Business

Unit 2.1

Human Resource Management (HRM): strategic approach to the effective

management of an organization’s workers so that they help the business achieve its
objectives and gain a competitive advantage. Requires careful planning of the
number and skills of people needed by the organization.

Steps:

1. Analysing and forecasting the number of workers (depends on: Forecasting

firm’s demand, The productivity levels of staff, The objectives of the business,
Changes in the law regarding workers’ rights, Labour turnover and
absenteeism rate)
2. The skills of those workers (depends on: The pace of technological change in
the industry, The need for flexible or multi-skilled staff)
3. All of which are necessary to achieve the organisation’s objectives.

Labour turnover: it measures the rate at which

employees are leaving an organisation.

 Internal and External factors

that influence Human Resource
Planning: Demographic Change, for
example Natural population growth
(or decline), Net migration
(compared to immigration) and
ageing population.

Labour mobility: Workers are willing and able to move to different jobs requiring
different skills to the extent.

 Developed economies: Labour tends to be relatively immobile. (higher prices

and higher skills)
 Emerging markets: area mobility tends to be higher. (lower prices and lower
skills)

Geographical mobility: Workers are willing and able to move to a geographical

region to take up new jobs to the extent.
 Recruitment: The process of identifying the need for a new employee, defining the
job to be filled and the type of person needed to fill it, attracting suitable candidates
for the job and selecting the best one.

 Job description: a detailed list about the key points about the job to be filled,
stating all the key tasks and responsibilities of it.
 Person specification: a detailed list of qualities, skills and qualifications that a
successful applicant will need to have.

Advantages and the

disadvantages of each method
of recruitment are the reverse
of the advantages of the other
method.

Training: work-related education to increase workforce skills and efficiency. There

are four types of training.

1. On the job training: It involves instruction at the workplace often conducted

by HR managers or department training officers (How a job should be carried
out). For example, Induction training.
2. Off the job training: It entails all training undertaken away from the business.
Could be organised by the company or by another outside body such as a
university. For example, Diversity training or Safety training
3. Cognitive training: These exercises are designed to improve a person’s ability
to understand and learn information by improving their ‘core’ abilities and
self-control. For example listening and reading.
4. Behavioural skills trainings: It is designed to improve an individual’s ability to
communicate and interact with others both inside and outside the
organisation. For example communication skills.
ADV DIS
• Training can be expensive. • Untrained staff will be less productive and give
• Risk of training, employees less satisfaction to customers.
can be ‘poached’ (leave to • Without training, workers can become bored and
another company). demotivated.
• Accidents may happen due to lack of training.

Appraisal of employees: It is the process of assessing the effectiveness of an

employee. Types:
1. Formal: It is based on a range of formal and informal assessment methods
employed by supervisors, not only to monitor an employee’s progress but also to
support and provide guidance for improvement. It involves, Quality feedback.
2. Summative: it measures the level of an employee’s success or proficiency in
meeting predetermined benchmarks. To be effective the objectives should have
been discussed and agreed with the employee before the assessment is to be
made. The outcome may influence the employee´s salary
3. 360-degree feedback: This is a summative assessment where information is
collected from ‘all around’ an employee.
4. Self – appraisal: It involves asking the employee to self-evaluate his or her job
performance.

Dismissal of employee: Should be removed from a job due to incompetence or breach

of discipline; If the reasons are not in accordance with the company policy or the
law, the civil court might take action; Before dismissal HR must have been seen to
have done all that is can to help the employee reach the required standard.

Redundancy: When a job is no longer required, so the employee doing this job
becomes redundant through no fault of his or her own.

 Main reasons for Changing Work Patterns and

Practices: Focus on competitiveness, Need for greater
Labour flexibility, Greater opportunities for
outsourcing, Changing social and demographic
patterns

HR strategies:
 Outsourcing: using another business (a third party) to undertake a part of the
production process rather than doing it within the firm’s own employees.
 Offshoring: the relocation of a business process done in one country to the same
or another company in another country.
 Re-shoring (in-shoring): reversal of offshoring; the transfer of a business
process or operation back to its country of origin.

Core activities should be left in house, while non- core activities can be considered
for outsourcing.

