Human Resource Management Notes

Unit 3: Business Management - Human Resource Management

AOS2: Human Resource Management

• Key Knowledge Areas:
  • KK1: The Relationship Between Human Resource Management and Business Objectives
  • KK2: Key Principles of the Theories of Motivation
  • KK3: Motivation Strategies
  • KK4: Advantages and Disadvantages of Motivation Strategies + their effect on short term and long - term motivation
  • KK5: Training Options
  • KK6: Performance Management Strategies
  • KK7: Termination Management
  • KK8: The Roles of Participants in the Workforce
  • KK9: Awards and Agreements as Methods of Determining Wages and Conditions of Work
  • KK10: An Overview of the Dispute Resolution Process

What is Human Resource Management?

• Human Resource Management (HRM) is the process of managing the relationship between the employees and the business.
• It involves the effective use of people within the business to achieve its strategic objectives.
• This includes functions such as:
  • Recruiting
  • Training
  • Motivation and retention
  • Managing performance
  • Awards & Agreements
  • Ending the cycle of employment.

Background Information: The Employment Cycle

• The employment cycle is the relationship between a business and its employees.
• It starts once a new employee has been hired and finishes when the employee eventually leaves the business.
• There are three stages:
  1. Establishment Phase
     • Consider Staffing Needs & Complete Job Analysis
     • Recruit and Decide on Arrangements / Remuneration
  2. Maintenance Phase
     • Induction & Training
     • Continuously Monitor Employee Performance
  3. Termination Phase
     • Termination – Voluntarily or Involuntarily
     • Pay Any Owed Entitlements & Offer Support

The Relationship Between Human Resource Management and Business Objectives

• A business can have the same products, the same amount of money, the same type of equipment, and raw materials, but it can’t have the same employees.
• Attracting and retaining high-quality employees can be a challenge for some businesses.
• It’s important a HR manager does everything in their power to keep these employees as they can positively contribute to business objectives.

Business Objectives

• Types of Business Objectives, according to the study design:
  • To make a Profit
  • To increase Market Share
  • To improve Efficiency
  • To improve Effectiveness
  • To fulfill a Market Need
  • To fulfill a Social Need
  • To Meet Shareholder Expectations

The Relationship between Human Resource Management and Business Objectives

• There is a strong relationship between human resource management and the achievement of business objectives.
• The human resource management team should ensure:
  • The most appropriate employees are recruited
  • The employees are motivated, well-trained, and receive constructive feedback
• The successful management of employees should contribute to:
  • Increased profit
  • Increased sales
  • Growth in the market share
  • Positive customer relations
  • Improved productivity (reduced inputs and improved outputs).

Effect of Successfully Managing Employees

• When employees have increased job satisfaction, the number of employees leaving the business is likely to decrease.
  • Effect on business: The costs associated with recruiting and training replacement employees for leaving staff are reduced. Business objective achieved: To make a profit.
• When employees have increased job satisfaction, the quality of the goods and services manufactured and delivered is likely to also increase.
  • Effect on business: A higher quality of goods and services can lead to increased customer satisfaction and sales. Business objective achieved: To increase market share.
• When employees have increased job satisfaction, they are motivated to work harder and to a higher standard.
  • Effect on business: Highly motivated employees can enable a business to increase its sales and profit, allowing higher dividends to be paid to shareholders. Business objective achieved: To meet shareholder expectations.
• When employees have increased job satisfaction, they are more likely to contribute innovative ideas.
  • Effect on business: A business that produces unique goods and services may be able to better meet customer needs. Business objective achieved: To fulfil a market need.
• When employees have increased job satisfaction, their support of business initiatives is also likely to increase.
  • Effect on business: Business initiatives that aid the community and reduce waste are more likely to be successful. Business objective achieved: To fulfil a social need.
• When employees have increased job satisfaction, they are more motivated and determined to complete work tasks, doing so in a focused, error-free, and productive manner.
  • Effect on business: A business is able to produce goods and services at a faster pace and to a higher quality, with fewer errors and discarded materials. Business objective achieved: To improve efficiency.
• When employees have high job satisfaction, they are more motivated to achieve business objectives and have greater resilience when doing so.
  • Effect on business: A business can more readily achieve its objectives and continue improving its performance. Business objective achieved: To improve effectiveness.

Sample Response: HRM and Profitability

• Many businesses will have the business objective to make a profit.
• The human resource manager may decide to implement ongoing training for the employees.
• For example, employees may receive product training so they understand the features of each product being sold as well as customer service training to improve the level of customer satisfaction.
• This can ensure the employees are able to service every customer effectively, which can lead to increased sales, improving the overall profitability of the business.

Further Examples of HRM Supporting Business Objectives

1. “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” – Richard Branson (Founder of Virgin Group)
   • Explain what this quote means.
2. An accident in the workplace has closed a factory for two days.
   • Explain how you think a human resource manager could attempt to avoid a similar situation in the future.
3. Jess has purchased new software to speed up the checkout process in her clothing store.
   • She has four employees who will need to learn the new software in order to carry out their duties.
     • a) Explain one business objective that Jess might be attempting to achieve through this purchase. (2 marks)
     • b) Identify two human resource strategies Jess might implement to achieve the business objective explained in part a. (2 marks)