1
Q
What is the human resource department (HR)?
A
The function that is focused on activities related to employees.
- This includes workforce planning, recruitment & selection, training & development, retention & employee motivation, welfare & benefits and dismissal & redundancy.
2
Q
What are the roles of HR?
A
- Workforce planning (how many staff do we need? for which roles? with what skills?)
- Recruitment and selection.
- Onboarding.
- Training and development
- Choice of employment contracts (full time? zero hour?)
- Staff engagement and remuneration (motivation)
- Measuring employee performance.
- Organisational structure (‘who does what’ and ‘who reports to whom’)
- Compensation and reward.
3
Q
Name the key human resources objectives
A
- Employee engagement and involvement.
- Talent development.
- Training.
- Diversity.
- Alignment of values.
- Right number, skills and location of staff (appropriate employee mix)
4
Q
Explain the ‘employee engagement and involvement’ HR objective
A
If employees are fully engaged and involved in the business, they are more likely to be motivated, leading to higher productivity and quality of input.
- Involves implementing appropriate financial incentives (wages, salaries) and non-financial incentives (health and safety measures, fringe benefits).
- A motivated workforce leads to increased productivity and reduces absenteeism and staff turnover, ultimately saving on recruitment costs.
5
Q
Explain the ‘talent development’ HR objective
A
This relates to the development and guidance of the future ‘stars’ of a business so that they can contribute to the business’ success and growth.
- It involves not just developing their talents but also the retention of these employees.
- Individual development: providing training for future managers and leaders. This is crucial for identifying, developing, and retaining high-potential employees, preventing them from seeking opportunities elsewhere.
6
Q
Explain the ‘training’ HR objective
A
The development of employee skills and/or behaviour in order for them to carry out their jobs more effectively and improve performance.
- Company-wide training: addressing new legislation or company-wide policy changes.
- Departmental training: enhancing skills and knowledge within specific departments to maintain motivation and productivity.
7
Q
Explain the ‘diversity’ HR objective
A
This concept encompasses acceptance and respect in terms of race, gender, age, sexual orientation, physical abilities, religion, etc.
- It means understanding that each individual is unique and recognising individual differences.
- A diverse workforce brings varied perspectives and strengthens the organisation, e.g. valuable insights into different markets and consumer preferences.
8
Q
Explain the ‘alignment of values’ HR objective
A
The sharing of a common set of core values between all employees.
9
Q
Explain the ‘right number, skills and location of staff’ HR objective (appropriate employee mix)
A
- Optimal employee count: ensuring the right number of employees aligned with business capacity, avoiding underutilisation and unnecessary costs.
- Strategic location: placing employees in locations that best serve the business, particularly crucial for multinational companies.
- Skill alignment: ensuring employees possess the necessary skills to meet the strategic focus of the business. This may involve training programs to address skill gaps.
10
Q
What would be the benefits of a business fulfilling all of the key HR objectives?
A
- A lower labour turnover
- Higher labour retention rates
- Higher productivity
- Full compliance with any UK labour legislation
11
Q
Internal influences on HR objectives
A
- Type of business (labour or capital intensive) - a business must ensure the skills of the workforce are appropriate for that particular product or service as well as the image of the business.
- Corporate objectives - if there is an overall objectives of growth, human resources needs to prepare for this by ensuring the availability of sufficiently skilled workers.
- Values
- Financial performance
12
Q
External influences on HR objectives
A
- Political decisions
- Economic conditions
- Social changes
- Technological changes
- Legal restrictions
- Environmental laws
- Competitor’s actions
13
Q
What is the philosophy of HARD human resource management approach?
A
Treats employees as just another ‘asset’ or resource that must be used as efficiently as possible, like machinery, supply, energy, etc.
14
Q
What is the philosophy of SOFT human resource management approach?
A
Treats employees as the most valuable asset or resource available to the business that needs to be developed and are a vital competitive weapon.
15
Q
Hard HR approach: timescale
A
HR management operates in the short term only: employees are hired and fired as necessary.
16
Q
Soft HR approach: timescale
A
Employees are developed over a long period of time to help the firm fulfil its corporate objectives.
17
Q
Key features of hard HR approach
A
- Pay is kept to a minimum.
- Little or no empowerment.
- Communication is mainly downwards.
- Emphasis is on the short term in recruiting and training employees.
18
Q
Key features of soft HR approach
A
- Employees are empowered and encouraged to take decisions.
- Employees are encouraged to extend and update skills.
- Employees are consulted regularly by managers.
- A long-term relationship is developed with employees through use of internal recruitment and ongoing training programmes.
19
Q
Hard HR approach: associated leadership style
A
Autocratic style of leadership
20
Q
Soft HR approach: associated leadership style
A
Democratic or laissez-faire leadership styles
21
Q
Hard HR approach: motivational techniques used
A
Principally financial techniques with minimal use of techniques such as delegation.
22
Q
Soft HR approach: motivational techniques used
A
Techniques intended to give employees more control over their working lives, e.g. delegation and empowered teams.
