Topic 6: Decision making to improve Human Resource Performance Flashcards
What is human resource management?
it is a common term for personnel function
What does human resource management involve?
- staff performance
- inductions
- talent acquisition
- compensation and benefits
- rewards
- talent development
What is the overall aim of Human Resource Management?
- maximise the contribution of employees to the the organisations overall objectives
- meet specific goals
- Human resources will be derived from the targets of the business as a whole
Define Human Resource management?
the design, implementation and maintenance of strategies to manage people for optimum business performance
What are some examples of Human Resource Objectives?
- Employee engagement and involvement
- talent development
- training
- diversity
- alignment of values
- the number, skills and location of employees
What are internal influences on human resource objectives?
- past experiences
- character and ambitions of newly appointed chief executives
- financial pressures felt by the business
- changing market conditions
What are external influences on human resource objectives?
- economic factors
- is the business a stock market quoted plc or a smaller family run business
- social and ethical climate
- government policy
- improvements in technology
What is the focus for hard hrm strategies?
identify workforce needs of the business and recruit and manage accordingly (hiring, moving and thriving)
What are the key points of hard hrm?
- short term changes in employee numbers
- minimal communications, from the top down
- pay enough to recruit and retain enough staff
- little empowerment for delegation
- appraisal systems focused on making judgements about taller organisational structures
- suits autocratic leadership style
What is the focus of soft hrm strategies?
concentrate on the needs of employees
What are the key features of soft hrm strategies?
- strategic focus on longer term workforce planning
- strong and regular two way communication
- competitive pay structure, with suitable performance related rewards
- employees are empowered and encouraged to seek delegation and take responsibility
- appraisal systems focused on identifying and addressing training and other employee development needs
- flatter organisational structure
- suits democratic leadership
Is hard or soft hrm strategies better?
- hard approaches can suffer from higher absenteeism and staff turnover and less successful recruitment.
- a too sift approach can make the cost of the workforce a competitive disadvantage for the business
define employee engagement?
Workplace approach designed to ensure that employees are committed to their organisations goals and values and are motivated to contribute to organisational success
Define hard hrm?
treating employees as a resource which needs to be monitored for efficiency reasons and can be replaced easily
Define natural wastage?
A reduction in the number of people who work for an organisation that is achieved by not replacing those people who leave
Define soft hrm?
Treating employees as a valuable asset to the business and of vital importance
How to analyse human resource performance?
- staffing costs can be a high percentage of a firms total costs
- firms try to measure their staff performance objectively
- calculations can be used to do this and also measure the success of new initiatives
What do managers look at when measuring performance?
- is the workforce fully motivated
- is the workforce as productive as it could be
- are the HR policies helping the business to meet its goals
What are the measures that managers have to measure?
- labour productivity
- employee costs as a percentage of turnover
- labour costs per unit
- labour turnover
- employee retention rate
What is labour productivity?
often seen as the single most important measure pg how well a firms workers are doing.
It compares the number of workers with the output of the business.
How to calculate labour productivity?
labour productivity = output per time period/ number of employees
How to improve labour productivity?
- better technology
- specialisation of staff
- motivation
- training
- leadership
Why does labour productivity need to improve?
- competitiveness
- profits
What does labour productivity increase?
- increases in productivity will result from improvements in efficiency
- improved productivity will result in lower labour costs per unit
- could allow a business to charge lower prices, leading to increased competitiveness
How to calculate employee costs as percentage of turnover (revenue)
employee costs as a percentage of turnover = employee costs/ sales turnover x 100
What does a high figure of employee costs as a percentage of turnover show?
the impact of inefficiency.
however, a higher percentage could be an indication of more staff/better service in a service sector organisation
How to calculate labour cost per unit
labour cost per unit = labour costs/ units of output
what does labour costs per unit suggest?
- close links to profitability
- if labour cost per unit is higher, lower profit margins will be made
- lower labour costs per unit will allow a firm to be more competitive
How to calculate labour turnover?
labour turnover (%) = number of staff leaving in the year/ average number of staff employed by the business during the year X 100
What are High labour turnover, internal causes?
- poor recruitment
- ineffective motivation or leadership
- wage level lower than other firms
What are high labour turnover external causes?
