3.6 - Decision Making To Improve HR Performance

Question 1

What is HRM?

Answer 1

The design, implementation and maintenance of strategies to manage people for optimum business perfromace

Includes activities like staff performance, recruitment and trainging - contributes to individual and company growth

Question 2

What are the 6 main objectives of HRM?

Answer 2

1 Number, skills and location of employees
- ensures right number at right time with right skills and attitudes

2 Alignment of values

• making sure feel central to decision making-sense of purpose
• recruitment and training focus on aligning staff with businesses core values-helps motivation and retention levels

3 Diversity
- shareholders benefit from diverse range of skills, background and experience in business

4 Employee engagement and involvement
- if not either they wont give 100%

5 Training
- more person does, more motivated

6 Talent development
- given opportunity for career progression but focusing on individuals could demotivate others, effecting teamwork, morale and culture

Question 3

What are 3 internal and 3 external influences on HR objectives and decisions?

Answer 3

INTERNAL

• past experiences, character and ambitions of new chief executives
• financial pressures (shareholders)
• changing marketing objectives (change training for higher service standard

EXTERNAL

• economic factors (if a boom-thriving and growing-may be shortage of employees if all businesses booming and want staff)
• legal factors (legislation-pay or hours able to work)
• improvements in technology (could job be taken over/need training)

Question 4

Summarise the hard and soft strategies used by HR

focus and 3 key features from each

Answer 4

HARD
- employee treat as a resource which needs monitored for efficiency-easily replaced
- identify workforce needs-recruit and manage accordingly
1 minimal communication-from top down
2 little empowerment or delegation (autocratic)
3 appraisal system focused on making judgements-objectively

SOFT
- employees treat as valued asset, source of competitive advantage and as individual with needs planned accordingly
- concentrated on needs (roles, rewards motivation)
1 strong, regular two way communication (democratic)
2 empowered and encourage to seek responsibility and delegation
3 appraisal system focused on identifying and addressing development needs

Question 5

Which is the better strategy hard or soft in HR?

One advantage and disadvantage of each

Answer 5

Hard
+ more cost effective workforce-quicker decision making and focused on senior managers
- likely to suffer higher absenteeism, staff turnover and less successful recruitment

Soft
+ rewards employee performance and motivates more effectively
- be “too soft” and when all employee benefits added up, cost of workforce may leave business at competitive disadvantage

Question 6

Managers require objective, unbiased ways to measure performance to look at motivation, productivity and if goals are met, what 5 measures could be used?

Answer 6

Employee costs as percentage of turnover

Employee retention rate

Labour productivity

Labour cost per unit

Labour turnover

Question 7

How is labour productivity calculated?

Answer 7

Labour productivity = output per time period/number of employees

Question 8

What is Britain’s productivity like? What 4 reasons have been put forward to explain this?

Answer 8

UK has experienced slump in productivity since financial crisis showing no signs of ending

• low rate of capital investment (most cant afford latest technologies)
• banking crisis (affects lending to those wanting to expand)
• persistent and skill shortages in key industries
• relatively low levels of market competition

Question 9

How can labour productivity be improved (5 ways) and why should it?

Answer 9

HOW (increased productivity=efficiency improvement)

• better technology (grants given to help afford this)
• training
• specialisation of staff
• motivation
• leadership

WHY

• higher growth in productivity is how nations become richer, living standards rise, governments have resources to improve public services or cut taxes
• if more productive can become more competitive (charge lower prices) and achieve higher profits as due to quicker production and better quality
• lower labour cost

Question 10

Employee costs as a percentage shows the impact of productivity, how is this calculated? What does a higher figure and higher percentage show?

Answer 10

Employee costs as a percentage of turnover = (employee costs/sales turnover) x 100

High figure can show impact of inefficiency (eg/ less productive staff, lower sales)

Higher percentage could be indication of more staff/better service in service sector organisation

Have to compare to similar businesses only

Question 11

Labour cost per unit closely links to profitability (what is actually kept, how is it calculated? What does a higher or lower labour costs per unit show?