23
Q
Hard or soft HR: on the Tannenbaum & Schmidt’s continuum of leadership behaviour, managers fall into the category of ‘Tell’ (makes all the decisions and gives orders)
A
Hard HR
24
Q
Hard or soft HR: workers are a key asset to the business
A
Soft HR
25
Hard or soft HR: employing staff using temporary & zero hour contracts
Hard HR
26
Hard or soft HR: provision of training
Soft HR
27
Hard or soft HR: use of a 'clocking in machine' to monitor attendance by recording staff's arrival & departure time
Hard HR
28
Hard or soft HR: workers are easily disposed of and replaced
Hard HR
29
Hard or soft HR: paying a salary and pension contributions
Soft HR
30
Hard or soft HR: on the Tannenbaum & Schmidt's continuum of leadership behaviour, managers fall into the category of 'Consults' (listens to staff ideas & suggestions before making decisions & involves them in decision making)
Soft HR
31
Hard or soft HR: offering flexi-time contracts & allowing staff to work from home
Soft HR
32
Hard or soft HR: using IT equipment to monitor staff's speed of work & length of breaks taken
Hard HR
33
Hard or soft HR: no skill required & no effort to develop staff skills
Hard HR
34
Hard or soft HR: allowing staff to belong to trade-unions (organisations defending employees' rights) or staff association
Soft HR
35
When would soft HR approach be best used for?
- The job requires creativity.
- Staff's ideas and input are needed.
- High margin businesses.
- If staff bring a competitive advantage.
- If the business wants to compete on differentiation: service, innovation, quality.
- Often used in head office or R&D department or in time of growth.
36
When would hard HR approach be best used for?
- The job is repetitive.
- Staff input isn't needed.
- Keeping labour costs low is a priority.
- Often used in warehouses or in times of crisis.
37
What is human resource data?
Quantifiable information used to measure the performance of the workforce and efficiency of management in utilising the human resources within the business.
- These data help inform decision-making on how to best improve human resource performance.
38
What are the measures of HR performance?
- Labour productivity
- Labour cost per unit
- Employee costs as a percentage of turnover
- Labour turnover
39
What is labour productivity? + how to calculate
A measure of how efficient the workforce is in transforming inputs into outputs, i.e. outputs per worker
= (total output) / (number of employees)
= no. of units per worker for a specific period of time, e.g. a year.
40
What is labour cost per unit? + how to calculate
The total labour costs, e.g. wages, taxes, motivators divided by the number of units of output.
= (Total labour costs) / (total output)
= £ per unit
41
What is employee costs as a percentage of turnover? + how to calculate
The proportion of sales revenue that is spent on employee remuneration.
= (Employee costs) / (sales turnover) x 100
= percentage (%)
42
What is labour turnover? + how to calculate
The measure of the number of employees leaving as a percentage of the average size of the workforce in a given period of time, e.g. a year.
= (Number of staff leaving) / (average number of staff) x 100
= percentage (%)
43
What is labour retention? + how to calculate
The proportion of employees with one or more years of service.
= (no. of employees with one or more years of service) / (overall workforce numbers)
44
Reasons why employees may leave a business
- Low or inadequate wage levels, leading employees to defect to competitors.
- Poor morale and motivation.
- A buoyant local labour market offering more attractive opportunities.
- Better working conditions or working hours elsewhere.
- Difficult relationship with boss or colleagues.
- Change of career, etc.
45
Why are some businesses experiencing a higher labour turnover than others?
- Some businesses may have seasonal labour turnover (e.g. holiday perks)
- Some businesses employ many temporary staff (e.g. hotels)
- Some businesses offer low paid jobs or difficult working conditions.
46
What are the problems associated with high labour turnover?
- Costs of recruitment, selection and training.
- Loss of trained and effective staff.
- Lower productivity (until new staff is fully trained).
- Errors or waste due to lack of experience of new staff.
- Low motivation of remaining staff.
47
Ways of reducing labour turnover
- Pay staff more.
- Move towards 'soft' HR
- Redesign jobs to make them more interesting
- Offer training, promotion & career development
48
Internal information and data used in human resource planning
- Labour productivity
- Labour turnover
- Retention rates
- Age profile of workers
- Unit labour costs
- Training needs
- Staff skills / skills needed
- Business' financial performance
- Corporate objectives: growth or survival
- Level of absenteeism
49
External information and data used in human resource planning
- Minimum wage
- Wage paid by competitors
- Market trends and demand growth forecast
- Competitor(s)' actions
- Unemployment rates
- Skills of potential candidates
- Employment laws
- Availability of new technology
- Changes in the economy (GDP)
- Social trends: increase in part time work
50
What is an organisational structure?
The way in which the workforce within a business is organised, including job roles and communication flows. It shows:
- Individual job roles and titles
- Authority and responsibility: who is responsible for whom & who is in charge?
- The people to whom others are accountable
- The formal routes through which communication flows in the business
51
What is chain of command?
Describes the lines of authority within a business.
52
What are organisational charts?
Provide the visual representation of the organisational structure.
- Illustrate the hierarchy within the business and the chain of command that provides a line of authority from the top of the business to the bottom, showing who reports to whom.
