Human resource management

2.1 Functions and evolution of human resource management

2.1.1 Human resources planning

Work force planning is the method used by a business to forecast how many and what type of
employees are needed now and in the future.
The development of the work force plan starts with determining the desired organizational goal.
Once the organization’s strategic goal has been determined, the work force plan should follow the
steps below:
 Assess current employees.
 Analyses demand for employees.
 Analyses the supply of employees.
 Compare the demand and supply data.
 Develop and implement the work force plan.
Forecasting the demand for employees
How can an organization predict its future employee needs? Organizations use different
approaches:
Past data: organizations use past data collected in previous years to predict employee needs in the
future. This method uses a scientific approach and is complicated. It doesn't consider the business'
plans for future development. It is based on growth or reduction of employee numbers in the past
so is backward looking.

Productivity of workers: this method allows a manufacturer to calculate the average productivity.
For example, if a manufacturer has 100 workers and produces 2,000 units per month, the average
productivity is 20 units per month per worker. If the manufacturer has predicted an increase in
sales and needs to produce 3,000 units, this will make it necessary to recruit 150 more workers to
satisfy the market demand. This method is simple, but does not consider economies and
diseconomies of scale. If an increase in demand has been forecast, more efficient methods of
production could be used to raise productivity, which may include using equipment more
efficiently. This method doesn't consider the impact on non-production workers and is most
suitable for manufacturing businesses.

Management knowledge: a business may use its managers' knowledge to determine its future
employee needs, seeking input from managers at all levels. For example, an advertising agency
may need more staff for the growing internet market.

Calculating staff turnover: employees leave organizations for a variety of reasons. They may
retire, be promoted or resign. The labor turnover rate shows this information as a percentage of the
work force. It can be used to predict the number of employees who may leave, retire or be
promoted in the future.
Analyzing the supply of employees
An internal source of labor is when the employees are available within the organization.

An external source of labor is when the employees have to be recruited from outside the
organization.

Internal employee supply

A business may plan to meet its future work force requirements from its current employees. This
will depend on whether the company encourages internal promotion, the available staff
development and training programs, the labor turnover rate and vacancies created, and the legal
conditions for redundancy and dismissal.

External employee supply

A business needs to consider a variety of local and national factors that impact the external supply
of labor. These include: the availability of housing and transport, levels of competition and the rate
of unemployment, government training and subsidies, skills available in the area, population and
demographics, labor legislation and the costs of recruitment.

2.1.2 Labor turnover

Labor turnover is defined as the proportion of employees leaving within a given period. The
labor turnover of an organization is measured by the number of employees leaving the business
divided by the entire work force.

Avoidable causes of employees leaving:

 Dissatisfaction with payment: sometimes employees feel they are underpaid and they leave
when another organization offers them a better reward for their effort.

 Poor working environment: if the working environment (such as lighting, ventilation and
sanitation facilities) is poor, employees may feel dissatisfied and look for more agreeable
opportunities elsewhere.

 Job dissatisfaction: an employee may be doing a job that doesn't correspond exactly to their
abilities and qualifications. They may leave if they have the opportunity of a job that better
suits their qualification and needs.

 Human resources policies: many organizations have an autocratic policy that requires strict
adherence to rules for sick leave or other leave, for example, and has little scope for
promotion or delegated decision making. Over time, employees may feel dissatisfied and will
look for an organization that is more flexible and offers better opportunities for professional
growth.

 Lack of facilities: the organization may lack medical and recreational facilities, which will
make employees dissatisfied. If the work place is situated outside of town, a lack of
 convenient transport will also cause a problem for employees.

 Dissatisfaction with working time: if employees are asked to work longer than normal
hours without overtime pay or are called in to work during holidays or overnight, this is
likely to create dissatisfaction. Employees may leave the organization at the first possible
opportunity.

Unavoidable causes of employees leaving:

 Family circumstances: employees may leave their job because of family circumstances,
such as moving to an area where there is better schooling for their children.

 Physical reasons: employees may find that their physical condition no longer allows them to
do the work, for example if they have had an illness that prevents it.

 Marriage: some employees will relocate to a new area after they marry, for example if job
prospects are better for one or other partner.

 Birth of children: parents of young children may choose to leave their jobs in order to
provide childcare for a longer period of time than maternity or paternity leave allows.

 Retirement: of course, employees usually retire from work when they reach a certain age.

 Dismissal: an employee may be dismissed from a job for a variety of reasons related, for
example, to their ability to do the job or to their conduct.

 Redundancy: the organization may need to cut jobs as a result of reorganization or a

downturn in sales revenue, and therefore some employees become redundant.

