MANAGING PEOPLE

Question 1

Human resource management

Answer 1

Managing the people withing a business in order to achieve corporate objectives. This involves tasks such as recruiting and training employees as well as designing performance management systems.

Question 2

Staff as an asset

Answer 2

When businesses view employees as a valuable resource to be invested in and ideally retained long-term.

Question 3

Staff as a cost

Answer 3

When businesses view employees as an expense to be minimised.

Question 4

Advantages of treating staff as an asset

Answer 4

*More skilled employees > easier to adapt to market change

*Higher levels of staff retention > reduce recruitment and training costs in the long run

*A more motivated workforce > higher labour productivity

*Reputation for being a good employer > easier to attract good people.

Question 5

disadvantages of treating staff as an asset

Answer 5

Higher labour costs > impact on pricing or profit margins

Risk that the business invests in staff who then go to work for rivals.

Question 6

Advantages of treating staff as a cost

Answer 6

*Easy to adapt the size & composition of the workforce in response to business needs – important in dynamic market

*May lead to lower labour costs – especially in the short run – important if competing on price

*Employees can be tightly controlled and supervised > important if relatively unskilled

Question 7

Disadvantages of treating as a cost

Answer 7

*Demotivated staff > higher labour turnover/absenteeism /low productivity.

*Poor reputation as an employer > harder to attract new staff, important in a tight labour market.

Question 8

Labour productivity

Answer 8

measures output per worker per time period

Question 9

Labour productivity formula

Answer 9

output per time period / number of employees

Question 10

Labour turnover

Answer 10

measures the % of workers that leave in a given time period

Question 11

Labour turnover formula

Answer 11

number of staff leaving /Average number of staff x 100

Question 12

Labour retention

Answer 12

Measures a firm’s ability to keep its workforce normally for more than one year

Question 13

Labour retention formula

Answer 13

No of employees serving for more than 1 year /Average number of staff x 100

Question 14

Absenteeism

Answer 14

Usually measures the % of days lost to absence

Question 15

Absenteeism formula

Answer 15

Number of days lost to absence / Total potential working day x 100

Question 16

Flexible workforce

Answer 16

Using permanent employees that carry out core tasks and peripheral workers that provide numerical and/or functional flexibility to allow a business to respond to changes in demand.

Question 17

Numerical flexibility

Answer 17

The ability to flex the size of the workforce up or down e.g. using temporary or past-time workers.

Question 18

Functional Flexibility

Answer 18

The ability to vary the tasks that a workforce can do, e.g. by multi-skilling or outsourcing.

Question 19

Multiskilling

Answer 19

Employees’ skills are enhanced so that they are able to carry out a range of different jobs.

Question 20

Outsourcing

Answer 20

contracting out certain business functions to another business. Commonly outsourced tasks include cleaning, catering and IT.

Question 21

Part-time work

Answer 21

Employing staff on contracts that are typically less than 30 hours per week. This can help the business to cut costs, only paying a part-time wage if only part-time work is required. Sometimes part-timers are asked to do extra work during busy times, further increasing flexibility.

Question 22

Temporary staff

Answer 22

these can be either full-time or part-time but are on a fixed term contract, for example when schools hire supply teachers to cover teacher illness or maternity/paternity leave and retailers use seasonal staff at Christmas.

Question 23

Flexible hours

Answer 23

This can involve a range of possible contracts, but examples include: flexi-time, where employees work core hours but have some freedom over start/end times and zero hours contract where employees only work/get paid when the business actually needs them.

Question 24

Working from home / Mobile working

Answer 24

The ability of an employee to carry out their job from their own home rather than going into an office or workplace.

Question 25

advantages of a flexible workforce

Answer 25

Can reduce labour costs, e.g. by:

*only paying staff when they are needed.

*reducing training costs – the firm can “buy in” specialists when they are needed.

Improved customer service - can help the business cope effectively with surges in demand.

Can help with recruitment / retention / motivation – many workers like flexible working e.g. flexible hours /multiskilling

Question 26

disadvantages of a flexible workforce

Answer 26

Can be expensive:

Hiring contractors/consultants may cost more than doing the work in house.

may reduce productivity – e.g. temporary hires may not be effective in role straight away.

Quality may deteriorate – e.g. as multiskilled workers are less specialist/permanent staff are under pressure when support temps.

Communication can deteriorate, e.g. as staff are not always working at the same time/rely on digital communication.