- May also show the span of control.
53
What is authority?
The power of an employee to instruct subordinates, make decisions and control the use of resources.
- Given to a manager or a leader to achieve organisational objectives.
54
What is a subordinate?
A person under the authority or control of another (a manager or boss).
55
What are the 4 main types of organisational structure of a business?
- Functional
- Product-based
- Regional
- Matrix structure
56
What is a functional structure?
Divides the organisation into specialised departments (e.g. marketing, operations, finance, human resources)
57
Advantages of functional structures
- Promotes specialisation and expertise, potentially leading to increased job satisfaction, productivity, and efficiency.
58
Disadvantages of functional structures
- Risk of 'silo' mentality (unwillingness to share knowledge or information) among departments, hindering collaboration.
- Can be inflexible and less agile, making it unsuitable for rapidly changing industries.
59
When would a functional structure be best used for?
Stable industries with clearly defined processes and limited need for rapid innovation.
60
What is a product-based structure?
Divides the organisation based on the products it produces.
- Each product team handles development, production, and marketing for their specific product.
61
Advantages of product-based structures
- Clear product focus.
- Encourages innovation.
- Faster decision-making due to customer proximity.
- Better meets customer needs.
62
Disadvantages of product-based structures
- Duplication of efforts across product teams (e.g. multiple marketing teams), potentially leading to higher average unit costs.
- Risk of silos between product lines.
63
When would a product-based structure be best used for?
Organisations with a diverse product range, a focus on product differentiation, and products that are independent rather than interdependent.
64
What is a regional structure?
Divides the organisation based on geographic regions.
- Each region is responsible for its own marketing, operations, HR, and finance.
65
Advantages of regional structures
- Enables a localised approach, allowing for better adaptation to regional market needs and faster local decision-making.
66
Disadvantages of regional structures
- Duplication of functions across regions, potentially leading to higher average unit costs and inefficiencies.
67
When would a regional structure be best used for?
Situations with significant regional variations in markets, necessitating localised strategies.
68
What is a matrix structure?
Combines functional and product-based structures, creating dual reporting relationships.
- Employees report to both a functional manager and a product manager.
69
Advantages of matrix structures
- Combines the benefits of both functional specialisation and product focus.
- Potentially fosters both efficiency and innovation.
70
Disadvantages of matrix structures
- Can be complex and confusing for employees due to dual reporting lines.
- Potential for conflict and ambiguity regarding authority between functional and product managers.
- This complexity can demotivate employees and decrease productivity.
71
When would a matrix structure be best used for?
Organisations needing both innovation and stability. Useful in established industries requiring some degree of innovation within a structured environment.
72
What is delegation?
The passing of authority to a subordinate within a business. It is the power to undertake a task that is delegated but not the responsibility for it (this remains with the manager).
- A manager must therefore choose delegates carefully - they must have the skills and ability to perform the task, and there has to be complete trust in the delegate.
73
What can be the outcome of successful delegation?
- Frees up time for management.
- Relieves managers of routine decisions, enabling them to concentrate on the more important decisions.
- Motivates workers by providing them job enrichment.
- May mean that decisions are being made closer to the shop-floor.
74
What is organisational design?
The process of shaping the organisational structure so that the business can achieve its objectives effectively.
75
Key factors influencing organisational design
- Span of control possible
- Authority vs amount of delegation given
- Hierarchy
- Level of centralisation or decentralisation
- Size of business
- Life cycle of organisation
- Corporate objectives
- Technology
76
What is a hierarchy?
The way different levels of authority are ranked in an organisational structure.
- The number of layers of management or supervision - levels of hierarchy.
77
Features of a tall structure
- Many layers of management.
- Longer chain of command.
- Narrow span of control.
78
Features of a flat structure
- Few layers of management.
- Short chain of command.
- Wide span of control
79
What is span of control?
The number of subordinates for whom a manager is directly responsible for.
- It is represented as the number of people, e.g. 3.
80
What does a suitable span of control depend on?
- The type of jobs and levels in hierarchy.
- The amount of supervision needed.
- Whether staff can be managed or controlled electronically.
- Whether staff input is needed or not.
- Ability of staff to work independently.
- Whether staff can be trusted or not.
81
Benefits of a narrow span of control
- Less overwhelming for managers.
- More thorough supervision.
- More opportunities for employee advancement.
82
Benefits of a wide span of control
- Faster decision-making.
- Improved communication.
- Reduced costs (less management levels)
83
Explain centralised structures
Businesses with a centralised structure keep decision-making firmly at the top of the hierarchy (amongst the most senior management), with little input from lower down.
- Authority rests with senior management.
84
Benefits of a centralised structure
- Quicker decision making: fewer individuals are involved in the decision-making process, leading to faster decisions. The experience of top-level managers contribute to efficient decision execution and communication throughout the business.
- Consistency: across organisation's goals, vision, and culture. This consistency provides stakeholders with a clear and unified outlook. Mandating specific suppliers e.g can lead to purchasing economies of scale, lowering average costs. Consistent service delivery across different branches (e.g. in restaurant chains) ensures a predictable positive customer experience.
