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Unit 3 Area of Study 2 Managing employees SAC

Suggested answers

QUESTIONS

Question 1 (19 marks)

In 2014 South African retailer Woolworths took over the Australian department store David
Jones (DJs). It aims to make David Jones the best department store in the southern
hemisphere. To achieve this they need to boost the earnings of DJs while also
implementing some cost cutting measures. One of the strategies has been to shift the head
office of the 178 year old retailer from Sydney to Melbourne. The move, while providing cost
savings for the parent company will also lead to the loss of hundreds of job in Sydney
across roles such as buying, planning, finance and visual merchandising. Staff will be
offered the opportunity to relocate to Melbourne, but more than 50 per cent are unlikely to
be willing to do so. Woolworths has also streamlined David Jones’ service model, hired
more permanent staff and introduced new accounting, merchandise and planning systems.

a. Describe the relationship that exists when a business is managing its objectives
while also endeavouring to meet the objectives of its employees. (2 marks)

Businesses establish measurable targets, create plans, strategies and actions in their quest
to achieve their business objectives. One very important stakeholder that a business needs
to properly manage is its employees, who also have their own objectives, such as better
pay and working conditions. It is important that the business is able to establish a positive
relationship with its employees, as they will then assist in the growth and success of the
business.

Mark allocation:
 1 mark – for description of the relationship between the business and its employees
 2 marks – description of relationship between business and employees and meeting
the objectives of each party

b. David Jones has identified that more than 50 per cent of its Sydney workforce will
not relocate to Melbourne.

i Identify two termination management issues that will face David Jones as a
result of this relocation. (2 marks)

Issue 1 – DJs will be involved in managing the retrenchment of a large proportion of their
Sydney-based staff who have indicated their unwillingness to transfer to Melbourne. It must
be remembered that these staff members are not being terminated due to poor
performance, but because of a structural (organisational) change: their job no longer exists.

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Issue 2 – DJs must ensure that the retrenched employees receive all the entitlements due
to them. These include receiving any outstanding pay (remuneration), long service leave
owing and accrued holiday pay. In addition, they will receive a redundancy
package/payment which will be calculated based on their number of years of
service/employment at DJs. If the DJs’ employees work under a workplace agreement, the
formula for working out redundancy payments will be stated in the agreement; otherwise
DJs will rely on the statutory method of calculating the payment.
Mark allocation:
 One mark for each termination management issue identified x 2

c. Propose and describe two strategies that David Jones management could
implement to ensure the termination of the Sydney employees is handled in an
appropriate manner. (3 marks)

While staff members who are being made redundant are not being terminated for poor
performance, it is still a stressful experience to lose your job. There are a number of
strategies that David Jones could adopt to support staff in their transition from leaving the
retailer to finding a new job.
One strategy that DJs could adopt is to offer a generous redundancy package which would
include all of the entitlements legally owed to an employee, such as accrued annual leave,
plus a payout based on what is stipulated in the employee’s conditions of employment
(employment contract), typically a certain number of weeks’ pay per year of service. DJs
would also be wise to exceed the notice period requirement to be given to employees on
their termination so they have plenty of time to make their arrangements.
A second strategy that DJs could adopt is the provision of outplacement services to the
employees who are being made redundant. Outplacement services assist employees who
have been retrenched to gain new work and to cope with the stress of losing their job.
Outplacement consultants assist employees to make the transition by initially counselling
retrenched employees to counteract the negative feelings associated with retrenchment.
They also provide skill development to assist them to find new employment. Individual
employees are assessed on what assistance they require, such as résumé writing and
interview techniques, or office space and access to a telephone to set up interviews. The
costs associated with the service would be paid by DJs. This would send a strong message
to the remaining staff that DJs cares about its employees.
Mark allocation:
 1 mark for an outline of two proposed relevant strategies
 1 mark for a proposed and described relevant strategy
 2 marks for two proposed and described relevant strategies
 3 marks for two proposed and described relevant strategies and linked to DJs

