3.6 DECISION MAKING TO IMPROVE HUMAN RESOURCE PERFORMANCE Flashcards
Name effective ways of measuring the workforce
- Staff Turnover
- Labour Productivity
- Absenteeism
- Retention Rate
Operational ways of measuring the workforce effectively
- Capacity utilisation
- Quality reports
- Waste levels
- Environmental targets
Marketing ways of measuring the workforce effectively
- Market share
- Customer satisfaction
- Recognition levels
- Customer loyalty
Why may a member of staff leave their employment?
- Lack of authority
- Bad working conditions
- Competitors offer better pay
- Stress / Mental Health / Personal
Define Retention Rate
Ability for a business to persuade its staff to stay with them
Define Labour Turnover
The percentage of the workforce (employees) that leave a business within a given period
Equation for Labour Turnover
Number of employees during period
/
Average number employed during period
(x100)
Why is high staff turnover a problem?
- Higher costs, for re-recruitment
- Increases pressure on remaining staff
- Disruption to production and productivity
Factors that may cause high staff turnover
- Pay
- Working conditions
- Lack of promotion
- Competition poaching staff
- Poor communication
- Economic conditions (e.g. during recession)
How to improve staff turnover
- Effective recruitment and training
- Competitive pay and benefits
- Job enrichment
- Reward staff loyalty / incentives
Define labour productivity
How much employees produce in a given time period, the more productive the better
Why does labour productivity matter?
- Labour costs are normally a very high % of total costs
- The efficiency of a business relies on how productive the workforce is
- Competitiveness depends on keeping unit costs down
Factors affecting labour productivity
- Extent and quality of fixed assets (e.g. equipment and IT)
- Ability to motivate the workforce
- Methods of production used
- External factors (e.g. reliability of suppliers)
How to improve productivity
MOTIVATE !
- Measure performance and set targets
- Invest in better equiptment
- Simplify products
- Improve employee training
Define Absenteeism
Measure people who are absent
Equation for Absenteeism
Number of staff absent during period
/
Number employed during period
(x100)
- or -
Number of days taken off for unauthorized absence (during period)
/
Total days worked by workforce over the period
(x100)
How to tackle absenteeism
- More days off
- Investigate the cause
- Set targets
- Have clear absence policies
- REWARD GOOD ATTENDANCE
Problems of bad absenteeism
- Costly
- Business will need to investigate which will be time consuming
- Productivity down
How is absenteeism predictable?
Often highly predictable because occurs at certain points in the year
Define ‘Human Resource Management’
Design, implementation and maintenance of strategies to manage people for optimum business performance
Why is HRM important?
- People are a critical resource in the quality and customer service level
- Competitiveness requires a business to be efficient and productive- workforce needs to be motivated; right skills and organised
- Flatter organisational structures place greater emphasis on delegation and communication
Suggest strategic methods of HRM
- Workforce planning
- Recruitment and training/development
- MOTIVATING STAFF
- Organisational structures (hierarchy etc)
How would a business…
Ensure human resources are employed cost effectively
(HR Actions)
- Pay rates should be competitive but not excessive, can cause loss
- Achieve acceptable staff utilisation
- Measure returns on investment in training, see if its worth it
How would a business…
Make effective use of workforce potential
(HR Actions)
- Ensure jobs have suitable, achievable workloads
- Avoid under-utilising or over-stretching staff potential
- Make best use of employee skills, don’t waste on unnecessary tasks
How would a business…
Match the workforce to the business needs
(HR Actions)
- Workplace planning: right number of staff in right place with right skills
- Effective recruitment
- Consider outsourcing
- Spread out staff effectively
What does workforce planning ensure?
Right number of staff in right place with right skills
How would a business…
Maintain good employer / employee relations
(HR Actions)
- Honest, constant communication with employees
- Comply with all correct ethical employment legislation
- Offering incentives (e.g. financially)
Internal influences on Corporate objectives (HR objective)
An objective of cost reduction is likely to require HR to implement redundancies, job relocations etc
Internal influences on operational strategies (HR objective)
Introduction of new IT systems and processes may require new staff training, fewer staff
Internal influences on marketing strategies (HR objective)
New product development into a new market may require changes to organisational structure and recruitment of a new sales team
Internal influences on financial strategies (HR objective)
A decision to reduce costs by outsourcing training would result in changes to training programmes
External influences on market changes (HR objective)
A loss of market share to a competitor may lead to a change in management. or job losses to improve competitiveness
External influences on economic changes (HR objective)
Recessions = reduce staff costs and improve productivity to combat it
External influences on tech changes (HR objective)
Rapid growth of social networking may require changes to the way the business communicates with employees and customers
External influences on legal changes (HR objective) - context
EU legislation on areas such as max working time and other employment rights which cannot be breached
Define ‘hard’ HRM
AUTOCRATIC - tall organisational structures
- Treats employees as a RESOURCE
- Strong links to corporate objective rather than functional objective
- HARSH: hiring, moving and firing - centralised decisions
- Pay absolute minimum as not worried about motivation
Define ‘soft’ HRM
DEMOCRATIC - flatter organisational structure
- Treats employees as an ASSET that can contribute and help the business achieve its objectives
- Treats employees as the most important resource in the business, and a source of competitive advantage
- Concentrates on their needs: roles, rewards and motivation
- Focuses more on long term
- Strong communication
- Competitive pay
What is ‘competitive pay’?