- Motivation and control: clear roles and responsibilities stemming from top-down directives can boost employee motivation and productivity. Middle managers might feel protected from complex decision-making pressures, potentially enhancing their motivation. Centralised budget control enables tighter financial oversight and resource allocation.
85
Disadvantages of a centralised structure
- Rigidity and missed opportunities: the need for constant consultation with top management can limit flexibility and responsiveness to local market conditions. This can lead to missed opportunities, particularly for businesses with geographically dispersed branches. Inability to react swiftly to local needs can hinder sales, promotions, and cost-saving initiatives.
- Demotivation and lack of innovation: centralisation can diminish the authority and empowerment of middle and junior managers. Limited decision-making power can lead to reduced motivation, productivity, and a decline in innovative thinking - qualities often sought from these roles.
86
Explain decentralised structures
Decision-making is redistributed to include more junior managers in the hierarchy, as well as individual business units or trading locations.
- Authority is delegated further down the hierarchy, away from a central location.
87
Benefits of a decentralised structure
- Motivation and productivity: delegation empowers employees, increasing motivation, initiative, productivity, and potentially innovation.
- Flexible decision-making: allows quicker responses to opportunities and challenges at local levels without needing top-level approval. This enables faster promotions, cost-saving measures, and localised strategies.
- Internal recruitment: provides on-the-job training and development for middle and lower management, preparing them for higher positions. This reduces recruitment costs and promotes internal mobility.
88
Disadvantages of a decentralised structure
- Less consistency: different agendas and interpretations of goals can lead to inconsistencies in aims, vision, culture, objectives, and customer experience.
- Quality issues: variations in implementation across locations can lead to quality discrepancies and potential reputational damage.
- Dependence on skill and experience: the success of decentralisation heavily relies on the competence of those receiving delegated authority. Poor skills can result in low quality, demotivation, and overall failure.
89
Influences on the level of centralisation and decentralisation
- Uniformity of decisions
- Management style
- Skills and ability of the workforce
- Economic influences
- Technology
90
What is delayering?
Removing one or more layers of hierarchy (making managers redundant) and making a structure "flatter".
91
Benefits of delayering to a business
- Offers opportunities for better innovation, empowerment and motivation as the number of managers is reduced and more authority is passed down the hierarchy.
- Can improve communication as messages have to pass through fewer levels.
- Can remove departmental rivalry if department heads are removed and the workforce is organised more in teams.
- Can reduce costs as fewer (expensive) managers are required.
- Can encourage delegation.
- Brings managers into closer contact with the business' customers which should (in theory) result in better customer service.
92
Disadvantages of delayering to a business
- Mass production industries with low-skilled employees may not adapt easily.
- Can have negative impact on motivation due to job losses, especially if it is really just an excuse for redundancies.
- A period of disruption may occur as people take on new responsibilities and fulfil new roles.
- Those managers remaining will have a wider span of control which, if it is too wide, can damage communication within the business.
- Danger of increasing the workload of the remaining managers beyond that which is reasonable.
- May create skill shortages within the business: business loses managers and staff with valuable experience.
93
What is HR workforce planning?
HR planning will consist of an audit to assess the current size and skills of the workforce, identification of future needs and plans for how to ensure the business has the right number of employees with the right skills to meet future needs.
- Allows management to be proactive and plan for any changes in the future size or nature of the workforce through a detailed plan of the strategies undertaken to meet these needs.
- These may include training, redeployment, internal promotion, external recruitment, natural wastage, relocation and restructuring.
94
What is human resource flow?
The management and movement of workers within an organisation. A business will carry out plans to try to manage this flow efficiently.
- Internal flow: training & redeployment.
- Inflow: recruitment & selection.
- Outflow: resignations & redundancies.
95
What is redeployment?
The process of moving employees to a different job, department, team, location or country within the same business.
96
Key steps in workforce planning
1) Define business objectives.
2) Evaluate current workforce.
3) Establish future requirements and identify any gaps.
4) Establish a plan to address the gaps.
97
Reasons for requiring new staff
- Employees may be promoted and have to be replaced.
- Workers move to another job.
- Workers may decide to resign/quit.
- E.g. a business may develop a plan to recruit a new IT manager when the current one plans to retire in 8 months time.
98
Define recruitment
Means identifying a vacancy and attracting suitable candidates.
- This can be internal or external.
99
Define selection
Means identifying the best candidate for a job among applicants.
100
What is the recruitment process?
1) Identify job vacancy.
2) Carry out job analysis.
3) Create job description and person specification.
4) Advertise job.
5) Send out application forms.
101
What is a job description?
Sets out the duties and tasks associated with a particular job or post.
102
What is a person specification?
Sets out the qualifications, skills and experience required of an employee for a specific job or post.
103
Methods of internal recruitment
- Jobs given to staff already employed by the business.
- Involves promotion and reorganisation.
104
Methods of external recruitment
- Job centres
- Job advertisements
- Recruitment agencies (offline & online)
- Headhunting
- Personal recommendation
105
Benefits of internal recruitment
- Lower costs: advertising and training.