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d David Jones as part of streamlining its service model has introduced new
accounting, merchandise and planning systems. As a training consultant you
have been asked to propose and justify a training option that would be
appropriate to train the employees in this new service model. (2 marks)

Training is the process where an employee is provided with the knowledge or specific skills
they need to do a job. Initially, a group of employees would be selected to undertake off-the-
job training from specialist or experts in the new service model. These employees would
then return to DJs to act as coaches/mentors to train their other team members. This would
be the most cost-effective training option for DJs as they would only be paying for a small
group to be trained by an outside course provider and then using this group to train the
other employees on the job.

Mark allocation
 1 mark – training option proposed
 2 marks – training option proposed and justified

e Compare the ideas of the following motivational theories: Hierarchy of Needs

(Maslow), Goal Setting Theory (Locke and Latham) and the Four Drive Theory
(Lawrence and Nohria). (6 marks)

Maslow’s Hierarchy of Needs is based on the assumption that within all individuals exist a
hierarchy of five needs, which can be arranged based on the importance of these needs. An
employee’s level of need in one level of the hierarchy must be substantially satisfied before
moving up to the next level, which is then activated as a motivator. Once that level of need
is satisfied, it is no longer effective in motivating an employee’s behaviour. The five levels in
the hierarchy are: physiological, safety, security, self-esteem and finally self-actualisation. It
should be recognised that individual employees will be on different need levels and that a
business must be able to recognise which level they are on to then provide strategies from
the next level in the hierarchy to act as motivators.

In comparison to the needs-based theory of Maslow, the theory of motivation developed by

Locke and Latham is based on the importance of goal setting. This theory notes that the
setting of goals which are specific, measurable, achievable, relevant/realistic and time-
bound will lead to an individual employee providing an increased level of effort, more focus
on their work tasks as well as being more persistent in their approach. Using this theory
requires discussion between the manager and employee to set the goals and then providing
opportunities for feedback to the employee on progress towards goal achievement. This
regular feedback provides opportunities for expectation clarification, adjusting the level of
difficulty of the goal while also gaining recognition. This goal-setting cycle provides
employees with a higher level of buy-in to the goals of the business.

Where Maslow’s theory focuses on the individual employees, Locke and Latham’s theory
can be used to motivate an individual employee or a team. Application of the goal-setting
approach involves participation between managers and subordinates at every level of the
business and is directly linked to the formalised operations strategy of a business.

The Four Drive Theory (Lawrence and Nohria) identifies four basic motivational needs,
namely the drive to acquire, bond, comprehend (learn) and defend, which act to
drive/motivate people. Similar to Maslow, the theory is based on understanding human

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psychology and the relative strength of each drive which therefore differs between
individuals. It is possible that if one drive dominates, an imbalance can occur between the
personal and business outcomes. The drive to acquire can be regarded as both a basic and
complex need. Basic when it relates to an individual being motivated to gather the
necessities for survival (e.g. clothing, housing, money). This basic need is similar to what
Maslow identifies as a physiological need. A more complex motivator relates to the
acquiring of status, accomplishment and power (e.g. promotion). This is similar to Maslow’s
higher level needs of self-esteem and self-actualisation. The drive to bond relates to our
desire to seek and connect with others whether it is family or peers. An employee’s
motivation is boosted when they feel proud to belong to a particular business, but will
plummet if the business does something to betray that feeling of pride. This drive is similar
to the levels of safety and security and social in Maslow’s hierarchy. The drive to
comprehend (learn) has similarities to the Goal Setting Theory in that both believe that
employees are motivated by having meaningful, interesting and challenging jobs within their
area of responsibility.

All three theories are similar in that they recognise that providing opportunities for personal
growth, career advancement and learning outcomes act as motivating factors.