Costs of high labor turnover:

 Recruitment: the business will need to find new employees and the recruitment process has
associated costs.

 Loss of productivity: the organization will lose some of its productive potential while it
recruits new employees and brings their skills and efficiency up to the level of the employees
who have left.

 Inefficiency, machine breakdown, waste, defective products: while new employees are
settling in, it will take time for them to master the job to a high standard.

 Training: the newly recruited employees will need to be trained, which takes time and
distracts the current experienced employees from their tasks.

 Reputation of the company: a high labor turnover tarnishes the company's image and may
make it difficult to attract talented employees.
2.1.3 Internal and external factors
External factors that affect work force planning:

 Competition:
If there are many similar organizations in the area offering similar jobs, it will be more
challenging to find and recruit qualified employees. A big organization may be able to attract
potential employees much easier as job seekers will find information about vacancies on their
own. On the other hand, a small business may need to advertise its vacancies and attend job fairs
to search actively for qualified employees. Competition for labor in the area will make it even
more important that the HR department develops strategies to retain current employees.

 Payment:
The labor supply in the market helps to determine the payment employees can be offered. If there
is high unemployment in the area and the labor supply is abundant, the remuneration can be lower
than if there is a shortage of suitable employees. Existing competition in the area also affects
wages and salaries. If there is a lot of competition for similarly qualified employees, the business
will need to offer higher salaries to attract qualified specialists. Industry-wide surveys keep track
of salaries and can be used to support decisions about the level of salary that will allow the
organization to retain current employees and attract new talent while keeping the business
competitive. It is also important that the HR department ensures that the internal compensation
structure is fair so as to avoid dissatisfaction among employees. For example, it will need to
decide whether an experienced employee receives a higher salary than a recent graduate.

 Legislation:
Work force planning needs to take account of the country laws that govern issues such as
recruitment and dismissal policies, compensation, retention of employee data and records, and
how these must be stored. For example, many countries have legislation that prohibits
discriminatory job advertisements or recruitment procedures. Legislation also exists on how
businesses should deal with employees' medical records and how long they should store their
employees’ data on medical and social insurance. The HR department needs to keep up to date
with changes in labor legislation to avoid fines and other issues.

 Technological advancements:
When new technology is brought in, it may allow a business to down size. The new technology
can allow a business to work with fewer employees as one person might be able to complete the
work of four people when the new technology is implemented. Technological advancements also
change the nature of the work place and may, for example, allow more employees to work
remotely. This allows businesses to offer employees more flexible working practices.

 Population and demographics:

Changes in the structure of the population may affect work force planning. For example, the
ageing population in Europe means that there are more older workers available for work who have
high levels of expertise in their field.

 Economic situation:
The economic situation in the area and in the country will affect work force planning. High rates
of unemployment mean an abundant supply of labor or a large pool of candidates from which to
choose. High national rates of unemployment mean that workers may be more willing to travel to
find a job and accept a lower salary.

 Availability of skills:
Certain skills will be more available in some areas. For example, an area such as Silicon Valley in
the USA is famous for its computer specialists and this has led to a concentration of IT industries
in that area.

 Government training and subsidies

The government is sometimes involved in training programs and also sometimes subsidizes
businesses to relocate to certain areas. This reduces the business' labor costs and gives it an
advantage over competitors in other areas.

Internal factors that affect work force planning:

 Structure of the organization:
The way in which the business is structured affects work force planning. An organizational chart
allows the HR department to identify positions that should be included and positions that are
redundant and to plan how to address those gaps or redundancies in the organization.

 Budget:
An important factor to consider is the funding available. In some cases, the number of employees
needed will depend on demand for the organization’s products or services, for example in the case
of manufacturing, warehousing or customer service. Increased revenue will provide the business
with the money to recruit and pay these employees. Other positions do not bring revenue but bring
value to the organization, so the business needs to find the money for these too. These are related
to the fixed costs of the business. Money should also be set aside for things like training and
professional development opportunities for employees, team-building events and well-being
programs. The HR department needs to distribute the available budget for all these activities,
which can be a challenging task.

 Promotion:
A company’s policy on promoting employees internally is important in work force planning. The
HR department needs to keep track of employees leaving and to ensure that other employees are
trained so that they can be promoted to higher positions when vacancies arise. These internal
opportunities for professional growth help to retain qualified employees.

 Working practices:
The HR department may decide to change the working practices in the business to ensure more
flexibility for employees. For example, it may change the working hours, or encourage teamwork
and multi-tasking. It may also create job sharing where two people share a single job.