Answer 11

Labour cost per unit = labour costs/units of output

If labour cost per unit is higher, lower profit margins made

Lower labour costs per unit allow firm to be more competitive

Question 12

Labour turnover measures the rate of change of a firms workforce, how is it calculated? What are 3 internal and 1 external cause of high labour turnover?

Answer 12

Labour turnover(%) = (no. staff leaving during year/average no. employed during year) x 100

A business does not want 0 turnover - want new skills and ideas

INTERNAL

• poor recruitment processes (wrong staff)
• ineffective leadership/motivation
• wage lower than other firms

EXTERNAL
- more local vacancies (choose jobs closer to home-les travel/better transport)

Question 13

What are the pros and cons of high labour turnover?

3 of each

Answer 13

+ new workers-new ideas and enthusiasm
+ new skills-rather than existing training only
+ new perspective and ways to solve problems

• high cost of recruitment and training
• takes time for staff to settle-less effective
• loss of productivity while they learn

Question 14

Employee retention added to turnover totals 100%, it is the % that stay, how is it calculated?

Answer 14

Employee retention rate (%) for particular time period = ((no. employees at end-number of leavers)/no. at end of period) x 100

Question 15

To what extent is it important to consider the views of stakeholders when making decisions?

Answer 15

Need to consider stakeholder interest, power and influence - some catered to more than others which varies overtime

Stakeholder desires could conflict-hard to make all happy

Eg/ in recession important to reduce prices resulting in wage rises being delayed or shareholders returns lowered

Managers have to make regular judgements about extent to which needs of particular groups should be satisfied - have to do whats best for business even if it reduces profit margins

Question 16

To what extent is centralised approach (head office keep control of how organisation is run) to decision making right for all organisations?

2 pros 2 cons

Answer 16

+ maintains uniformity of product/service
+ head office can provide support functions more effectively

• local differences in eg/ taste - important issue for large companies in different markets
• branch mangers no say over inventory ordering may ignore valuable local knowledge - high labour turnover

Question 17

What is job design?

Answer 17

Tasks and responsibilities grouped into specific job

Boring repetitive jobs often lead to poor quality and low productivity (demotivated)

Question 18

In relation to job design, what did Herzberg introduce?

Answer 18

Concept of job enrichment - redesigned to do range of activities and responsibilities and cut tall structures

Builds motivating potential

Hackman and Oldham expanded on this - provided framework to enrich jobs-job characteristics model

Question 19

Hackman and Oldham expanded on the work of Herzberg, creating a job characteristics model, what is it based on? What are the 3 things involved in it?

Answer 19

Based on belief task is key to motivation

1 CORE JOB CHARACTERISTICS - suggested there was 5 characteristics to help predict job satisfaction
- measured against scale from very low to very high coverage

2 PSYCHOLOGICAL STATES- focus on people than jobs,

• there are 3 things which impact state
• greater level of these gives a positive and relaxed worker

3 OUTCOMES

• 1&2 both impact workplace outcomes-can and should be measured
• consist of employee motivation, performance, job satisfaction and practical measurements eg/turnover

Question 20

What is the value of changing job and organisation design?

Answer 20

JOB
+ lead to reduced stress levels associated with lack of control (manage themselves) so lower absenteeism and labour turnover figures

ORGANISATION
- some businesses have changed many times in the search for the perfect structure, does it exist

Question 21

From Hackman and Oldham’s model for job enrichment, Outline the 5 aspects of job design that according to their model, can influence how motivating a job will be

ive 2 examples of characteristics to help predict job satisfaction (CORE), 2 examples of what affects workers psychological state

Answer 21

CORE
1 skill variety
(able to do no. diff tasks using no. skills/talents/abilities aka does it stretch them to develop skills, motivating not repetitive)
2 task identity
(clearly defined-enjoy feelings of achievement as opp. to complete from start to finish with identifiable outcome)
3 task significance
(importance of job&impact of employees work)

PSYCHOLOGICAL
4 meaningfulness of work&feedback
(can relate to work not just repeated movements&offered feedback regarding performance&outcome)
5 responsibility for outcomes aka autonomy
(given opp, freedom, learn on job&have control of own work)

Question 22

What is involved in organisation structures? Why is organisational design needed?

