Managing People:

1.4.1 Approaches to staffing

Staff as an asset
Value their employees and have concern for their welfare
Employers recognise that their efforts will help the business to perform more
effectively
Employer will try to meet the needs of employees, promotions, safe comfortable
environment, holidays and sick pays
Staff as a cost
Try to minimise cost as much as possible this results in
Zero-hour contracts, neglecting investments in training
This cause productivity to be lower due to poor motivation so staff turnover and
absenteeism may be higher and more conflict between staff and management
Makes employees feel exploited, neglected, stressed and unhappy at work
Flexible workforce
A workforce that responds in quantity and type to changes in the market demand.
1. Part time and temporary staff, some people prefer part time because it suits their
lifestyle (student or parent) and temporary staff are those who are employed limited
period, usually during seasonal periods
- Allow a busines to quickly respond to change in demand for products, so
when products are high in demand (Christmas and sales) employ staff help
provide customer service.
- Staff may not be trained so poor customer service, or they might be
trained which is costly and a waste capital if staff are going to be laid
off when not needed
2. Flexible hours -when staff work flexible hours so they can choose when they work
during their period.
- Employees achieve a better work life balance
- Many employees want this option so they can balance their personal
commitments. So, they will not feel like work taking over their life and feel
dissatisfied when doing their job. Puts them in control.
3. Zero-hour contracts – is a contract that does not guarantee a particular number of
working hours.
- However, it does not offer financial security, so you make have periods where
you do not get paid because you have not worked then
4. Working from home – undertake regular work from home
- suits people’s lifestyles and reduces travelling time to work. businesses
also benefit from this because reduces certain cost like electricity and
office space and fewer problems with absenteeism or lateness due to
poor weather or other travelling issues.
- However, there may be communication problems if staff cannot be contacted
and it is more difficult to monitor the quality and quantity of work
undertaken

5. Outsourcing - this involves getting other people or business to carry out tasks
that were originally carried out by people employed by the business.
Advantages:
- Allows business to focus on its core capabilities and allow others to
carry out its outer work.
- Cost is lower and capacity can be increased
- Outsourced workers may also be undertaken more effectively
especially if they are specialist
- Business does not have to pay for training cost of the outsourced
workers as they are already trained
Disadvantages:
- Employees may resent outsourcing because their jobs might feel threatened
and cause demotivation as they may want to be part of a stable team and not
disorientated
- Outsourced workers may have less loyalty to the business and only there for
financial gain
- Outsourced worker may supply products late which can stop production
process and supply will decrease
Dismissal and redundancy
 Dismissal is when employer can dismiss the employee because of unfair
reasons like their part of trade union or legal reasons like incapable of doing
their job
Redundancy is when the employee job role doesn’t exist anymore this could
be because new technology, business closure or reconstructing

Recruitment and Selection process 1.4.2

Internal Recruitment - means that potential applicants are found within the organisation

External Recruitment - means that potential candidates are found from outside the organisation,
either by advertising, job centres, recruitment agencies (online and offline), headhunting and
personal recommendation.

BENEFITS OF INTERNAL RECRUITMENT

 Cheaper and quicker to recruit

 People already familiar with the business and how it operates
 Provides opportunities for promotion within a business
 Reduces training costs
 Motivates the workforce with chances of career progression
DRAWBACKS OF INTERNAL RECRUITMENT

 Business already knows strengths and weaknesses of candidates

 Limits numbers of potential applicants
 No new ideas can be introduced from outside
 May cause resentment amongst candidates not appointed
 Creates another vacancy which needs to be filled
BENEFITS OF EXTERNAL RECRUITMENT

 Outside people bring in new ideas

 Larger pool of workers from which to find the best candidate
 People have a wider range of experience
DRAWBACKS OF EXTERNAL RECRUITMENT

 Longer process
 More expensive process due to advertisements and interviews required
 Selection process may not be effective enough to reveal the best candidate
 May need a longer training and induction period
 Impressions at interview might be misleading and mistakes may be made.

Costs of recruitment and training

Labour Turnover - measures the rate at which staff leave the business. They may or may not
need replacing. It can measured by the percentage of staff leaving within a time period.

Recruitment and training are expensive and it takes some time for new recruits to become fully
competent. The more senior the position, the more it will cost.

