2 Human resource management Erroten On completion of this chapter you should be able to: vvyvy The importance of human resource management This chapter explores the specific role ofthe hur resource management (HRM) department and the impact it can hav on efficiency, flexibility and motivation of the workforce. The change in attitude t workforce management has been great and fundamental since the early years of the twentieth century and the introduction of mas production. There are still firms and factories that ‘hire and fire’ on an most daily basis and which offer no training or staff development at all However, these are now the exception rather than the tule. Modern HRM has been developed not just in esponse to increasing legal constraints on how workers are treated but also as a recognition that a truly successful and competitive business depends on the support and co-ordination of a well-trained and suitably motivated team of staff. Human resource management - the purpose and role The central purpose of HRM is to recruit, train and 's Pe manner to assist the organisation in the achievement sonnel in the most productive of its objectives. This management function has developed from, but is rather different to, the work of traditional ‘Personnel Departments. These departments, historically, were responsible for fore hn et explain the importance of human resource management in the efficient running of the organisation understand the main functions of human resource managers recognise the importance of good labour-management relations and the role of collective bargaining explain the importance of the main laws affecting health and safety in the workplace training, discipline and welfare of staff they tended to be ‘ rather bureaucratic in their approach with an inflexible approach to staff issues; ‘ focused on recruitment, selection and discipline rather than development and training; and + reluctant to give any HR roles to any other functional managers. Human resource management is broader and more far reaching in scope. It focuses on: + planning the workforce needs of the business + recruiting and selecting appropriate staff, using a variety of techniques; + appraisin stage of their careers training and developing staff at every + developing appropriate pay systems for different cate sgories of staff * involving all managers in the development of their staff — emphasising that this is not just the job of, the HR department. By understanding the huge range of tasks and responsibilities undertaken by human resource departments it is now possible to understand the importance of HR to the efficient running of a business, Without such a department these are just some of the problems that could be experienced:‘¢ ‘Too few or too many staff employed at any one time # Recruiting and selecting the wrong type of workers # Not training workers for the tasks they are to perform and not developing staff to allow them to contribute fully to the business. ‘* Unfair or inappropriate pay systems. ‘# No data on employee performance and no means of improving performances. Functions of human resource management Workforce planning Planning the workforce needs of the busi manpower planning HR departments need to calculate the staffing needs of the business over future ess — time periods. Failure to do this can lead to too few or too many staff or staff with inappropriate skills Workforce planning means thinking ahead and establishing the number and skills of the workforce required by the business in the future. These two factors need careful study: 1 The number of staff required in the future will depend on many factors: ‘¢ The demand for the firm’s product. This itself will be influenced by market and external conditions, seasonal factors, competitors’ actions, trends in consumer tastes and so on, It could be a mistake to replace a worker who decides to leave the firm if consumer demand is falling or if there is likely to bea seasonal downturn in demand. Demand forecasts may be necessary to help establish workforce planning needs but we know that these are subject to margins of error. For this re some firms allow some additional sta built into the plan to allow for unplanned increases in demand. An alternative might be to recru is to be temporary or part-time staff with flexible hours’ contracts ~ this issue is studied in more detail la The productivity levels of staff. If productivity is forecast to increase ~ perhaps as a result of more efficie needed to produce the same level of output. machinery ~ then fewer staff will be The objectives of the business, This could influence future workforce numbers in two main ways. Firstly, if the business plans to expand over the coming years then staffing numbers will have to rise to accommodate this growth. Secondly, if the firm intends to increase customer service levels, possibly at the expense of short-term profits, then more workers might need to be recruited. A workforce plan cannot be devised without consideration of business objectives.Management of Business - Unit 1 # Changes inthe law regarding workers’ rights. If the government of a country decided to pass laws Which established a shorter maximum working week or introduced a minimum wage level then there will be a considerable impact on the workforce plan. A shorter worki toa greater demand for staff to ensure that all the available work is completed in time, A minimum Wage might encourage firms to employ fewer workers and to substitute them with machines, where this is possible, © The predicted labour turnover and absenteeism rate The measurement of these factors is considered later but their impact is clear. The higher the rate at which staff leave a business then the g be the firm’s need to recruit replacement staff. The higher the level of staff absenteeism then the eater Il be the firms need for higher staffing levels to ensure adequate numbers are available at any one time, [Acti ty 1g week might lead ater will 2. The skills of the staff required. The need for bette qualified staff or for staff with different skills is a constant factor in the minds of HR managers. The importance of these issues will depend upon. The pace of tech logical change example production methods and the ¢ the industry, for omplexity of the machinery used. The universal application of IT in offices has meant that traditional typists or clerks are now rarely required ~ skilled computer photocopier and intranet operators are in gr demand than ever Th businesses tr need for flexible or multi-skilled staff as void excessive specialisation, The danger of producing iny items of a specialised product or service is that if demand patterns change, stock levels could build up. Most businesses therefore need to recruit staff or train hem with more than one skill that can be applied na variety of different ways. This gives the firm market conditions ~ and can make the workers’ jobs more much more adaptability to cha rewarding too, By accepting the resignation of three key production line ‘workers, Roman Kaul knew that he would be lucky to meet the staff needs of Cameron Sweets over the next six months. The three workers had been attracted away fram the firm by the offer of higher wages and better conditions in a local bakery. As HR manager, Raman had been planning the workforce numbers for the future. He hhad collected data from both the marketing department ‘on estimated sales figures and the production department for details of the new machines being installed next ‘month. Price reductions by Cameron’s leading competitor was making