Answer 22

Breaks an organisation into functions-shows the roles, responsibilities and relationships of each member in a business (links departments with people)

Reinforces communication flow, lines of authority and layers of hierarchy

Organisations grow, become more complex, require more formal structure and more management layers (managers aren’t overloaded with subordinates)
- more management levels means slower, less reliable communication and more difficult to see work done by those closest to customer

Question 23

What is span of control? What are the 2 types?

Answer 23

Number of people directly under supervision of one manager

NARROW - smaller number reporting to one manager

WIDE - large number of staff reporting to one manager

Question 24

What are the 3 advantages and 3 disadvantages of narrow span of control?

For WIDE span of control=opposite
(WIDE - large number of staff reporting to one manager)

Answer 24

+ allows close management supervision (vital if staff are inexperienced or task is critical)
+ excellent communications (small immediate team)
+ many layers of hierarchy-chances to move up career ladder

• workers feel over supervised-feel not trusted so leave
• communications suffer, more layers so vertical communications harder
• restricted scope for initiative and experiment

Question 25

What is the extent to which decision making power and authority is delegated known as?

Answer 25

Centralisation - decision making power remains in hands of top management

Decentralisation - decision making power delegated to workers lower down hierarchy (attitudes to staff influence this-is there trust? Empowers and motivates staff)

Question 26

Toyota changed their organisational structure from centralised to decentralised? Why? What does the new structure now allow?

Answer 26

Changed as response to safety issues and corresponding product recalls-before Japan headquarters made all decisions, individual units didn’t communicate, slow response

+ greater degree of flexibility empowers Toyota to speedily response to issues
+ more capable of responding to regional market conditions
+ facilitates business resilience and contributed growth
- increased decision making of regional heads has reduced headquarters control

Question 27

Delayering is removing a management layer.
Who is it good for?
Who is it bad for?

Answer 27

GOOD for some employees and shareholders (better finance)

BAD for trade unions and some employees (may effect community)

Question 28

What is matrix design/management? What are the advantages and disadvantages of this?

Answer 28

Staff work in project teams in addition to responsibilities-can be answerable to more than one boss

+ help break traditional department barriers improving communication across entire organisation
+ individuals use particular skills within a variety of contexts (motivating)
+ share resources (cost effective) and ideas

• members have divided loyalties as report to two line managers-under a heavy pressure of work
• takes time for matrix team member to get used to the structure
• may neglect functional responsibilities

Question 29

What is HR planning about and what are the 4 key steps of the workforce plan? How are these impened within the business?

Answer 29

Thinking ahead so staff have right balance of the right skills each year into future

1 Audit aka inspect
(what do you have atm-how many staff, their skills, aspirations etc)
2 Analyse
(corporate plan to turn plans into people-eg/growth)
3 Account
(for changes between now&then eg/leavers, retirements etc)
4 Calculate
(gaps needing filled)

Plans then put into practice through recruitment, training&planned redundancies

Question 30

What is job description and personal specification?

Answer 30

• Duties and responsibilities of job (pay, location, hours etc)
• Essential and desirable skills, qualifications, attributes required in person to fill role

Question 31

What are 3 types of training?

Answer 31

3 types:
- induction training
(insight to business culture, aims objectives, health and safety, security and meet key members-familiarises employee with business so ready to start)
- on the job training
(workers trained whilst doing job, shadow experienced workers-some degree of productivity)
- off the job training
(leave job to train, fully focused, specialist trainers, lost production)

Question 32

What is redeployment?

