KBF 3: Human Resources - Alon YR 12 notes
Human Resources Role
Human Resource Management:
Manages the relationship between employer & employees.
Strategic role: helps businesses meet employee needs to achieve long-term objectives.
Ensures workers are well-suited, trained, and motivated.
Interdependence of HR with other Key Business Functions (KBF)
Operations:
Requires staff to ‘man’ the production process.
Finance:
Requires skilled accountants, payroll officers, and financial managers to ensure the business achieves profitability, liquidity, efficiency, growth, and solvency.
Marketing:
Requires market researchers to:
Engage in market segmentation and establish a target market.
Determine customer needs & wants.
Develop successful marketing campaigns.
HR requires each of the other departments to provide a business in which to work.
Employees vs. Independent Contractors
Employees:
Enter into a contract of service.
Perform services daily for a wage/salary.
Independent Contractors:
Workers to whom jobs are outsourced.
Contract is called a contract for service.
Outsourcing
Definition: Hiring an external provider (independent contractor) to complete a particular job.
HR jobs frequently outsourced:
Payroll: payment of wages/salaries.
Administration support: e.g., typing services.
Maintenance: e.g., plumbers, electricians.
Advantage:
Allows a business to focus on its core functions (main source of profits).
Categories of Outsourcing
Domestic Outsourcing:
Outsourcing to a contractor within the same country or locality.
Risks: Losing customer contact, loss of business knowledge over time.
Global Outsourcing:
Outsourcing to subcontractors overseas.
Benefits: Cheaper prices for services.
Risks: Same as domestic, plus controlling quality, security, cultural & language barriers, and legal issues (e.g., breach of contract remedies).
Differences Between Employees and Contractors (cont.)
Contractor:
Serves your business and performs work as a representative of your business.
Employee:
Is protected by laws such as Minimum Employment Standards (sick leave, holiday pay, etc.).
Influences (STEEL)
Stakeholders
Definition: Anyone with an interest in or affected by the business.
Examples: Employers, employees.
Shift in Rights: Employees now have expanded rights, especially since the advent of trade unions.
Trade Unions
Definition: Organizations formed by employees to improve wages and working conditions.
Decline in Membership: Due to casualisation of workforce, performance-based contracts; original purpose may no longer be relevant.
Employers Associations
Role: Advise employers on rights & obligations, provide representation at Industrial Relations Tribunal.
Examples: Australian Chamber of Commerce & Business Council of Australia.
Government
Influences on HR:
Legislator: passing laws (e.g., Workplace Relations Act, Fair Work Act, Racial Discrimination Act).
Employer: Nearly 1/3 of workers in government roles.
Economic Manager: Manages the economy, including businesses.
Industrial Relations Policies Administrator.
Represents Australia on world markets (influences business strategies).
Fair Work Commission
Established by Fair Work Act (2009).
Functions:
Encourages dispute prevention and settlement via conciliation and arbitration.
Determines minimum wages through national wage case hearings.
Arbitrates unfair dismissal claims.
Applies the Better Off Overall Test (BOOT) to wage agreements.
Federal Court of Australia
Enforces industrial relations legislation and resolves disputes.
Other Government Agencies
Safe Work Australia (SWA):
Deals with Work Health & Safety (WHS).
Develops national policy on WHS and workers’ compensation.
Australian Human Rights Commission:
Investigates & conciliates discrimination & human rights complaints.
Equal Employment:
Protected by laws including Sex Discrimination Act 1984, Disability Discrimination Act 1992, Age Discrimination Act 2004, Racial Discrimination Act 1975.
Workers Compensation Commission:
Resolves issues between employers & injured workers.
The Anti Discrimination Board:
Administers the Anti-Discrimination Act 1977.
Eliminates discrimination via conciliation, raising awareness, and advising the government.
Demands of Society
Reflected in Articles 23 & 24 of Universal Declaration of Human Rights:
The right to work.
The right to freely choose employment.
Fair conditions of work.
Equal pay for work.
Fair remuneration.
