Business unit 2

2.1
Human resource management (HRM) is a broad term used to describe the overall management of
an organization's workforce. This includes roles such as attracting, selecting, training, assessing,
motivating, rewarding, and retaining employees. Essentially, the role of HRM is to make the most
efficient use of an organization’s workers. Due to the evolving workforce planning needs of an
organization, human resource management is an ongoing function of the personnel department of
an organization.
Effective human resource management is vital for any organization to achieve its business
objectives. The role of human resource management is therefore important as the effectiveness of
the workforce has a major impact on the current and future success of the organization. HR
managers play a vital role in ensuring that the right people in the right numbers are hired, at the right
time, deployed in the right places, and at the right time.

Human resource management involves numerous roles or functions, which include:

 Recruitment - hiring the right number of appropriately qualified and suitable workers at the right
times to fill job vacancies.
 Induction - training for new employees to get acclimatised with the norms and operations of the
organization.
 Retention - retaining/keeping workers at the organization by meeting the needs of employees.
 Appraisals - the formal procedure of assessing the performance and effectiveness of employees in
relation to their job description.
 Absenteeism - dealing with issues that arise when employees are unable to attend work
 Dismissal - letting go of workers no longer needed, often due to underperformance or misconduct in
the workplace.
 Redundancies - letting go of workers if/when their jobs are no longer needed, perhaps due to a
prolonged economic recession.
 Training and development - improving the competencies, productivity, and skills of workers.
 Performance appraisals - holding workers accountable for their performance/conduct at work.

Internal factors that influence HRM

 Size of the organization – The larger the firm, the more involved it needs to be in human resource
planning. Not only do larger firms need to recruit more workers, they are more involved in training,
appraisals and other related human resource matters.
 Strategic direction of the organization – For example, if growth is a priority, the organization will
plan to recruit more workers and internally promote some employees to senior positions.
 Organizational structure – A clear organizational structure helps workforce planning. For example,
the HR manager can identify vacant positions and jobs that are redundant, thus can plan how best
to address these gaps in the firm.
 Finances of the organization – Effective workforce planning cannot happen without sufficient
funding being available. Growth enables the firm to gain more revenue, which will provide it with the
finances to hire and pay for more workers. Training and professional development opportunities for
workers also require finance.

 Motivation in the workplace – The level of motivation in an organization is an important internal

factor affecting workforce planning. The higher the level of motivation, the more productive workers
tend to be, and the lower the labour turnover rate. The human resources department needs to keep
records of why people leave the organization in order to retain their employees.
 Corporate culture of the organization – The culture of the organization affects how the HR
department operates. In turn, this influences its approach to HR matters such as working hours,
flexitime, teamworking, appraisals, job sharing (where two employees share a single job), training
and professional development opportunities, dismissal and redundancies, outsourcing, and the
internal promotion of staff.

external factors that influence HRM

External factors are those that are beyond the control of the organization, such as the legal
minimum wage or other employment legislation. These external factors include:

1. Demographic change

2. Change in labour mobility

3. Immigration

4. Flexi-time

5. Gig economy

1. Demographic change
Demography is the study of population and population trends. Demographic change refers to
variations in the structure of the population that influence human resource planning. This might
include developments and trends in the population, such as:

 The average age of the population

 Distribution of the population by ethnicity

 Gender distribution

 Educational attainment levels, and

 Average household income

 Official retirement age in the country.

2. Change in labour mobility
Labour mobility measures the extent to which workers have the ability and willingness to move
between geographical locations and/or occupations for their employment. Increasing and
maintaining labour mobility ensures a more efficient allocation of human resources.
There are two types of labour mobility: occupational mobility and geographical mobility.
(i) Occupational mobility
Occupational mobility refers to the ability and willingness of employees to do another job or pursue
a different career. Occupational mobility can be improved if employees have the necessary
qualifications, experience and skills to move from one job to another. Occupational immobility occurs
due to impediments such as rules and regulations.
All professional careers have their own standards, such as education requirements and training. For
example, the supply of doctors, accountants, and lawyers is very limited due to the specialized
training and licensing requirements in order to work in these professions. Teachers need a Post-
graduate Diploma in Education (PGDE), degree in education, or other similar qualification in order to
work in schools.