Mark allocation:
1 mark – description of one motivation theory only
2 marks – description of two motivation theories
3 marks – description of three motivation theories
4 marks – explanation of three theories, with no points of comparison provided
5 marks – comparison of points of likeness/differences of two motivation theories
6 marks – comparison of points of likeness/difference of three motivation theories

f Identify and explain two motivation strategies that DJs management could use
to motivate their staff following the relocation to Melbourne. (4 marks)

Strategy 1 – It is important that the staff who are being relocated to Melbourne are
supported by both management and their co-workers as the relocation is a big change in
their working life. Being supported, encouraged and acknowledged for their work
performance will act to motivate them and provide them with the desire to achieve in their
new role. Their individual managers must create a positive environment and ensure there is
open communication between all members of the team. This should assist in overcoming
any problems that may arise in the short-term.

Strategy 2 – Investing in training for the relocated employees demonstrates that DJs values
its employees and wants them to feel they are being given opportunities to contribute to
business outcomes, both in the short term and long term. Creating this positive culture will
aid in motivating these relocated employees. DJs must ensure that the employees are
placed in jobs for which they are suitable, they are provided with fully functioning equipment
and offered the opportunity through training for them to advance in their careers.

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Mark allocation:
1 mark – identify two motivation strategies or identify and describe one motivation strategy
2 marks – identify and describe two motivation strategies
3 marks – identify and explain two motivation strategies (not linked to DJs)
4 marks – identify and explain two motivation strategies linked to DJs

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Question 2 (11 marks)

In November 2016, Asciano Limited, the owner of Patricks, Australia’s largest stevedoring
business which handles almost 45 per cent of all container cargo in Australia, has
successfully negotiated a workplace agreement with the Maritime Union of Australia (MUA).
The vote by 1000 dock workers working at Patrick Stevedores’ four container terminals in
Sydney, Melbourne and Brisbane to accept this agreement came after a long and complex
two-year campaign. The long and bitter workplace feud between Patrick and the MUA
culminated in simultaneous strikes which forced the shutdown of Patrick’s four terminals
earlier in 2016. Patricks threatened a national lockout of its employees to force the
deadlocked dispute over rosters, hours worked, pay, worker safety and other financial
issues to arbitration.

Many of the negotiated terms of the workplace agreement are well above inflation and
broader wage growth predicted in the economy. The MUA believes the new workplace
agreement is a victory for workers and the company, securing important job protection
conditions and should provide stability to the waterfront.

Under the new four-year deal, Patricks’ workers will receive:

 Financial payments eg. a $1500 sign-on bonus, a one-off payment of 2.5 per cent
for the six-month period in 2016, subsequent pay rises of 2.5 per cent for the
remainder of the agreement period
 Legal protection for job and job security for all work currently performed
 Job protection provisions and full consultation on the introduction of new technology
or automation including extra redundancy payment, redeployment, reduced hours,
retraining and protection of jobs through such change
 Fully functional dispute settlement and consultation procedures
 Superannuation at the rate of 12 per cent.

a. For each of the two types of industrial action listed below, identify which party to
an industrial dispute takes this action and describe the purposes of the action. (2
marks)
I. Strike

A strike involves a deliberate withdrawal of labour from the production process by

employees, often but not always organised by a union. The usual purpose of this action is to
compel an employer to comply with particular demands of employees regarding terms and
conditions of employment.

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Mark allocation:

 1 mark for identifying the party taking the action and describing the purpose of a
strike.

II. Lockout

A lockout is an employer’s response to protected industrial action whereby the employer

suspends or restricts work by stopping workers entering a plant or building to perform their
work. This form of industrial action is usually taken when management believes that
negotiations with workers and bargaining agents have reached a stalemate and may need
to be referred to a third party (Fair Work Commission) to assist them to resolve the
industrial conflict. Its purpose it to enforce the current terms and conditions of employment
on employees with whom it is in dispute.