The right to form & join a trade union.
The right to leisure & rest.
Technology & Globalisation
Impacts on HR:
Making jobs redundant or creating new jobs.
Creating a need for retraining.
Potentially making work-life balance more difficult.
Enabling remote work.
Allowing businesses to operate globally.
Effects of AI on jobs.
Economic
7 Signs of Economic Activity:
I = Inflation
W = Wages
I = Interest rates
P = Productivity
I = Investment
C = Consumption
E = Employment
Economic influences on HR:
During economic growth: employers compete for limited employees leading to higher wages.
Trade unions have strong bargaining power, potentially causing inflation.
During downturns: Less demand for labor, reduced workforce size, and loss of bargaining power for employees.
Structural Change
Definition: Change in the nature and pattern of production of goods and services.
Impacts on demand for type and quantity of labor.
Examples: Drop in demand for air travel, imposition of tariffs, increase in ageing population.
Ethics & CSR
Ethical Practices:
Socially responsible, morally right, honourable, and fair.
Unethical practices: Exploitation of workers (offshore outsourcing), child labor.
CSR (Corporate Social Responsibility):
Businesses consider social, economic, and environmental concerns.
A business can commit to CSR by:
Investing in community projects.
Supporting research initiatives.
Adopting environmentally friendly practices.
Introducing codes of ethics.
Engaging in strategies that promote work/life balance.
Benefits of Ethical Practices
Staff retention
Low absenteeism
Reduced costs (less retraining/recruitment)
Enhanced business reputation.
Example: Lush.
Legal Framework
Relationships Between Employers and Employees
Categories:
Individual Contracts
Awards
Enterprise Agreements
Regulated by the Fair Work Act, 2009 (Clth).
Minimum Employment Standards
Part of the Fair Work Act, 2009 (Clth).
10 national minimum standards:
Maximum weekly hours: 38 hours/week + reasonable additional hours.
Flexible working arrangements: parents/carers of children under 18 can request changes for childcare.
Parental leave: up to 12 months unpaid leave + request for additional 12 months + other forms of leave.
Annual leave: 4 weeks paid leave per year (+ 1 week for certain shift workers).
Personal/carer’s leave: 10 days paid, 2 days unpaid carer’s leave, 2 days compassionate leave (unpaid for casuals).
Community service leave: unpaid leave for voluntary emergency activities and jury service (up to 10 days paid for jury service).
Long service leave: after a long period of working for the same employer.
Public holidays: paid day off, except where reasonably requested to work.
Notice of termination: up to 4 weeks’ notice (5 weeks if over 45 with 2+ years of service) + redundancy pay (up to 16 weeks), both based on length of service.
Fair Work Information Statement: employers must provide this statement to all new employees.
The Individual (“Common Law”) Contracts
The employment contract:
Agreement setting out the legal relationship between employer & employee.
Need not be in writing.
Preconditions for validity:
Parties must intend to create a legal relationship.
Contract must not contravene any law or public interest.
Both parties must have legal capacity (e.g., of age).
Offer and acceptance.
Each party must obtain a benefit.
Genuine consent is required from each side (no pressure).
Obligations Under the Common Law
Employer:
To provide work.
To pay wages or salaries.
To obey industrial relations legislation.
To comply with a duty of care.
Employee:
To obey lawful & reasonable demands of employer.
To use skill & care in performance of work.
To act in good faith & in the interests of the employer.
Awards & Enterprise Agreements
Awards:
Legally binding document containing minimum terms and conditions of employment.
Determined in annual National Wage Cases by Fair Work Commission.
Cover employees in lower-skilled occupations (hospitality, retail, community service).
Minimum Wage Rates:
From 2010, the employee’s base rate of pay for ordinary hours worked has been determined by 2 factors:
The Award that covers the employee; the rate of pay cannot be less than the minimum wage.
The national minimum wage - this applies to employees not covered by awards or agreements, and is reviewed annually by a panel of 7 members of Fair Work Australia.
