1.4 MANAGING PEOPLE

HR APPROACHES

• The overall way in which a business treats its staff

• Has a direct impact upon the level of performance, motivation of employees and management styles

• There are 2 opposing HRM approaches

• Hard HRM - staff asa cost

• Staff are treated as a resource that must be managed in order for the business to control costs and output

• Soft HRM - staff as an asset

• Staff are treated as an asset to the business that can contribute and help the business achieve its objectives

HR APPROACHES

Soft HRM

• Opportunities for staff development 
  • Training
  • Internal promotion 
• Empowerment
• Consultation
• Greater autonomy and responsibility
  • Flatter organisational structure

  Hard HRM

• Control mechanisms
  • Judgemental appraisals
  • Centralised decision making
  • Tall organisational structure
• Fixed term contracts
• Minimum wage

FLEXIBLE WORKFORCE

• It is important to be able to match workforce skills, size and location to business needs

• This is necessary for a business to run smoothly and be able to match supply to demand

• Enabling all aspects of the business to function

• Meet new challenges to the business

• Meet seasonal fluctuations

• Respond to changes in the workforce e.g. people leaving, changing jobs internally, taking maternity or paternity leave

FLEXIBLE WORKFORCE

• A flexible workforce will help a business math the workforce to the business' needs
• Multi-skilling

• Part-time employees
  • They are contracted to work less hours than a full time employee e.g. 3 days a week 

• Offer greater flexibility to a business and may be a more affordable option

• Hours can be increased if there is an increase in demand and the firm requires more workers

• Legally, part-time workers should not be treated less favourably than full time workers 

• Offering part-time work increases the number of applicants for a position e.g. Parents and retired workers may be more likely to be interested in part time work

• In the uk job sharing has increased where employees share a full-time position

FLEXIBLE WORKFORCE

• Temporary employees

• A person who is contracted to work for a business for a specified period of time e.g. 6 months to cover maternity leave

• Temporary employees can be full-time or part-time and help meet the short term needs of a business

• They do not have the security that a permanent employee has

• Often, they are agency workers and are brought in to fill gaps at peak times e.g. seasonal work or to cover peak holiday periods

FLEXIBLE WORKFORCE

• The benefits of using temporary and part-time employees include: 

• However there are issues:

FLEXIBLE WORKFORCE

• Flexible hours and homeworking

• Flexible hours give some degree of autonomy to the employees to choose their own hours of work, normally within certain boundaries

• e.g. 36 hours a week, anytime between 7 and 5 per day but must be in between 10 and 4 each day

• Homeworking is the ability to work from home rather than travelling into the workplace

• increases flexibility to the employee

• Reduces costs to the employer

• Made easier by advances in technology

Outsourcing

The practice of using the services of other organisations to complete all or parts of the manufacturing process

• The value of outsourcing includes:

• However

DISMISSAL

• Dismissal is when an employee's contract is terminated due to a breach of the terms of that contract by the employee

• The position still exists and therefore the business is likely to look to recruit a replacement worker

• Unfair dismissal is when an employee's contract is terminated but the reason is seen as unfair in the eyes of the law e.g. being pregnant or an unrelated criminal record

REDUNDANCY

• Redundancy is a form of dismissal when an employee’s contract of employment is terminated because the job no longer exists

• This may occur as a result of a change in the businesses needs including: 

• Closure

• Restructuring

• Relocation

• New technology

• Rationalisation

EMPLOYER / EMPLOYEE RELATIONS

• Employer/employee relations are the defining features of how employers and employees interact with each other on a day to day basis

• Employee representation are the systems put in place to aid communication between employers and employees

• Giving a voice to employees through a recognised body that represents them

• In large organisations one to one discussions with all employees is not a realistic option

• The elected voice must have a clear remit and the objectives understood by all related parties

• Methods of collective bargaining include:

TRADE UNIONS

• National organisations with a remit to protect its members and improve their economic and working conditions

TRADE UNIONS

• Unions can work with employees and employers to:

EMPLOYER / EMPLOYEE RELATIONS

• An industrial disputeexists when there is a disagreement between the employer and the employee or employee representative