accurate forecasting dificult - taking last year’s results and adding on 5%, the standard practice in this business, would no longer be accurate enough. (30 marks, 40 minutes) 1 Define the term ‘workforce planning’ (3) 2 Read the case study below and then tackle the exercises that follow. Case study - Manpower planning at Cameron Sweets Ltd. ‘The new machinery was fully automated and there Would be no more manual packing at the end af the line The machine would need reprogramming for each new type of sweet and the operations manager had also expressed cancem about maintaining such complicated ‘machinery. To add to Roman's problems, two of the ‘women in the materials preparation department had ‘announced that that they wauld be applying for maternity leave over the next three months. With all Of these issues occurring, Roman's plans were thrawn into further confusion by a leaked report from the government that suggested a plan to introduce a law ‘making 48 hour, or longer, working weeks illegal. plain the possible consequences to firms, such as Cameron Sweets, of not having a workforce plan. (7) 3 Outline FIVE factors from the case that will influence either the number of workers or the skill levels of workers needed by the business over the next year. (10) 4 To what extent will it be possible to accurately predict the workforce needs of Cameron Sweets over the next 12 months? (10)Workforce planning - full or part time, temporary or permanent? Future numbers of workers and the skills they need are the most important parts of a workforce plan. They are not the only issues to be considered, however, Should, for example, a firm's future need for ten additional workers be met by ‘ Recruiting ten full-time staff on permanent contracts? ‘ Recruiting 20 part-time staff on ‘half time’ permanent contracts? ‘Employing workers on temporary contracts that can be terminated at short notice? # Not adding to employed staffing levels at all but offering ‘outsourcing’ contracts to other firms or self-employed people? ‘These will then supply a ut will not be directly specific service or product b employed, Recent trends in labour recruitment have been towards employing more part-time staff on temporary contracts and using outsourcing more often. These di opments have certain advantages and drawbacks to both the business and the staff concerned, Part-time employment contracts are those that do not require the worker to work a full week, only a set proportion of it. The claimed advant es of this type of contract are as follows: can be required to work at particularly busy periods of the day but not during the slack times, for example banking staff needed at lunch times or theatre and cinema receptionists needed mainly in the evening. This will reduce overhead costs to a business. This flexibility offers firms real competitive aalvantages, as they can give good customer service without substantial cost increases. 2 More staff are available to be called upon should there be sickness or other caiuses of absenteeism. 3 The efficiency of staff can be measured before they are offered a full-time contract. 1 This contract could be ideal for certain types of parents with youn; workers, for example student children or more elderly people who do not wish to work a full week, 2 They may be able to combine two jobs with different There are potential drawbacks too: To the firm 1 There will be more staff to‘man all full-time. 2. Effective communication will become much more than if they were difficult, not just because there will be more staff in total but also because it may be impossible to hold meetings with all the staff at any one time. There could be greater reliance on written communication methods because of this. 3. Motivation levels may be a rersely affected because part-time staff may feel less involved and committed sss compared to full-time workers. It will be much more difficult to establish a team work to the busin culture fall the staff never actually meet each other because of their different working hours. To the part-time workers 1 They will be earning less than full-time workers. 2 They may be paid at a lower hourly rate than full- time workers, 3 The conditions are often inferior to those of full-time curity of employment and other working workers. This is now changing in some countries. In all of the states of the European Union for example the law now gives as many employment rights to part-time as to full-time workers. This is still not the case in other regions of the world. 4 Lower levels of job security can mean that ‘safety’ needs as identified by Maslow may not be satisfied and this will have a negative effect on motivation. Temporary contracts can be either fall time or part time, They are contracts for fixed periods of time as opposed to permanent contracts. Permanent contracts only end when a worker is sacked, for example for poor discipline, made redundant, for example when demand has fallen, or leaves of their own accord. The advantages and drawbacks of temporary contracts are similar to those of part-time contracts. The combination of part- time and temporary contracts gives firms the chance to create a small team of full-time staff, called core workers, and combine this with a number of flexible workers, who, are only employed as and when necessary. This trend is further enhanced by the increasing use of outside contractors to perform specific jobs within the business ather than employing staff directly. This is often referred 197‘Management of Business ~ Unit 1 fo erences between core to as outsourcing, The three types of contracts are termed ‘peripheral’ workers as they are not part of the central core of full-time employees (see Figure 12. [ Activity Recruiting and selecting staff Organisations need to obtain the best workforce available if they are to meet their objectives and compete successfully. As far as possible the workers need to be chosen so that they meet exactly the needs of the anisation in order to reduce the risk of conflict sween their personal objectives and those of the busin 1] precise n draw up a job descripston (or specification, tablish th ture of the job vacancy and This provides a complete picture of the job and will (ii) details of the tasks to be include (i) job tt performet the hierarchical structure, (v) working conditions and (vi) how the job will be assessed and performance -asured. The advantage of the job description is s. The recruitment process involves several steps: |, (ii) responsibilities involved, (iv) place in that it should attract the right type of people to apply for the job, as potential recruits will have an idea whether they are suited to the position or not. Read the case study below and then tackle the exercises that follow. Case study - Staff vacancies at Select College Select College specialises in offering CAPE courses for students over 16 years old. The college is expanding rapidly. The Deputy Principal in charge of human resources has been given the task of recruiting three mote administration workers and ten more lecturers The lecturers will be needed to start up the science and geography departments. The office workers are required to cope with the enrolment of the increasing numbers of students. [A decision has to be taken on the employment contracts to be offered to these new workers. The Principal is keen to see costs kept as low as possible, He is paid a share of the college profits each year. He believes that part-time and temporary contracts should be given to the office workers. The lecturers, he believes, should be offered