Why is this beneficial (4)?

Answer 32

Find employees another role in the business to avoid redundancy (changes in demand or tech make tasks or responsibilities redundant)

+ staff from redundant roles may be able to switch to other role elsewhere
+ saves redundancy payments
+ helps morale
+ avoids external recruitment

Question 33

What is piece rate pay?

Would could this lead to?

Answer 33

Paid amount per item sold

Then work faster to earn more (better productivity and output)

• more wastage=more costs as mistakes made
• quality suffers (reputation suffers)

Could lead to being a lower quality business charging lower prices

Question 34

What is employee engagement?

Answer 34

Contribution employee makes toward their work including intellectual effort&positive emotions

Question 35

What was found about motivation in the UK?

Answer 35

15% highly motivated
25% coasting
8% completely demotivated
28% would be more productive with better boss

If underperformance tackled, value of UK output would rise by more than £350 billion a year=motivation matters

Question 36

What are the 4 motivational theorists and what do they advocate?

Answer 36

Taylor (scientifc management)

Mayo (human relations management-Hawthorne effect)

Maslow (hierarchy of needs)

Herzberg (2 factor theory-hygiene or maintenance factors)

Question 37

What is Taylors scientific management theory and its 4 main principles?
How is it applied to a business (3)?

MOTIVATION

Answer 37

Workers mainly motivated by pay
- employers should reward for every increased productivity rather than scolding for every minor mistake “dont have intative&obey orders&quick”

4 main principles:
1 use scientific methods to determine&standardise 1 best way of doing job eg/identify person doing best process&apply to all
2 clear division of tasks&responsibilities
3 high pay for high performing employees (eg/piece rate)
4 hierarchy of authority&strict surveillance of employees (bc dont enjoy job)

How to apply
1 measurement of what can be done better&how
2 motioring to ensure targets=met
3 control through analysis

Question 38

What is Herzberg’s two factor theory?

How does the business implement this?

Answer 38

• There’s certain factors business could introduce that would directly motivate employees to work harder (motivators-eg/advancement, nature of work, responsibility, recognition)
• Also factors that would de-motivate employee if not present but wouldn’t in themselves actually motivate employees to work harder (hygiene factors-eg/company policies, quality of leaderships, work conditions)

Managers have to create ideal enviro eg/eliminate demotivators&increase motivators (focus on motivation&job enrichment, talk to employees, be an example setting standards of work, give a voice

Question 39

What is Mayos Human Relation Theory?

How does the business implement this, what did he conclude best motivated workers (3)?

Answer 39

Workers not just concerned with money, could be better motivated by having social needs met whilst at work (paternalistic management style)

Did Hawthorne effect experiment-found job satisfaction &productivity increased through new light levels&employee participation, not ST incentives

Mayo concluded that workers best motivated by:
1 Better communication between managers&workers (taking interest, hearing opinions)
2 Greater manager involvement in employees working lives (what do they enjoy?)
3 Working in groups or teams

Question 40

What is Maslow’s hierarchy of needs? How does the business implement this? Give 2 advantages and 2 disadvantages

Answer 40

Focused on psychological needs of employees
5 levels of needs employees need fulfilled at work, only once lower need is fully met will worker be fully motivated by having next need in hierarchy satisfied (basic bottom, more personal as up)

1 psychological
(basic needs - acceptable pay and conditions)
2 safety
(safe working environment/job security, health and safety protection)
3 social
(sense of belonging-working in team, mentor and coaching)
4 esteem
(self respect/status-trust, recognition of achievements)
5 self actualisation
(intellectual needs&fulfilling potential-challenging work, promotion opportunities)

Business should offer different incentives to help fulfil each need in turn and progress up hierarchy

Question 41

Herzbergs work had such an impact n business as he also gave a method to improve motivation
What is it and what 3 things does it involve?