(ii) Geographical mobility

Geographical mobility refers to the ability and willingness of employees to relocate to another
location or country for work reasons. Some jobs require their employees to travel long distances for
work purposes, such as delivery truck (lorry) drivers, pilots, and sales executives.
Geographical immobility occurs due to the unwillingness of workers to move to another area. Such
impediments to geographical mobility include: family ties to a geographic location, relocation costs,
lower wages and salaries, fewer benefits, higher property prices, or higher costs of living in the new
location.

The international mobility of labour is even more challenging to achieve. To attract people to work in
overseas locations, businesses tend to have to offer highly attractive remuneration packages. For
example, many international schools offer perks (such as flights, educational allowance, housing
allowance, health care, and end-of-contract bonuses) as an incentive for the teachers they want to
hire to relocate overseas.
Labour mobility can be improved by offering workers improved pay and benefits. Workers can
improve their own labour mobility by partaking in training and development programmes. However,
this can be expensive for the business, of course.
Labour mobility is important for organizations and economies. In general, greater labour mobility
means that workers are able to find better paying jobs in order to improve people’s standards of
living. Businesses also benefit because labour productivity should improve as a result of improved
morale and motivation.

3. Immigration
 Migrant workers are people who move to other locations or countries in search of job opportunities.
For example, many people from rural areas move to the cities in search of employment opportunities
as well as better-paid jobs.
On an international scale, the United Nations defines a migrant worker as someone who “is engaged
or has been engaged in a remunerated activity in a State of which he or she is not a national”.
In an increasingly globalized world, it is not uncommon for citizens of one country to temporarily
work in another country. These citizens, known as "expatriates", may be attracted by higher salaries
or favourable working conditions in overseas countries. For these citizens to be considered
expatriates (or expats), there is the assumption that they will return “home” after a period of time. An
example is teachers working overseas in international schools. A significant number of IB World
Schools hire expatriate teachers. Another example is the 400,000+ foreign domestic helpers who
work in Hong Kong Special Administrative Region of the People's Republic of China (HKSAR),
representing more than 5% of the population of economy. Most of these foreign workers come from
the Philippines, Indonesia, and Thailand.
The influx of migrant workers from overseas can provide many business opportunities, such as:

 Easing of skills shortages - Hiring skilled migrants has two advantages to a business. First, they
take on the jobs that cannot be filled by domestic workers, perhaps due to a lack of willingness or
skills (ability). Secondly, since a skills shortage is prevented, the pool of migrant workers helps to
keep wage costs down.
 Flexible work structures - Businesses are able to open for longer hours due to workforce flexibility.
Migrants add to the supply of staff willing to work part-time or shift work. This is good news for
businesses which have outlets that open 24-hours a day, such as 7-Eleven convenience stores,
bars, petrol (gasoline) stations, and hotels.
 Marketing opportunities - Migrant workers are likely to have different habits and tastes from the
mass population. This can provide niche marketing opportunities, such as the provision of cultural
goods and services. Examples are as varied as Polish beer being sold in Britain, to Malaysian spicy
noodles in Finland, or Chinese 'dim sum' cuisine in Denmark.
 Personnel opportunities - The supply of migrant workers allows a business to employ a more flexible
and dynamic workforce. They may bring new ideas, experiences and ways of thinking. Skilled
migrants can pose a threat to less-skilled workers in the country. This form of competition can raise
the standard of skills in an economy as domestic workers update their skills to retain their own jobs.
 Net social benefits - The majority of migrants are of working age. This means they are likely to pay
income tax (good news for the government and the general public). It also means that they have
income to spend on goods and services (good news for marketers).
Studies have consistently shown that migrant workers contribute net benefits to an economy. Not
only do they raise tax revenues for the government and provide marketing opportunities, they also
contribute to the economic prosperity of the country.
Recruiting migrant workers (and part-time staff) can certainly help businesses to meet their short
term human resource needs, such as during peak trading times of the year. Businesses also gain if
they can hire experienced and highly qualified migrant professionals (sometimes referred to as
expatriates, or ‘expats’) on a permanent basis. However, many migrants lack the necessary skills
and qualifications needed to secure high-paying jobs, so often end up working in low-waged
occupations.
 The migration of workers has intensified due to globalization, such as the continual expansion
of multinational companies around the world, and the development of trading blocs such as the
European Union (thereby easing the geographical mobility of labour between countries).