• Industrial action is when the employees take sanctions to try and impose pressure on the employer

• Work to rule

• Demonstration

• Lobbying

• Strike

• It is better to avoid disputes before they become troublesome than try to resolve them later

EMPLOYER / EMPLOYEE RELATIONS

• Avoiding disputes

• Early involvement of employees and employee representatives

• Clear communication

• ACAS - an independent body that can be called in to help avoid (or resolve) disputes by helping both parties work together

• It is better to call in their services sooner rather than later

• Advisory

• Conciliation

• Arbitration

• Services

EMPLOYER / EMPLOYEE RELATIONS

• Resolving disputes

• Open and honest communication

• Explore all avenues

• Industrial action (as a last resort)

• Utilise the services of ACAS

• Conciliation – facilitates debate

• Arbitration – if both parties agree to arbitration then the solution presented by ACAS has to be accepted by both parties

WORKS COUNCILS

• Employees have a legal right to request a works council if working in a business with over 50 employees

• Representatives must be elected

• The council should have one representative per 50 employees

ADVANTAGES OF EMPLOYEE REPRESENTATION

• Medium for effective 2 way communication

• Reduces feeling of “them and us”

• Employees kept informed

• Employers have some understanding of employee perceptions

• Improved motivation

• Less risk of industrial disputes

DISADVANTAGES OF EMPLOYEE REPRESENTATION

• Opportunity cost of time

• Can cause conflict due to different agendas

• Slows down decision making

• Employer may not be able to respond to employee wishes

• Non homogeneous employees

INDIVIDUAL APPROACH

• An employee could opt to take an individual approach to employer/employee relations

• Each employee would negotiate individually with management for their own interest e.g. pay or working conditions

• Decisions would be made on a one to one basis rather than for the workforce as a whole

• Individuals may be better equipped to “fight their own corner”

• Managers can judge each case on individual merit

RECRUITMENT

• Recruitmentis the steps undertaken by a business to identify a vacancy and attract suitable candidates; this can be internal or external
• Selection is the actions taken by a business to help identify the best candidate for a job

INTERNAL RECRUITMENT

Internal recruitment occurs when candidates for a position are recruited from within the organisation.

BENEFITS INCLUDE:

• Lower recruitment costs
• Improved promotion prospects
• Known abilities of candidates
• Quicker process
• Shorter induction period

DISADVANTAGES INCLUDE:

• Reduces talent available
• Limits the number of applicants
• Can cause friction between internal candidates

EXTERNAL RECRUITMENT

External recruitment occurs when candidates for a position are recruited from outside of the organisation.

BENEFITS INCLUDE:

• Increases the talent available

• Increases the number of applicants

• Can provide new sources of ideas to the company

DISADVANTAGES INCLUDE:

• Higher recruitment costs

• May upset internal candidates that have been overlooked

• Not able to see candidates at work over a period of time

SELECTING THE BEST EMPLOYEES

Methods of selection include:

• Interviews 

• Assessment centres:

• Multiple tasks, exercises and meetings held over a period of time, often 2 days, where candidates are measured against a set of competencies

• Tests might include:

• Psychometric testing involves a mixture of the following:

• Aptitude – measures the ability to develop skills and acquire knowledge

• Attainment – measuring levels of understanding e.g. maths

• Personality – measuring aspects of a candidate’s behaviour

SELECTING THE BEST EMPLOYEES

• Interviews – Alec Rodger’s Seven Point Plan

• The Seven Point Plan is a way of carrying out selection interviews:

1. Physical make-up – health, appearance, speech

2. Attainments – education, training, experience

3. Intelligence – ability to learn, analyse and evaluate situations

4. Aptitudes – special skills e.g. maths, IT

5. Interests – social, active, intellectual

6. Disposition – humour, maturity, independence

7. Circumstances – geographical mobility and availability

• Rodger’s distinguished between ‘essential’ and ‘desirable’. For a taxi driver it is essential that they hold a driving licence but only desirable that they have passed an advanced driving course.