Answer 41

Job enrichment- giving people opportunity to use ability

For job to be enriched it would have to contain:

1 complete unit of work
(not just small repetitive fragment of job but challenging tasks)

2 direct feedback
(work should enable worker to immediately judge quality of what he/ she has done-gives satisfaction of knowing how ell done-must be held responsible for own quality)

3 direct communication
(avoid delays of communication via supervisor so feel committed, in control and gain direct feedback-communication and motivation interrelated)

Question 42

Why is effective communication important?

How can it be managed and improved?

Answer 42

Links various activities
Without, employees wouldn’t know what to do, why, how, when to do it by and managers would have little idea of how business performing and what people actually doing
- ensures all working to common goal an enables feedback (help staff feel have real input on business decisions)
- vital for decisions (need high quality info-need to know what shop floor staff know about customer and competitors)

M&I

• take regular initiatives to meet with staff and talk
• staff happy to keep contributing thoughts if know complaints aand suggestions addressed

Question 43

What are the influences on employer employee relations?

Answer 43

• underlying demand conditions
  (eg/ revenue growing, whole staff optimistic about job security and promotion prospects)
• level of skill required by producers of product or service
  (risk of “them and us” divide if management see staff as low skilled, causing rift in communication and trust, may build solidarity in opposition)
• conditions in broader labour market
  (if economy booming, demand for labour high enough to make staff push hard for perhaps overly ambitious improvements to pay and conditions of service-fault lines then appear between employer-employee)

Question 43

What are methods of employee involvement?

Answer 43

Success depends on full participation of many staff possible

SMALL FIRMS-informal griup consisting of 1 person from each department, monthly meetin gs used to raise issues and discuss future plans

LARGER FIRMS-formal methods so structure to allow element of workplace democracy or staff represented by trade union

Question 44

Why would a company recognise a trade union?

Answer 44

Helpful for managers to have small representative group to consult and negotiate with-collective bargaining removes need to bargain with every individual

Promote consultation over conflict (union officials consulted by business at early stage about causes, procedures and objectives-give workforce confidence management acts thoughtfully)

Provide channel of upward communication not filtered by middle managers

Question 45

Outline a case where theres been a lot of trade union involvemnt

Include teir plan, action, deal, results&duration

Answer 45

BRITISH AIRWAYS

PLAN
-unite&secure deal t end long running dispute over BA’s plans to fire&rehire workforce in cargo division

ACTION
-undertook 9 day strike over Christmas/new year causing overwhelming disruption to company’s cargo services, then proposed further 9 days but called of last minute after progress made during negotiations

DEAL
-key points inc. end of fire rehire, no compulsory redundancies, improved pay protection whose pay sits above new agreed rates, increased pay for significant prop. of staff

RESULTS
-anticipated deal will be accepted, airline believes bc of agreed changes they’ll modernise crew industrial relations&help ensure same kind of dispute doesn’t occurs again

DURATION
-began in 2009, resulted in travel chaos for many passengers costing BA around £150m

Question 46

To what extent is increased labour productivity accepted by workers?

Aka depends on factors

Answer 46

How higher profits achieved are shared (do employees earn more/invested in R&D)

How is higher productivity achieved (more work/better equipment-but might create fear of job being taken over)

Does greater productivity impact quality

How much is the targeted increase in productivity

Question 47

Taylors motivational theory is a scientific management theory which suggests employees are best motivated by financial reward

Explain 1 benefit and 3 costs
Is it used today?

MOTIVATION

Answer 47

+ increase in output&profit, lower costs so more competitive&raise pay

• workers easily replaced due to high pay (no security)
• quit (no time to slow or stop-unhappy&overly supervised and overworked)

Depends on what actually motivates YOUR employees regardless of industry

TODAY trade unions involved&employment laws (recorded reason need to sack)

Question 48

Analyse 3 effects/outcomes on the business/indiviual of a firm using Hackman&Oldhams model

Answer 48

Autonomy=people given independence, control&freedom over task completing so feel empowered&trusted by business thus valued&motivated=better productivity

Feedback enables performance to be monitored ebales work to be improved thus reduced waste&better customer satosafcatiin&enables employee to develop

Task identity=see complete unit of work, feel make difference=empowered

Question 49

What are 3 advantages and 3 disadvantages of delayering?