fulltime but temporary contracts. This would allow the college to stop employing the teachers at the end of the year if either they were poor performers or student numbers were lower than anticipated ‘he Deputy Principal does not believe this proposal will work. She told the Principal that, ‘it would seem unfair to these new teachers if we offered them 2 shorter-term contract than out existing lecturers. Also, there isa national shortage of good science teachers ond we need to motivate and keep good staf. | believe that ‘we could outsource our student recruitment and enrolment to a specialist administration business. Ne would only need their services for about six weeks each ‘year The two had t6 agree on College policy on these issues as the job advertisements were due to appear in the papets shorty. (20 marks, 25 minutes) 1 What evidence is there that workforce planning has been undertaken in this college? (5) 2 Discuss the arguments for and against offering fulltime and permanent employment contracts to the new lecturers. (8) 3 Advise the management team at Select College on whether to employ the additional administration staff or to outsource the function of enrolling new students to a specialist administration business. (8)2 To draw up a person specification. This is an analysis of the type of qualities and skills being looked for in suitable applicants. It is clearly based on the job d and complexity of the job have been description because these skills can only be assess once the natu identified. The person specification is like a ‘person profile’ and will help in the selection process by eliminating applicants who do not match up to the necessary requireme 3 Todev job advertisement ref tng the requirements of the job and the personal qualities looked for. This can then be displayed within the business premises — particularly ifan internal appointment is looked for or in government job centres and/or newspapers, Care must be taken to ensure that there is no element of discrimination implied by the advertisement as neasly all countries outlaw unfair selection on the basis of ace, gender or religion. The option of recruiting, internally for more senior positions, rather than from outside of the organisation, has certain benefits and drawbacks (see Table 12.1) Once applications have been received then the jn, This can be achieved by Benefits of recruiting internally Drawbacks of recruiting internally * Applicants will be well known to thase doing the selecting. '# No new ideas or practices vill be brought into the business. ‘© ‘The internal organisation vill be knawn to the applicant. There willbe fewer applicants than i external rectuitment was used, the culture of the ‘organisation will be well Understood by the applicant, There may be some resentment amongst other internal applicants Who are not offered the ¢ Should be quicker than lee extemal recruitment, ‘@ The standard of applicants could be lower than ifthe job was advertised more widely © Likely to be cheaper than Using external advertising of recruitment agencies © Gives internal staff a career structure and a ‘chance to progress, Table 12.1 Intemal ectuitment ~ ad using a range of different techniques. A typical process will follow this patter: ‘¢ A shortlist of applicants is drawn up from the application forms and personal details, often contained on a CV (curriculum vitae). References may have been obtained in order to check on the character and previous work performance of the applicants. ‘# Interviews are conducted which will be designed to question the applicant on their skills, experience and character to see if they will both perform well and fit into the o nisation # Other tests might be conducted, such as aptitude tests and psychometric tests. The former are just di task, for example retooling igned to test an applicant’ ability in a specific thine, Psychometric personality by using a series of role plays, que tests are designed to test charact es and and problem-solving situations, Its claimed that these can be more accurate for selection purposes than an interview where a skilled ‘actor’ can perform well under stressful conditions but m not have the personal attributes required Compensation of staff - developing approy pay systems This section will not repeat the financial reward component of Chapt 1 7. The HR department will be heavily involved in analysing which method of financial reward should be applied to each ca ory and grade of worker, In addition, the HR team may be asked to compare different types of jobs within the business to allow for the appropriate pay levels and pay differentials between the jobs to be set. This process of objectively comparing the demands of different jobs is called job evaluation Job evaluation identifies the different skills, levels of physical effort, responsibilities and qualifications needed 10 perform each job effectively. The factors the jobs be common to -ompared ate then identified, Each job is given a number rating for each factor and the totals are compared. The job with the highest number of points is then given the highest pay grade. A number of points can be made about this process: ¢ tis an attempt to compare jobs not people — appraisal is the system used to assess an ndividual’s performance, not job evaluation, 199Menagement of Business ~ Unit 1 # It is difficult to evaluate and compare completely different jobs; there might be very few common, factors between the © Experienced HR managers are needed to give the h job ‘numerical rankings to e they need a close understanding of what each job involves. ‘© The results can be used to help determine pay lifferentials between different jobs but the actua level of pay may still be determined by bat with workers or collective bar Tr Having spe jing, developing and appraising staff at deal of time and effort on recruiting ght staff, the HR department mus and selecting the r censure that they are well equipped to perform the duties and undertake the responsibilities expected of them. This ‘ill nearly always involve training in order to develop the full abilities of the worker There are different types of trainir 1 Induction training is given to all new recruits. It has the objectives of introducing them to the people that they will be working with most closely, explaining the internal organisational structure, outlining the layout of the premises and making clear essential health and ga fire emer safety issues, such as procedures du gency. 