses and training/development needs
   

The Main Uses of 360 Degree Feedback
 

• 360 Degree feedback can be a valuable tool when used effectively

  • It should be implemented carefully to ensure that it serves its intended purpose and does not lead to conflicts or resentment

  • It is essential to have a clear process for collecting, analysing and providing feedback and to use the information obtained for employee development

Self-appraisal

• Self-appraisal involves employees evaluating their own performance, skills, strengths, weaknesses and achievements

• It is commonly used in the workplace as part of the performance management process

• Self-appraisal is typically used alongside evaluations from managers or supervisors to provide a comprehensive view of an individual's performance
   

Typical Elements of Self-Appraisal
 

The Value of Employee Self Appraisals

• The process can lead to increased self-awareness
  

• The process provides an opportunity for employees to share their perspectives and goals with their supervisors, which can promote open dialogue
  

• The process identifies areas that need improvement and by setting clear goals for the future, it supports professional growth and development
  

• The process can balance out the evaluation process as it allows employees to express their viewpoints and provide context/balance

An Introduction to Recruitment

• Recruitment is the process of attracting and identifying potential job candidates who are suitable for a particular role

  • Recruitment activities include job advertising, job fairs, social media outreach and referrals from current employees

  • The goal of recruitment is to create a pool of qualified candidates who can be considered for the role
    

• Selection is the process of choosing the best candidate

  • Selection activities often involve reviewing CVs and conducting interviews or assessment tasks

  • The goal of selection is to hire the most suitable candidate for the job
     

Diagram: The Recruitment and Selection Process

The recruitment and selection process is focused on sourcing the best person for a job role

 
1. Define the role

• Businesses should determine exactly what is required and part of that is developing a job description and a person/job specification

  • A job specification outlines the qualifications, skills, experience, and personal qualities required from a candidate for a specific job e.g. problem solver, good communicator, able to code in Java etc.

  • A job description outlines the duties, responsibilities, and requirements of a particular job

2. Determine the best source of candidates

• The business can advertise the role internally, externally, or a combination of both

  • Internal recruitment is the process of hiring employees from within the organisation

    • Internal recruitment can be beneficial as it encourages employee development, builds morale and can save time and money on training

  • External recruitment is the process of hiring employees from outside the organisation

    • External recruitment can bring fresh ideas, experiences and perspectives to the organization
      

• These methods are considered in more detail below

3. Advertise

• Businesses with a strong social media presence can use these platforms to advertise cost effectively e.g. Facebook, LinkedIn, TikTok

• Depending on the nature of the business, there may be specialist recruitment portals through which they can advertise and these tend to cost more e.g. The Times Educational Supplement is one of the main publications used to recruit teaching staff

4. Receive applications

• The application stage involves collecting information from potential candidates

• These methods are discussed fully below

• Someone within the business must be nominated to manage the application process

  • This person (possibly together with others) will draw up a shortlist of candidates from the many applications received

  • The shortlist usually includes 3-5 candidates who are invited to interview
    

5. The selection process

• This process varies significantly between organisations

• Businesses must decide on the most appropriate method which will help them to identify the best candidate

• The most commonly used methods are discussed fully below

Internal & External Recruitment

• Businesses often use a combination of internal and external recruitment methods, depending on the nature of the job and the availability of suitable candidates

• The method chosen will also depend on the organisation's goals, the level of the position being filled and the industry in which it operates
   

Internal Recruitment Methods

• Internal recruitment involves the promotion or redeployment of staff to fill a vacant post

• Vacancies are advertised internally on staff notice boards, in newsletters or via in-house electronic communications

• Recruiting internally has a range of advantages and disadvantages
   

Advantages and Disadvantages of Internal Recruitment

External Recruitment Methods

• If a vacancy cannot be filled internally it will be necessary to look outside of the business to find suitable candidates

  • New skills, experiences and ideas can be introduced to the business

  • Some methods are expensive and it can be difficult to target the desired audience
     

A Comparison of External Recruitment Methods

• External recruitment overcomes some of the disadvantages of internal recruitment 

• However it is often more expensive than internal recruitment

• There is also a greater degree of uncertainty as external candidates are unknown to the business
   

Applying for a Job

• Both internal and external candidates typically apply for advertised roles by submitting an application form

• Alternatively candidates are asked to submit a curriculum vitae (CV) with an accompanying cover letter

Selecting the Right Candidate

• A range of methods may be used to make a choice between job applicants

• Business commonly use a combination of these methods
   

Diagram: Common Selection Methods

Businesses commonly use interviews to select their chosen candidate along with testing, portfolios and gathering references
 