Stacks up well when compared with similar jobs from other employers
What is the typical organisational structure for ‘Soft HRM’
Flat
What is the typical organisational structure for ‘Hard HRM’
Tall
Advantages of Hard HRM
- More cost-effective
- Decision making quicker
- Employer gets max control
Disadvantages of Hard HRM
- May suffer from high absenteeism; staff turnover and unsuccessful recruitment as employee morale is low
- Lower staff engagement: staff may not enjoy going to work
Advantages of Soft HRM
- Motivates employees
- Rewards employee performance effectively
- Employees feel more valued and involved - part of the process
- Teamwork encouraged
Advantages of Soft HRM
- Motivates employees
- Rewards employee performance effectively
- Employees feel more valued and involved - part of the process
- Teamwork encouraged
Disadvantages of Soft HRM
- Costly: can be too ‘soft’, can cost the business a lot of money causes a loss of competitive advantage
- Lack of focus: large focus on employees rather than corporate goals/strategies
- Employees may disapprove of an employee-centred model
What are the key categories of human resource objectives?
- Employee engagement and involvement
- Training
- Diversity
- Alignment of values (what the business stands for)
- Number, skills and location of employees
What is the Hackman and Oldham job characteristics model based on?
The belief that the task itself is key to employee motivation
List all 5 characteristics of the ‘Hackman and Oldham job characteristics model’
JOB SATISFACTION IN MIDDLE
- Skill variety
- Task identify
- Task significance
- Autonomy
- Job Feedback
Define ‘task identity’ (Hackman and Oldham)
Whether there is a clearly defined task beginning, middle and end to a task
Does the employees know what they are doing
Define ‘task significance’ (Hackman and Oldham)
Does the task have a substantial impact on the business
Does it have meaning?
Define ‘autonomy’ (Hackman and Oldham)
How much freedom an individual has to accomplish tasks
e.g. free to schedule work?
Define ‘job feedback’ (Hackman and Oldham)
Employee kept in the loop about performance
Told what they have done well
Told what they have done bad (constructive in improvement)
Define ‘span of control’
Number of subordinates for whom a manager is directly responsible.
What does a suitable span of control depend on?
- Personality of the manager
- Nature of the business
- If close supervision needed, may need narrower span
- Skills and attitudes of the employees - INDEPENDENCE?
- Tradition and culture of the organisation: democratic tradition
Advantages of Narrow Span of Control (Tall Organizational Structure)
- Closer supervision of employees
- Effective communication
- Closer/adapted teams: teamwork
Disadvantages of Wide Span of Control (Flat Organizational Structure)
- Fewer Opportunities for Employees: with fewer layers within the organization there is less opportunity for employees to be promoted.
- Poor Discipline: with so much autonomy given to employees these organizations can suffer from poor discipline.
Advantages of Wide Span of Control (Flat Organisational Structure)
- Gives subordinates the chance for more independence
- More appropriate if labor costs are significant – reduce number of managers
- Less spending on managers, reduces costs
Disadvantages of Narrow Span of Control (Tall Organizational Structure)
- Expensive: differing job roles
- Limit the ability of team members to exercise independence in decision-making and problem-solving processes
- Higher Number of Managers - employees may feel controlled
- Too much supervision of employees - affecting their performance, increase in labour turnover
Define ‘delegation’
Shifting of authority and responsibility for particular functions, tasks or decisions from one person to another
Usually to employees
Define ‘centralisation’
Business decisions are made at the top of the business or in a head office and distributed down the chain of command
Autocratic approach
Define ‘decentralisation’
SPREADING decision making down the organisational structure
Decision-making powers delegated by top management to further down the hierarchy
Democratic approach
Contextual example of ‘centralisation’
Fast food use centralised structure to ensure that control is maintained over their thousands of outlets
Need to ensure consistency of customer experience (franchise)
Benefits to Centralisation
- Keeps subordinates on task
- Prevents other parts of the business from becoming too independent
- Easier to coordinate and control from centre
- Economies of scale and fixed costs savings easier to achieve
- Quicker decision making - stronger leadership
Drawbacks to Centralisation
- Autocratic
- Higher costs: extra layers to hierarchy
- Lack of authority down the hierarchy, reduce manager motivation
- Customer service: lack flexibility and speed of local decision making
Define ‘delayering’
Involves removing one or more levels of hierarchy from the organisational structure.
Contextual example of ‘decentralisation’
Hotel staff given authority to make customer service decisions
Benefits to Decentralisation
- Decisions made closer to the customer
- Better able to respond to local circumstances
- Improved customer service
- Cost less: flatter hierarchy
- Improves motivation of staff: empowerment
Drawbacks to Decentralisation
- Decision making can be unreliable
- Harder to ensure consistency at each location
- May be some diseconomies of scale: e.g. duplication of roles
- Who provides strong leadership when needed? (e.g. in a crisis)
- Could be badly organised, lead to cost overruns - staff inexperienced in finance
Define ‘internal recruitment’
When the business looks to fill the vacancy from within its existing workforce
Define ‘external recruitment’
When the business looks to fill the vacancy from any suitable applicant outside the business
Advantages of ‘internal recruitment’
- Cheaper and quicker to recruit
- Already familiar with the business and how it operates
- Provides opportunities for promotion: motivating
- Business already knows the strengths and weaknesses of candidates
Disadvantages of ‘internal recruitment’
- No new ideas can be introduced from outside
- May cause resentment amongst candidates not appointed
- Creates another vacancy which needs to be filled, in their place
- Limited choice
- Failed applicants become less motivated
- Bias / favouritism
Advantages of ‘external recruitment’
- Bring in new ideas
- Larger pool of workers from which to find the best candidate
- Wider range of experience / choice
- Fairness: not familiar with applicants