2. On-the-job training involves instruction at the place by the HR officers. Watchin, of work. This is often conducted eithe: managers or departmental traini or working closely with existing experienced members of staff is a frequent component of this Benefits of training staff + Improving the performance of unskilled workers and raising their performance up to that of skilled workers ‘ Raising the skill levels in the whole business making workers morte flexible, adaptable and more able to meet, technological and other challenges ‘ Developing staff to reach their potential which should lead to a more stable and committed workforce. + Improving efficiency of operation and the quality of the finished product. Table 12.2 Costs form of training. It is cheaper than sending recruits on external training courses and the content is. 3. Off-the-job training entails any course of instruction away from the place of work. This could be a pecialist training centre belonging to the firm itsel or it could be a course organised by an outside body such as a university or computer manufacturer to introduce new ideas that no one in the firm currently has knowledge of. These courses can be expensive ye they may be indispensable if the firm lacks anyone with this degree of technical knowledg Training can be expensive. It can also lead to well qualified staff leaving once they have gained qualifications from a business with a good training structure. The costs of not training are also substantial Untrained will be less productive and will give a less satisfactory customer service. Without being pushed to achieve a higher standard or other skills, workers may become bored and demotivated, More accidents are likely to result from staff unbriefed on safety matters ould be a and appraisal of staf ‘acess, Development might take the form of new challenges and opportunities, additional training courses to learn new skills, promotion with additional delegated authority and chances for job enrichment. To achiev a sense of self fulfilment the HR department should work closely with the worker's functional department to establish a catee plan that the individual feels is relevant and realistic, For this process to be a fally strategic one, the HR Costs of training staff @ Financial costs of training courses ~ this is especially the ‘ase with offthe-job training programmes. Costs of staff ted up undertaking the training ~ a cost particulary associated with on-thejob taining, The risk of welltrained and qualified staff leaving for ‘opportunities with other firms. This may lead to businesses cutting back on training programmes and the result could be too few trained staf.department should analyse the likely future needs of the ;elopment plan for the business when establishing the de workforce. In this way, an individual's progress and improvement can also be geared to the needs of the firm, Appraisal is often undertaken annually. It is an essential component of a staff develoment programme. The analysis of performance against pre-set and agreed targets combined with the setting of new targets allows the future performance of the worker to be linked to the objectives of the business. You will recall from the chapter on motivational theorists that both appraisal and staff development are important features of Herz .erg’s motivators ~ those intrinsic factors that can provide the conditions for effective motivation at work. Performance management The consequences of poor workforce performance can be damaging for business prospects. On the other hand, [Activity provements in performance should be recognised and fed back to the staff. There are a number of indicators that HR and other managers can use to assess the level of achievement and morale of the workforce. Measuring workforce performance The consequences of low worker morale can be crippling to an organisation, What are the major signs that all is not well with the commitment level and degree of motivation of the workforce? Labour productivity as the key test of workforce performance. It is a This is often viewed by managers comparison of the number of workers with total output ode. Average number of workers Labour productivity = Output per time pe employed in time period ‘The Job Centre is sending someone round this afternoon, said Haryo, the Operations Manager of E and B. The new ‘customer order was a bit of a surprise but if had been kept informed by the marketing people that they were trying for this Trinidad job then | could have arranged to increase my stalf in good time! As usual, Harmyo was ‘complaining to the Chief Executive, only this time he did | have a case. The new order would stretch his existing ‘manpower to the limit and he did nat want to drive the existing workers away through over-warking them. ‘Vsuppose we have to use the Job Centre, said the Chief Executive. The trouble is they never really know what we are looking for andl we often heave to let really unsuitable | people start here before we find out what they are really '30 marks, 40 minutes) Comment on the HR problems this firm is facing. (6) The business has no HR department motivation. (10) ‘who have not got a clue about machines! Read the case study below and then tackle the exercises that follow. Case study - Recruitment, selection and training at E and B Engineering like: Hanyo agreed but said, ‘We cannot afford to be choosy this time, | will give them a quick session on the machines | and then I just hope they pick it up after that. My job would be easier ifthe new supenisor had support from the other ‘workers. | always thought it would be 2 good idea to recruit someone from outside to break up some of the informal ‘groups but he seems to have no influence over them at al Hanryo left the Chief Executive's office and wondered what he was going to say to the new workers being sent ver by the Job Centre. ‘l wish | knew a bit more about them he thought to himself. they are no good | will have to think about advertising in the local paper, but this ahways leads to so many applications from people how would an HR manager help the firm deal with the problems it is facing? (6) Examine the suitability of recruitment and selection polices used for the new machine operators. (8) Discuss the links that might exist, using this case as a starting point, between effective HR management and staff 201Management of Business ~ Unit | If this result increases over time then labour productivity or efficiency is increasing. It also means that, given constant wage rates, labour costs per unit of output will be falling. This is, therefore, a major factor influencing the competitiveness of a business. In your answer to (3) in the Activity below you may have suggested different levels of workforce motivation his could well be rue, Do not and performance — an forget that quantitative data can lead to false conclusions, however. Suppose Company A had been affected by a strike at it suppliers. Or the capital ‘equipment used at Company C is much more modern. Labour productivity data do have some very important ut, as with any single measure of performance, the causes of changes in it need careful analysis. Absenteeism rates This measures the proportion of the total workforce who are absent over a particular time period No. of staff abse Absenteeism (%) 100 Total no. of staff This can also be worked out for a whol year b knowing the total number of working days lost through absenteeism and expressing this as a percentage of the total number of days that could have been worked, Staff absenteeism is disruptive to any business especially those providing consumer services. These cannot be held in ‘stock’ to be kept for use during periods of absence. Once a consumer has experienced poor service due to staff absence that consumer may return. It is expensive to employ ‘extra’ staff just to cover for staff away from work or to ask other workers to work overtime. Absenteeism is a commonly used [Activity measure of workforce motivation as, itis argued, really well-focused and motivated staff will avoid missing days tis possible that, apart from 's motivating factors not being from work at all costs Herzbe: fully present at work, the ‘hygiene’ factors ofthe job might be maki absenteeism worse. For instance, poor working conditions could lead to illness or over-supervision could lead to worker stress, and days off work cou be a consequence of either problem. Labour turnover staff leave a business over a certain time per This is a measure of the rate at which od, Labour turnover (%) = No. of staff leaving in 1 yr x 100 Average no. of stail employed Therefore if, in a firm employing on average 200 staff last year, 30 left