Mark allocation:

 1 mark for identifying the party taking the action and describing the purpose of a
lockout.

b.Describe the role of the Fair Work Commission when an employer and its
employees cannot reach agreement on the terms and conditions of a new
workplace/enterprise agreement. (2 marks)
Enterprise agreements made under the Fair Work Act require the parties to include a
dispute resolution clause in the agreement. This clause sets out a procedure that requires
or allows either the Fair Work Commission or some other independent person to settle a
dispute. The Commission can settle a dispute via mediation or conciliation. A mediated or
conciliated outcome occurs where the parties use the services of the Fair Work Commission
as an independent mediator or conciliator to help them arrive at their own agreement. In this
case, the Commission could have acted as an independent mediator bringing the two
parties together (Patrick Stevedores and the Maritime Workers Union representing the
Patrick dock workers) to try and come to a mutually acceptable agreement relating to the
dispute.
Should mediation or conciliation not result in a mutually acceptable agreement, then the
Fair Work Commission, if the parties agree, may deal with the matter by arbitration. This
involves the Commission arbitrating by listening to both sides of the dispute and then
making a decision based on the arguments put forward by the parties. The decision of the
Commission will be legally binding on the parties.
Mark allocation:
 1 mark for an outline of the role of the Fair Work Commission
 2 marks for describing role of the Fair Work Commission acting as a mediator,
conciliator or arbitrator when the parties to a new enterprise agreement are unable
to reach agreement

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c. Describe the role of the following participants in the workplace:

 Unions
 Employer associations
 Human resource managers (3 marks)

Unions perform the role of representing and protecting the common interests of workers in
all matters relating to their employment. Unions usually represent employees from a
particular industry, such as the Maritime Union of Australia. They have achieved significant
changes and improvement in the workplace for employees such as: annual leave, pensions,
superannuation, maternity and paternity leave.

Employer associations are groups of employers who unite to promote a common interest in
workplace relations issues. They share information and provide mutual support to each
other and represent employers in cases before the Fair Work Commission. Employer
associations can also represent employers during collective bargaining over wages and
working conditions.

Human resource managers have specialist knowledge in the area of workplace/employee

relations. Their role is to provide advice and support and to work closely with other
departments to create a harmonious and productive workplace that is staff by motivated,
skilled and fulfilled employees. They administer the day-to-day procedures relating to pay
and leave entitlements, participate in dispute resolution, act as intermediaries between
employees/unions and management and actively participate in the negotiations for
establishing enterprise agreements at a workplace.

Mark allocation:
1 mark – description of role of one participant
2 marks – description of role of two participants
3 marks – description of role of three participants

d. Analyse and evaluate whether the satisfactory negotiation and adoption of the
workplace agreement between Patricks and the MUA will achieve the objectives
of both a business to increase its productivity levels and its workers to achieve
better pay and working conditions. (4 marks)

To successfully negotiate the terms and conditions of a workplace agreement requires the
parties to openly communicate with each other. After two years of heated discussions, this
more positive approach taken by Patricks and the MUA has assisted in creating greater
cooperation between the parties. With more open communication, management should
become aware of the potential of the workers as problem-solvers, thereby encouraging
them to contribute to solutions identifying ways to improve production and productivity at the
workplace. This more inclusive approach has the additional benefit of acting as a motivator
to workers as they are likely to feel valued by their employer. Not only does this ‘best
practice’ approach to negotiating on an even basis assist Patricks to achieve their objective
of a productivity gain, it can also work towards the stevedoring employees’ objectives of
better pay and more security in their working conditions. For Patricks, the new agreement
has provided them with certainty for the next four years as they introduce strategies to
improve their rate of productivity. The MUA believes the new workplace agreement is a

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victory for workers and the company, securing important job protection conditions and
should provide stability to the waterfront.

Mark allocation:
1 mark – description of an enterprise/workplace agreement and its purpose
2 marks – explanation of workplace agreement and its relationship to achieving objectives
of either the business and/or its workers
3 marks – analysis of whether an enterprise agreement (workplace agreement) can achieve
the objectives of both parties (employer and employees) – no reference to Patricks or MUA
4 marks – for a detailed analysis and evaluation of whether an enterprise agreement
(workplace agreement) can achieve the objectives of both parties (employer/Patricks and
employees/MUA)

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Question 3 (10 marks)

In Australia, employees working for businesses can be employed under any of the
following three types of agreement.