Ethical considerations HR should be aware:

 Lack of cultural awareness: training and cultural classes could help employees.
 Bribery: HR manages must prepare employees that travel how to properly
interact with clients, suppliers, authorities etc.
 Pay: pay levels for each country may vary, and this may cause problems.

-HRM strategies can be influenced in two main cultural factors: of the organization
and National cultures
Unit 2.2

 Level: Each level of hierarchy represents a grade or rank of staff.

 Levels of hierarchy: It is a stage of the organizational structure at which the
personnel on it have equal status and authority.
 Span of control: the number of subordinates reporting directly to a manager.
 Chain command: this is the route through which authority is passed down an
organization - from the chief executive and the board of directors.

○ Tall organisation (vertical): one with many

levels of hierarchy and usually, narrow spans of
control.

 Flat (horizontal) structure: one with few

levels of hierarchy and wide spans of control.

Delegation: passing authority down the organisational hierarchy. Generally, the

wider the span of control the greater is the degree of delegation.

Accountability: the obligation of an individual to account for his or her activities

and to disclose results in a transparent way.

Delayering: Removal of one or more of the hierarchical levels to flatter the

structure.

Bureaucracy Different types of organizational structures:: An organizational system

(usually found in government organisations) with standard procedures and rules.

Centralisation: Keeping all of the important decision-making powers within head

office or the center of the organisation.

Decentralisation: Decision-making powers are passed down the organisation to

empower subordinates and regional/ product managers.

 Power and responsibility are clearly specified and allocated to individuals

according to their standing or position in the hierarchy in a structure. –
HIRARCHICAL STRUCTURE

-3 different categories inside the hierarchical type:

 1. By product

ADV
• Good team work focus.
• Senior executive to raise funds.
• Build a common culture.
DIS
• Different product divisions may
compete reducing cooperation.
• Compartmentalization and duplication
of work.

2. By function

ADV
• It can improve efficiency.
• Employees capitalise on their
specialised skills to go up the ladder.
• Managers train and develop employees
in their given role.
DIS
• Top- downwards communication tends
to be the norm, its not efficient.
• Few horizontal links between
departments.
• Manager usually suffer from tunnel
vision regarding their department.
• It is an inflexible structure and often
leads to resistance to change.

3. By region

ADV
• Communication can be direct and
personal
• Grouping employees can help create a
strong group for planning and decision-
making.
• Hiring local managers ensures they are
familiar with the local business
environment.
• Aware of specific cultural factors.
• It’s easier to track a region’s
performance.
DIS
• Duplication of personnel.
• May lead to unhealthy competition
between different areas.
• May be hard to keep an identical code
of conduct.
• Strategies might be inconsistent in
different regions due to poor
coordination between regional offices.

● A range of factors determine the internal structure of the organisation: Size

and number of employees, Leadership style and management culture,
Retrenchment (reducing overhead costs), Corporate objectives, New
technologies

● Different types of org.: the matrix, Horizontally Linked Structure, Handy’s

Shamrock Organization.
A good manager does not always make an effective leader. Leadership is the art of
motivating a group of people towards achieving a common objective.

○ Mintzberg’s management roles: To carry out management functions managers

have to undertake many different roles. He identified 10 roles and divided them
into 3 groups:

 -Interpersonal roles: dealing and motivating staff.

 -Informational roles: acting as a source, receiver and transmitter of information.
 -Decisional roles: taking decisions and allocating resources to meet objectives.

There are 5 distinct leadership styles (or management):

1. Autocratic leaders: a style of leadership that keeps all decision making at the
centre of the organisation.

2. Paternalistic leaders: a type of fatherly style typically used by dominant

males where their power is used to control and protect subordinate employees
who are expected to be loyal and obedient.

3. Democratic leaders: a leadership style that promotes the active participation

of workers in talking decisions.

4. Laisse – faire leaders: a leadership style that leaves much of the business
decision-making to the workforce - a ‘hands-off’ approach and the reverse of
the autocratic style. It literally means ‘let them do it’.

