Human Resources - Business Study Notes

The focus of this topic is the contribution of human resource management to business
performance.

Role of Human Resource Management

Human Resources Management refers to the management of the total relationship between an
employer and employee in order to achieve the strategic goals of the business.

An employer, for legal purposes…

- Has control over employees
- Has responsibility for payment of wages or salaries
- Holds the power to dismiss employees

An employee is a worker under an employers control.

strategic role of human resources

HR value and strive for positive employee-employer relationships as an effective workplace
can…
→ add value to all areas of their business performance (eg, by improving competitiveness and
profitability)

HR sees employees as a valuable resource to be nurtured and developed, rather than to be

hired and fired (dismissed).

interdependence with other key business functions

HR and marketing HR relies on marketing to determine the skills required for employees to
produce the desired product.

Marketing relies on HR to recruit motivated and skilled employees who

develop and deliver desired products/ services.

HR and operations HR relies on operations to conduct safe practices which do not put
employees in danger.

Operation relies on HR to monitor performance of employees and implement

training and development initiatives when required.

HR and finance HR relies on finance to allocate budgets, such as funds towards training and
development, health and safety

Finance relies on HR to recruit skilled and highly trained employees which

will help maximise the business's revenue and profits.

Case study: MenuLog + other food delivery services

 - 5 delivery riders died in Australia over three months
- poor health and safety, exploitation of contractors
- MenuLog looking at employing drivers rather than outsourcing from independent
companies to be able to ensure improved working conditions (only ethical food delivery
service = competitive advantage + increased market share)

outsourcing
Outsourcing refers to the transfer of a business function to an external service provider. Eg,
recruitment firms.

Advantages Disadvantages

- access to greater expertise - miscommunication between business

- cost savings (may reduce the need to
hire full time staff)
- allows managers to focus on their
core activities
- improvement in service quality and
delivery
and outsourced company
- business may become too dependent
→ long-term additional cost
- loss of control
- security issues (leaking confidential
information)

- human resource functions

HR management has evolved to include a wider range of functions.
→ larger businesses can afford to keep HRM within the business
→ many smaller businesses choose to outsource all or some of the HRM responsibilities to
external businesses

● Using contractors - domestic, global

A contractor is an external provider of services to a business. It may be an individual or a
business.
 → Contractors are not employed by the business

Domestic contracting:
- Contracting within your country

Global contracting:
- Contracting outside your country
- Allows Australian business to access use of cheaper labour without having to consider
minimum labour requirements and WHS

Case study: Apple

- global contracting to FoxConn to minimise costs (lower wages) and maximise efficiency
- However, not meeting CSR as working conditions are poor

Key Influences (STEELS)

stakeholders - employers, employees, employer associations, unions, government
organisations, society (EEE Under Great Stress)
Stakeholders: any individual/group that has a common interest in/is affected by the actions of an
organisation.

Employers - exercise control over employees

- responsible for payment of wages and/or salaries
- power to dismiss employees

objectives include:
- increased profitability
- Productivity
- Efficiency
- Competitiveness

Employees - under the control of an employer (this control includes workplace location, way
work is performed, extent of supervision)
 Objectives include:
- better pay/working conditions
- flexible working conditions
- fair/ethical treatment

Employer - Organisations that represent and assist employer groups (covering employers
associations in the same or related industry)
- provides advice to employers and employees to help them better understand
their rights and obligations in the workplace

Objectives include:
- promote/ assist interests of employers

Eg, Australian Medical Association (AMA)

- promotes and protects the professional
interests of doctors and the healthcare
needs of patients and communities

Unions - Organisations formed by employees in an industry, trade or occupation to

represent them → improve wages & working conditions of members.
- negotiating enterprise agreements and making submissions on awards

Objectives include:
- protect, represent and promote interests of
employees

Eg, Australian Education Union

- represents & protects teachers
- eg, by campaigning for fairer education funding

Government - Provides a legal framework that businesses must follow (most influential), e.g.
organisations WHS and taxation
- Employs (federal and state governments employ almost one-third of Australian
workers)