during the year then the labour turnover rate would be 15%. If this result is high and increasing over time then it is a good indicator of staff discontent, low morale and, possibly, a recruitmen policy that Jeads to the wrong people being employed These problems could also then be seen in low productivity too. The costs of hig! labour turnover can be substantial. There will be additional recruitment and training costs. Disruption of production and poor customer service could result from staff shortages. However there are two points of evaluation to make, First, high labour turnover might not be the result internal problems but a result of external factors, such as very low rates of unemployment locally, which tends to create other job opportunities, or improved transport links with other regions of the country. These could encourage workers to seek employment in firms tha were previously inaccessible, Seco In the following example, assume that all workers are paid a salary of $20,000 per year. Company Output in 2001. Average number of workers in 2001" Labout productivity. Labour tost per unit a 10,000 1,000 10 $2,000 8 14,000 2 4 7 c 30,000 1,500 2 $1,000 (15 marks, 20 minutes) 1 Calculate the figures for the cells marked "Y (3) 2. Explain what happens to labour cost per unit as labour productivity increases. (4) 3. How might you explain the different levels of labour productvity2(8)turnover might be beneficial for a business that is looking to reduce staff numbers or for a firm in which managers believe the new workers who they need to employ will bring in new skills and ideas. Other measures of workforce performance several other me: There are ares of worker attitudes and morale at work but many of these are not applicable to all types of business activity. They include waste levels (expressed as a proportion of total output), reject rates and consumer complaints, as a proportiort of total customers served, and the industrial relations record of a business. The last point, often measured in terms of the number of working days lost through strikes, isa much less widely used indicator nov, since, at least in K, the ability of workers to take ‘unofficial’ action sulting from discontent at work has been restricted by changes in labour laws. Employee performance ~ methods to improve it There is no one sofution to solving an identified problem of poor performance or low morale, Not all measures that might be take iate in all circumstances. He policies of those are approp} ever, there is a common thread running through the businesses that seem to be most successful in motivating staff and in raising their levels of commitment and loyalty. This common theme is built around the need to consider the worker as a resource to the full extent and be nurtured and developed so that range of his or her abilities can be applied to the work situation. The techniques frequently used to increase employee performance include: ¢ apprais ¢ training and general educational opportunities to stretch and challenge every worker Issue © Change ~ eg relocation or new technology, Working conditions, such as hours of ‘otk, pension schemes, health and safety, Table 12.3. Common ‘Common management view © Change is necessary to remain competitive and profitable, © quality circles ~ small groups of workers encouraged to take responsibility for identifying lutions to work-related problems; oups where teams of workers are given multi-skilling and suggesting sol ¢ cell production and autonomous work g training and the opportunity to take responsibility for a complete section of work ~ this could involve them taking decisions on finding the best way to motivate the team in order to achieve pre det mined goals; ¢ financial incentives linked to taking a stake in the ownership of the company, such as executive share options and preferential share buying schemes, Labour/management relations In any business with ‘employees; that is with staff employed other than the owner/man always likely to be pote ial conflicts of opinion and interests. At a simple level, the owner/manager aims to achieve satisfactory profit levels by keeping costs, including labour costs, as low as possible. However workers, and do not forget that wage costs are often a major part of total business costs, will seek to obtain scope for conflict here but it is not the only source pay and shorter working hours, There is clear Of possible clashes of interest between labour and. management. Some other common areas of dispute or conflict are shown in Table 12.3, So, to a certain extent, conflict and differing objectives are inevitable between labour and management within business, How can these be resolved or at least reduced so that the conflict is not Common worker view © Change can lead to job losses, often requires retraining that causes uncertainty and flexibility from staff that ig conditions, fay worsen wor ‘Improvements in these can add to Improvements are expected as living business costs and must either be ‘earned! by increased productivity or resisted by management. Conditions improve and to match the ‘working conditions of management. ‘They can have positive motivational effects.Management of Business - Unit 1 so great that it completely prevents all forms of co- ordination and working together? In very broad terms, there are three approaches that may be adopted by management and labour to deal with conflict situations. Mauch will depend on the culture and legal structure of the country in which the firm operates, as well as the culture of the business itself. For example, in some countries, trade unions are still ilegal or their operations are strictly controlled. At the other extreme, in the European Union workers’ rights over minimum pay levels, security of employment and working conditions are protected by laws that restrict quite lly the independence of management in deciding on such issues. ‘Three broad approaches to labour-manage relations substan vent 1 Autocratic management style with a ‘take or leave it" attitude to workers. Workers might be employed for very short-term contracts — even on a daily basis — offering no security at all. Ifa worker objects to the conditions of work then the attitude of management is often to ‘sack’ the worker and replace them with another person, who might be so desperate for work that they will not raise any objections. HEAD OFE DOMINICA TRADE This approach to labour/management relations is still quite common in certain countries with no labour protection legislation, weak or non-existent trade unions and with high unemployment. It was widely adopted in the USA and Europe up to the 1920s and 1930s, It might lead to very low labour costs, but consider the drawbacks to such an approach: + no labour security and very low levels of motivation: + staff will not have the opportunity to be trained dlue to frequent job changes; ‘# no common objectives established between labour and management; + non-existent job enrichment and no staff involvement oF participation. 