2.1.4 Recruitment process

1. Job analysis: it provides details of the skills, training and tasks needed to carry out the job.
2. Job description: it is a simple 'word picture' of the job.
3. Person specification: it is derived from the job analysis and job description and defines the
qualities of the individual needed to fill the vacancy, e.g. qualifications, experience,
personality, skills.
4. Job evaluation: it is an assessment of the value of the job in relation to other jobs, so that the
rewards and remuneration can reflect its value.
5. Job advertisement
6. Selection: The process of selecting the most suitable candidate for the job
i. Application: The organization will start to receive applications from interested
candidates. The HR department will review the applications and select the most suitable
candidates to shortlist, usually on the basis of how well they match the person
specification.
ii. Job interview: The interview is an opportunity to evaluate the candidate's skills,
knowledge and ability to do the job, validating the information provided in the
application.
iii. Testing: The interview may be combined with tests. Achievement tests are designed to
find out what the candidate knows and can do. Aptitude tests aim to find out the
potential of a candidate to perform specific tasks required by the job. Personality tests
or psychometric tests examine candidates' traits and personal characteristics.
Intelligence tests examine the overall mental ability of the candidate.
iv. Job offer: The successful candidate is offered an employment contract which may be
subject to a successful medical test.
Internal and external recruitment:

Internal recruitment means that a job vacancy is filled from within the business by promoting
and retraining an existing employee rather than employing externally.

Advantages Disadvantages

• Shorter induction training will be • The number of applicants is limited

needed as the employee is familiar with
the company.
• Existing resources can be used,
building on the expertise of existing
staff.
• The employer/manager is familiar with
the candidate's abilities and experience.
• It is likely to be less expensive than
external recruitment.
• It can be used to motivate other
employees who will see possibilities
for development.
• It retains valuable employees and
avoids recruitment costs.
to employees in the company.
• There is no opportunity to select
from external candidates who may
be of better quality.
• Another vacancy is created and will
have to be filled.
• Fewer new ideas and innovative
solutions are brought into the
organization.
• There may be support by internal
groups in the organization that
causes conflict.
• It may cause discontent among
employees who have been
overlooked for promotion.

External recruitment is when the company fills a job vacancy by recruiting an employee from
outside the organization, usually because the company needs certain skills that it lacks in its
current employees.

Advantages Disadvantages

• It avoids the risk of creating internal
conflicts by promoting existing
employees.
• New people will bring new ideas, skills
and knowledge.
• It encourages existing staff to complete
and update their skills and education.
• It promotes change as part of the
organizational culture.
• It offers greater choice and a range of
experience in candidates.
• The new employee may not fit well
in the organizational culture.
• Existing staff may become
demotivated because they feel
overlooked.
• It is time consuming and costly.
• Longer periods of induction and
training will be required.
• The risk of employing someone
unsuitable is greater.
2.1.5 Types of training
Training can be defined as the acquisition or improvement of knowledge and competencies as a
result of learning.

The benefits of training:

 A well-trained work force is more productive and can contribute better to achieving the
business' goals.

 Trained employees can replace each other when a reorganization is being carried out.

 New technologies are constantly being introduced to business practices and training makes
introduction faster.

 Training helps reduce accidents in the work place as employees are familiar with health and
safety procedures and requirements.

 Training makes employees more confident in what they are doing, which helps to ensure a
positive experience for customers, thus improving the image of the company.

 When a business organization takes care of the training needs of its employees, they feel
more valued and their job satisfaction and motivation increases.

 Training provides better chances for employees to be promoted.

 Training can give a company a competitive advantage over rivals that don't provide
adequate training for their staff.

The need for training:

• At organizational level: the company might change its objectives and reorganize so that
employees need to be trained to be able to achieve the new objectives. If the company
introduces new procedures and practices (for example, just-in-time stock control),
employees will need to be trained. Sometimes, reorganization means that existing roles
cease to exist and employees must retrain to be able to fill other roles.
• At department level: it may be possible to identify a need for training from leave
records, absences, production levels and customer complaints. Differences between
departments may signal that training is needed.
• At individual level: the appraisal procedure can indicate the need for training and
employees themselves may request it, perhaps to keep up to date with new industry
practices or to support them in a new supervisory role.
On-the-job training is conducted while the employee is performing work activities, without
leaving the work place.
 Type of on-the-job
training Advantages Disadvantages

Coaching The supervisor offers New employees lack the freedom to

feedback and suggestions for express their own ideas.
improvement. The supervisor is taken away from their
It improves efficiency main duties.
quickly.

Mentoring The training is personalized. The mentor can get distracted from
Advice is always available to their main responsibilities.
the trainee.

Job rotation It reduces boredom. Employee morale may reduce if they

It increases skills and job prefer their own routine to the new role.
satisfaction. It can disrupt the workflow while the
It opens new professional employee is learning new skills.
opportunities for employees.