HARD COSTS OF RECRUITMENT

 Advertising and recruitment agency costs

 Interview costs and expenses and managerial time diverted
 Costs of training and induction
SOFT COSTS OF RECRUITMENT

 Loss of production when staff are involved in recruitment and training

 Time taken to build up knowledge, experience and working relationships with co-workers
and customers.
The costs of recruitment and training mean that a high rate of labour turnover can be a real
problem. It entails the loss of valued skills and knowledge and therefore lowers productivity. It
may affect employee motivation. Even so, a certain amount of labour turnover can bring in
capable and innovative people who will have a positive effect.

Training costs can be significant in any business. Most employers are prepared to incur these
costs because they expect their business to benefit from employees' development and progress.

Training is needed within a business for a variety of reasons. Common training needs includes;

 Supporting new employees (induction training)

 To improve productivity
  Supporting high standards of customer service and production quality
 Introduction to new technology, systems and or other change
 Support employee progression and promotion (internal recruitment)
BENEFITS OF EFFECTIVE TRAINING

1. Better productivity
2. Higher quality
3. More flexibility through better skills
4. Less supervision required
5. Improved motivation - through greater empowerment
6. Better recruitment and better employee retention
7. More loyal employees
MOTIVATION AND EFFECTIVE TRAINING

 Assuming training is effective; then...

 Employees feel more loyal to firm
 Shows that business is taking an interest in its workers
 Provide employees with greater promotional opportunities
 Enables employees to achieve more at work - perhaps gaining financially from this
REASONS WHY BUSINESSES NEGLECT EFFECTIVE TRAINING PROCEDURES

1. They fear employees will be poached by competitors (who will then benefit from the
training)
2. A desire to minimise short-term costs
3. They cannot make a justifiable investment case
4. Training takes time to have the desired effect
5. Sometimes the benefits of training are more intangible (e.g.morale) than tangible
Types of training

On-the-job training - occurs in the workplace, sometimes as part of an apprenticeship scheme

Off-the-job training - takes place away from the workplace in colleges or specialist training
centres.

Induction - is the training given to new employees to familiarise them with the work
environment, the requirements of the job and their colleagues.

Induction training is the first stage of an ongoing training programme, designed to welcome new
starters and help motivate them. It will usually involve introductions to key personnel, a tour of
the premises and facilities and including coverage of relevant health and safety requirements.

ADVANTAGES OF ON THE JOB TRAINING

 Generally most cost-effective

 Employees are actually productive
 Opportunity to learn whilst doing
 Training alongside real colleagues
 Easy to organise
 Training is specific to the business and therefore fully relevant
DISADVANTAGES OF ON THE JOB TRAINING

 Quality depends on the ability of trainer and time available

 Bad habits might be passed on
 Learning environment may not be helpful
 Potential disruption to production
 Trainers may not have up-to-date knowledge
ADVANTAGES OF OFF THE JOB TRAINING

 A wider range of skills or qualifications can be obtained

 Can learn from outside specialists or experts
 Employees can be more confident when starting job
 Training can be both relevant and intensive
 Training will be professional
 Training will be up-to-date
DISADVANTAGES OF OFF THE JOB TRAINING
  More expensive - e.g. transport and accomodation
 Lost working time and potential output from employee
 New employees may still need some induction training
 Employees now have new skills/qualifications and may leave for better jobs.

Organizational Design:
Chain of command - sets out the levels of authority for giving and taking instructions within an
organisation.

The chain of command enable information and decisions to be passed through the organisation,
from those making decisions to those affected by them.

Each individual will have links and responsibilities to others both above and below in the
hierarchy.
Tall hierarchies will have a long chain of command.
Flat hierarchies will have a short chain of command
Hierarchy - employees are ranked in layers, one above each other. Each has fewer employees
than the one below, in a typical pyramid shape.

 Layers of hierarchy reflect levels of seniority.

 In the past, tall hierarchies suited businesses that wanted to supervise employees very
closely, fitting neatly with an autocratic leadership styles.
 Responsibilities are clearly defined and there are opportunities for promotion.
 More layers mean more managers can specialise... but interdepartmental rivalry may
reduce efficiency.
 Flat organisations suit businesses that want to encourage flexibility in the workforce.
 Some employees who are given more responsibility become more motivated
 Communication may be easier, faster and more effective
 In a flatter organisation, decision making may be quicker and clearer and reaction to
market change may be faster.
Span of control - is the number of people directly answerable to each person in the chain of
command. The most appropriate span of control depends on the circumstances.