Enterprise Agreements
Agreements made at a workplace between an employer and a group of employees about terms and conditions of payment.
Alternative to an Award.
Can offer better (but no worse) conditions than an Award.
Must pass a “better off overall test (BOOT), compared to the modern award.
Types of Enterprise Agreements
Single enterprise agreements: between a single employer and group of employees.
Multi-enterprise agreements: between 2 or more employers and groups of their employees.
Greenfield agreements: single or multi-enterprise agreements for a new enterprise before any employees are employed; often negotiated with unions.
Other Types of Contracts
Independent contractors: consultants or freelance workers; self-employed, services normally limited to specific project
Contracts for casual work: short-term, paid on a daily/hourly basis; no paid leave; favored by employers due to fewer obligations (redundancy, sick leave, holiday pay, superannuation).
Part-time contracts: continuing agreement for a particular term; entitled to all benefits under the Fair Work Act (paid leave).
Anti-Discrimination Legislation
Statutes protecting employees from direct/indirect discrimination.
Applies to recruitment, selection, training, promotion, remuneration, termination, and access to employment benefits.
Discrimination: Policy or practice disadvantaging a person/group based on irrelevant personal characteristics (race, sex, age, etc.). Includes harassment, offending behavior, and vilification.
Equal Employment Opportunity (EEO)
Equitable policies and practices in recruitment, selection, training and promotion.
Ensures the best person for the job is chosen.
Promotes a positive work environment.
Social Influences on HR
Dramatic growth in part-time and casual work.
Changing work patterns:
More career flexibility & job mobility.
Rising female participation rate.
Increasing trend for early retirement.
Australia has high living standards, but changes in the workforce may erode this.
Processes (ADMS) - HR Life Cycle
Definition: Management of employees through a 4-stage process:
Acquisition: How employees are acquired.
Development: Induction, training & development.
Maintenance: Retaining staff & managing their well-being.
Separation: Employee leaves (voluntary or involuntary).
Acquisition
Involves:
Recruitment: Locating & attracting the right staff at the right cost.
Selection: Gathering information and choosing the most appropriate applicant.
Placement: Locating the right employee and placing him/her in a position that best utilises their skills to meet the needs of the business.
Development
Involves:
Induction: Introducing new employees to the job, co-workers, environment, and culture.
Training needs to use strategies to help motivate and retain talented staff. The aim of training is to seek a long-term change in employees‘ skills, knowledge, attitudes and behaviour in order to improve his work performance in the business. A lack of training could be damaging, as it could result in higher turnover rates because staff may seek employment in other businesses.
Organisational development: HR managers Examples include: job enlargement, job rotation, job enrichment, job sharing, self-managing teams, mentoring & coaching.
Mentoring & Coaching: Improve skills and performance, develop leadership potential.
This is given by the business in order to improve a person’s skills and performance, in order to enable the carrying out of specified roles more effectively.
Mentoring & coaching are increasingly used to motivate & develop staff with the leadership potential
The person being mentored is free to accept or reject the advice offered, but it is being offered for his/her benefit and advancement in the business
Performance appraisal to evaluate employee performance and identify areas for improvement needed for leadership development.
Performance appraisal is used to evaluate employee performance, and identify areas for mentoring, coaching, leadership development or performance management to enable the employee to contribute most effectively to a business’ success
Maintenance
focuses on the processes needed to retain staff & manage their well-being at work
Well-being: Allowing employees to participate in decision-making and have control over their work lives. Employers should listen to workers.
Good communication: Effective workplace relationships rely heavily on a business’ communication systems; poor communication can lead to conflict and high turnover rates.
Benefits for workers: Can be monetary (increased wages, bonuses, company car) or non-monetary (flexible working conditions, employee of the month awards, counselling).
Work-life balance: Employers are responding more to employees’ desire for this.
Separation
Employee leaves the business (voluntary or involuntary).
Voluntary Separation:
Resignation: sickness, dissatisfaction, relocation.
Retirement.
Involuntary separation:
Expiry of contract.