5. Situational leaders: effective leadership varies with the task in hand and
situational leaders adapt their leadership style to each situation.
 - The style will depend in: Training, experience and degree of responsibility of
the workforce; The amount of time available for consultation and participation,
Background culture of managers

Unit 2.4

Motivation: The intrinsic and extrinsic factors that stimulate people to take actions
that lead to achieving a goal.

Extrinsic motivation: Comes from external rewards associated with working on a

task, for example pay and other benefits.

Intrinsic motivation: Comes from the satisfaction derived from working on and
completing a task.

Motivational theories:

1. Taylor and Scientific Management: By optimizing and simplifying jobs,

productivity would increase. Bigger salary based on higher productivity (money
as motivation).
2. Maslow theory: He identified and classified the main needs that humans have in
the form of a hierarchy (Physical needs, Safety needs, Social needs, Esteem needs,
Self- actualisation - fulfilment of potential).

-limitations: Not everyone might have the same needs assumed in the hierarchy;
In practice it’s hard to determine to what extent each need has been met and at
what level the person is at; Money satisfies physical needs but can also play a
role in satisfying needs such as status and esteem; Self – actualization is never
permanently achieved.

3. Herzberg´s 2 factor theory: 2 main factors

Motivators (inrincint factors): Achievement, Recognition, The work itself,

Responsibility, Advancement.

Hygiene factors (extrincint factors): Company policy and administration,

Supervision, Salary, Relationships with others, working conditions.

 However, even if hygiene

factors were addressed,
they alone would not be
able to create a well-
motivated workforce.

4. Adams and equity theory:

5. Daniel pink: He suggests there are three elements of intrinsic motivation.
 Autonomy: giving employees control over various aspects of their work.
 Mastery: The essential tasks should be set at just the appropriate level of
difficulty and challenge so as not to bore or frustrate the employee.
 Purpose: People who find a purpose in their work unlock the higher level
of motivation.

Payment of Financial Reward Systems

1. Salary: Annual income that is usually paid on a monthly basis and it doesn’t
dependent on the hours or units produced.
2. Wage:
a) time-based wage rate: An hourly wage rate or ‘time rate’ is the
payment to a worker made for each hour worked. They could work
overtime. (Wage = number of hours worked x hourly rate)
b) piece rate: It is a payment made to a worker that depends on the
quantity of output produced. The level of the rate can either motivate
or demotivate employees.
3. Commission: It is a payment to a sales person for each sale made which
reduces security because there is no ‘basic’ or flat-rate payment. Doesn’t
encourage team work.
4. Performance-related pay bonuses: It is usually a form of bonus scheme to
reward staff for above-average work performance. Mostly used for workers
whose input is not measurable in quantitative terms such as management,
supervisory and clerical positions.
 Main aim: encourage staff to meet agreed targets.
 They are usually individually based but can be awarded to a team or
department.
5. Profit-related pay: It is a bonus for staff based on the profits of the business,
usually paid as a proportion of basic salary. staff will feel more committed to
the success of the business and will strive to achieve higher performances and
cost savings.
6. Employee share-ownership schemes: It offers shares to each worker when the
firm declares a profit. This establishes workers as part- owners to motivate
them.
7. Fringe benefits (perks): These are those non- cash forms of rewards. They are
added to the employee’s regular salary, for example, Car, Medical care.

Non-financial methods of motivation: money alone cannot create the necessary

motivation

A. Job enlargement: It is the attempting to increase the scope of a job by

broadening or deepening the tasks undertaken.
 B. Job Enrichment: It attempts to motivate employees by giving the possibilities
to use the full range of their abilities. 3 key features: Cell production, direct
feedback on performance, job redesign
C. Job Rotation: It’s the practice of moving employees between different tasks to
promote experience and variety. For doing this you need a variety of workers
that are skilled in several areas.
D. Team working: In this case the production is organised so that groups of
workers undertake complete units of work.
E. Delegation and empowerment: passing down of authority and allows workers
some degree of control over their task.

- Financial and non-financial motivational methods vary on the way they view
employees. Three cultural differences that had the most impact on the rewards
system:

1. Performance orientation; greater emphasis on performance-related pay,

bonuses and share purchase schemes.
2. Future orientation; more individual-incentive schemes, such us share
ownership schemes
3. Institutional collectivism; Team-based incentives and employee profit-sharing
is much used