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Summary Human Resources AQA AS level business A* notes
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Human Resources notes AQA AS level business, specification-specific. These are in-depth and got an A* for AS levels.
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3.6.1: setting human resource objectives:Spec point 1: The value of setting human resource objectives:
Importance/value of setting human resource objectives:
• Giving employees something to work towards—> increasing motivation
• Creates clarity and purpose
• Allows success to be measured and reviewed
• Enables better decision making in relation to HR decisions
• Enables business to plan and then allocate resources accordingly
• Improving efficiency
• Improving coordination between departments
Outcomes of good HR management:
• Reduced costs: through higher productivity, efficiency and quality production.
• Greater added value, increasing profit margins: resulting from better quality, good customer service and innovation through motivation.
• Better skilled labour retention.
Human resource objectives: 6 objectives
• Employee engagement and involvement:
◦The more engagement, the more likely they are too find better ways to work for the benefit of the business.
◦The extent to which employees feel that they can genuinely influence the day to day running of an organization and outcomes they
achieve
◦More satisfactory completed appraisals
◦Ensure there are opportunities for career progression like promotions, to engage workers.
• Talent development:
◦The workforce is a source of innovation and employees who advance should be nurtured and encouraged.
◦Helping staff in a business realize their full potential to maximize productivity and achieve objectives
◦Long term develpment
◦Increase investment in training
◦Focus on most talented employees reaching to full potential: extra training and “fast-tracking” schemes.
◦Increase staff retention and % of job vacancies filled by internal candidates.
• Training:
◦Better training reduces costs (errors) so improve effectiveness of training
◦Induction, on the job, off the job
◦Improves productivity
◦Motivates workforce
◦However, can apply to other jobs now
• Diversity:
◦Diversity in all positions: from floor staff to directors.
◦Discrimination in: race, age, sexual orientation and gender is illegal
◦Diverse workforce—> meet needs of customers better
◦Workforce with diversity in: age, gender and race will have a wide variety of skills, ideas and experience.
◦Attracts potential employees and customers too.
• Alignment of values:
◦The more the workforce can understand underlying purpose of the business, the quicker and more efficiently decisions will be
implemented.
◦Business reflecting values held by employees
◦In induction training and recruitment: focus on core values
• Number, skills and location of employees:
◦Ensuring the business has enough resources to achieve its corporate objectives to match supply to demand
◦The workforce needs to match business requirements to operate effectively hence the HR department must plan to watch those
needs.
◦Improve retention and reduce turnover
◦Recruitment targets
◦Training budgets
◦Extent of skill gaps in workforce
Others:
• Maximizing labour productivity
• Minimize labour cost
• Maintain positive employee relations
,Spec point 2: Internal and external influences on human resource objectives and decisions:
Internal Influences:
1. Corporate objectives: eg cost minimization needs redundancies
2. Operational strategies: new IT—> training
3. Marketing strategies: new product development—> changes to organisational structure
4. Financial strategies: amount of funding available
5. Culture within business: fast food restaurants might not worry about labour turnover
6. Nature of product: traditional manufacturing vs high tech
7. Management attitudes: theory x vs theory y
External Influences:
1. Political and legal change: legislation such as max working time impact workforce planning. All UK businesses subject to employment laws
2. Economic changes: changes in UE—> affect supply of labour and wages. Boom/recession affects training and recruitment.
3. Social changes: improved health and longer lifespans—> average UK workforce rising
4. Technological changes: rapid growth of social networking may change businesses way to communicate with employees. Improvements in
technology—> HR requiring people who can use certain type of software/machine.
5. Environmental and ethical issues: eg condemning of zero-hour contracts
6. Market changes: loss of market share to competitor—> changes in divisional management or redundancy to improve competitiveness.
Soft and Hard human resource management approaches (HRM) can influence HR objectives too:
2 schools of thought in HRM.
SOFT HRM:
Staff is treated as a valuable asset to the business that can contribute and help the business achieve objectives.