Retrenchment: Role ceases to exist (downsizing, closure).
Redundancy: Job lost because skills are no longer required (automation).
Dismissal.
Managing involuntary separation carefully and complying with legislation.
Dismissal
Types:
General dismissal: poor performance or redundancy. Compliance costs apply.
Employers need to prove that they have complied with all legislative and contractual requirements before dismissing an employee. The costs to a business of complying with laws are called compliance costs. In the case of dismissal based on poor performance, employers are required to: ❏ give the employee a written warning about their performance, ❏ give advice and guidance so that they have an opportunity to improve, ❏ notify the employee of the reason for the termination, and ❏ provide an opportunity for them to respond. In the case of redundancy the employer might be required to show: ❏ that the job is no longer needed ❏ that there is no appropriate alternative work elsewhere in the business. ❏ proper notice was given and all legal requirements, including payments have been complied with ❏ That there is no appropriate alternative work elsewhere in the business.Summary dismissal: instant dismissal for serious misconduct (theft).
Unfair dismissal: Harsh, unreasonable, or unjust dismissal. Employee can claim at the Fair Work Commission if business has 15+ employees. Reinstatement or compensation may result.
Where an employee is dismissed in circumstances that are believed to be harsh, unreasonable or unjust.
In such a case the employee is entitled to make a Claim for Unfair Dismissal at the Fair Work Commission. The claim will be successful if the Commission finds that amongst other things:(1) the employee was dismissed, (2) the dismissal was harsh, unjust or unreasonable.
To make a claim for unfair dismissal, the business must have more than 15 employees.
The claim may be resolved through informal conferences, mediation or by a formal hearing.
Reinstatement is the remedy for a successful claim, unless this is not in the interests of the parties - in which case compensation may be ordered.
Strategies (GLDRRTPD)
Global Strategies
Businesses rethink HR by looking overseas due to high domestic labor costs and skills shortage.
Accessing overseas labor for technical expertise and cost savings.
Leadership Styles
Directive (authoritarian/autocratic): Immediate compliance. Employees do not appreciate constant supervision. They also appreciate managers who are open and honest in their communication, encourage, listen and support staff and who demonstrate integrity in managing the business.
Participative (democratic): Group consensus, teamwork.
Delegative: Able & skilled employees make their own decisions
Employees generally feel far more committed where they are empowered, consulted, recognised for their achievements and receive some sort of constructive feedback concerning their performance
Visionary: Long-term vision.
Affiliative: Creates harmony.
Coaching - emphasis is on personal growth of employees
Laissez faire: allows workers to do as they choose
Dispute Resolution
Negotiation: Discussions to reach a compromise and agreement.
Mediation: Confidential discussion with a neutral third party (Fair Work Commission, Human Rights Commission, Anti-Discrimination Board).It avoids expensive legal costs and empowers the parties to resolve disputes themselves.
Grievance procedures: Formal procedures in an award or agreement to resolve disputes step-by-step.
These are formal procedures written into an award or agreement that set out agreed step-by-step processes to resolve disputes in the workplace. They are useful in reducing the risk of an issue rapidly becoming a serious dispute.
The involvement of Courts and/or Tribunals (such as the Fair Work Commission) occurs when disputes are escalated to a high level because negotiation, and mediation has failed.Conciliation and Arbitration:
Conciliation: Third party helps both sides reach an agreement. The “Member” (the person appointed to attempt to conciliate the dispute) arranges a conference and attempts to get both sides to reach an agreement. https://youtu.be/iuCkWWh7MfU. He/she may require all parties to continue negotiations, to reduce the ambit of the dispute or develop other strategies to resolve it.
Arbitration: Third party listens and makes a legally binding decision.
This is a process where a third party listens to both sides and makes a legally binding decision to resolve the dispute. There is a hearing of both sides of the dispute in a more formal, court-like setting and a judgement in the form of an Order, based upon the evidence and the merits of the case.
Common law action: Formal court proceeding (last resort).