Objectives include:
- Stimulate economy
- Satisfy society’s needs/ wants

Federal legislations include…

Fair Work Act 2009
- promote harmonious and productive workplace relations
- ensure compliance with Australian workplace laws.
Fair Work Commision
- hears and resolves disputes, eg. unfair dismissal
- helps create agreements
- determines annual safety net

Society - Businesses must respond to society’s concerns in order to continue to attract

 customers
- Changes to work conditions and treatment of employees often influence their
opinions on the business

Objectives include:
- Seeking the best price/service/quality

legal - the current legal framework

→ creates obligations for both employer and employee, and all businesses operate within a
legal framework of common law and statute law.
→ employment relationships are subject to a considerable number of regulations and laws.

- the employment contract - common law (rights and obligations of employers and
employees), minimum employment standards, minimum wage rates, awards, enterprise
agreements, other employment contracts

Employment Legally binding, formal agreement between employer and employee.

contract - Offers better protection to both parties than a verbal contract

Case study: Australia Post former CEO Christine Holgate “stood down unfairly”
- misuse of taxpayer funds, however passed by the board (buying designer brand
watches as rewards for 4 employees)
- humiliated in court by Scott Morisson
- asked to stand aside at the time, and then later left, claiming she was bullied
- raises issue of how women are treated in the workplace & extent of protection
under the employment contract

Common law Rights and obligations of employers and employees

- Developed by courts and tribunals

Under common law, employers and employees have basic obligations in any
employment relationship. Eg…
→ Employers = duty of care, pay agreed wage
→ Employees = offer their labour, obey lawful instructions & commands

Minimum 11 national employment standards that must be provided by employers.

employment
standards These include…

- Maximum weekly hours

- Requests for flexible working arrangements
- Annual leave
- Public holidays

Minimum wage In Australia: employees base rate of pay for the number
rates of ordinary hours that they work.

Case study: Dominos

- faced legal action (negative reputation) around
2007 as Dominos instructed some of its
franchises to systematically underpay its workers.
- Domino’s store manager was told by senior
management to keep labour costs below 27% of
sales by any means. Employees worked hours
“trimmed”, reducing their pay.

Awards The legally enforceable minimum terms and conditions that apply to a business.

Modern awards: Simplify older awards into industry/occupation based categories

→ Reduce the confusion surrounding proper minimum employment entitlements
Eg.
- Fast Food Industry Award 2010
- Hair and Beauty Industry Award 2010

Individual flexibility arrangements: varies the modern award/enterprise agreement to

address their individual circumstances

Enterprise Collective agreements between an employer and a group of employees about terms
agreements and conditions of employment.

-
- Must pass ‘better off overall test’ (BOOT🥾
Must be approved by the Fair Work commission
) → requires that each of the
employees to be covered by the agreement is better off overall then under the
relevant modern award

Other Individual contracts: employer and an individual employee negotiate a contract covering
employment pay and conditions.
contracts
Independent contractors: often known as consultants or freelancers, undertake work for
others; however, they do not have the same legal status as an employee.

Casual employees: employment that is short term, irregular and uncertain; they are not
entitled to paid holiday or sick leave.

- work health and safety and workers compensation

Growing community and worker awareness of health and safety.

Work Health and Safety (WHS) Act 2011: employers must ensure the health, safety & welfare at
work of all employees by providing a safe system at work.
- Legislations on WHS covers employees, employers and the self-employed.

Case Study: Qantas

- their Work Health and Safety program has greatly increased
safety awareness by employees, employers and outsourcers…
leading to an 80% reduction in employee injuries since 2001
- program creates a healthy, safe and secure workplace through
effective safety management systems and risk controls
- minimise compensation costs + maximise productivity as
employees feel valued = maximise profits

Workers compensation: provides a range of benefits to an employee suffering from an

injury/disease related to their work.
- May also be provided to family of affected individual

Workers Compensation Act 1987 (NSW): govern the process of employees gaining financial
compensation for injuries sustained at work.

- anti-discrimination and equal employment opportunity

Discrimination occurs when a policy or a practice disadvantages a
person or a group because of a personal characteristic that is
irrelevant to the performance of the work.