Apprenticeship The apprentice has the It takes a long time and is expensive.
opportunity to acquire expert There is no guarantee that the
skills. apprentice will continue working with
the same company.

In-house courses Own employees can be used Employees may be dissatisfied if they
and are relatively need to stay after hours for training.
inexpensive.
It improves employee
motivation for people who
are used as trainers.

E-learning It is cheaper as there is no There is a lack of face-to-face

need for trainers. interaction.
Employees can learn from Because lessons don't take place in 'real
home and when they have time', there may be a delay in getting
free time. answers to questions.

Off-the-job training is training that takes place away from the employee's normal work place.
 Lectures and conferences: these involve verbal presentations for a large audience. This
approach is often used in colleges and universities. It must be interesting enough to motivate
the audience and the speaker must be expert in the subject.
 Vestibule training: in this type of training, employees are trained in a prototype environment
near the work place. This might be a specific part of a factory dedicated to training, which
replicates working conditions as closely as possible. This method was commonly used in the
past when large numbers of workers had to be trained in the skills needed for factory work.
 Simulations: this training involves specialized equipment that simulates the working
environment as closely as possible. The trainee is asked to make decisions after which
feedback is provided. It is widely used to train pilots in the aviation industry.
 Case studies: trainees are presented with a case study and related questions that they have to
think about. The follow-up is a discussion with the group and the instructor. This type of
training is good for promoting decision-making abilities and motivating trainees to
participate fully in training.
 Role-playing: some of the trainees in a group are given roles to play. There are no lines to
remember and no rehearsals, but trainees have to react to different situations as they would in
real life. Role-playing usually focuses on topics such as employer-employee relations, hiring
and firing, appraisal and customer service.

Type of
training Advantages Disadvantages

On-the-job It is conducted at the workplace. It disrupts the workflow.

training It is more affordable.
It is directly related to the
performance of the work.
It is conducted under the supervision
of more experienced employees.
It takes time away from work for
supervisors and mentors.
It may be conducted after working
hours, which can cause dissatisfaction.

Off-the-job It is usually conducted by experts in It is not directly related to the job

training the field. context.
It is professionally organized. It is expensive.
The training program may add value Trainees may lack the motivation to
for employees if well organized. learn.

2.1.6 Types of appraisal

The process of appraisal or performance review involves different methods and uses preset
standards to evaluate the employee’s performance. The performance review may be completed
quarterly or annually.
Types of performance appraisal
• Performance appraisal by superior: most performance appraisals are completed by the
employee’s line manager. This is the person who has the best knowledge of the
employee’s performance, the tasks they carry out and how well they were completed.
• Appraisal by a manager up in the hierarchy: a higher-level manager can also be
involved in the appraisal process in a couple of ways. The senior manager might carry out
the appraisal themselves or might be involved in approving the appraisal once the
employee's line manager has completed it.
• Formative appraisal: the employee receives this type of appraisal on an ongoing basis,
even while undergoing training. It is a type of feedback from the line manager on the
skills the employee is mastering and the progress being made on a project, especially if
modifications are needed.
 • Summative appraisal: when the employee finishes a project or period of training, a
summative appraisal may be conducted. It consists of evaluating the attitudes and
information learned from the training program and determining how the information
learned is to be used back on the job.
• Self-appraisal: the employee uses the preset criteria to assess their own performance.
This helps the employee prepare for the discussion and identify their own needs for
professional training. However, the self-appraisal method does not usually replace
appraisal by the immediate manager.
• 360-degree appraisal: this method of appraisal uses surveys to gather information about
an employee’s performance from different people involved in their work. The employee is
rated by supervisors, subordinates and peers. Customer ratings and self-ratings can also
be used. The 360-degree appraisal gathers the feedback of many different stakeholders
and is usually used when a decision needs to be made about promotion.
• Management by objectives: this method of appraisal uses clearly identified and
measurable goals, which are agreed upon, to evaluate an employee's performance. It is an
objective form of evaluation and therefore reliable. However, it is only appropriate in
certain work place settings where it is possible to identify clear goals and ways of
measuring achievement.