- Process can be quicker.
- Candidate's skills, experience and behaviour are already known.
- Promotions are good for staff motivations, encouraging them to work harder.
106
Benefits of external recruitment
- Brings in new ideas and experience to the business.
- Larger pool of potential workers & skills.
- Don't need to replace a worker (if do internal you need to replace that person's old job)
- Can help change the culture.
- Can bring diversity.
107
What is the selection process?
1) Collect application forms and CV's.
2) Create a shortlist.
3) Hold interviews/testing.
4) Inform successful candidate.
108
Explain in detail the initial stages of the selection process
- Will involve sorting through letters of application, CVs and application forms to identify those candidates worthy of further consideration. This is called shortlisting.
- Selecting the best employees involves the matching of candidate's skills and personalities to those identified in the job description and person specification.
109
Explain in detail the later stages of the selection process (after candidates have been shortlisted)
After the candidates have been shortlisted, more rigorous selection activities will take place:
- Interviews
- Selection tests
- Assessment centres
110
What does an interview entail (selection process)
A question & answer session with a candidate, normally using the same questions for each candidate.
111
What is involved in selection tests (selection process)?
Involves assessing candidates' performance throughout a series of activities, individual & team tasks, exercises and meetings over a period of time (often 1 or 2 days).
112
What do assessment centres entail (selection process)?
Written assessment designed to provide the employer with some understanding of how the applicant interacts with others, responds to pressure and their ability to cope with the intellectual demands of the position.
- These include: psychometric, aptitude and attainment tests.
113
What is training?
The process of increasing the knowledge, skills and behaviour of the workforce to enable them to perform their jobs effectively.
- Training is therefore a process whereby an individual acquires job-related skills and knowledge.
- It may be undertaken either on the job, learning from an experienced worker, or off the job at college or some other training agency.
- It can provide qualifications and drive cultural change.
- Training costs can be high but businesses are prepared to incur these costs as they expect training to improve profits.
114
What is induction training?
The introductory training for employees new to an organisation.
- This is designed to familiarise the employee with the business procedures and policies.
115
What is training commonly required to do for a business?
- Support new employees (called: induction)
- Meet health & safety legislation
- Improve productivity
- Increase marketing effectiveness
- Support higher standards of customer service and production quality.
- Introduction of new technology, systems or other change.
- Addresses changes in legislation.
- Support employee progression.
116
Benefits of effective training
- Improved human resource performance measures, e.g. labour productivity, labour turnover, etc. = reduces costs.
- Less need for supervision: wider span of control = reduces costs.
- Improves other function measures, e.g. better quality, less waste, better customer service, more innovation, etc. = increases revenue and reduces costs.
- Helps implement change in the business, e.g. new machines or new culture.
117
What is on the job training and what are the methods used for it?
An employee receives training whilst remaining in the workplace. The main methods of on-the-job training are:
- Demonstration/instruction - showing the trainee how to do the job.
- Coaching - a more intensive method of training that involves a close working relationship between an experienced employee and trainee.
- Job rotation - where the trainee is given several jobs in succession, to gain experience of a wide range of activities (e.g. a graduate management trainee might spend periods in several different departments).
- Projects - employees join a project team - which gives them exposure to other parts of the business and allows them to take part in new activities. Most successful project teams are "multi-disciplinary".
118
Advantages of on-the-job training
- Most cost-effective (using own staff to train new staff)
- Trainees are actually productive
- Opportunity to learn the business' own processes and use its equipment.
119
Disadvantages of on-the-job training
- Productivity will be lower - supervisor won't be doing their own job.
- Variable quality: depends on ability of trainer to train.
- Bad habits might be passed on.
- Potential disruption to production and for mistakes.
120
What is off the job training?
Training that takes place away from the workplace. Common examples are:
- Day or part-time attendance at college
- Professional development courses or conferences
- Online training / distance learning
- Training centre
121
Advantages of off-the-job training
- A wider range of skills or qualifications available.
- Can learn from outside specialists or experts.
- Could provide better training if delivered by a trained specialist.
122
Disadvantages of off-the-job training
- More expensive: no work from the employee while training is taking place & higher costs of external provider.
- Not necessarily specific to the business.
123
What is redundancy?
When an employee is dismissed due to their job no longer existing.
- May take place on a voluntary basis, and an organisation must consult with individual employees as well as worker representatives if 20 or more employees are made redundant.
- Those who have been employed for over 2 years are entitled to redundancy pay.
124
Give reasons for redeployment.
- Need to change & adapt the structure of the business.
- Avoids negative impacts of redundancies: redundancy costs & demotivation.
- Retaining skills & experience.
125
Difference between dismissal and redundancy
- Dismissal: staff is removed - underperformance or disciplinary action.
- Redundancy: business no longer requires the role.
126
What are the circumstances in which an employee may be dismissed for?
- Gross misconduct, such as violence towards a customer or colleague, or theft.
- Persistent minor misconduct, such as regularly arriving late for work, but only after set procedures have been adhered to in terms of verbal or written warnings.