COSTS OF RECRUITMENT, SELECTION AND TRAINING

• Costs of recruitment may include:
  • Time drawing up job descriptions and person specifications (if these do not already exist)
  • Placing advertisements in newspapers or journals
  • Fees paid to a recruitment consultancy

• Costs of selection may include:
  • Managers time shortlisting and interviewing
  • Candidate expenses if reimbursed for interviews
  • Fees paid to assessment centres

• Costs of training may include:
  • Productivity time lost by employee receiving training
  • Productivity time lost by asecond employee if training is provided in house
  • Fees paid to an external training provider plus employees travel costs

TRAINING

• Training is the process of equipping employees with the skills and knowledge necessary to carry out their job effectively

• Training can fulfil different roles within a business:

• Methods of training include:

ORGANISATIONAL DESIGN

• Organisational design is the framework that provides a business with a structure to achieve its objectives

• Organisational structure is the way in which the workforce within a firm is organised, including job roles and communication flows

• Organisational charts provide a visual representation of the organisational structure

HIERARCHY

• Hierarchy is the structure of the workforce within an organisation showing who is accountable to whom

• The levels of hierarchy within firms will differ:

CHAIN OF COMMAND

• Chain of command is the way authority and power is passed down the levels of hierarchy

• The chain of command will be from the top of the organisation structure downwards

• The longer the chain of command the slower communication and potentially decision making

• It is however important that communication can flow in both directions

SPAN OF CONTROL

• The span of control shows the number of subordinates that a manager or supervisor is directly responsible for

• If a manager has many subordinates this is called a wide span of control

• If they have few subordinates this is called a narrow span of control

• The size of a manager's span of control is likely to influence the amount of supervision i.e. with a narrow span of control a manager only has a few subordinates and can therefore supervise them closely

AUTHORITY

• Authority is the power of an employee to instruct subordinates, make decisions and control the use of resources

• Authority can be:

CENTRALISED AND DECENTRALISED

• Centralisation is when the responsibility for decision making is maintained, by a limited number of senior managers, at the top of the hierarchy
• Few decision makers
• Decisions are made by those at the top of the hierarchy
• Speeds up decision making
• Maintains tight control
• Bureaucratic 

CENTRALISED AND DECENTRALISED

• Decentralisation is when the responsibility for decision making is delegated to a number of middle managers throughout the hierarchy

• Delegates decision making

• Decisions made at many levels within the hierarchy

• Frees up management time

• Provides motivation

• Reduces bureaucracy

INFLUENCES ON DELEGATION, CENTRALISATION AND DECENTRALISATION

• Attitudes and priorities of leaders and their preferred leadership styles

• Organisational design

• The skills and attitudes of the workforce

• The nature of the decisions to be made

• Legal form

• Business objectives

• Response to changes in technology

• Degree of confidence and stability in the economic environment

TYPES OF STRUCTURE

• A matrix structure is one where teams are put together from different functional areas to work on specific projects

• Advantages
  • Communication across functional areas

• Disadvantages
  • Potential loss of control

IMPACT ON EffICIENCY AND MOTIVATION

• Speed of decision making

• Flow of communication

• Degree of supervision

• Opportunities for promotion

• Cross functional relationships

• Clarity of roles 

• Employee motivation

EMPLOYEE MOTIVATION

• Motivation is the factors influencing the way people behave

EMPLOYEE MOTIVATION

• Benefits:

MOTIVATION THEORIES: FREDRICK WINSLOW TAYLOR (1856-1915)

• Taylor believed that workers were not capable of understanding their tasks and should follow strict rules on how to produce products

• All tasks should be studied scientifically using a study of time and motion

• The most efficient way of carrying out a task will hence be identified

• Each employee can then be trained and instructed in exactly how to do a job in the most efficient manner

• Workers should be closely supervised

• He coined the term economic man believing money is the key to motivation

• His ideas are linked to piece rate, the division of labour and mass production

• He is criticised for making jobs tedious

MOTIVATION THEORY: GEORGE ELTON MAYO (1880-1949)