2.1.7 Dismissal and redundancy

When the employer decides to terminate an employee's contract, this is called dismissal.
Common steps in the dismissal process:
1. Full investigation: after the misconduct has been established, the situation needs to be
investigated and witnesses’ statements gathered. Witness statements relating to a specific
incident should provide details of the date and time and a description of the employee's
behavior.
2. Complete check: the manager should check the company policies and the employment
agreement to determine what is considered misconduct that warrants dismissal.
3. Provide written evidence: a letter is sent to the employee with details of the allegations,
details of any previous misconduct and warnings issued, and the relevant clauses in the
employment agreement or company policies that have been breached. The letter should
also include the date when there will be a meeting with the employee to discuss the matter
and what the consequences might be.
4. Meeting with the employee: the meeting gives the employee the chance to present their
side of the story. The allegations are discussed as well as the possible consequences if
they are upheld.
5. Written notice: after a decision has been made, a written notice is sent to the employee.
The decision might be that the employee receives a final warning, a first warning (if this
is the first incident) or dismissal (if there has been a final warning about an incident in the
past). The written notice should contain details about the policies and clauses that have
been breached, the decision made and the last day of employment with the organization in
the case of dismissal.
Common steps in the redundancy process:
Redundancy is a lawful reason to dismiss employees when there is insufficient work in the
company.
Step 1. Planning the redundancy
The HR department should plan the redundancy carefully and consider whether it is necessary.
The reasons should be clearly identified. Has the demand for products and services decreased, or
is the work being moved to another location? Are the changes needed because of a restructuring
within the organization?
There are three main types of redundancy:
1. Job redundancy: when the employer’s business, or the part of the business where the
employee works, cease to exist.
2. Work place redundancy: when the business has moved to a different location.
3. Employee redundancy:
• because of a reduction in the volume of a particular type of work;
• as a result of reduced demand for the employee, e.g. the work has been outsourced to an
independent contractor or other employees can absorb the work duties;
• because of a reorganization and the installation of new equipment so that fewer
employees are needed.
Step 2. Identifying alternatives to redundancy
Alternatives might include exploring the availability of volunteers for redundancy, looking at
employees who meet the retirement requirements, a recruitment freeze, a ban on overtime work,
the possibility of job shares and the termination of work for part-time employees. It is important
for the employer to identify whether such alternatives exist to avoid future employment
discrimination claims in front of the employment tribunal.
Step 3. Prepare a schedule
Once it has been decided that redundancies are necessary, the HR department prepares a
redundancy schedule. This covers the timescales, including the advance notice that must be given
to employees, which ranges from 30 to 90 days depending on the relevant country's labor law. It
also has to say when employees will first be informed about the need for redundancies.
Step 4. Inform employees
The employee representative or trade union representative must be informed about the redundancy
plan, usually in an informal discussion. The employer must give the reasons for the redundancy,
the number and type of employees to be made redundant, the method used to select the employees
to be made redundant, the procedure for dismissal and how the payments have been calculated.
The informal consultation above only applies if a big group of employees is to be made redundant.
If only a few employees are affected, the employer should inform the employees directly about the
reasons and the payment they will receive. News such as this can have a huge impact on employee
morale for those remaining as well as those being made redundant. The employer should
communicate the news sensitively.
Step 5. Redundancy selection
The employer should select those who are to be made redundant using criteria that are transparent
and fair. Things to consider are experience and qualifications, performance, disciplinary record
and available skills for future business tasks. The employer should ensure that the selection will
not result in unlawful discrimination leading to a possible employment discrimination suit.
Consideration of absences cannot relate to pregnancy, maternity or other contractual leave.
The employer should also consider the possibility of offering alternative similar employment. If
such an offer is made to the employee and is refused, the employee usually loses the right to
redundancy payment.
Step 6. Individual consultations
The employee must be told about the situation and that they have been selected to be made
redundant. The employee would usually have the opportunity to comment on the selection criteria
and to discuss the situation.
The final decision is confirmed by letter with details of the meetings and discussions. The
employee must be told how the redundancy payment has been calculated.
Employers frequently use legal advice when they have to make employees redundant. This may be
the best approach as employees can sue the company for unlawful dismissal and discrimination
and thus damage the image of the company.

2.1.8 Work patterns and practices

Part-time work is when employees are contracted to work fewer hours than are required of full-
time employees.

Advantages Disadvantages

Employer Wage costs are lower. Part-time employees have lower

Employees are easy to replace.
It enables more efficient use of
equipment.
It is useful during peak demand times.
It enables use of experienced staff, e.g.
retired people.
motivation and loyalty.
Employees stay with the business for a
shorter time.
Training and recruitment costs are
higher.

Employee Employees have time to pursue other
interests.
It is easier to take care of children, the
sick and the elderly.
It makes it possible to study and work.
Part-time employees receive lower pay.
They receive fewer benefits than full-
time employees.

Temporary employment is an employment situation where an employee is expected to remain in

a position only for a certain period of time.

Advantages Disadvantages

It provides convenient cover for Temporary workers may lack motivation and
permanent staff (e.g. sick leave and commitment.
annual leave).