Question 27

advantages of multiskilling

Answer 27

• Better able to respond to surges in demand > maintain lead times > improved customer experience
• Higher labour productivity > workers can be moved around depending on demand so fewer workers are needed > reduced unit costs.
• Increased motivation > workers are less likely to be bored > likely to reduce labour turnover.
• Reduced disruption associated with absence.

Question 28

disadvantages of multiskilling

Answer 28

Higher training costs > impact on profit

Risk that the business invests in staff who then go to work for rivals.

Risk that workers become demotivated if they feel they are being required to do a more challenging job for the same pay.

Question 29

advantages of outsourcing

Answer 29

Focus on core competencies: Outsourcing allows a company to focus on its core business activities while paying specialists to carry out non-core functions (e.g. IT, HR, accounting).

Access to expertise: Outsourcing providers are often specialists in their fields, which means the company can benefit from the expertise and experience of professionals in that specific area. This could mean better quality and can also help to overcome problems with skills shortages.

Cost savings: Outsourcing often leads to cost reductions for lots of reasons, e.g.:

Businesses can avoid paying for specialists that they don’t year-round.

They can avoid tying up capital, e.g. in production facilities.

As some outsourcing is done to businesses based in lower cost locations, this can lower costs of labour-intensive tasks substantially, e.g. customer service.

Question 30

disadvantages of outsourcing

Answer 30

Lack of control > quality concerns: In some cases, outsourced providers may not deliver the expected level of quality, leading to dissatisfied customers/damage to the brand

Increased power of suppliers: Overreliance on outsourcing partners can pose risks, especially if provider a crucial service.

Ethical concerns: where work is outsourced to unethical businesses, e.g. those with very poor working conditions. This may damage the brand or lead to dissatisfied stakeholders, e.g. shareholders or customers

Cost: Sometimes specialist contractors are very expensive.

Question 31

Employee-employer relations

Answer 31

the process of discussing/negotiating and agreeing to changes in the terms of conditions of work

Question 32

Dismissal

Answer 32

when an employee loses their job due to misconduct (such as theft) or because they are incapable of doing their job.

Question 33

Redundancy

Answer 33

when an employee loses their job because there is insufficient work for the employee to do (they will be entitled to a redundancy payment).

Question 34

Trade union

Answer 34

Organisations that work to protect members’ interests and improve their terms and conditions at work.

Question 35

Works council

Answer 35

An internal group of employees representing a workforce in discussions with their employers.

Question 36

Collective bargaining

Answer 36

A method of determining conditions of work and terms of employment through negotiations between employers and employee representatives, such as trade unions.

Question 37

Industrial action

Answer 37

Collective activity by workers to put pressure on employers, usually over terms and conditions of employment. Examples include strikes, overtime bans and work-to-rule.

Question 38

advantages of collective bargaining

Answer 38

Can be quicker to negotiate collectively > important if change needs to be implemented quickly.

Outcomes are more likely to be accepted by employees if they feel employers have negotiated with representatives > avoid industrial action e.g. strikes

Employees may feel that they are being treated fairly, as bargaining collectively gives them more power when negotiating with a large employer.

Question 39

disadvantages of collective bargaining

Answer 39

Can lead to higher labour costs as unions push for better terms and conditions for workers.

May lead to industrial action of agreement cannot be reached.

collective bargaining usually leads to standardised terms and conditions, e.g. nationally negotiated pay scales. This makes to pay workers differently, e.g. depending on their level of productivity, or in response to labour market conditions.

Question 40

Recruitment

Answer 40

Searching for and attracting potential candidates to fill job vacancies.

Question 41

Selection

Answer 41

Choosing the right person for a job from a field of candidates.

Question 42

Internal recruitment

Answer 42

Filling a job vacancy with current employees. This can involve promotion, but could also just be a change of role.

Question 43

External recruitment

Answer 43

Filling a job vacancy with candidates from outside the organisation.

Question 44

why do businesses recruit?

Answer 44

Business expansion due to increase in sales, developing new products, entering new markets etc.

Existing employees leave – to work with competitors, due to retirement, etc.

Employees are promoted creating a vacancy.

Workers may be required to work on a temporary basis

Business needs employees with new/different skills, e.g. due to change in the market.

Question 45

Why is effective recruitment and selection important?

Answer 45

It is important to get recruitment and selection right! If the right person is selected they are…

More effective at work – increasing labour productivity > lower unit costs or higher profit margin

Less likely to leave, creating a vacancy to fill and perhaps meaning a deterioration in the quality of work > complaints/damaged reputation

Fewer training requirements > lower costs, operational more quickly

Recruitment & selection is expensive and time-consuming – if the wrong person is hired the whole process may need to be carried out again > cost in £ but also the opportunity cost of management time.