Anti-Discrimination Act 1977 (NSW) was enforced to prevent direct

and indirect discrimination in all processes of HRM.
Case study: HUB International
- home office due to COVID-19
- lost her job due to a supervisor complaint about her children being
noisy during meetings
- Alledged gender discrimination, retaliation and wrongful termination
- sexist statements from her supervisor
- woman was meeting all the deadlines and “worked harder than …
ever”

Equal employment opportunity refers to equitable policies and practices in recruitment,

selection, training and promotion.
- ensures the best individual is chosen so the business gains the required skills and
abilities for the position.
 Legislations include:
- Workplace Gender Equality Act 2012
- Human Rights and Equal Opportunity Commission Act 1986

Case study: Qantas

- fair and equal employment → not only do they eliminate compliance fines and reduce
the risk of discrimination claims made against them (maintain positive reputaion), but
they also have a diverse workforce (made up of 99 nationalities, speaking 51 languages)
- Diverse workforce allows them to connect better with customers and create an image of
inclusivity

economic
The economic cycle – fluctuation of the economy between periods of growth (boom) and
recession.

Employment levels, demand for labour and employee bargaining power fluctuates according to
stage of the economy:
During boom During recession

- Low unemployment - Unemployment rises (less demand for

- Increased consumer spending
- Employers raise production & high demand
for labour
- Easier for employees to negotiate benefits
→ improved wages & working conditions
good/service) & increased competition for
work
- Reduced staff to cut costs (redundancy)
- Employee bargaining power fails
- Multiskilling of staff

Structural change refers to a change in the nature and pattern of production of goods/ services
within an economy. This includes a significant growth in the level of services in an economy
compared to other sectors.

Globalisation is the integration of the world's economies resulting in increased trade, investment
and information flows.
 - Has led to increased flexibility, competition and overseas recruitment + outsourcing of
HR tasks (internationalisation of workforce)

HR managers need to be able to predict when a business will need more/less staff
- In recession, HR managers may have to carefully retrench workers and avoid unfair
dismissal claims.

Case study: Qantas

- COVID lead to recession and significant decrease in demand for travel
- terminating 6,000 employee contracts, a further 15,000 to be stood down, while
international travel bans remain in place

technological
Technological change is the source of increased productivity, flexibility, communication and
competition within and between businesses.
- Causes the nature of production to change – new jobs have been created, others
become redundant.

Technology has:
- Increased flexibility and productivity (allows employees to work from home or offshore)
- Provided 24 hour support to businesses (access to info + help chats = better customer
relations)
- increased need for ongoing training programs to ensure a work-life balance (people
expected to be 'always on call')

social - changing work patterns, living standards

Changing work patterns – Over the last two decades, dramatic growth in part-time and casual
work, largely due to growth in the finance, retail, hospitality and community service industries.

- Career flexibility and job mobility has increased.

- Increased participation rates for women

- Ageing of the workforce → growth in the average age of the population, due to sustained
low fertility and increasing life expectancy.

- Early retirement from full-time work is popular today.

Case study: Qantas

- new childcare facilities: Qantas’ work-based long-day care centre, the Joey Club Sydney,
provides flexible and family friendly support to the Qantas community

Living standards include WHS, regular wage increases, performance bonuses, fringe benefits,
leave and superannuation benefits.
 - Businesses that seek to undercut conditions are challenged by unions to avoid the
erosion of living standards, e.g. strikes

ethics and corporate social responsibility

Ethical business practices are those practices that are socially responsible, morally right,
honourable and fair.

Many businesses realise the benefits of embracing ethics + CSR

- e.g. good business reputation → wider range of employees attracted, committed staff
- improves staff retention and absenteeism rates as staff feel more valued and motivated

Consequences if businesses do not conduct ethical or socially responsible HRM include:

- poor morale from employees → low productivity
- Bad publicity → damaged reputation, loss of sales

Ethical and socially responsible HR practices include:

- Providing employees with a pleasant working environment and good working conditions
- Making staff feel secure, equally valued and rewarded

Code of conduct: statement of acceptable and unacceptable behaviours in a business.