It enables suitable support in times of Temporary workers sometimes receive higher wages
peak demand for a business' products. than permanent employees, which may cause
resentment.
Flextime employment is when employees can choose their working hours within the core time
that the business is open.

Advantages Disadvantages

It enables recruitment and retention of qualified Preparation of the work schedule by

employees who are unable to work traditional managers can be more difficult and time
hours. consuming.

It accommodates the various demand patterns of It may create resentment among full-time
customers. employees.

It reduces absenteeism and lateness. Some communication difficulties may occur

if staff are sharing roles.

It creates a sense of personal responsibility in

employees.

It provides better efficiency at core times and

more flexibility at peak times.

Teleworking is when the employee spends all or part of their work time at a location other than
the work place.

Advantages Disadvantages

The costs of office space and other facilities Teleworking is not suitable for all types of
are reduced. jobs.

It can improve productivity as people are not The technology needed may be expensive.
interrupted by the day-to-day distractions in
the office.

Employees have more freedom to choose Some employees may feel socially isolated.
where they live and how to organize their
work.

Time spent on travelling is reduced as are Communication between managers and

absenteeism and labor turnover rates. teleworkers may be difficult because of time
zone differences.

Portfolio work is a type of employment where the employee is not dependent on a company or a
client and can offer high professional skills to several companies at the same time.

The United Nations Convention on the Protection of the Rights of All Migrant Workers and
Members of Their Families defines a migrant worker as: 'a person who is engaged or has been
engaged in a remunerated activity in a State of which he or she is not a national'.

2.1.9 Outsourcing, offshoring and reshoring

Outsourcing is when a company transfers or contracts part of its work to outside suppliers or
companies instead of completing it internally. This practice is used by many companies in order to
facilitate specialization and ensure more efficient production. Outsourcing also allows companies
to reduce their costs.

Advantages Disadvantages

• It saves overhead costs and HR
costs.
• It allows the business to focus on
its core activities and competences,
which are important for its future
growth and success.
• It allows for specialization and
economies of scale.
• It reduces the requirement for
training of new employees.
• The business can hire the best
experts for a project.
• It may take time and effort to find and
sign a contract with a suitable company
to which to outsource a task or a
business function.
• If the outside company has access to
confidential information, this can pose a
security threat.
• There might be difficulties in
communication between the business
and the outsourced provider, which can
delay the completion of projects.

Offshoring occurs when a company relocates a manufacturing operation to a foreign country

without giving up control or ownership of the operation.

Reshoring is the process of bringing back manufacturing facilities that were offshored to another
country.

2.1.10 Influence of innovation, ethics and culture

Innovation:
Recruitment: one area in which HR management has been significantly affected is recruitment.
Technology has made recruiting more efficient and effective. HR personnel now can post a job
in more locations and have millions of people see it. In the past, when only printed media and
networking was used, this was impossible and the pool of candidates was limited.
Training: organizations’ training policies have changed dramatically with the advancement in
technology. Employees now can be trained more efficiently. Costs for bringing experts to the
training venue have greatly reduced as it is now possible for them to work remotely on
employee training. Assessing employee progress can also be done through computerized tests.
Storage of files: HR staff process considerable amounts of paperwork and the use of electronic
imaging has made it possible to store files in an electronic format. Printing of forms needed for
employees is also made easier with computer technology. Time spent on managing employee files
has shortened greatly.
Performance review or appraisal: performance reviews of employees have become easier with
computer technology. A variety of software programs can be used for examining employees’
performance.
Administrative tasks: information technology has reduced administrative costs by automating
routine administrative and compliance functions. It has also facilitated outsourcing of the HR
function. It enables easier management of the data necessary to manage employees and their
development, career growth and equal treatment. The use of technology for many of the HR
functions has enabled HR staff to concentrate on strategic planning of the work force.
There are also some drawbacks to technological advancements. Technology is becoming a threat
to HR itself with the concern that it will reduce the reliance on manpower and prevent the
organization from achieving its original objectives and the vision of the company. Errors in data
entry are also not rare, which can create problems. Technology becomes obsolete very fast and
information needs to be transferred in another digital format, although this issue can be solved
with storage space in the cloud.

Culture:
Culture is defined as the values that guide people’s behavior in society and that translate into
work-related behavior and attitudes.
Organizational culture
Many institutional factors influence HR policy. In liberal market economies (such as the USA
and the UK), the focus is on short-term financial performance and employees are likely to be
regarded as disposable resources. Employers will closely manage individual performance and
may see the training and development of staff as a burden. There will be considerable
movement of labor between organizations. Employees may lack commitment and motivation.
On the other hand, in collaborative market economies (such as Germany and Scandinavia), long-
term performance is a priority. Investment strategies focus on product and process innovations and
the associated development of employee skills. Employees tend to be regarded as a valuable
resource for competitive advantage and their training and development is considered
important. There is a high level of job security, employee motivation and commitment, yet this
kind of organization may run the risk of being less competitive globally.