The size of a span of control depends on;

 1. Experience and personality of the manager
2. Nature of the business. If being a line manager requires a great deal of close supervision,
then a narrow span might be appropriate.
3. Skills and attitudes of the employees. Highly skilled and professional employees might
flourish in a business adopting wide spans of control.
4. Tradition and culture of the organisation. A business with a tradition of democratic
management and empowered workers may operate better in wider spans of control.
Tall organisations with narrow spans of control run the risk of slow decision making and
distorted communication... but they can monitor staff more efficiently.

Flat organisations with a wide span of control can have managers which find it hard to manage
their wide span of control of people effectively... but this can allow staff to take on more
responsibility and become more creative and productive.

NARROW SPAN OF CONTROL

1. Allows for closer supervision of employees

2. More layers in the hierarchy may be required
3. Helps more effective communication
WIDE SPAN OF CONTROL

1. Gives subordinates the chance for more independence

2. More appropriate if labour costs are significant - reduce number of managers

Decentralised structures - means that business have moved the decision making process away
from a central head office, and spread it throughout the organisation, often to branch level.
Decentralisation is closely linked to delegation.
Centralised structures - involves keeping all decision-making at the top of the hierarchy, usually
in the head office (i.e. amongst the most senior management).

Types of Organizational Structure:

Tall structure - An organisational structure that has many levels of hierarchy.

Flat structure - A hierarchy with few levels between staff and executives.

Matrix structure - Where teams are put together from different functional areas to work on
specific projects together.
KEY FEATURES OF FLAT STRUCTURE

 Few layers of hierarchy

 Wide spans of control
 Less direct control
 More delegation
 Fewer opportunities for promotion
 Greater responsibility
 Vertical communication is improved
 Fewer layers = less staff = lower costs
KEY FEATURES OF TALL STRUCTURE

 Many layers of hierarchy

 Narrow spans of control
 Less delegation
 More opportunities for promotion
 Takes longer for communication to pass through the layers
 More layers = more staff = higher costs

MATRIX STRUCTURE

 In a matrix structure, individuals are assigned to teams according to their specialism, and
work on a particular project.
 This can generally encourage teamwork, empowerment and creativity and give real
flexibility to an organisation.
 It is particularly suited to creative organisation in fast moving markets, such as
advertising agencies or tech start ups.
 Once the project is complete, employees may be moved onto a different team
 It can mean an individual reports to different managers depending on which project they
are working on; careful management is required.
ADVANTAGES OF A MATRIX STRUCTURE

1. Help to break down traditional department barriers, improving communication

2. Individuals get to use their skills within a variety of contexts
3. Likely to result in greater motivation amongst the team memebers
4. Encourages sharing of good practice and ideas across departments
5. A good way of sharing resources across departments.
DISADVANTAGES OF A MATRIX STRUCTURE

1. Members of project teams may have divided loyalties as they report to two line managers
2. May not be a clear line of accountability for project teams
3. Difficult to coordinate
4. Team members may neglect their functional responsibilites
5. It takes time for matrix team members to get used to working in this kind of structure
Impact of different organisational structures on business efficiency and motivation
The 7 impacts of good organisational design are...

1. Speed of decision making

2. Flow of communication
3. Degree of supervision
4. Improved competitiveness
5. Opportunities for promotion
6. Clarity of roles
7. Employee motivation
Motivation in theory and practice
The importance of employee motivation to a business
Motivation - the will to work or ways in which businesses can encourage staff.

Motivation comes from enjoyment of work itself and/or from desire to achieve certain goals e.g.
earn more money or achieve promotion.

An engaged employees is one that has emotional commitment to the organisation and its goals.
This means that engaged employees actually care about their work and their company and are
motivated to contribute to the company's success.

Motivated employees are generally thought to be more productive and better able to
communicate and collaborate. Business managers try to meet employee's needs in a way that will
enhance their performance and productivity, so maximising efficiency.

There are two broad approaches available to motivate employees

 FINANCIAL METHODS (salary, bonus)

 NON-FINANCIAL METHODS (passing on responsibility or praise)

BENEFITS OF MOTIVATED STAFF INCLUDE:

1. Higher labour productivity

2. Lower labour turnover
3. Higher retention rates
4. Lower unit costs
5. Lower absenteeism
6. Improved customer service
7. Better workplace relations
Motivational Theories - Taylor and Scientific Management
Scientific Management - A motivational theory developed by Frederick Taylor to try and
increase the productivity in businesses, specifically factories.
ADVANTAGES OF SCIENTIFIC MANAGEMENT

 Avoids inaccuracy in production of products

  Better planning and decision making
 Enhances teamwork - cooperation between managers and workers
 Maximises productivity
 Improved democracy in the workplace
 Increased opportunities for workers to acquire further training
DISADVANTAGES OF SCIENTIFIC MANAGEMENT

 Not suitable for big firms, only small organisations

 Managerial decisions may involve severe stress for managers due to need for complete
control over the work place
 Feelings of pressure among employees mainly influenced by piece rate as if they don't
make enough of their product, they wont get enough money to live on.
 May demotivate employees due to repetition of task with no flexibility
 In order to meet productivity requirements, quality may suffer
 As productivity increased, fewer people were need to do the work therefore job security
was unsure
Motivational Theories - Mayo and Human Relations Theory
Human relations approach - emphasises the importance of ways in which people interact and
how they are treated. Motivation can improve when the employee feels more involved.