- A substantial reason, such as not agreeing to new reasonable terms of employment.
127
What is natural wastage?
The loss of employees from a business due to retirement, resignation, family reasons or death.
- Every business expects a number of its employees to leave in this way.
128
Reasons why redeployment is better than redundancy
- Reduces costs: avoids redundancy payment (for the role no longer needed) and recruitment & selection costs (for the vacancy).
- Maintains job security for employee and prevents loss of motivation.
- The business retains the employee's skills and experience.
- Provides opportunities for promotion within the business.
129
If there is no satisfactory redeployment option, what are the alternatives to redundancy?
- A freeze on recruitment - with jobs lost through natural wastage (e.g. retirement)
- Short-time working or job-sharing
- Pay cuts or overtime bans to reduce wage costs.
130
What is motivation?
Results from a range of factors that influence people to behave in certain ways - the will to work.
- Some believe that motivation comes from within an employee.
- An alternative view is that it is the will or desire to achieve a given target or goal due to some external stimulus.
131
What are the benefits of a business having motivated and engaged employees?
- Productivity: a fully engaged & motivated workforce is not only likely to work harder, so producing more, but will probably put in the extra work to make sure deadlines are met, etc. - lowers unit cost.
- Recruitment & retention: an organisation that has a fully engaged workforce is more likely to be seen as the employer of choice and is more likely to be able to retain its workers, reducing recruitment costs.
- Lower absenteeism.
- Increased innovation.
- Higher profitability.
- Better workplace relations.
- Improved customer service.
- Improved quality as staff take a greater pride in their work.
132
How can managers influence employee motivation?
- Monetary factors - some staff work harder if offered higher pay.
- Non-monetary factors - other staff respond to incentives that have nothing to do with pay, e.g. improved working conditions or the chance to win promotion.
133
What are the 3 key motivational theories?
- Taylor - scientific management
- Maslow - hierarchy of needs
- Herzberg - two-factor theory
Each theory attempts to explain the key influences on human behaviours.
134
What is Taylor's scientific management theory (motivation)?
- He believed that people were solely motivated by money.
- He argued that efficiency would improve productivity, competitiveness and profits. This required employees to be organised, closely supervised, and paid according to how much they produced (piece rate - payment according to output).
- Workers should have no control over their work.
- The social aspect of employment was considered irrelevant and ignored.
- Use financial rewards: piece rate, commission/bonus, salaries.
135
What are the implications of Taylor's motivational theory on leadership style, organisational structure, centralised vs decentralised decision making?
- Autocratic leadership style.
- Tall structure with narrow span of control.
- Centralised decision making.
136
What is Maslow's hierarchy of needs theory (motivation)?
- Staff are motivated by needs.
- Needs follow an order or hierarchy.
- Motivation depends on finding the right way to satisfy staff's needs.
- A business should offer different incentives to workers in order to help them fulfil each need in turn and progress up the hierarchy.
- Once one level of needs is satisfied, people can be motivated by tasks that offer the opportunity to satisfy the next level of needs.
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What are the different needs in Maslow's hierarchy of needs?
BOTTOM OF HIERARCHY
1) Physiological - the need for food, shelter, water (survival) - basic need.
2) Security - the need to be free from threats and danger, stable work environment (work safety) - basic need.
3) Social - the need to love & be loved, and to be part of a group (cooperative peers, good boss) - higher level need.
4) Esteem - the need to have self-respect and the respect of colleagues (perks, job titles) - higher level need.
5) Self-actualisation - the need to develop personal skills and fulfil one's potential (autonomy, subject matter expert) - higher level need.
TOP OF THE HIERARCHY
- The 2 bottom needs make staff turn up for work (basic needs) and the 3 levels above make them work hard and motivates them (higher level needs).
138
What is Herzberg's two-factor theory (motivation)?
Herzberg divided the factors motivating people at work into two groups:
- Motivators: these are positive factors that give people job satisfaction and therefore increase productivity as motivation rises.
- Hygiene (or maintenance) factors: these are factors that may cause dissatisfaction among employees. Herzberg argued that motivators should be built into the hygiene factors. Improving hygiene factors will not positively motivate but will reduce employee dissatisfaction.
Only when hygiene factors are properly met can motivators begin to operate positively.
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Examples of motivating factors (Herzberg)
- Achievement
- Recognition
- Meaningful, fulfilling work
- Promotion
- Learning & growth
- Responsibility
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Examples of hygiene factors (Herzberg)
- Relationships at work
- Working conditions
- Company policy (rules)
- Job security
- Status
- Pay & benefits
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What is the value of theories of motivation?
- Theories help understanding the concept of motivation but do not offer a 'one-fit-all' solution.
- Different factors can motivate different individuals at different times in their career.
- The challenge is to find ways of motivating a maximum number of staff.
- The choice of motivation method(s) will depend on finances available & the type of business, style of leadership & and what the competitors are offering.
142
What were the motivational theorists' views on pay?
- Taylor was the only theorist to emphasise pay, in particular piece-rate, as the best way of motivating employees.
