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
ExplanationLabour 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 PlanningThere 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
ExplanationBusiness 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
ExplanationRemote, 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
Explanation1. 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
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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
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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
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Market Uncertainty |
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Rapid Technological Advancements |
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Global Expansion |
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Competitive Pressures |
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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
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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
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Crisis situations |
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Hierarchical organisations |
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Time-sensitive projects |
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Inexperienced or unmotivated teams |
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Maintaining order and discipline |
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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
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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
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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
How Businesses use Taylor's Approach | Advantages | Disadvantages |
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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
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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
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Motivations |
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Behaviours |
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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
Autonomy | Competence | Relatedness |
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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
Adaptability
Recognises that not all individuals are motivated in the same way
Can be adapted to account for variations in motivation across different cultures
Can be applied to different situations
It has been used widely in business, education management, sports coaching and healthcare
Backed by research
Numerous studies have demonstrated its validity and relevance
Weaknesses of Deci & Ryan's Self-Determination Theory
Potential cultural bias
Its origins are in Western psychology
May not fully account for cultural variations in motivation between regions
Overemphasis on intrinsic motivation
Downplays the significance of extrinsic motivators such as financial incentives
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
Under-Reward | Equity | Over-Reward |
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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
Easy to understand
Most people have an inherent sense of fairness and grasp the concept of equity
Recognises individual differences
What one person perceives as equitable may not be the same for another
Highlights the importance of social comparisons
People often compare their situation to others
Weaknesses of Adams's Equity Theory
It is subjective
What one person considers fair may differ from another's perspective
Ignores other influences on behaviour
Factors such as personal values, intrinsic motivation and organisational culture also influence behaviour
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
Expectancy | Instrumentality | Valence |
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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
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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
Advantages | Disadvantages |
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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
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Ongoing Feedback |
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Improvement-Oriented |
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No or Low Stakes |
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Timely Feedback |
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Employee Involvement |
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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
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Endpoint Assessment |
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Evaluation of Achievement |
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High-Stakes |
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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
Performance Appraisal | Personal Development |
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Career Development | Leadership and Management Development |
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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
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Achievements |
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Strengths |
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Areas for Improvement |
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Goals & Development Plans |
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Self-Reflection |
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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
Advantages | Disadvantages |
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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
Method | Explanation |
Referrals/Personal Recommendations |
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Online Advertising |
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Newspaper Advertising |
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Specialist Trade Publications |
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Employment Agencies |
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Headhunting |
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Job Centres |
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Careers Fairs |
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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
Application Form | Curriculum Vitae (CV) | Covering Letter |
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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
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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
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Piecework |
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Commission |
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Bonus |
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Profit share |
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Performance-related pay |
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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
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Empowerment |
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Team working |
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Job enrichment |
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Job rotation |
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Job enlargement |
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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
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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
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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
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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
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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 CultureOrganic 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
ExplanationCommunication 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
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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 CommunicationFace-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 CommunicationWritten 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 CallsPhone 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 ConferencingVideo calls allow people in different locations to connect
Unreliable internet connections or audio/video problems can hinder effective communication
Instant Messaging & Chat ApplicationsInstant 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 jargonThe 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 distractionsPhysical 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 feedbackCommunication 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 differencesIn 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 barriersEmployees 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 concisenessVague, lengthy or overly technical messages can confuse recipients
Emotional barriers or lack of timeIf 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 barriersOver-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 filtersPeople 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
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IG Metall
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Unión General de Trabajadores (UGT)
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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
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Work-to-Rule |
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Strike Action |
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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
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
ExplanationLabour 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 PlanningThere 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
ExplanationBusiness 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
ExplanationRemote, 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
Explanation1. 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
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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
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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
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Rapid Technological Advancements |
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Global Expansion |
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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
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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
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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
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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
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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
How Businesses use Taylor's Approach | Advantages | Disadvantages |
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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
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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
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Motivations |
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Behaviours |
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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
Autonomy | Competence | Relatedness |
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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
Adaptability
Recognises that not all individuals are motivated in the same way
Can be adapted to account for variations in motivation across different cultures
Can be applied to different situations
It has been used widely in business, education management, sports coaching and healthcare
Backed by research
Numerous studies have demonstrated its validity and relevance
Weaknesses of Deci & Ryan's Self-Determination Theory
Potential cultural bias
Its origins are in Western psychology
May not fully account for cultural variations in motivation between regions
Overemphasis on intrinsic motivation
Downplays the significance of extrinsic motivators such as financial incentives
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
Under-Reward | Equity | Over-Reward |
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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
Easy to understand
Most people have an inherent sense of fairness and grasp the concept of equity
Recognises individual differences
What one person perceives as equitable may not be the same for another
Highlights the importance of social comparisons
People often compare their situation to others
Weaknesses of Adams's Equity Theory
It is subjective
What one person considers fair may differ from another's perspective
Ignores other influences on behaviour
Factors such as personal values, intrinsic motivation and organisational culture also influence behaviour
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
Expectancy | Instrumentality | Valence |
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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
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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
Advantages | Disadvantages |
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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
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Ongoing Feedback |
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Improvement-Oriented |
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No or Low Stakes |
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Timely Feedback |
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Employee Involvement |
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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
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Endpoint Assessment |
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Evaluation of Achievement |
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High-Stakes |
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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
Performance Appraisal | Personal Development |
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Career Development | Leadership and Management Development |
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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
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Achievements |
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Strengths |
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Areas for Improvement |
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Goals & Development Plans |
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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
Advantages | Disadvantages |
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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
Method | Explanation |
Referrals/Personal Recommendations |
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Newspaper Advertising |
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Employment Agencies |
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Headhunting |
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Job Centres |
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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
Application Form | Curriculum Vitae (CV) | Covering Letter |
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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
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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
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Piecework |
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Commission |
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Bonus |
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Profit share |
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Performance-related pay |
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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
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Empowerment |
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Team working |
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Job enrichment |
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Job rotation |
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Job enlargement |
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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
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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
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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
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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
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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 CultureOrganic 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
ExplanationCommunication 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
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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 CommunicationFace-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 CommunicationWritten 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 CallsPhone 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 ConferencingVideo calls allow people in different locations to connect
Unreliable internet connections or audio/video problems can hinder effective communication
Instant Messaging & Chat ApplicationsInstant 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 jargonThe 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 distractionsPhysical 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 feedbackCommunication 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 differencesIn 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 barriersEmployees 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 concisenessVague, lengthy or overly technical messages can confuse recipients
Emotional barriers or lack of timeIf 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 barriersOver-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 filtersPeople 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
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IG Metall
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Unión General de Trabajadores (UGT)
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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
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Work-to-Rule |
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Strike Action |
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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