Mayo believed that workers are not just concerned with money but could better motivated by
having their social needs met whilst at work (something that Taylor ignored).

The Human relations approach focused on managers taking more of an interest in the workers,
treating them as people who have worthwhile opinions and realising that workers enjoy
interacting together.

Mayo concluded that workers are best motivated by:

 Better communication between managers and workers

 Greater manager involvement in employees working lives
 Working in groups or teams
 Better working conditions
Psychological and social factors are more important in increasing productivity

His theory most closely fits in with a paternalistic style of management.

ADVANTAGES OF HUMAN RELATIONS APPROACH

 Workers are recognised and appreciated for their work so increases motivation
 Their well-being is considered
 Relationship between managers and workers are built
 Potential to increase employee retention rates
DISADVANTAGES OF HUMAN RELATIONS APPROACH

 Companies risk workers becoming too social or easily swayed by personal emotions and
opinions when making decisions, rather than relying on hard data.
 It may be more difficult to reprimand employees for poor performance or dismiss them
once they have become invested in the company.
 More freedom for workers = less control over workers
Motivational Theories - Maslow and Hierarchy of needs

Hierarchy of needs - focuses on the psychological needs of employees. Maslow put forward a
theory that there are five levels in a hierarchy of human needs that employees need to have
fulfilled at work in order for employees to feel motivated .

Self-actualisation - Fulfilling potential, being able to develop and be creative

Self-esteem - Gaining respect and recognition for achievements, feeling competent

Social needs - Communicating with colleagues, friendship, team-working and trust

Safety needs - A safe working environment and job security

Physical needs - Having enough money for the essentials. Being paid wages that enable
employees to pay the bills.
CRITICISMS OF MASLOW'S THEORY
  Some jobs are very satisfying but do not actually pay enough for the employee to survive
in the long run e.g. charities
 Not all employees' needs are the same - some employees are so ambitious that they do not
care very much about communication and friendship.
 The higher needs do not have much impact if there is a threat of redundancy.
Motivational Theories - Herzberg and Two Factor Theory
Two factor theory - concept that employee satisfaction is related to factors which motivate, and
factors which can cause dissatisfaction (hygiene factors)

Hygiene factors can demotivate employees if absent causing job dissatisfaction. Employees will
only turn up to work if their hygiene factors are being fulfilled. These must be satisfied before
any attempt is made to improve motivation.

Once Hygiene factors have been fulfilled, a business can then start to use Motivating factors to
increase the motivation of its employees. They can be a mixture of non-financial and financial
rewards.

JOB ENRICHMENT
Job enrichment attempts to give employees greater responsibility by increasing the range and
complexity of tasks they are called upon to complete and giving them the necessary authority. It
motivates by giving employees the opportunity to use their abilities to the fullest.

He believed that job enrichment was an important motivator because it allows the job to have
more depth to it as the job has a wider range of tasks and activities. This allows greater challenge
and complexity. By using job enrichment, employees feel they are in control of their workload,
are able to feel like they can complete it and feel achievement once completed.

EMPOWERMENT
Delegating power to employees so that they can make their own decisions. This gives employees
more control and authority with decision making, which in turn leads to higher motivation. This
could be done through less supervision by managers leading the employees to be more
independent. By doing this, it demonstrates trust from the managers towards the employees.

Herzberg argued that managers should:

1. Motivate by using motivators plus ensuring hygiene factors are met

2. Use job enrichment and job empowerment (delegating more power to the employees to
make their own decisions)
CRITICISMS OF HERZBERG'S THEORY

1. Some researchers have challenged the idea that happy and satisfied workers increase
productivity.
2. Different individuals respond in different ways to the various factors
3. For some employees, the hygiene factors may be the motivating factors

Financial incentives to improve employee performance

Piecework - means that each production worker gets paid according to their level of output

KEY FEATURES

 An agreed amount is set for each item produced

 There is an incentive to be as productive as possible
ADVANTAGES

 Requires low levels of manager supervision

 Encourages high speed production
 Provides good incentive for workers who are mainly motivated by pay
DISADVANTAGES

 Quality may suffer as workers try to get as much done as possible

 It is repetitive for workers and can be demotivating
 Workers are only used to one set method of production so may be resistant to change
Profit share - means that an agreed share of the profits is paid to employees.