2 Collective bargaining between powerful trades unions and major employers and their associations. The growing power and membership of trades unions in the 1950s, 1960s and 1970s in the USA and Europe led to the widespread development of national collective bargaining. This is when representatives of unions and national employers negotiate wage levels and working conditions for the whole industry or for large sections of it. The leaders very powerful as they were able to threaten and actually call for strike action from all of their members and this could bring the entire industry to a halt. collective negotiations made trades union ESTABLISHED IP JAN. 1945 3r DEC 1945 Trade Unions bring workers together to achieve greater collective influenceThis system of labour/management relations was partly made possible by the e at this time, which meant that employers could not replace workers easily as unemployment was Jow. Workers’ wages rose and their conditions of work generally improved but there were major disadvantay to this way of tackling disputes within industr ¢ national agreements were not always suitable for, or affordable to, smaller businesées; ¢ strikes and other industrial action caused disrupt on and lost output and sales: powerful unions resisted any changes that might adversely affect their members and this led to lack of investment in, and development of, ke industries ¢ industries in the USA and Europe began to lose competitiveness and markets to firms in other countries where more flexible labour/management ations led to greater co-ordination confrontation, for example Japan [ Activity Human resource management 3 Co dination managemien the recog on that successful competitive businesses will, ultimately, be beneficial to owners, managers and workers. This approach draws heavily on the Japanese experience after about 1960, Recent management thinking has been not to seek to oppose workers’ suggestions and ers but to actively involve them in those of their union lead important decision-making and operational issues. In much of modern industry, therefore, there is much less confrontation, far fewer strikes and a great deal more and working towards common goals than there ‘was up to the late 1970s, There is still a role for trades unions in this new industrial order but itis rather different from that which they were associated with in much of the twentieth century In conclusion, itis now widely accepted that ment relations based on mutual respect, understanding and common aims are much more likely to lead to a competitive and productive business that will be able to survive the added strains of a globalised economy. Indeed, participation and staff involvement could become a significant factor determining the long term success of business in rapidly changing market #1 Read the case study below and then tackle the exercises that follow. Case study - Human resources crisis at the hotel The customer complaints file on Bernardo Alves’ desk was bulging with letters received over the last few weeks, He had never known a period like it. Short staffed for the last three months and with unsuitable recruits being asked to take on quite responsible jobs without training, no wonder customers were fed up with the service. Hotel rooms had been over booked, no porters were available for a whole week because of illness and the restaurant seemed to be making a habit of serving hot dishes stone cold. As deputy manager of the hotel Bernardo wondered why the owners had not taken up his suggestion two years ago to create a specialised human resources department. The owners had rejected the proposal stating that it would cost too much and that itwas better for ‘such matters to be dealt with by each of the departmental managers. The trouble was that these managers were not experts at recruiting, training or even retaining staff. They were good at their jobs, whether it be reception, kitchen, conference organising, housekeeping and so on, but Bernardo had never rated their ‘people management’ skills very highly. Labour turnover was high in all departments other than reception ~ and that seemed to be over staffed but under trained and inefficient, judging by the number of computer errors being made. The departmental managers did not enjoy recruiting staff and so they all depended on outside agencies to select new recruits, This they did, at a cost, but they often failed to explain to new people what the stresses of working in a busy hotel were Bernardo decided to dust off his two year old report to the hotel's owners, attach the most recent letters of complaint to it and try once again to convince them that specialist management of people was just as important as specialist managers in other areas of the business. 205Management of Business ~ Unit 1 (30 marks, 40 minutes) (@) Outline FOUR HR problems identified in this case. (8) (©) With each of these problems, explain how they might be tackled by a professional HR manager. (2) (©) Explain why the owners might have been opposed to the appointment of such HR specialists, (4) (@) To what extent would the appointment of an HR manager be likely to increase the level of customer satisfaction in this hotel. (10) 2 The following data refer to the Windies Airlines: zoo | 2005 | — 2008 Sta enploed as oot ana a a (20 marks, 20 minutes) (@) Calculate labour turnover and absenteeism rates forall years. (12) (b) Explain possible reasons for the trends in the data. (8) Collective bargaining These are negotiations about pay level majority unions, rather than on an industry wide basis working conditions and health and safety issues between Many companies have industrial relations or human resource managers who handle negotiations. Smaller usually, trade management and worker representatives companies, which do not have industrial relations union officials. This is not the same as individual professionals, may hire private negotiators on their behalf le workers discuss such issues bargaining ~ when sing with managers. In some countries the management is represented by officials of a national employers organisation so any agreemen made would apply to the whole industry — but this arrangement is rare in Trinidad and Tobago. Trade Unions are organisations of working people with the objective of improving the pay and working conditions of their mem support and has been the basis of union influence for many years sand providing them with al advice, Power through being united” and this is best illustrated by their ability to engage in ‘collective bargaining: Collective bargaining puts position than if they workers in a much stronge negotiated individually. In Trinidad and Tobago, the representative associations of monthly paid state employees may bargain collectively with the chief personnel officer, who ned to be the employer of state employees under the Industrial Relations Act. The subjects of these negotiations include wage increases, travelling and other leave entitlements. In the private sector, collective bargaining is generally engaged between individual companies with the respective recognised Collective ba ocedures in Trinidad and Tobago: ‘@ Where a recognised majority union and an employer initiate negotiations for a collective agreement they must notify the Ministry of Labour ‘¢ When the parties have settled upon a collective igreement it must be registered by the Industrial Court either through the Minister or by either party to the © Upon rey greement. stration with the court, the ag becomes bipding on both parties and enfor by the Industrial C art + A collective agreement may be made for a period of not less than three years and not more than five The benefits of collective bargaining are 1 To the workers: ‘¢ More power and influence over negotiations than with individual bargaining.wot our urea day azojazoqp pur — arejdhysom yp Suypuane wioyy s1oj40m 1uaAzud siadofduio Uoyar st y10-30} ¥ ‘saununos 4294p UT Sys09 soMK0] 6} an suONEIAdO as0[9 OF LOIST9p yp Supp aq deur oyss suonerodioo jeuoneunynu (nim Aqjepadso ‘oanaoyout aod uayo day nq asox9HU pout rea! ayerouad uoyo suonse asoyy,“ssoutsnq, ur uonerado agp daay oy Suudjoq