Financial Rewards to Improve Performance

• Financial rewards are payments given to employees in return for their labour - or improved performance 

Examples of financial rewards

Types of Financial Incentives & Their Links to Motivational Theory

Non-financial Rewards to Improve Performance

• Non-financial rewards are motivators not directly related to money

Examples of non-financial rewards
  

• These incentives are usually intangible and include methods that lead to recognition, praise, job satisfaction, and better work-life balance
   

Types of Non-financial Incentives & Their Links to Motivational Theory

Reasons why Firms Train & Develop Their Employees

• Businesses need to make sure that new and existing staff are trained and developed appropriately

• Training is the teaching of new skills

  • Development is the improvement of existing skills
     

•  A well-trained workforce is important for several reasons

  • Well-trained staff are likely to be more productive

  • Staff may feel valued if a business invests in training and development

  • Staff are more likely to be flexible and resilient in the face of change
     

Reasons for training and development

•  Well-trained employees are likely to be motivated because they recognise that their employer is spending money on their development
   

• Motivation theory suggests that employees work more enthusiastically at the things they’re good at 

  • if employees are trained in managing quality they are more likely to think about how to improve the standard of the goods they produce
     

• If motivation is improved through better training labour retention is also likely to increase

  • If an employee feels they’re becoming better at their job they are far more likely to stay with the business even if another employee is offering higher rates of pay because they want to keep developing in the job they have

Types of Training Provided by Businesses

• Different types of training have their advantages and disadvantages for the business
  

Three common types of training that businesses put their new employees through

Induction training

• Induction training is a type of training that new employees receive when they start working for a company

Common elements of induction training

• It introduces them to the company, its culture, policies, procedures, and their job roles and responsibilities

  • E.g. when new employee joins Marks & Spencer they receive induction training that covers customer service, product knowledge, store policies, and safety procedures
     

The Advantages & Disadvantages of Induction Training

On the job training

• A type of training that takes place while employees are working in their job roles
   

• It allows employees to learn new skills and knowledge from colleagues while performing their job duties

  • E.g. A sous chef at The Ivy Restaurant in York may receive on-the-job training from the Chef to learn how to prepare new dishes, use new equipment, or improve their cooking techniques
     

The Advantages & Disadvantages of On the Job Training

 
Off the job training

• A type of training that takes place outside of the workplace
   

• It can be in the form of workshops, seminars, conferences, or online courses

  • E.g. Teachers can attend exam board training days at which they learn how to better teach the syllabus and help their students to prepare for their exams
     

The Advantages & Disadvantages of Off-the-Job Training

An Introduction to Corporate Culture

• Culture refers to the personality of an organisation 

  • This includes shared values, beliefs, attitudes and practices that shape the way people work together within an organisation

  • A strong organisational culture exists where these factors are easily recognised and embedded into the way that a business operates

  • Businesses with strong cultures are likely to possess a range of visual and operational features

Visual and Operational Features in a Business with a Strong Culture

• In businesses with a strong culture it is likely that employees

  • Are united and support the mission of the business 

  • Have a 'can do' attitude and are enthused by their work

  • Have a strong belief that the business is a force for good
    

• In a business with a weak culture, these signs may be difficult to identify

  • A 'them and us' attitude may exist between workers and management

  • Employees may doubt the sincerity of the corporate mission

  • High levels of staff turnover and low commitment amongst staff may exist

  • Charles Handy's Gods of Management

    • Handy argued that different cultures are needed are needed for different businesses and different situations

    • He identified four types of organisational culture in his book The Gods of Management
       

    Charles Handy's 'Gods of Management' Classification of Organisational Cultures 

    Zeus Power Culture	Apollo Role Culture
    Decision-making is carried out by one or a small number of powerful individuals usually at the top of the business hierarchy Few rules exist to determine decision-making procedure A competitive atmosphere between workers vying for power Most communication is by personal contact It is argued that Alan Sugar's Amstrad adopted a power culture with Sugar as its powerful decision-maker	Key decisions are made by those with specific job roles Power lies with those with particular job titles rather than those with desirable skills There is usually a very clear hierarchical structure Employees are expected to adhere to rules and understand their place in the hierarchy It may be difficult to adapt to rapidly changing market conditions Large public sector organisations such as the NHS are considered to have highly structured role cultures
    Athena Task Culture	Dionysus Person Culture
    In a task culture decisions are made by teams made up of employees with specific skills Power lies with those with task-related skills (e.g. a finance specialist may make decisions related to funding within the group) Teams are created and dissolved as projects are started and completed There is an emphasis on adaptability and team-working PepsiCo is in example of a business that has a task culture	In a person culture individuals with extensive experience and skills are loosely brought together These individuals have significant levels of power to determine their own decision-making procedures and often work autonomously Organisations with person cultures are very common in professional services such as accountancy and law