Code of ethics: statement of a firm’s values and principles.
Best Practice: business practices that are regarded as the best/ highest standard in the industry.
Code of practice: statement of the principles used by a business in its operations.
Processes of human resource management

acquisition
Acquisition is the process of attracting and recruiting the right
staff for roles in a business.
- Involves analysing internal (eg, goals and objectives)
and external (eg, competition) environments.

Recruitment involves attracting appropriate staff to apply for

employment vacancies.
- May be internal or external.
- often outsourced

Employee selection: choosing the most appropriate applicant

Placement involves locating the employee in a position that

best utilises their skills to meet the needs of the business.

development
Development refers to enhancing the skills of an employee in line with the
changing and future needs of the organisation.
- Can motivate employees → increase productivity

Training refers to initial induction and further professional learning to

improve work performance.
- mentoring/ coaching (transfer of knowledge/ skills from
experienced employee to less experienced employee)

Organisational development strategies include:

- Job enrichment (increasing responsibilities of staff member)
- Job rotation (moving staff from one task to another to multiskill
employees)

Case study: Qantas

 - invested $275m every year from 2014 to 2019 in training and development
- Intensive training → Qantas’ pilots do 48000 hours in aircraft simulators

maintenance
Maintenance focuses on the processes needed to retain staff and manage their wellbeing at
work.
- Retention strategies = aiming to retain employees and reduce turnover → less
recruitment (save time and money)

Performance management or appraisal is a process of evaluating the performance of an

employee, generally against a set of criteria or standards.
- usually conducted by an employee’s supervisor

Monetary rewards 💵 are reflected in pay or have financial value.

Non-monetary rewards do not have financial value (eg, recognition such as employee of the
month).

HR managers need to implement a range of proactive and preventative strategies to ensure

legal compliance with WHS, anti-discrimination laws and conflict resultion laws.

separation
Separation is where an employee leaves a business.

- Voluntary separation = resignation, relocation, voluntary redundancy, retirement

- Involuntary separation = contract expiry, retrenchment, involuntary redundancy,
dismissal
- Retrenchment: targets the employee (paid)
- Redundancy: targets the position (paid)
- Dismissal: you are not paid to leave

Unfair dismissal occurs where an employee is dismissed by their employer and they believe the
action is harsh, unreasonable or unjust. Can lead to legal consequences.
Case study: HUB International (*refer to Antidisctimination and equal employment opportunity)

Strategies in human resource management

leadership style
Leadership style: ways that managers communicate with their employees to inspire and
motivate them to work together to achieve business goals.
 Autocratic Democratic/ participative

Key - High degree of direction and little or - high degree of employee

characteristics no participation in decision making participation in decision making +
by subordinates (lower employees) open communication channels

Advantages - Workers listen and corporate - Encourages collaboration → new,

-
high pressure situations ⚠
Great for emergency situations or
-
innovative ideas
Employees feel heard and valued
→ employee satisfaction +
increased motivation

Disadvantages - Lack of employee motivation (eg, - Can slow process of implementing

bored) → less productivity, strategies
decreased quality - May lead to a less productive
- Huge employee turnover environment
- Conflict if not everyone agrees

Typical Associated with the Classical-scientific Associated with the Behavioural

application Approach (eg, early Ford factories) Management Approach

Case Study: Foxconn/ Apple Case Study: Facebook

🤖
- low paid employees (“human
robots” ) performing repetitive
tasks
- open floor plan to encourage
collaboration
- performance feedback (employees
- low employee satisfaction typically receive feedback from up
to 7 individuals, every 6 months)

Case study: Qantas

- annual employee surveys + training and development → culture-focused to increase
participation → increase employee satisfaction

job design - general or specific tasks

Job design: process of designing the content of a job and how it will interact with other jobs and
employees, so as to motivate and retain an employee and to achieve business goals.
General tasks: greater variety of tasks to be performed by employees, social interaction,
challenge, direction and autonomy = high employee satisfaction/ productivity