Answer 49

+ REDUCED COSTS (wages) - higher up higher wages and bonuses (more costly)
+ BETTER EFFICIENCY through reduced length of chain of command
+ NATURAL WASTAGE seek voluntary redundancies not forced out of job (nicer way) if not criteria has to be fair to justify

• STAFF UNHAPPY with more responsibility especially if on same pay
• REDUNANCIES DEMOTIVATE remaining staff=union involvement (strike)
• DAMAGES CUTOMER RELATIONSHIPS as sales disrupted, trust gone

Question 50

4 steps in HR planning consist of audity/inspect, analyse, account and calculate and tend to be implemented in th ebusiness through recruitment training and planned redundancies

What dose this place emphasis on/focus on in relation to HR?

Answer 50

Emphasis on recruitment, quantity&quality of staff
Eg= if expanding, new skills needed OR are job roles the same?
- internal/external advertisement needed but expensive&time consuming so has to be right first time

Question 51

3 types of training are induction, on the job and off the job, what are 3 costs and 3 benefits to training?

Answer 51

+ increases skills
(improve productivity and quality)
+ increases flexibility
(quick response to changes in demand or tech)
+ more motivated workforce
(more chance for development and promotion)

• expensive
• production disrupted, lost output
• newly trained workers may be poached by other firms

Question 52

What is motivation?

What are the 4 impacts of a motivated workforce?

Answer 52

Desire to achieve results

+ better productivity
(lead to lower unit costs, enabling firm to sell at lower price)
+ lower levels of absenteeism
(content workers-also gives good reputation)
+ lower levels of staff turnover
(less leaving=lower training and recruitment costs)
+ likely to improve product quality/customer service associated with product

Question 53

Taylors motivational theory is a scientific management theory which suggests employees are best motivated by financial reward

Which industry types is it most/least suitable for?

Answer 53

MOST
factories where labours divided with specialised roles so piece rates possible (speed up if paid for every job performed)

LEAST
service&high quality=cant measure as time with each customers diff as may have diff qs etc so wouldn’t work

Question 54

Herzbergs 2 factor theory explains motivation through motiavtors and demotivators
Give 2 advantages and 2 disadvantages

Answer 54

+ focuses on employees rather than external factors
+ brings change by measuring employee satisfaction not in terms of money but other equally important factors

• job satisfaction and job productivity not directly related so business may face disappointment
• different people have different perceptions of job satisfaction

Question 55

Mayos Human Relation Theory suggests workers arent just concerned with money and could be better motivated by having social needs met whilst at work (paternalistic management style)

Give 2 advantages and 2 disadvantages

Answer 55

+ makes more democratic workforce
+ workers given more freedom at work

• individual responsibilities cause pressure and stress
• workers given more freedom=less control

Question 56

Malows hierarchy of needs focuses on psychological needs of employees where 5 levels of needs employees need fulfilled at work
Give 2 advantages and 2 disadvanatges

Answer 56

+ hugely influential
+ can be applied to most jobs and is simple to understand as all go through at least one stage of needs in pyramid during lifetime

• not everyone has same needs and may move through pyramid in different orders due to different degree of need
• not everyone has same set of needs (some need no more than money from job) and may never be fully satisfied (human desire for achievements limitless)

Question 57

What are the values of having good employee employer relations?

Answer 57

VALUABLE bc they have to get along in long term for business success
- as changing external market conditions can force change eg/ redundancy trust hugely valuable (staff accept short term difficulty if believe headed in right direction-need to base on “all in it together”