• Workers= key to business success most importance resource
• Building the business around skills of workforce
• Encourage development of workforce to create competitive advantage
• Motivation: through empowerment and development
• Appraisals are development
• Training to meet development needs
Key features:
• Democratic leadership
• Performance related pay
• More delegation for empowerment
• Employees managed on long-term basis
• Flat organizational structure (wider span of control and short chain of command)
HARD HRM: links to theory X management
Staff is treated as a resource that must be emanated to control costs and output
• Employees hired on short-term basis
• Main motivator is money
• Appraisals are judgmentental
• Training only to meet production needs
Key features:
• Autocratic leadership
• Time related pay
• High turnover
• Tall organizational structure( small span of control longer chain of command)
Approach depends on:
• Skills of manager and their confidence to manage
• Nature of product/service
• Is it customer service or shop of customer facing employees—> SOFT—> employees need to be happy if serving to customers
• Financial situation of business(tough times need touch approaches to cut costs)
• Low skilled or high skilled workforce: how important is it to retain
Which is better?
Hard HRM can benefit a business as managers keep control of workforce—> less mistakes made. Easy for business to replace as they are just seen as
resources
But: they don’t use their employees to their full potential—> missing out on chances to increase profits (opportunity cost). It can be demotivating with
boring, repetitive jobs—> employees feel undervalued—> high staff turnover.
Soft HRM increases staff morale—> feeling valued . This makes it easier to retain staff.
Business benefits from the skills and experience of its staff as they can input decisions and it encourages commitment and good performance- they feel
loyalty
However: isn’t always appropriate.
Employees might not be interested in development or empowerment, and soft HRM involves higher costs because encourages investment in
employees. Extra training is time consuming so they need to identify staff needs to see if it will be cost effective.
Risk: employees who have completed all the training might want to leave for a better job.
, 3.6.2: Analysing human resource performance:
Spec point 1: Calculating and interpreting human resource data:
HR data—> analyzed—> to make decisions
Calculations:
Below are figured which are calculated using a performance management system and used to check that the business’s
Human Resources are always being used to maximum efficiency.
They will also compare figures to their competitors’ to see who is utilizing their Human Resources better and if they need to
improve in certain areas. Eg: if competitors have much higher retention rates then HR needs to look at why employees don’t
want to stay at their company.
• Labour turnover: number of employees leaving during period/ average number employed during period
• Labour retention: number of employees for one year or more/ overall workforce number x100
• Labour productivity: output per period/ number of employees per period
• Employee costs as a % of revenue: employee costs/ sales revenue x100
• Unit labour costs: total labour costs/ total units of output
1. Labour Turnover:
External causes of high labour turnover:
• Changes in regional unemployment levels
• Growth of other local firms using staff with similar skills.
Internal causes of high labour turnover:
• Poor motivation
• Low wages
• Lack of opportunities for promotion
Poor recruitment process that selects incompetent candidates—> will increase labour turnover.
Increased delegation, job enrichment, higher wages and better training—> will reduce turnover.
Labour turnover should NOT be 0%: businesses need some to bring new ideas in.
Benefits of high turnover:
• constant stream of new ideas through new staff
• Firms can recruit staff who’ve already been trained by competitors- saves money
• If sales fall—> firms can reduce workforce through natural wastage rather than costly redundancy.
• Enthusiasm of new staff influences other workers.
Disadvantages if high turnover:
• lack of loyal and experienced staff who know the business
• Losing already trained staff often to direct competitors.
• Training costs money and productivity drops while new staff gets trained
• High recruitment costs.
2. Labour Retention: measures a company’s ability to keep its employees:
Higher turnover—> lower retention.
HR could deal with low retention rates by improving the induction process. They could highlight the opportunities available to all
employees and reinforce the values and goals of the business so employees feel valued and included.
3. Labour productivity: HR needs to look at trends in labour productivity figures before making decisions on training, recruitment and pay.
How can HR improve labour productivity:
• HR can have a positive impact on labour productivity by employing a diverse workforce—> ensuring all employees feel engaged and
motivated.
• They can also make sure the right people are in the right roles.
• These both reduce absenteeism levels.
If labour productivity is increasing—> HR could reward employees with bonuses and increased salaries to keep levels of motivation high
and so workers know their hard work is valued.
HR will compare their LP data to competitors to see if they need to improve theirs or if they’re already head of game. If its low compared
to competitors they will improve theirs- but this information is tricky to find.
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