Question 46

Advantages of internal recruitment

Answer 46

Productivity - Recruits are familiar with the business so likely to require less training and be operationally effective more quickly

Increase motivation/retention – e.g. increased opportunities for promotion/self-actualisation (personal fulfilment)

Lower risk - More likely to choose a suitable candidate? Applicants are well known to the employer – easier to be sure of their skills/experience

Lower advertising costs – e.g. advertise via intranet rather than an agency

Question 47

advantages of external recruitment

Answer 47

Improved business performance? An external candidate may bring fresh ideas to the business.

Reduced impact across the organisation - Avoids creating other vacancies within the business.

More suitable candidates? - Access to a wider pool of candidates – may be easier to find some with the right skills/experience .

Question 48

costs of recruitment and selection

Answer 48

Direct costs – e.g. advertising in specialist publications/websites, paying a recruitment agency or a head-hunter.

Indirect costs – Depending on the skills experience of the candidates/s selected on-the-job or off-the-job training may be required. At a minimum, induction training will be needed.

Opportunity costs – Managers (sometimes senior) will need to commit time to the process, e,g, shortlisting candidates and carrying out interviews. This takes them away from their main role.

Question 49

Training

Answer 49

Increasing the knowledge and skills of employees so that they can do their jobs more effectively.

Question 50

Development

Answer 50

Creating opportunities for employees to acquire a broader set of skills to prepare them for future roles.

Question 51

Induction training

Answer 51

Initial training for people starting a job. Typically includes an introduction to the business/role and a health & safety briefing.

Question 52

On-the-job training

Answer 52

Where an employee is trained by a more experienced employee while doing their job in the normal working environment.

Question 53

Off-the-job training

Answer 53

Taking people away from their normal workplace to learn new information or skills, e.g. when apprentice goes to College 1 day per week.

Question 54

Why invest in training?

Answer 54

To provide higher quality products and services – especially important if the business is competing via differentiation.

Improved labour productivity – reducing unit costs – especially important if the business is competing via cost.

Increased workforce flexibility – e.g. by multiskilling employees – especially important if demand is variable or the market is dynamic.

Improved worker motivation – as employees feel valued, more confident in their job and may enjoy it more, especially if it is more varied/challenging.

Less need for supervision – especially important in a flat hierarchy where managers have a large span of control.

These factors can contribute to improved HR competitiveness - E.g. lower labour turnover, absenteeism, longer periods of retention etc.

Question 55

advantages of induction training

Answer 55

Faster Integration: helps new employees integrate into the workplace quickly, reducing the time it takes for them to become fully productive.

Cultural Integration: New employees gain insights into the company culture, values etc. This helps them to “fit in”.

Reduced Turnover: can positively impact employee retention by ensuring that new hires feel supported and valued from the beginning.

Reduced risk of accident/injury: Employees should be trained in dangers/risks of their role before starting

Question 56

disadvantages of induction training

Answer 56

Cost: expensive to set up (creating materials etc) and whilst training employees are not producing

Information overload – would this information be absorbed better if introduced gradually?

Generic Content: Some induction programmes offer generic content that might not be tailored to specific job roles. This can lead to a lack of engagement for certain employees.

Question 57

on-the-job training advantages

Answer 57

Effective - directly relevant to the job

Low-cost – it is usually quicker than off-the-job and done by a more experienced employee, rather than a specialist trainer

Productivity - the worker is actually productive whilst training, as opposed to having a day out on a course.

Culture – as well as passing on basic skills, employees can get a sense of “how things are done around here” helping them to integrate

Question 58

on-the-job disadvantages

Answer 58

Quality of the training may depend on the skills of the trainer.

Training in a pressured work environment may mean some key processes/skills may be missed.

Limited exposure to different perspectives or industry best practices – perhaps missing an opportunity for improvement.

Question 59

off-the-job training advantages

Answer 59

More effective? – trainers are usually experts

More thorough - trainees can cover a planned curriculum away from the workplace where they can concentrate

Exposure to industry best practices – perhaps leading to improved business practice.

Networking opportunities – sometimes training takes place with professionals from other organisations, allowing the sharing of experience.

Question 60

off-the-job disadvantages

Answer 60

Cost – it is usually more expensive as requires a specialist trainer, travel and sometimes accommodation.

Productivity - the employee will need time off work.

Relevance – sometimes off-the-job training is off-the-shelf (non-customisable, so may not be totally suitable.