Ethics:
Moral values are principles that govern a person's behavior or the conducting of an activity. These
values and principles allow an individual to distinguish between right and wrong.

2.2 Organizational structure

2.2.1 Terminology for understanding organizational structure
The organizational structure determines how tasks are divided and coordinated, who employees
report to, who has the authority to define tasks to employees and what the role of each employee is
in the organization.

Delegation is the assignment of responsibility or authority to another person to carry out specific
activities.
Delegation empowers employees to make decisions; it shifts the decision-making authority
from one level to a lower one. However, the person who delegates the work is still accountable
for the outcome of the work. Delegation can help in building skills and motivating people. But
it can also cause frustration and confusion if the person to whom responsibilities are delegated is
not willing to take on responsibility.

Advantages Disadvantages

Empowers employees to make Employees may feel frustrated if they are unwilling to take
decisions more responsibility

Builds skills and motivates Tasks may be repetitive and tedious

employees

The manager will free time for Employees may feel that they are doing the tasks of the
higher-priority tasks manager for much less pay than the manager

Span of control describes the number of subordinates that a manager or supervisor can directly
control. This number varies with the type of work: complex, variable work reduces it, whereas
routine, fixed work increases it.
A hierarchy is a pyramid-like structure where each level (except the top and the bottom levels)
has one higher and one lower level. The higher a level is in the hierarchy the greater the authority
or importance. There can be a hierarchy of ideas, individuals or items.

The chain of command in an organization is the line of authority and responsibility along which
orders are passed from one person to another.

Bureaucracy is a system of administration with clear hierarchical structure in which people are
expected to follow precisely defined rules and procedures. It is used to describe the formal rules in
an organization, the communication and impersonal relationships.

Decentralization means a transfer of decision-making power. Decentralization is usually achieved

by delegation of authority to individual or groups at all levels of an organization.

Advantages Disadvantages

Centralised Efficiency in making business The many layers of bureaucracy

organization decisions under pressure as those make communication difficult.
are made centrally by the top More time will be needed to
management. accomplish tasks.

Decentralized Manages to utilize the employees’ Different individual opinions may

organization expertise and knowledge at various create difficulties in the
level. organization, especially in
decision-making.

Delayering is the HR strategy of reducing the number of levels in the organizational hierarchy.
2.2.2 Types of organizational charts
An organizational chart is a graphical illustration of relationships between an organization’s
departments, functions and people.

A flat or horizontal organizational structure is one with few levels of hierarchy, typical for small
businesses.

A tall organizational structure is a structure with multiple levels of management, typical for
large and complex organizations.

Flat organizational structure Tall organizational structure

limited levels of hierarchy numerous levels of hierarchy

wide span of control narrow span of control

de-centralized centralized

short chains of command lengthy chains of command

democratic leadership 'top-down' leadership

 Flat organizational structure Tall organizational structure

increased delegation of authority limited delegation of authority

Hierarchical organizational structure is a tall organizational structure with many levels of

hierarchy, and the organizational chart is similar to a pyramid.

In the product organizational structure, the business is organized into departments focused on
different products.

A functional organizational structure is a common type of organizational structure in which the

organization is divided into smaller groups based on specialized functional areas, such as
marketing, production, finance, IT and others.

Organizational structure by region is a type of organizational structure used by organizations

with operations in different geographical locations. It is also called ‘geographical organizational
structure’.
2.2.3 Changes in organizational structure
Project-based organizational structure is a temporary structure which is created to facilitate the
execution of a specific project. It can exist within all types of organizations.