4. Flexi-time

Flexi-time is a form of flexible work practice that enables employees to work a set number of core
hours per week, often at the office during peak periods of the day and/or week. The employees then
have the flexibility to choose when they work during the rest of the week; so long as their work gets
completed.
Many organizations encourage their employees to maintain a work-life balance. The belief is that
supporting the well-being of the workforce has direct benefits to the employer in the long run. To do
this, a commonly used human resource strategy is to allow employees to adopt a variable work
schedule so they can have greater control over when they begin and end work.
Professor Charles Handy first discussed flexible working practises in his Shamrock
organization model. Handy suggested that modern organizations would increasingly consist of
three elements: core workers, contracted specialists and a flexible workforce (which includes
flexitime and part-time staff). As predicted by Handy, the growth in flexitime and part-time
employment have reduced the numbers of full-time workers in some professions, such as the retail
and fast food industries.
Flexitime empowers workers as they have the autonomy to complete their work in their own time,
when it best suits them. It also creates flexibility in their personal schedule, allowing parents to raise
their young children, for example. Hence, flexitime can help to improve morale and labour
productivity.
However, flexitime suffers from similar disadvantages to teleworking, such as the potential lack of
accountability and productivity. There are also costs implications if managers have to check and
approve the hours flexitime staff claim to have worked.
Flexitime is not a new concept, but has been an increasingly common practice, allowing people to
have greater work-life balance, especially for those with young children. Watch this intriguing lecture
by Dr. Heejung Chung, Senior Lecturer from the University of Kent, who discusses this topic in great
depth but in a very succinct way.

5. The gig economy

The gig economy (sometimes referred to as the on-demand economy) refers to labour markets in
which workers are given short-term or one-off contracts, such as freelance work, rather than long-
term or permanent jobs. Gig workers (sometime referred to as platform workers) are on-call,
independent contractors who enter into formal agreements with on-demand businesses to provide
certain services to the firm's customers. This is usually done through an online platform or mobile
app. Gig workers are paid for each individual job (or "gig") they do, instead of traditional payment
methods such as wages per hour or salaries per month. Essentially, workers in the gig economy are
more like entrepreneurs (self-employed) than traditional employees of a business.
The gig economy is a growing sector in many parts of the world. For example, in 2021, a report by
the McKinsey Global Institute (MGI) suggested that more than 5 million people in the UK worked in
the gig economy (around 15.6% of the total full and part-time workforce in the country). Examples of
gig workers include:

 Accountants
 Babysitting and child minding services

 Cleaners

 Couriers / drivers (e.g., DPD, DHL, FedEx)

 Food delivery (e.g., Uber Eats, Deliveroo)

 Gardeners and landscapers

 Management consultants

 Massage therapists

 Mechanics (car repairs and maintenance)

 Painters and decorators

 Personal shopper

 Pet carers, such as dog walkers

 Photographers

 Plumbers

 Translation services

 Taxi drivers (e.g., Uber, Bolt, Lyft)

 Tutors

 Website designers

The gig economy has huge implications for workforce planning as businesses require people for
flexible jobs by paying independent contractors and freelance worker instead of full-time employees.
In the modern digital world, the gig economy is increasingly common, especially with more people
choosing to work remotely or from home. This trend was accelerated across the wprld following
national lockdowns and safety measures introduced during the global coronavirus pandemic.
Businesses will need to plan for changes to the world of work, including the gig economy, when the
COVID-19 pandemic eventually ends.

Reasons for resistance to change

1. Self-interest

This occurs when employees place their own interests above those of the organization. This reason
for the resistance to change occurs from a perceived threat to a person's job security, status/rank,
and financial position. It is human nature to pursue self-interest, but it is not always clear why an
organization’s goals should sometimes take priority.
Employees are often more interested in and/or worried about the implications of change for
themselves, rather than the possible benefits to the organization as a whole. Hence, there is
resistance to change as they may feel it is unnecessary and/or requires too much effort on their part.
This reason is particularly strong if employees do not feel committed (loyal) to the organization.

2. Low tolerance

People tend to like stability and normality (or inertia) in their personal and professional lives. Change
often entails new policies and procedures or new ways of doing things in the workplace. However,
humans need an element of security, predictability, and stability in their lives, including work. Hence,
people often have a low tolerance of change or are fearful of it; either way, these people are
naturally resistant to change.
Instead of being open-minded and embracing change as an opportunity for professional growth,
some people see it as a hindrance. Intolerance of change also occurs because people simply dislike
disruptions and uncertainties in their lives. They might also worry that they cannot adapt to change,
so again resist it.