- more local vacancies
- better transport
Would a business want 0 labour turnover and why?
no because staff leaving isnt always bad new skills, experience that isnt already in the business
What are the negatives of a high labour turnover?
- cost of recruitment
- cost of training
- time taken for staff to settle
- loss of productivity whilst new workers learn
What are the positives of a high labour turnover?
- new workers with new ideas and enthusiasm
- workers bring new skill
- new ways to solve problems
How to calculate employee retention?
employee retention rate (%) for a particular time period = number of employees at end of period - number of leavers/ number of employees at end of period X 100
How to use data for decision making?
poor productivity and labour turnover can suggest poor management of the workplace
What do good managers analyse to assess the performance?
- changes over time
- comparisons with similar firms
- performance against targets
What is the need for organisational design?
- as organisations grow they become more complex and require a more formal structure
- management thinkers such as Taylor considered how to structure an organisation
- they saw the function of organisations as converting inputs into outputs in order to make profit
- they viewed organisation design as being similar to designing a machine with the objective being efficiency
- their key considerations included breaking an organisation into functions, every employee reporting to a line manager, no manager being overloaded with too many subordinates, requiring more layers of management
What is an organisational structure?
- shows the roles, responsibilities and relationships of each member of the business
- often illustrated in an organisation chart
- chart shows links between people and departments
- shows communication flow, lines of authority and layers of hierarchy
What are the levels in the hierarchy?
- the number of levels of supervisors/managers/workers shown from the top to the bottom of the chart
- the more levels there are, the slower and less reliable communication may become
- the more levels there are, the more difficult it is for people at the top to see the work faced by those at the bottom
What is span of control?
- the number of people directly under the supervision of one manager
- narrow span of control: a smaller number of staff reporting to one manger
- wide span of control: a large number of staff reporting to one manager
- communication/control/help/support
- depends on nature of tasks/skills and attitudes of workers and managers
Advantages of narrow span of control
- allows close management supervision
- communication may be excellent within small, immediate teams
- many layers of hierarchy means many rungs on the career ladder
Disadvantages of narrow span of control
- workers may feel over supervised and therefore not trusted, this may cause better staff to leave in search of more personal responsibility
- communication may suffer within the business as a whole, as a narrow span of control means more layers of hierarchy, which makes vertical communications harder
- The narrow span usually leads to restricted scope for initiative and experiment, the boss is always looking over your shoulder, this will alienate enterprising staff
What is chain of command?
- the reporting system from the top to the bottom of the hierarchy; the route through which information and orders are carried
- the more levels in the hierarchy, the longer the chain of command and the bigger the gap between workers at the bottom and managers at the top
- the longer the chain, the more chance there is of information becoming distorted
What is delegation?
- passing authority down the hierarchy
- giving responsibility to junior managers or staff, empowering and motivating them
- passing on dull or difficult tasks should not be confused with delegation
- the attitudes of managers towards staff will influence delegation
- delegation of power requires training, knowledge and confidence
Define centralisation
decision making power remains in the hands of the top management
Define decentralisation
decision making power is delegated to workers lower down the hierarchy away from the centre
What is delayering?
- removing a management layer from the organisational structure
What are the advantages of delayering?
- improve efficiency
- improved communication
- more responsibility
- better motivation
- reduced costs
What are the disadvantages of delayering?
- natural wastage
- voluntary redundancies
- demotivated
- loss of knowledge
- affects customer relationships
What is matrix design/management?
where staff work in project teams in addition to their responsibilities within their own department. Staff can therefore be answerable to more than one boss.
What are the advantages of the matrix design/management?
- can help to break down traditional department barriers, improving communication across the entire organisations
- can allow individuals to use particular skills within a variety of contexts
- avoid the need for several departments to meet regularly, so reduces costs and improving conditions
- likely to result in greater motivation amongst the team members
- encourage cross fertilisation of ideas across departments
- a good way of sharing resources across departments
What are the disadvantages of the matrix design/management?
- members of project teams may have divided loyalties as they report to two line managers
- there may not be clear line of accountability for project teams given the complex nature of matrix structures
- difficult to co ordinate
- it takes time for matrix team members to get used to working in this kind of structure
- team member may neglect their functional responsibilities