This is a formal Court proceeding, and is very costly It is generally regarded as a “last resort” because all other attempts at resolution fail.
Recruitment
Attracting the right quantity & quality of staff at the right cost.
Job advertisement is most common.
CSR: Employing from diverse backgrounds.
In terms of CSR, a business that employs from a wide range of backgrounds is seen as being more inclusive and more diverse, reflecting what the world is actually like.Internal or external recruitment
Involves filling job vacancies with people from within the business. These are sourced from employees, ex-employees, former applicants or employee referrals. External recruitment - involves filling vacancies with people from outside the business. They are found through the more traditional sources including newspaper & online advertisements, social media recruitment agencies, radio, TV, trade union and employer association publications, and trade shows helping others to reach an agreement.
General Skills
Key general HR skills include flexibility & versatility, social confidence, positive attitude, motivation, ability to work as a team or independently, leadership & decision-making styles, willingness to learn, and ability to work under pressure. Such skills are important, not only to gain employment but also to progress within a business. General skills are important as many jobs require employees to work independently and to undertake many different tasks. General diversity in an employee is highly
Most businesses are concerned about skill shortages and need to target employees with specific skills to fill gaps in their business. For example, the need for chefs, skilled tradespeople, specialised teachers. Many companies will engage in a process of “in house”training of staff in specific areas. By doing so they ensure that the employee in question becomes acquainted and suited with the tasks needed to be filled. The alternative is to recruit from external sources, or to outsource from independent contractors.
Specific Skills
Most businesses are concerned about skill shortages and need to target employees with specific skills to fill gaps in their business.
Many companies will engage in a process of “in house”training of staff in specific areas.
Alternative:Recruit from external sources, or to outsource from independent contractors.
Rewards Management
A well planned reward system is a key management strategy for attracting, motivating and retaining employees.
Different classifications of rewards:
* Monetary and non-monetary rewards- Monetary rewards are reflected in pay or having a financial value. Non-monetary rewards are those that do not have any financial value, such as social activities or retirement planning.
* Intrinsic and extrinsic rewards- Intrinsic rewards - rewards derived by the individual from the job itself, eg sense of achievement; Extrinsic rewards - sourced from outside the job itself. They may be monetary (eg a pay increase) or non-monetary, eg flexible work schedules.
Rewards Can Relate to Performance Management
* Rewards can relate to:One individual’s performance only; however this can lead to conflict and rivalry if not managed effectivelyA team’s performance - which may encourage motivation and solidarity between them.
* Key issues to consider in designing a reward include:Rewards and benefits offered by competitorsThe probability/viability of the business compared to competitors
* Significant considerations for employers when designing reward systems:Whether a reward is performance related - eg incentives for good work, bonuses and commissionsWhether a reward is job related - eg the role and level of responsibility for the job and the scope of supervision needed.Other individual considerations - eg group incentives, job sharing rewards.
Performance management
This is a systematic process of evaluating and managing employee performance to achieve the best outcomes for a business.
Its aim is to measure both the performance of the employee and the business
Performance management
There are 2 types:
Administrative Performance Management
This provides information (following an annual appraisal) and is used by management for planning in HR such as training, rewards, pay levels, benefits and performance improvement.
Its focus is on collecting data to ensure that individual and business goals are aligned and that strategic goals are met:
Developmental Performance Management
This focuses on the development of individual skills and abilities, so employees can improve their effectiveness, overcome weaknesses and are a preparation for promotion.
Achieved through year round feedback and discussions that is both empathetic and goal focused.
Benefits of Performance management
These can be viewed through the eyes of the business and the individual employee. They include:
For the business
assists with HR planning
identifies training & development for legal compliance needs
identifies & records poor performance, and links it with training and improvement strategies
helps identify, motivate and train talented staff for leadership succession
For the employee
create an opportunity for an employee to receive feedback
as positive feedback is received, the employee becomes more motivated
helps assess rewards linked to performance
Fosters promotion based on merit
Training and Development
* Aims to develop skills, knowledge and attitudes that lead to superior work performance.