• Culture Clash and Business Change

  Culture Clashes and Culture Gaps

  • Cultural clashes in businesses often happen when people from different backgrounds come together in the workplace

    • Individuals may have diverse values, communication styles or work habits

    • Misunderstandings can occur due to different expectations, communication breakdowns and varying approaches to problem-solving
      
      

  • A culture gap occurs when a businesses actual culture is not aligned with management's desired culture
    

  • A range of changes in business organisation can create a culture gap
     

  Examples of Cultural Gaps when Organisations Change

  Change in Business Organisation	Impact on Business Culture
  Organic growth	Organisational structure often becomes increasingly hierarchical Higher levels of bureaucracy distance leaders from the workforce
  Mergers & takeovers	Successfully combining the cultures of two businesses is particularly difficult The dominant firm's culture often prevails  A hybrid (combined) structure may emerge
  Overseas growth	Differences in national/regional cultures are not always fully understood Language and tradition/cultural norms may create additional barriers
  Leadership	New leaders bring different ideas and vision  Different strategic direction can lead to conflict especially if communicated poorly

   

  Consequences of Culture Clashes

  • If culture clashes are allowed to persist in a business it may face a range of negative consequences 

  • Negative Consequences of Culture Clashes

    Consequence	Explanation
    Communication Breakdown	Different communication styles can lead to misunderstandings  Quality and quantity of output may be reduced
    Demotivation	If employees' cultural values are not respected/understood it can lead to low morale This can lower productivity and cause negativity
    Resistance to Change	If a new strategy clashes with the existing culture employees may resist it This can lead to disengaged employees and increased labour turnover
    Less Team Spirit	Cultural differences can lead to the formation of subgroups within the organisation This can result in a lack of cohesion within teams and affect collaboration
    Less Innovation	Innovation can thrive when employees bring unique perspectives/ideas Without diverse viewpoints creative thinking and problem-solving may decline  jknkjnlknlkn

• Methods of Communication

  • The aim of communication is to exchange or transfer information
     

  • Formal communication is channeled through a businesses formal organisation structure and is likely to be capable of being recorded in some way
     

  • Informal communication is any communication that takes place outside of the official channels and is unlikely to be formally recorded
    

  

  The main forms of communication used by businesses
   

  • The effectiveness of each method depends on the business context, the nature of the communication and the personal preferences of both the sender and receiver of information
    

  Strengths & Weaknesses of a Range of Communication Methods

  Method of Communication	Strength	Weakness
  Face-to-Face Communication	Face-to-face communication allows for the exchange of facial expressions, body language, and tone of voice which enhance understanding	Face-to-face communication may not always be feasible due to geographical distances or time constraints
  Written Communication	Written communication provides a paper trail that can be referred to in the future for clarity	Without facial expressions and tone of voice, written messages can sometimes be misinterpreted or lack emotional context
  Phone Calls	Phone calls allow for real-time communication, enabling quick exchange of information and resolution of queries	Without seeing the other person, it can be challenging to interpret their body language and facial expressions accurately
  Video Conferencing	Video calls allow people in different locations to connect	Unreliable internet connections or audio/video problems can hinder effective communication
  Instant Messaging & Chat Applications	Instant messaging (WhatsApp, Slack) enables fast and real-time communication making it ideal for brief exchanges or urgent matters	Text-based communication lacks non-verbal cues, increasing the chances of misunderstandings or miscommunication

• Barriers to Communication

  • Barriers to communication hinder the flow of information leading to potential misunderstandings, conflicts and inefficiency
    