3. Misinformation and misunderstandings

If the reasons for change are not clearly and effectively communicated to the workforce, a lack of
understanding arises, which creates misunderstandings and hence resistance to change.
Misinformation causes the purpose and potential benefits of change not to be clearly communicated.
Misperceptions may be widespread because of informal communications in the workplace (such as
gossip) so workers may believe there are no compelling reasons in favour of change. Hence,
workers may feel that change is unnecessary or there are no good reasons for change, especially if
the business is not in a crisis or faced with adverse conditions.

4. Interpretation of circumstances (different assessment of the situation)

Different people can have different interpretations or views of a given situation. Employees and
employers may disagree on the rationale for and the benefits of change. Workers may believe that
senior managers do not know what they are doing or why they are doing it and they may feel that the
business is not acting in their best interest. Indeed, they may feel that they have better solutions and
wouuld change things in different ways.
Different assessments or perceptions of change can create conflict and hence cause resistance to
change. Again, if the purpose of change are not communicated clearly to the workforce, then
misunderstandings can arise, leading to opposition to change.
Note: This reason for the resistance to change is different from "self-interest" because the restraining
force in this case is based on competing interpretations or assessments of what is best for the
business and its stakeholders.

HR strategies for reducing the impact of change and resistance to change

1. Education and communication

This approach to change management aims to inform and educate staff (and other stakeholders)
about the change beforehand. Early communication and clarification can help stakeholders to see
the rationale for change and establish trust. Perhaps more importantly, this approach reduces any
unsubstantiated claims and rumours about the proposed change. Hence, this helps to limit
misinformation and misunderstanding (one category of Kotter and Schlesinger's reasons for
resistance to change).
2. Participation and involvement
This approach links with several motivation theorists, such as Frederick Herzberg, who argue that
employee involvement in decision-making can motivate and improve morale amongst the workforce.
Kotter and Schlesinger argued that involving employees in the change process, perhaps through a
series of consultations, means they are more likely to accept change instead of resisting it.
Allowing workers to be involved in decision-making gives them ownership in the process and a
greater incentive to ensure change is successfully implemented. It can also help to prevent
misunderstandings and misinterpretations of the purpose of change. However, this approach is likely
to be rather time consuming.
3. Facilitation and support
This approach to change management is about providing authentic support so that people have the
skills and resources they need to cope with change. This approach is paternalistic in style as
managers become supportive of staff during difficult times, thereby averting potential resistance to
change and helping people to accept change instead.
Facilitation and support can come in numerous forms, such as retraining of staff to enable them to
cope with the new changes or counselling workers to deal with their fears and anxieties.
4. Negotiation and agreement

This is the ‘carrot’ approach whereby managers use bargaining incentives to remove or limit
resistance to change (unlike the ‘stick’ approach, below). This can be done for example by ‘inviting’
workers to accept amendments in their employment contracts to accommodate the new changes.
Alternatively, staff who resist change might be offered early retirement or redundancy incentives to
leave the organization.
At other times, managers may be willing to compromise to provide incentives for employees to settle
for the change. Negotiations with workers could mean slightly different and possibly better changes
than originally intended.
5. Manipulation and co-option
This approach involves bringing a representative of those resisting change into the change process.
The purpose is to give these key influential people representation in the negotiations process, but
the underlying reason is to convert the representative’s thinking so that the advantages of change
can be communicated to those resisting change.
These representatives, such as labour union leaders, are usually given a symbolic role but the reality
is that their view will not affect the desire of management to push for the change. This approach is,
of course, seen as unethical and can backfire if those resisting change discover what the
management are really trying to do.

6. Explicit and implicit coercion

This is the ‘stick’ approach to dealing with resistance to change and is typically used as a last resort.
Managers can use coercion (bullying tactics) to force staff into accepting change, by threatening
disciplinary action, dismissals, job losses, redeployment (transferring employees to other jobs), or
not promoting employees. In other words, they force the change through even if employees may not
agree with the change.
Explicit and implicit coercion mean that workers "accept" change simply because they have to, not
because they want to or feel it is in their best interest. Quite often, over time, people may come to
accept the change and their perspectives and behaviour change too, especially if the change proves
to be successful. However, due to employment legislation that exists to protect employees, coercion
may be carried out implicitly by senior managers.

Ultimately, senior managers need to deal with change in a way that is purposeful, positive, and
promising. Essentially, this will help to gain the support from their employees.