• Believed that workers must be seen as members of a group not as individuals

• He emphasised the informal work group as the means to improving productivity

• He believed that workers had ‘social needs’ and that these should take precedence over other areas such as money as a motivator

• Changes in working conditions and financial incentives have little impact on labour productivity

• In his ‘Hawthorne experiments’ he looked at the power of informal, as opposed to formal, groups as a basis for production in the workplace

• His findings were that motivation can be improved by:
  • Consultation
  • Paying an interest in workers
  • Team work
  • Some degree of autonomy in one’s working day e.g. break times

MOTIVATIONAL THEORY: ABRAHAM HAROLD MASLOW (1908-1970)

• Maslow’s hierarchy of needs is based on seeing human needs as being placed in order, each need must be fulfilled before one could move on to the next
• Employees can be motivated by being presented with the opportunity to achieve the next level

MOTIVATIONAL THEORY: FREDRICK IRVING HERZBERG (1923-2000)

• Job satisfaction is a key factor leading to motivation

• Job satisfaction could be influenced both positively and negatively

MOTIVATING FACTORS

• if present, lead to job satisfaction and hence motivation

• achievement, recognition, work, responsibility, promotion and growth

HYGEINE FACTORS

• if present, do not lead to motivation but if absent lead to dissatisfaction

• pay and benefits, company policy, workplace relationships, work conditions, status and job security 

FINANCIAL INCENTIVES TO IMPROVE EMPLOYEE MOTIVATION

• Financial incentives are the variety of methods that have a money value and are used to reward the workforce and influence their behaviours at work
• Non-financial incentives are the methods of motivating employees through elements of job design

FINANCIAL METHODS OF MOTIVATION

• Financial methods of motivation include:
  • Piece rate is when payment is based on the number of items (pieces) produced by an employee
  • Commission is when payment is based on the number of units sold
  • Bonus is an additional, lump sum, one off payment to an employee for meeting individual, team or company targets
  • Profit share is when a proportion of employee pay varies with the profits of the company
  • Performance related pay (PRP) is when employees receive a bonus based on the performance of the employee measured against a pre agreed range of criteria 

NON-FINANCIAL TECHNIQUES TO IMPROVE EMPLOYEE PERFORMANCE

• Delegation involves the passing of authority down the hierarchy

• Authority occurs when an employee is given the right to do something by their superiors

• Responsibility remains with the manager

• This will:

NON-FINANCIAL TECHNIQUES TO IMPROVE EMPLOYEE PERFORMANCE

• Consultation is the process of seeking the thoughts and opinions of employees prior to making decisions that may affect them

• Empowering employees 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

• Team working is where employees are organised into groups and work together in order to meet set objectives

• Flexible working gives employees greater control over their own work routines e.g. start and finish time, may include the ability to work from home

NON-FINANCIAL TECHNIQUES TO IMPROVE EMPLOYEE PERFORMANCE

• Job enrichment is an increase in the level of responsibility that an employee has in order to increase motivation

• Job rotationis varying the tasks that an employee does to reduce boredom and increase the range of skills that the worker has

• Job enlargement is an increase in the number, as opposed to level, of responsibilities that an employee has in order to increase motivation

MANAGERS AND LEADERS

• Leadership is the ability to influence and direct people in order to meet the goals of a group

• Management is the process through which company resources are used and decisions made in order to meet the objectives of the firm

• Leaders are those people that can inspire and motivate people to meet objectives

• Managers will set objectives and decide how to go about achieving them

• Often leaders and managers are one and the same person

WHAT MANAGERS DO

• The role of managers includes:

TYPES OF LEAADERSHIP STYLES

Autocractic– the leader makes a decision without consultation e.g. in the army when quick decisions are required in battle

Democratic – the leader consults the team but makes the final decision e.g. a skilled workforce where each team member can make strong contributions

Paternalistic– the leader acts in a fatherly way towards the workforce – making decisions based on the needs of the workforce as well as the business e.g. often family or smaller organisations with a more caring style ofleadership

Laissez-Faire (to leave alone) –the leader allows the team to make decisions e.g. experienced and competent staff given freedom to make decisions themselves