  An Explanation of the Barriers to Communication in Business

  Barrier	Explanation
  Language and jargon	The use of technical terminology or industry-specific jargon can create barriers between individuals or departments Misinterpretation or lack of comprehension can occur when people are not familiar with the terms being used e.g. many businesses use a large amount of acronyms which can leave new staff feeling confused
  Noise and distractions	Physical noise such as loud machinery or a crowded workspace can interfere with effective communication Similarly, distractions like phone notifications, email alerts, or multitasking can divert attention and impede clear communication
  Lack of feedback	Communication is a two-way process and the absence of feedback can affect understanding When individuals don't ask for or provide feedback, assumptions and misunderstandings can arise, leading to communication breakdowns
  Cultural differences	In today's globalised business environment people from diverse cultural backgrounds work together Cultural differences in communication styles can create barriers if they are not understood
  Hierarchical barriers	Employees may feel hesitant to communicate with their superiors due to fear of repercussions or a perceived lack of accessibility This can impede the free flow of information and ideas within the business
  Lack of clarity and conciseness	Vague, lengthy or overly technical messages can confuse recipients
  Emotional barriers or lack of time	If individuals are angry, stressed or upset their ability to convey or understand messages may be compromised Busy work schedules and competing priorities can limit the time available for communication
  Technological barriers	Over-reliance on technology or improper use of communication tools can create barriers Technical issues such as poor internet connections, malfunctioning equipment or unfamiliarity with communication platforms can slow down communication
  Personal biases and filters	People often have preconceived notions, biases or filters that affect their interpretation of messages These biases can affect their ability to listen objectively and understand the intended meaning accurately

   

  • Organisations should encourage open communication, may consider providing training on effective communication techniques and encourage a culture of transparency and collaboration to overcome these obstacles

• Sources of Conflict with Employees

  • Conflict at all levels in the workplace can arise as a result of differences in goals, values, personalities or communication styles

  • It can occur at all levels within a business
     

  Reasons for Conflict in the Workplace

  Inadequate Leadership & Communication	Power Struggles	Relationships
  Poor management or leadership styles Lack of support from supervisors Differences in communication styles	Struggles for influence/authority Competition for limited resources or promotions Budget constraints leading to tension Pressure to outperform colleagues	Personality clashes Incompatible work styles Personal biases or prejudices Differences in cultural backgrounds
  Workplace Inequities	Stress & Role Ambiguity	Differences in Values and Goals
  Perceived favouritism Unequal distribution of resources/opportunities Discrimination or harassment Employees feeling undervalued/unrecognised	High levels of pressure Overworked employees with unrealistic expectations Unclear job responsibilities Lack of role definition leading to confusion	Varied opinions on what is important or priorities Conflicting personal or professional goals Intolerance/inability to compromise

   

  • Unresolved workplace conflict can lead to a range of issues

    • Lower productivity as workers are distracted from the task at hand

    • Reduce employee morale as a result of anxiety/stress

    • Limit opportunities for collaboration

    • Create negative workplace 'politics' which can undermine business efficiency

Employee Approaches to Conflict

• A trade union is an organisation whose members come together to achieve common goals

• They negotiate with employers to improve terms and conditions of employment for workers

  • Improved pay

  • Increases in paid holidays

  • Reduced hours of work

  • Sufficient rest breaks

  • Improved training and development

  • Better facilities
    
    

• Trade unions can also give individual advice when employees have a problem at work
  

  • They also lobby governments to pass laws that favour employees such as improved health and safety regulations
    

• Union members pay a membership fee and elect representatives to represent them in the employment relationship 

• Approximately one third of British workers are represented by trade unions 

  • In the UK the largest trade unions represent workers in the public sector and previously nationalised industries

    • Members of Craft unions share a specific skill or craft such as printing

    • Industrial unions recruit members from a particular industry such as education

    • General unions accept members from a range of manual industries such as manufacturing

    • White collar unions recruit non-manual workers such as those employed in banking
      

  • Membership of trade unions is generally in decline

    • Government legislation has weakened their powers

    • Many economies have moved away from manufacturing

    • Part-time and flexible workers tend not to be unionised
        

Examples of European Trade Unions

• Trade unions can use a range of approaches to resolve conflict in the workplace

  • Collective bargaining

  • Work-to-rule

  • Strike action

Collective Bargaining

• A process where trade unions negotiate with employers to reach agreements on terms and conditions of employment

  • It is a structured way for employers and employees to come to a mutually acceptable agreement

  • Trade unions have greater negotiating power than individual employees

  • Negotiations typically cover a range of issues, including wages, working hours, benefits and workplace conditions

Diagram: The Collective Bargaining Process

This process leads to conflict resolution and collective agreement

•   The goal of collective bargaining is to reach a collective bargaining agreement

  • This is a legally binding document that determines the employment relationship for a specified period
    