Human
Production Marketing Resources Accounting

Project Alpha Manager 3 Employees 1 Employee 1 Employee 1 Employee

Project Bravo Manager 4 Employees 2 Employees 2 Employees 1 Employee

Project Charlie 5 Employees 1 Employee 1 Employee 1 Employees

Manager

Project Delta Manager 2 Employees 2 Employees 2 Employees 1 Employee

Project Echo Manager 3 Employees 1 Employee 1 Employee 1 Employees

Shamrock organization
Model composed of three groups of workers: Core, Peripheral, and out-sourced.
The model encourages flexibility.
2.3 Leadership and management
2.3.1 The key functions of management
Planning: a manager sets out how to achieve short and long-term goals or objectives. Objectives
=– strategic (long-term), tactical (short-term) and operational (day-to-day) objectives.
Coordinating: like a juggler with five balls in the air at once, a manager must coordinate the
activities of different departments within an organization. That might mean ensuring suppliers
know which goods to produce and when, that stores receive the product at the right time to sell it,
that financing is in place to purchase the goods and that marketing is ready with its ad campaign.
All these activities must be coordinated so that, when a company rolls out its product, the roll-out
is a success.
Commanding: this aspect of a manager's job involves giving instructions to employees and
ensuring work performance is of a high standard. Sometimes managers need to intervene if an
employee's job performance is not satisfactory.
Controlling: this requires a manager to understand the business' processes and policies and make
changes to ensure objectives are met. It entails effective communication between the manager and
employees.
Organizing: this function requires the manager to use the available resources efficiently. These
resources can be capital, human or natural.

2.3.2 Management vs. leadership

Management is the work of directing a business organization’s resources (physical and non-
physical) to achieve business objectives.
Leadership is the use of strategic and creative thinking that inspires people to meet challenges
and accomplish defined goals.

2.3.3 Leadership styles

Situational leadership is the ability of a leader or manager to adjust their style of leadership to fit
the task or situation that they find themselves in.
Paternalistic leadership is when a leader or manager treats employees as if they were family.
This is characterized by a strong leader who tries to make decisions in the interest of their 'family'.
Employees, in return, give their loyalty.

Laissez-faire leadership is the ability of a leader or manager to give employees minimal direction
and large amounts of freedom to make decisions and find their own methods of accomplishing
objectives.

Autocratic leadership is the ability of a leader or manager to make decisions with little or no
outside input. Instead, autocratic leaders rely on their own ideas and instincts when making
decisions.
Democratic leadership is characterized by inclusiveness. Employees feel validated and are
encouraged to share their ideas, participating in the decision-making process.

2.4 Motivation
2.4.0 The big picture
Motivation is a reason or set of reasons why we do something. These motivations can be intrinsic
or extrinsic or a combination of the two.
Extrinsic motivation is the behavior that is driven by satisfaction external to one's self, such as
one's salary, celebrity or approval.
Intrinsic motivation is the behavior that is driven by satisfaction internal to one's self. It comes
from inside you. An employee works at a job for the satisfaction it brings, for the joy of it.

2.4.1 Motivation theories

Taylor's 'Scientific Management' is the systematic study of workflows that breaks down tasks
into their smaller components. This helps to improve efficiency and productivity. Its most
common application is in assembly-line work.

Maslow's 'Hierarchy of needs' stresses the importance of having basic needs met so that other
higher order needs – psychological and self-fulfillment needs – can then be satisfied.

Herzberg's two-factor theory suggests that 'hygiene' needs (demotivating factors) are basic
needs that must be met and 'motivator' needs, if met, give an employee satisfaction in their work.
使职工感到满意的都是属于工作本身或工作内容方面的；使职工感到不满的，都是属于工
作环境或工作关系方面的。他把前者叫做激励因素，后者叫做保健因素。

Adams' Equity theory suggests that employees are satisfied when they perceive that there is
equity between the work they put in (inputs) and the benefits they receive (outputs).

Pink's Drive theory of motivation is derived from his book. His theory rests on the notion that
the ultimate motivators are intrinsic and they are autonomy, mastery and purpose.

2.4.2 Financial motivation tools

Salary is a fixed annual sum that is usually paid over 12 equal monthly instalments.

Wages (time rate) is a payment made in weekly sums based on the number of hours one works.

Wages (piece work) means that a worker's pay is based on the number of units or 'pieces' they
make or complete.

Commission is a type of reward system, which is most frequently seen in sales work. A
salesperson who works on commission gets paid a percentage of their total sales.

Profit-related pay means that the employee receives a percentage of the profits that the company
makes that year.

Performance-related pay means that the worker can receive additional money (bonuses) for
reaching pre-agreed objectives.

An employee share-ownership scheme means that employees are given shares in the company as
a reward or, in some instances, they have the opportunity to buy shares at discounted prices.

Fringe benefits (perks) are rewards are paid to the employee in addition to their salary, such as a
company car, housing allowance or free meals.

2.4.3 Non-financial motivation tools

Job enrichment is when employees are given added tasks that require more skill or training.

Job rotation is when employees change jobs for a period of time to learn a new task within a
work process, e.g. the different tasks in assembly line production work.

Job enlargement is when tasks are added to an employee's job description. These tasks are mostly
of a similar level.

Empowerment entails giving employees greater responsibility in deciding how to perform their
job.

Purpose is when the employee seeks to make a positive contribution with their work for the
greater good.

Teamwork is the collaborative effort of a group of employees working together to achieve

completion of a task or goal.