- Maslow & Herzberg all felt that non-financial rewards such as team working, empowerment or job enrichment acted as a better incentive for employees to work harder.
143
List financial methods of motivation
- Bonus
- Wages
- Piece rate
- Performance related pay (PRP)
- Share option
- Commission
- Salaries
- Profit sharing
- Fringe benefit
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Define piece rate - financial
When payment is based on the number of items produced by an employee.
- Often common in agriculture and the textile industry.
145
Define commission - financial
When payment is based on the number of units sold.
146
Define bonus - financial
An additional, lump sum, one off payment to an employee for meeting individual, team or company targets.
147
Define salaries - financial
A basic rate of pay given to employees, usually paid monthly, but determined on an annual basis.
- It is normally based on levels of experience and skills.
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Define wages - financial
A basic rate of pay given to employees, usually based on an hourly rate and the number of hours worked.
- It is normally paid at the end of each week.
149
Define profit sharing - financial
A system whereby employees receive a proportion of a company's profits.
150
Define share option - financial
Common incentive for senior managers who are given shares in a company rather than a straightforward bonus or membership of a profit sharing scheme.
151
Define performance related pay (PRP) - financial
When employees receive a bonus based on the performance of the employee measured against a pre-agreed range of criteria.
- Used in many industries, from banking to education.
152
Define fringe benefits - financial
Items an employee receives in addition to their normal wage or salary.
- E.g. company car, private health insurance, free meals, etc.
153
List non-financial methods of motivation
- Consultation
- Flexible working
- Delegation
- Fulfilling job
- Promotion
- Team working
- Praise
- Job enlargement
- Job enrichment
- Better communication
- Empowerment
154
Define delegation - non-financial
Involves the passing of authority down the hierarchy. Authority occurs when an employee is given the right to do something by their superiors but the responsibility remains with the manager.
155
Define consultation - non-financial
The process of seeking the thoughts and opinions of employees prior to making decisions that may affect them.
156
Define empowerment - non-financial
Involves delegating responsibility to employees, allowing them to use their abilities and to have a greater say in the decision-making process of the company.
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Define team working - non-financial
Where employees are organised into groups and work together in order to meet set objectives.
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Define flexible working - non-financial
Gives employees greater control over their own work routines.
- E.g. start and finish time, may include the ability to work from home.
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Define praise - non-financial
Recognition for good work.
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Define promotion - non-financial
Promoting employees to a position of higher responsibility.
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Define fulfilling job - non-financial
Providing employees with interesting and challenging jobs.
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Define job enrichment - non-financial
Giving employees more challenging and interesting tasks.
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Define job enlargement - non-financial
Giving employees more tasks of a similar level of complexity.
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Define better communication - non-financial
Employees have a chance to give feedback and advice to managers.
165
What needs to be in place within a business in order for non-financial methods of motivation to be effective?
- The leadership and management style is more likely to be soft and democratic.
- Opportunity needs to be provided fir involvement and responsibility.
- The culture of the business needs to be one of involvement and communication.
166
Cons of piece rate pay
The system encourages effort but often at the expense of quality.
167
Pros of profit sharing pay
- Encourage all employees to work hard to generate the maximum profits for the business.
- Offers some flexibility: in a recession, wages can fall with profits, reducing the need for redundancies.
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Cons of share option pay
Share ownership may cause discontentment if this perk is available only to the senior staff.
169
Cons of performance related pay (PRP)
Whatever criteria are used to decide who should receive higher pay, the effect can be divisive and damaging to employee morale.
170
Internal factors influencing the choice of motivation methods
- Organisational culture
- Leadership style
- Employee needs & preferences
- Employee skills
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Explain how organisational culture influences the choice of motivation methods
The ethics and values of a company shapes its approach to motivation.
- If a company values innovation and creativity, it may use methods like empowerment and recognition to motivate employees.
- In contrast, a hierarchical organisation might rely more on traditional incentives like bonuses or promotions.
172
Explain how leadership style influences the choice of motivation methods
The way managers and executives manage staff can greatly impact motivation methods.
- Autocratic leaders may prefer directive methods like rewards & punishments, while democratic leaders might focus on participative approaches such as goal-setting & teamwork.
173
Explain how employee needs & preferences influence the choice of motivation methods
Understanding the diverse needs and preferences of employees is crucial in choosing effective motivation methods.
- Some employees may value autonomy & self-direction, while others may prioritise financial rewards or opportunities for career advancement.
174
Explain how employee skills influence the choice of motivation methods
The competencies & capabilities of employees play a significant role in determining the most effective motivation methods.
- Employees who demonstrate high levels of skill & competency may be motivated by opportunities to take on challenging tasks, lead projects, or be delegated greater responsibility.
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External factors influencing the choice of motivation methods
- Economic conditions
- Industry competition
- Legal and regulatory environment (law)
176
Explain how economic conditions influence the choice of motivation methods
Factors such as market demand, inflation & unemployment rates can influence the availability of financial resources for motivation methods.
- During economic downturns, companies may need to be more creative with non-monetary incentives to maintain employee morale.