Specific tasks: employees specialise in a certain task = decrease in motivation, no challenge or

innovation, low employee satisfaction/ productivity

3 elements of a well designed job include:

Job rotation - employees switch from one job to another
Job enlargement - employees given more things to do with the same job (variety + challenge)
Job enrichment - employees given more control and independence

Case study: Qantas

- Combination of general and specific tasks
- General: ground-staff (do variety of tasks - check baggage, check-in etc) →
better maintain employees as they are able to complete a variety of tasks
- Specific: engineers + pilots → allows Qantas to ensure a high quality and safe
service as employees completing specific tasks are qualified and experienced

recruitment - internal or external, general or specific skills

Recruitment: process of locating and attracting the right quantity and quality of staff to apply for
employment vacancies or anticipated vacancies at the right cost.
Internal recruitment involves filling job vacancies with individuals from within the business.
+ Motivates employees to progress
+ Recognises and rewards employees
+ Cheaper than external recruitment
- Can reinforce negative culture
- Rivalry for positions
- Little value added, no new skills

External recruitment involves filling job vacancies with individuals from outside the business.
+ Bring new, experienced employees with skills no one else may have
+ Wider applicant pool
- Lost productivity in orientation/ induction
- Risk of legal claims (eg, discrimination)

General skills include flexibility, social confidence, positive attitude, motivation, and the ability to
work as a team and/or independently.

Specific skills are highly specialised and are required for some jobs within science, technology
and engineering sectors.
 training and development - current or future skills
Training aims to develop skills, knowledge and attitudes that lead to superior work performance.
- Training = “for today”

Development refers to enhancing the skills of the employee in line with the changing future
needs of the business.
- Development = “for future”

Case study: Qantas

- invested $275m every year from 2014 to 2019 in training and development
- Intensive training → Qantas’ pilots do 48000 hours in aircraft simulators

performance management - developmental or administrative

Performance management: addresses individual and business performance to ensure
business’s strategic objectives are met.

Key features Why is it used? (benefits)

Developmental Uses data to develop skills and abilities of Improve effectiveness of employees in
model individual employees their roles and prepares them for
promotion

Administrative Uses data about an entire business to Ensures individual and business goals
model plan HR functions such as training, are aligned and strategic goals are met
development, rewards, pay, benefits, etc

rewards - monetary and non-monetary, individual or group, performance pay

A reward is an additional to the employee’s minimum legal entitlements.

Monetary rewards: reflected in pay or have financial value 💵💵

→ direct (eg, bonuses, commision)
→ indirect (eg, superannuation, company car)

Non-monetary: do not have financial value

→ job (eg, challenging work, recognition such as employee of the month)
→ environment (eg, career security, learning and development opportunities)

Case study: Qantas

- Monetary rewards: competitive salaries (competitive pay means offering within 10
percent (above or below) the market average for a job), performance-based pay
(motivate), travel discounts
- Non-monetary: flexible + family friendly workplace

Rewards are often related to individual performance...

 → however, the increasing use of group/ team-based structures
means it is often difficult to distinguish performance of individuals
within groups.

Performance pay refers to remuneration (pay) that is based on

distributing rewards according to individual employee performance (eg,
commissions such as house sales, bonuses).

global - costs, skills, supply

Globalisation has impacted Aus businesses and brought with it the need for change.

Advantages of globalisation for HRM Disadvantages of globalisation for HRM

- Greater labour pool → able to find - Negative publicity

employees who have the right skills, fill - Consumers may choose to support
domestic labour shortages with global your competitors who may still hire
workers locally
- Low labour costs - Exploitation of global workers

Costs: Aus has high living standards, thus higher awards rates – businesses may seek
international labour to reduce costs and remain competitive

Case study: Qantas

- outsource maintenance (NZ + Singapore) + IT (India) for cheaper labour → achieve cost
leadership
- However, could drop standard of work → decreased customer satisfaction and
reputation

Skills: Aus has a relatively small population and faces skill shortages. Global HR supply can fill
the skill shortages. However, HR managers need to be careful as overseas qualifications may
not have as high a standard as in Aus.