m1 aoumstsse aye4s 30} Agdde osye ew vorun samp pur sioys0M ayy, woResado pantmnroo sir Supanses Jo un aep ype sostesaad suonpsiuedio ay Adno90 ssaxoydurg, quourunut si amsop wap pasunout aaey auAuIAseUeUT ary Uuonestueduo ue Jo aansop ayy Supuasaad ge pawure are 2sat[],UOde [eLnsNpUT Jo ULO} saIPOUP sf ULM Y 1puo pom pu dvd porosduuy 20 spueuiap suonn pest ayp adanze 10 suonenoau yyL anuNLo> oy 1a40jdura aif aSeanoous pue uononposd adn <1p 015] uon>e sup Jo asodand ay, xasojduua aqp 0} 410m 01 asnppx pu snogey sou ssexpypEs sHoys08 Udo SIM9dO OLS V Surspom pue seyEns uy spusi, 990M passitusip v o9 yusULde}duLa 24 40 quotuayeysUt-94 R48 OF 1aKod AzoIMEIS sey 1g 4ue18 Kew nod axp szpauiar axp Suowy snl uv atey s1apistio> 1 se siapro 40 spaeate qons soyeur pur soindstp souruuorap pur suvay ine ayy, undiDsIp, Je89] e fam se asuostountn> yernseid Jo uONPUIqUIOD & st seindsqp suonepes [ensnpur yum Suypeap 01 y>voadde sap Suu stp 0} ang sisuONN>eId suone|ar feLNSNpUTL /puv squeyunosde ‘s1stwWOUODS ‘SistuOIUN speN sopnppUt 1 ‘sraqurot sit asftuowre asiuzadxo Jo xu P sey MOD) axp‘saRpnf poyyjenb woy wedy yano9 jesnpuy eyL sonsed yjog uo Suspurg pue peuy aue [euNqLI jeppadg 24p Jo suosspop ayy, "22H498 aay pure swURALAS rato sraypear ‘soqjod amp pure (ojduaia ayes uaaMaaq, 9 poungusy, .e!oads Vy ano [eNSNpUT at op parIajaz saindstp Jo uowiopnas 203 5187 st zaneur agp (pty dq aieoynss> pasiosorun, ue somssr ssystunyy aup ‘sryp quaaaid oy apeUs sf WOya 41949 [uv “wotp ‘paypeas aq uv2 quatUdae OU JL “UNOS 9M 61 Appauip poxzayer Huraq weyp soured sYOrLyH|>U0D az0J0q 8 sose9 oandsip [pe Aijenta Sousead uy “sanyg'ssod pu suondo quowapas asojdxa 07 ypog wep sdjay oy Aused paryp quapuadopur ue aroyaq au0> sopued tpog sv uoneypaut A[[eo1 St SH, woReEPDUOD sunop JeLasnpuy axp o1 Apouyp soneUE ayp ZOIOE & mogey Jo sarsturyy, yp dq payutodde 1oywypou0> ojaq parey||su09 sae 9x aAvY 01 PaII0sd & ssompanord 1uatiap is aindstp yousaUy uso atoyL paatosqo 10U 9Aey {oup Jt sanzed om atp on y>eq andsip aya purs + deus ays 10 34 raystutpy au 01 parzodar ua9q sey aandsip apen v 2540) nog Jo s2IstULpY 9ep 01 UD »iBosip ayy xajax Aout je OW TENS JT aero 1p) {zed s9qp9 uaup «poyseas 9q we> uoUIDa4 pypany 07 LONDe [eEsnput afer deur suoIUN pastuFooay ‘onued pinup opisino Jo aouerstsse ayy ys (uoR|peut) uonenigre 10 woREH>UOD aafoauy pIoD stu “sANpaDoud uwonnjosas amndstp jeu: Tuy ue Ysinomp oF o1 soned ‘om 949 J0j woULLLOD StF UastuP sey 2andstp & 29u0 aindsip sii e jo ase ayp ut uorun pastuBosa you ® dq parussoudou 2q eo s9xs0M v “soandsip asoamqur ayyqun ‘ing ‘sandsip Jo ada soy o1 Aaaed 9g JUD A>YI0M [PNPIAIPUL UY s>YsOM e JO [eSSILUSIP _ngyumn Jo ase9 e se ypns quaurdojdurs Jo suopypuos pur swia) Sunsrxo op Jo uoneaydde ayy mnoqe yuawuaseueU 2ujsng PUR 40M UDDAKIOG TuOWIODUBESTp v st ste, -aindsip siy811, © st aandstp Jo 2444 puonas ay ‘uown 9pexy postutiogay Aq paypurey aq Aju0 ue aindsyp assiaiur up offeqo], pur peplutay uy -pouad auin Ixou 4p 405 398 94 0) suonpuo Hupom pur dvd ayp Uo stowwnoFou, Uuooajoq quate Susp v st stu. amndstp gsaraqut, ue st odldy yj au, uowoSeueLE ssoutsng ay PUL S1D{00M uupaasiaq soindstp [eusysnpur jo sad. om axe arou, squowamas aindsig JOU 40 UOIUN a4p Jo SIOquIDUL LOY ‘quouiaas8e ures aup Aq pazanod aq JEM SImYIOM [[V + ‘ov af doaae 07 Ajay] 2x0UU 940 SI9]10M 94L sidoooe oyun axp Jt ‘pu ‘uorun yp on queuiaaise Jeuy 94p urejdxo diay ue sioyenoBu uorUN aL & uzy0N, peo ypu dyjenpiarpur SupepoRau wep IPIND © sduvduio> a4 OL, Z soniieajjo> sisip weyp [Pap snag e parenofou axvy 0} SuRUEP S19y10M aWOS sploae SY, “WouN Aynofeu aup jo saquister e you are Aaqp st u9A9 — auatuaasie owes ay dq pasas03 2g [IA SI}L0M IY + “peur siusuoaite yp uppidxo {peop ue> sioWHOAsU LOU +Management of Business ~ Unit 1 wages — in order to encourage the workers and their union to accept the management offer of pay and work conditions. Industrial action in Trinidad and Tobago is strictly regulated by the Industrial Relations Act (IRA). Such action can only be taken in respect of unresolved ‘interest, disputes. The IRA only allows a recognised majority union to tak may not take strike action, An employ lock-out action against workers who are not members of such a union, When either an employer or a union intends to ta ce such actions, then they must give notice to the other party and to the Minister of Labour. The importance of communication Disputes between unions and employe scan only be effectively resolved by communication, Strikes, work-ins and lock-outs do not, by themselves, solve disputes — they are means used to encour make a more acceptable compromise proposal to end the dispute. The ending of any industrial conflict will only e the other party to be brought about by discussion between the two parties, between the two parties and a conciliator or between the \wo parties and the Industrial Court. A solution that is acceptable to both sides will eventually be worked ou hrough discussions that explain the attitudes and positions of each party to the other. It is important for companies, therefore, to have in place appropriate mechanisms for effective and regular communication with union representatives. By establishing frequent and ‘meaningful negotiations between both parties, disputes, are both less like! y to occur and, if they do, are more likely to be solved without any lasting damage to the company through strike action, The need for reconciliation Once a dispute has been settled ~ either by sgotiation, conciliation or by a ruling from the Industrial Court — it is important for reconciliation to occur. This means that the bridges that might have been broken during the dispute, which may have included the use of damay industrial action, should be rebuilt between the two sides as quickly as possible. With goodwill on both sides, ng collective bargaining can once again be used to establish mutually acceptable pay and work condition Read the case study below and then tackle the exercises that follow, | Case study - Nestlé workers stage boycott | Protesting Nestlé employees on two shifts falled to turn up for duty yesterday. Trade union representatives said | production was brought to a halt atthe plant in Port of Spain. Yesterday's protest was focused on the workers demand to end 2 four-shift system introduced five years ‘aga and retum to the previous three shift system. The workers are represented by the Oilfields Workers Trade Union (OWTU), and its representative said This was a Voluntary agreement the union made with the company jn 2001 when the union realised the plant was likely to close. We agreed not to insist on the collective (20 marks, 25 minutes) ‘agreement that had existed up until then and go into a four-shift system ~ more productive and cheaper for the ‘company — but to be reviewed every six months! Nestlé Human Resources Manager agreed that bath parties had entered the agreement which was registered with the Industrial Court. The agreement had nat included any additional payment for the workers. The HR manager said Nestlé has told the OTWU that the matter should be settled at the Industrial Court ~ but she added that they had instead chosen to ‘walk off the job’ (IntGities.com 3/10/08) 1 Suggest THREE reasons why workers at this Nestlé plant are members of a trade union. (3) 2. Outline the benefits to both the workers and the company of collective bargaining for pay and work conditions. (6) 3 Why di tnion agree to the new shift system in 2001? (3) 4. How would you now advise the union and NestIé to settle this dispute? Justify your answer. (8)agreements, Regular meetings between both