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Explain how industry competition influences the choice of motivation methods
Competitive pressures within an industry can impact the choice of motivation methods.
- Companies may need to offer attractive incentives to attract and retain talented staff, especially in sectors with high demand for skilled workers.
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Explain how legal & regulatory environment (law) influences the choice of motivation methods
Compliance with employment laws & regulations influences the design and implementation of motivation methods.
- Companies must ensure that their incentive programs comply with relevant employment legislation to avoid legal risks and liabilities.
179
What are employer-employee relations?
The defining features of how employers and employees interact with each other on a day to day basis, and the degree of harmony.
- Effective communication is key.
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What can influence employer-employee relations?
- Leadership styles, e.g. authoritarian or democratic.
- Decision-making processes, e.g. centralised or decentralised organisation.
- Human resource approach, e.g. 'soft' or 'hard'.
- Overall attitudes of workers towards management and vice versa.
181
Why are employer-employee relations critical to businesses?
Less risk of industrial disputes means:
- avoiding negative media attention
- reducing or avoiding loss of revenues and increase in costs due to industrial actions (strikes)
Motivated and engaged employees means:
- higher labour productivity
- lower labour turnover
Better reputation as an employer means:
- higher staff retention
- easier to attract new staff
Better reputation in the public eye means:
- favourable media attention and reputation
182
Define employee representation
The formal or informal methods of involving employees in decision-making within an organisation.
- Can improve employer-employee relation, as it provides employees as a group with a structure through which they can communicate with management.
183
Define industrial action
Occurs when workers do something that is intended to force an employer to agree to something, especially by stopping work.
- Caused due to conflict between workers and management.
- This imposes pressure on the employer.
- E.g. strikes.
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What are the methods of employee representation?
- Trade unions
- Work councils
Both have the potential to give greater power to members through collective bargaining.
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What is a trade union?
An organisation that aims to protect and enhance the economic position of its members by improving the pay & working conditions of employees in a profession or industry.
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What is a work council?
A group including employer & employee representatives that aims to discuss issues regarding pay & working conditions in one business.
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What is collective bargaining?
When a trade union negotiates with an employer on behalf of its members on matters such as pay and conditions.
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What are the roles of trade unions?
- Protect and improve the real incomes of their members.
- Provide or improve job security.
- Protect workers against unfair dismissal and other issues relating to employment legislation.
- Lobby for better working conditions.
- Offer a range of other work-related services including support for people claiming compensation for injuries sustained in a job.
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What are the 2 main functions of trade unions?
- Represent: + protect interest of employees.
- Negotiate: on behalf of employees with employer.
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What does the typical agenda for a works council include?
- Business objectives and performance.
- Workforce planning issues (e.g. recruitment, staffing levels).
- Employee welfare issues (working conditions, health & safety)
- Training and development programmes.
- Compliance with legislation (e.g. discrimination)
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Advantages of employee representation (from business' perspective)
- Increased empowerment.
- Employee commitment to corporate objectives.
- Better decision-making (employee opinions)
- Lower risk of industrial disputes.
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Disadvantages of employee representation (from business' perspective)
- Time consuming (slows decision making)
- Conflict may block change.
- Managers may feel authority is being undermined.
193
Define communication
The process of passing information between interested parties to the right person, at the right time and in a format this is understandable to the recipient.
194
Define industrial dispute
Exists when there is a disagreement between the employer and the employee or employee representative.
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What are the most common methods of industrial action?
- Work-to-rule
- Overtime ban
- Go-slow
- Strike
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What is 'work-to-rule' industrial action?
Employees follow the strict conditions of their employment contract - no voluntary overtime, no participation in supporting activities. Staff still get their basic pay.
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What is 'overtime ban' industrial action?
Employees refuse to work overtime.
- Can have a significant effect on production capacity during periods of peak demand, but ineffective as a bargaining tool during quieter periods.
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What is 'go-slow' industrial action?
Employees work at the slowest or least-productive pace that is allowable under their employment contracts.
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What is 'strike' industrial action?
The action of last-resort; fraught with danger for both employer and employee and strictly policed by legislation on industrial action.
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What is the damage to the business as a result of industrial action?
- Loss of output.
- Damage to customer satisfaction.
- Internal distraction for management.
- Damaged relations between employer and employees.
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What is the damage to the employee as a result of industrial action?
- Loss of pay.
- Potential job losses (if cost cutting is needed)
- Possible loss of customer support.
- Risk that illegal action with result in legal proceedings.
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What is 'Advisory, Conciliation and Arbitration Service' (ACAS)?
Because industrial actions can cause damages to businesses, employees and the entire economy, the government set ACAS in 1975 as an independent body with the responsibility of resolving industrial disputes and preventing industrial actions.
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What services does ACAS (1975) provide?
- Advice: to employers, trade unions and employee associations on topics such as payment systems, absenteeism and sickness.
- Conciliation: encourages continuation of negotiation rather than industrial action.
- Arbitration: it can act to resolve a dispute by making recommendations that may be either binding or non-binding.
A Level Business AQA
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