 Industry-wide awards
 Workplace/enterprise agreements
 Individual contracts
a. Compare the three types of employment arrangements under which Australian
employees can be employed. (6 marks)

An industry-wide award is a legally binding agreement made by Fair Work Australia arising
from submissions made to it by employers, unions and other peak bodies. It sets out the
minimum pay and working conditions for employees within a particular industry or
occupation. The 10 National Employment Standards (NES) form part of the award.
A workplace agreement results from a period of good-faith bargaining at a workplace
between employees and the employer. The agreement covers pay and working conditions
and incorporates the 10 NES (minimum entitlements). Fair Work Australia provides
approval for the agreement.
An individual contract is an agreement made directly between an employer and an
employee that covers working conditions and remuneration. The employee and the
employer negotiate the terms and conditions of the contract and any dispute arising from
the contract is enforced through the courts.
All three agreements set out minimum wages and conditions. However, only individual
contracts set out the minimum wages and conditions for a single individual, while industry-
wide awards and workplace agreements set out the minimum wages and conditions for
groups of people. In addition, industry-wide awards set out the wages and working
conditions for an industry as a whole, while workplace agreements set out the wage and
working conditions for a particular workplace. All three types of industrial agreements
cannot cover less than the national minimum wage or provide for less than the NES.
A workplace agreement is one that has been determined by the process of bargaining and
determines the terms and conditions of employment through direct negotiation between
unions (acting as bargaining agents) and/or a collective group of employees with employers
relating to a particular workplace or industry. This is similar to the direct negotiations that
occur between an individual and their workplace when they agree to an individual contract;
however, industry-wide awards arise from submissions made by employers, unions and
other peak bodies and are made by Fair Work Australia, which makes the legally binding
agreement that covers the whole of the respective industry.
Mark allocation:
 1–3 marks for a brief description of the three types of employment agreements
 4 marks for a description of the three types of employment agreements, including basic
points of comparison
 5 marks for a description of the three types of employment agreements, including a more
detailed comparison
 6 marks for a description of the three types of employment agreements, including a
comprehensive comparison (similarities/differences)

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b. Implementing a performance management system is a practice that businesses

undertake to assist their decision-making relating to the performance of their
employees. There are a range of strategies that can be used with performance
management, namely:
 Management by objectives
 Appraisals
 Self-evaluation
 Employee observation
Choose two strategies from the above list and describe how they are used to
determine the performance of an employee. (4 marks)

Strategy 1
Management by objectives (MBO) is a form of goal setting which involves participative
goal setting whereby the appraiser (manager) and the appraisee (subordinate/employee)
jointly determine at the beginning of the review period a set of objectives/goals which
directly relate to the employee’s job or areas of responsibility. As the employees are
directly involved in the goal-setting activity, they are more likely to understand their
responsibilities and the results expected of them. For this goal-setting approach to work
effectively, managers need to be aware of their employee’s progress and performance
towards achieving these objectives. Adopting this strategy allows for both
progressive/ongoing monitoring of an employee’s performance as well as finally judging
whether the employee has met, achieved or exceeded their objectives and level of
performance.

Strategy 2
Employee observation can be used as a strategy when a business wants to gain a
broader, more objective perspective on the performance of an employee. Using a 360-
degree multisource feedback process will provide feedback on a regular basis from
people who work with the employee, such as other managers within the business, the
employee’s work colleagues, subordinates and sometimes customers. Using this
strategy can help overcome any bias, tension or clash of personalities that may currently
exist between a manager and employee.

Mark allocation:
 1 mark – identification of one performance management strategy
 2 marks – identification of two performance management strategies
 3 marks – description of two performance management strategies
 4 marks – description of two performance management strategies and how they
assist in determining the performance of an employee.

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