parties, should allow frequent discussions of issues that concern either the union or the employer, and, if these issues are raised early enou hya quick solution might be found that would prevent further disputes occurring. It is important that ‘old wounds’ are healed quickly to ensure that industrial peace prevails and co-operation replaces dispute in the future. Any business that fails to achieve reconciliation with the union and its members will find it much more difficult to survive and thrive in today’s very competitive world. Laws affecting health and safety in the workplace Why do countries have laws that protect workers? ‘Nearly all countries have some forms of legal protection for employees. These health and safety laws can cover lange range of issues such as: 4 Working conditions ~ to ensure that these are as sate as realistically possible and that adequate facilities are provided for workers. to ensure that of the working week workers do not endanger themselves and others by working very long hours. ‘@ Minimum age for employment ~ to ensure that, very young people are not offered employment to prevent them attending school. + Employment contracts to ensure that workers nave contracts that spell out the exact pay and conditions of the job they are being asked to do, So, these health and safety laws are aimed at reducing, the chance of worker exploitation by employers. If these laws did not exist, itis probably true to say that some profit-seeking and unethical employers would try to reduce costs by . making employees work'in dangerous conditions employing very young workers, rkers, + of employment. . # not providing any facilities for w not giving them ac The main law werns health and safety issues in Trinidad and Tobago is the 2004 Occupational Health and Safety Act. This very detailed and comprehensive act covers many issues including: ‘¢ General duties of employers towards their employees. 4 Rights of employees to refuse to work where safety or health are endangered. 4 Safety in the workplace, for example employment of young persons on dangerous machines, protective clothing, removal of dust and fumes, effective safeguarding of machin Fi a Sanitation, washroom and drinking water facilites. afety, including the provision of fire escapes. anliness and ventilation of the workplace eee Notification and investigation of accidents and industrial diseases, ‘¢ Employment of young people. The Act also established the Occupational Health and Safety Authority This body has overall responsibility for ‘ Inspecting health and safety provisions in workplaces in Trinidad and Toba # Providing an information and advisory service to all employers and unions. © Kee # Takiny breaking the law 1g records of health and safety infringements. action against those firms thought to be Education of employees on safety regulations This is an essential function of the HR department Much of this training will take place as an employee joins the company ~ known as induction training, This will include issues such as: ¢ Safety rules and regulations relevant to that business, for example not smoking in a gas service station, Health requirements relevant to that business, for nd 3 in a restaurant kitchen example cleanlin washing hands afier use of toilet ¢ How to operate machinery safel ¢ Fire drill procedure — how fire extinguishers work and the location of fire escapes. This training may need to be refreshed and updated for existing workers too. Training isa vital part of the health and safety system operating within a company. All accidents can be avoided and by providing effective training for al employees, related to the particular risks of the business concerned, the number and severity of accidents can be * ‘educed. Training will also reduce the company’ legal liability for damages payments in the event of anManagement of Business ~ Unit | accident, if it can be proven that adequate training was given to the employees concerned in an accident. Importance of the provision of safety facilities An employer could certainly save money in the short term by not providing any health and safety facilities. By not having fire extinguishers, a proper washroom, safeguarded machines, adequate working space, so tha accidents are less likely and so on, the company could save much valuable capital, which could be invested elsewhere in the business. However, what would the long-run consequences be? ‘# Workers will realise that their safety needs are not satisfied and they may be demotivated, leave being and be difficult to replace. Productivity and profits could be badly hit as a consequence of this, ‘¢ The company will be liable for civil damage claims rom workers who have been injured at work and these could far exceed the cost of the safety ures in the first place. # The directors or owners of the company will be breaking the 2004 law and may be liable to prosecution, Procedure to deal Whe safety complaints a worker reports a safety problem then there should [_ Activity | Case study - Accident at CaribChem ‘1 wasned the HR department that this could happen at any time, said Bill Spoony, an employee of CaribChem, | ‘but nothing was ever done about it. Now that the accident has happened they tell me | should have reported the danger to the Health and Safety Committee, but I did not know there was one! Several of Bills work colleagues had been injured ‘when a boiler tank exploded. The pressure gauge had ‘not worked properly for some time and workers had been told by managers, who knew about the problem, 16 marks, 20 minutes) Read the case study below and then tackle the exercises that follow. clear company procedure to follow. This procedure should help to ensure that the problem is recorded, id tha ‘occurrences of similar problems are made less likel cted and rectified if necessary a future nsp This is a typical procedure for dealing with safety complaints. ‘@ Appoint a person or committee at the place of work to have overall responsibility for dealing with health and safety issues. ‘ Ensure that these responsible persons are known to ne workforce so that any worker will know who to port a health and safety issue to, ¢ When an issue arises — perhaps an accident wit machine or a fall on a wet floor ~ the worke concerned must report the date, time and nature of the incident to the Health and Safety Comm Often a form will have to be completed so tha written d + Me bers of the committee should inspect the place where the incident occurred and should have the power to sanction immediate action to prevent a recurrence, for example scaffolding to have safer nets around it if a s affolding pole has fallen to the ‘# Consider if more permanent corrective action is necessary, for example retraining of workers of additional safety equipment provided. that they should ‘just watch for signs of over-heating and tutn the boiler down when in trouble’, Well, trouble had happened allright ~ the boiler tank had exploded without warning and ten people were now in hospital, production of chemicals had been brought to a halt and the union was threatening strike action. To make matters worse, five of the workers had just joined the company and when they were injured they did not know where the first aid equipment was and their burns are much more serious as a result. | 1 Explain FOUR failings that you believe contributed to this serious safety incident. (8) 2 Assuming you were appointed Head of Health and Safety at th company, give details of the changes that you would make to the staff training and health and safety procedures in the business. (8)