* In choosing the nature of training and development of skills, businesses need to use a systematic process to evaluate the skills needed in the business.
* Businesses need to consider the mix of skills it can develop internally and those for which they need to recruit. Amongst the options are these:
* Investment in further in-house training and development
Recruitment of staff from external sources with specific skills
* Retention of people through flexible work structures eg part time work
Sharing of staff with other firms or doing work with other firms.
The outsourcing of specific functions
* Sponsorship of overseas migrants for areas for major shortages.
Job Design
Job design is the process of designing job and how that job will interact with other jobs and employees
The aim is to strike a balance between: (1) employee satisfaction and (2) achieving business goals such as profit maximization and cost minimization
It involves these sorts of considerations
Effectiveness (ACT BAWD) indicators
Absenteeism
* This refers to employee absences on an average day, without leave approved in advance. In other words a “sicky”- The worker neglects to turn up when scheduled to do so.
* High levels of absenteeism may indicate that workers are dissatisfied with the business culture or that there is a conflict within the workplace.
* Every business strives to achieve a low absenteeism rate.
* But it must always be borne in mind some levels of absenteeism are inevtiable, depending on the industry. For example, one might expect doctors in a hospital setting to be away more often as a result of sickness.
Corporate Culture
*A business’s HR management will not be effective if it has a poor corporate culture.
* This refers to the values,ideas,expectations and beliefs shared by members of the business. A positive corporate culture gives rise to better work and employment relationships.
* Strategies that focus on building trust & communication between workers, & value their ideas, are critical in building a positive workplace culture.
Turnover of staff
* This refers to the loss of employees leaving for a variety of reasons including sickness, accidents, retirement, relocation. Some staff turnover is always to be expected and natural.
* The problem with excess staff turnover is an indication of the effectiveness of a business’s HR functions. If the level is too high compared to other businesses (in the same industry, ie benchmarking) this may be an indication that the work environment/ corporate culture is unhealthy
* High resignation rates are often linked with absenteeism rates as indicators of dissatisfaction by employees in the workplace.
Benchmarking Key Variables
The process of measuring a business's HR performance against established standards. There are 4 types:
* Informal benchmarking - any informal strategies such as networking through discussions with colleagues in other businesses, visiting other businesses, researching best practice and attending conferences.
Performance benchmarking - comparing the performance levels of a process with other businesses.
* Best practice benchmarking- comparing performance levels with those of another best business.
Balanced scorecard benchmarking - used for measuring whether the business activities are meeting its objectives in the strategic plan.
Accident Rate
Number of lost-time injuries in the reporting period x 1,000,000 / Total hours worked in that period
*When assessing safety performance, one of the most important measures is a formula known as the Lost Time Injury Frequency Rate (LTIFR)
The LTIFR is the number of Lost Time Injuries that occured during a reporting period, eg one year. Most companies choose to calculate LTIFR per 1 million hours worked.
*Lost Time Injury is an injury suffered by a worker while on the job prevents him/ her from being able to perform their job for at least one day or shift.
Example:
There were 6 Lost Time Injuries in the past year, and a total of 2,500,000 hours worked.
To calculate the LTIFR, plug those numbers into the formula. Ie LTIFR = (6*100000) / 2500000=2.4
That figure can then be compared to the LTIFR of other similar businesses.
Worker Satisfaction
* An indicator of the effect of HR management is the level of worker satisfaction.
* At its basic level worker satisfaction refers to how much employees enjoy their workplace.
Employee satisfaction surveys are useful in helping employers understand how their staff feel about their work, the management and the culture of an organisation.
They can be conducted in private through confidential communications to avoid embarrassment. Ultimately employee satisfaction will boost productivity and hence profitability, because workers will be far more efficient and enthusiastic if they occupy roles with which they are satisfied.
Dispute Resolution
* The levels of dispute within a business can also be a measure of the effectiveness of HR management.
* Disputes are unproductive and bad for business on many fronts.
* There are both overt or covert indications of disputes: Overt indications