Supply: Aus has a labour supply shortage. International supply of labour provides a greater
number of suitable workers.

Types of staffing:
Geocentric = choosing the best employee for the job → greater flexibility
Polycentric = use of host country staff → local knowledge
Ethnocentric = use of parent company staff → understanding of
business culture

Case study: Bangladesh garment outsourcing

- brands including GAP, Zara, Kmart outsourced factory workers in
Rana Plaza → low labour costs → competitive advantage
 - Rana Plaza 2013 collapse → more than 1000 died
- Millions of workers working long hours (poor working conditions)
- Low prices at the cost of negligence to working conditions

workplace disputes
Industrial/ workplace disputes = conflict between employers and employees resulting in
employees ceasing work
- Can be overt (eg strike) or covert (eg absenteeism, sabotage)
- Employers may impose a “lock out” - close gates of workplace in
response to dispute

Major causes of disputes include remuneration (eg, wage), employment

conditions, and managerial policy.

Conflict can result in absenteeism, low productivity, legal claims and

high staff turnover → lost income for both parties, costly.

Conflict resolution can increase working conditions and improve relationships → higher
productivity and worker satisfaction.

- resolution - negotiation, mediation, grievance procedures, involvement of courts and

tribunals
Grievance procedures: formal procedures that state agreed processes to resolve
disputes.

3 key stages to dispute resolution:

1. Negotiation: parties reach a solution by themselves (compromise)
2. Mediation: discussion of issues with a neutral third party
- Empowers parties by resolving own disputes, reduces risk of escalation
and legal costs
3. Involvement of courts and tribunals… (expensive + bad publicity)
- Conciliation: independent party (Fair Work Australia) assists with the
development of an agreement
- Arbitration: independent arbitrator or court determines how the dispute will be
resolved and makes a legally binding order.

Effectiveness of human resource management

Effective HRM = management and employees work well together in their efforts to achieve
business goals.
indicators
Indicators: performance measures that are used to evaluate organisational or individual
effectiveness.
- corporate The values, ideas, expectations and beliefs shared by members of the
culture business.

Indications include:
- staff turnover
- levels of absenteeism
- Disputes and internal conflict

- benchmarking Way of using indicators to compare business performance between internal

key variables sections of a business or between businesses.

Indications include:
- measuring employee performance against established standards e.g.
output per worker

Types of benchmarking...

Informal benchmarking: strategies such as networking through informal

discussions with colleagues in other businesses, visits to other businesses
etc.

Performance benchmarking: comparing the performance levels of a

process/activity with other businesses

Best practice benchmarking: comparing performance levels with those of

another best practice business → gain skills, knowledge, and modify
processes

Balanced scorecard benchmarking: measuring whether business activities

are meeting its objectives established in strategic plan

- changes in Staff turnover refers to the loss of employees by a business who leave for a
staff turnover variety of reasons.

- High staff turnover may indicate low employee job satisfaction, thus
poor HRM.

- absenteeism A worker who neglects to turn up for work when they were scheduled to do
so.

- High absenteeisms may indicate low employee job satisfaction and

morale, thus poor HRM.

- accidents A work related injury or illness.

- High levels of workplace accidents indicate poor WHS, thus poor

HRM.

- levels of The number, type and frequency of industrial disputes (covert or overt)
disputation
 Indications include:
- strikes and lockouts
- Legal action

- worker A measure of how staff feel about their work, their management and the
satisfaction culture of an organisation.

Indications include:
- Absenteeism
- Staff turnover rates
- Benchmarking key variables (output quality)

Case study: Qantas

- From a range of indicators, it is evidence that HRM at Qantas has been effective:
- Absenteeism: 9.6 days in 2012 to 8.5 days in 2017
- Staff turnover: 5.5% in 2013 to 4.9% in 2017 (influenced by the implementation of
flexible and family friendly workplace practices)
- Accidents: decreased due to a focus on training and development + focus on
WHS
- Worker satisfaction: staff surveys, feedback & external consultants indicate
increased satisfaction