    • Both parties must adhere to the terms of the agreement

    • If further disputes arise tools such as mediation and arbitration can be used

Other Forms of Trade Union Action
 

Employer Approaches to Conflict

• Resolving conflict in the workplace is of great important to business owners

• Organisations may resolve conflicts in-house using highly-skilled senior leaders

  • Senior leaders with HR skills form a negotiation team

  • This team is empowered to act on behalf of the business in reaching a mutually acceptable agreement with employees or their representatives

• Alternatively it may use external specialists such as management consultancies or align with employer organisations
   

• Businesses have a range of tools they (or their representatives) can use to resolve workplace conflict

Threat of Redundancies

• The threat of job losses can be used as a powerful tool to persuade trade unions or employees to end industrial action

  • Trade unions may be more willing to compromise if the alternative is members losing their jobs
     

• In August 2023 large-scale redundancy threats helped to bring about a swift settlement to a dispute between British Airways and the Unite union over employee pay and conditions

Changes to Contracts of Employment

• Employers can, in some circumstances, make changes to terms and conditions of employment

• The use of fixed term contracts can support this - workers may not be re-employed if they dispute changes

• Trade unions may become involved in larger-scale negotiations

Threat of Closure

• In extreme cases businesses may choose to threaten to close the business rather than concede to employees' demands

• This can be a powerful persuasive tool

  • Employees are not generally paid during periods of closure

  • Permanent closure means workers are made redundant

Lockouts

• Lockouts are another extreme measure taken during a period of dispute

• Employees are prevented from entering the workplace

  • Security guards are often employed or premises access codes changed
    

• During the period of lockout employees do not receive any pay

• Lockouts are used to pressure workers to defy trade union instructions and return to work without concessions being made
  

• In 2012 contract negotiations between American Crystal Sugar and its workers' trade unions broke down

  • The business wanted workers to agree to higher payments for health coverage and increased outsourcing

  • Its unionised workers refused to accept their demands

  • Following a period of strike action the company locked them out and hired replacement workers on lower wages

  • Workers gradually returned to work and, largely, accepted the employer's contractual changes

• Resolving Conflicts

  • Conflict resolution is the steps taken by leaders and employees (or their representatives) to solve disagreements in the workplace

    • Successful conflict resolution usually requires the needs of both the business and its employees to be met

    • There is a range of ways to resolve workplace conflict

      • Conciliation & arbitration

      • Employee participation

      • Industrial democracy

      • No-strike agreements

      • Single-union agreements

  Approaches to Conflict Resolution

  Approach	Explanation	Example
  Conciliation & Arbitration	Conciliation involves an independent mediator supporting negotiation and compromise between conflicting groups Arbitration involves an independent mediator making a decision to resolve a dispute on behalf of conflicting groups Non-binding arbitration decisions can be accepted or ignored by conflicting parties Binding arbitration decisions involve a compromise that must be accepted by both parties Pendulum decisions are a binding decision that makes no compromise - they declare entirely for one party	In 2019 Prospect union and airports company Hial invited the Advisory, Conciliation and Arbitration Service (Acas) to conciliate in a pay dispute Air traffic controllers increased pay demands were at odds with Hial's refusal to increase wage budgets
  Employee Participation	Employee participation involves giving authority to workers to take on responsibilities and have some level of authority in the organisation Examples include teamwork, suggestion schemes, quality circles and worker panels	Animation studio Pixar has a successful culture of collaboration which enables teams to work together on complex creative projects Employees are encouraged to share ideas, actively participate in the creative process and make decisions
  Industrial Democracy	Industrial democracy involves workers having significant involvement in the decision-making process Worker-owned businesses and worker co-operatives have strong commitments to industrial democracy	Workers at the UK's John Lewis Partnership influence how the business is run through their elected representatives in local forums Staff, known as partners, also receive a generous share of business profits
  No-strike Agreements	An agreement with trade union members not to take strike action when workplace conflict arises These agreements can improve the reputation of a trade union Builds trust and increases the likelihood of businesses being willing to negotiate	An "Olympic truce" was declared following meetings between unions including the National Syndicate of Air Traffic Controllers (SNCTA) and the French Directorate General of Civil Aviation Despite ongoing conflict French air traffic controllers' unions agreed that no strike action would take place until after the 2024 Olympics in Paris
  Single-union Agreements	A business agrees to negotiate with one, rather than multiple, trade union organisations to resolve conflict	After refusing for many years Starbucks started, in 2023, to negotiate with the Starbucks Workers United union Early agreements include a $20 per hour starting wage, a 32-hour minimum working week for full-time employees and credit card staff tipping at all stores