KEY FEATURES

 Employees have an incentive to be as productive as possible

 Can take the form of cash or share options
ADVANTAGES
 1. Creates a direct link between pay and performance
2. Creates a sense of team spirit - helps remove 'them and us' barrier between managers and
workers if all employees are involved
3. May improve employee's loyalty to the comany
4. Employees more likely to accept changes in working practices if they can see that profits
will increase overall
DISADVANTAGES

1. Not linked to individual performance

2. External factors can reduce profit through no fault of the employees.
Commission - based on the percentage of business generated by an employee such as a
salesperson. Commission is a payment made to employees based on the value of sales
achieved.

KEY FEATURES

 An incentive to increase worker productivity

 Knowing that extra effort means more pay can motivate
 Depends on selling price of product
ADVANTAGES

 Enables high performing sales people to earn huge amounts.

 The payroll cost is related to the value of business achieved rather than just the amount
produced.
 Increased sales due to it being a motivator
DISADVANTAGES

 No incentive to build relations with customers

 Income can be unreliable, especially in a recession
 May lose customers if employees are using aggressive sales techniques in order to secure
commission which damages the business' reputation
Bonus - designed to motivate employees by rewarding them for achieving particular targets or
standards set by the employer.
KEY FEATURES

 Can help to recruit, motivate and retain staff

 Can increase employee commitment to the business
ADVANTAGES

1. A bonus payment to an employee can be used as an incentive, especially in a field where

employees must make sales or meet specific goals.
2. Bonus payments do not have to be awarded on a holiday, at the end of the year or as an
incentive. A bonus payment can also be used as a means of appreciation for an
employee’s hard work throughout the year or in a specified amount of time in the year.
Receiving a bonus payment will not only show the employee he was appreciated for his
hard work, but it will motivate him to continue to work hard for further rewards.
DISADVANTAGES

1. Not all jobs show a clear link between performance and productivity or profit
2. Employees may neglect other goals to concentrate on bonus targets.
3. Because bonuses are paid out in several different ways - incentive for meeting goals,
performance, profit-sharing or end-of-the-year/holiday bonuses - employees may not
always receive the same amount or percentage.Both methods can cause issues of fairness.
For example, if one employee has worked for a company for 10 years and another
employee has only worked for two years, but the 10-year employee is always late and
hardly works while the two-year employee works extra hours and has never missed a day,
it might not seem fair to award bonuses based solely on seniority. The two-year employee
might feel as though he is not being rewarded for his hard work.
Performance-related pay - is a scheme where wages or salaries are linked to performance in the
workplace. There are many different schemes...

KEY FEATURES

 An appraisal (review of performance) is conducted by senior managers

 Payment may be based on specific targets
 Goals and/or targets are set for the next appraisal
ADVANTAGES
 1. Senior managers can easily monitor and assess individual employee performance during
appraisal process
2. Setting of targets for employees can ensure they are all closely focused to company
objectives
DISADVANTAGES

1. Discourages a team based approach - can create unhealthy rivalry between managers
2. Can be difficult to accurately measure performance of some workers e.g. in service sector
firms
3. Incentives may not be large enough to motivate employees
4. Employees may disagree with the appraiser

Non-financial techniques to improve employee performance

Delegation - Where responsibility for carrying out a task or role is passed onto someone else in
the business.

Delegation involves the assignment to others of the authority for particular functions, tasks,
and decisions. Delegation can allow subordinates to gain more autonomy and become
empowered leading to an increase in performance

The main advantages and disadvantages of delegation can be summarised as follows:

Advantages
 Reduces management stress and workload
 Allows senior management to focus on key tasks
 Subordinates are empowered and motivated
 Better decisions or use of resources (potentially)
 Good method of on-the-job training
Disadvantages
 Cannot / should not delegate responsibility
 Depends on quality / experience of subordinates
 Harder in a smaller firm
 May increase workload and stress of subordinates
Consultation - involves discussions between managers and employees covering all aspects of
the work. Taking into account the views of employees further down the hierarchy.

Encourages a sense of responsibility and gives a chance to review areas of difficulty, can
enhance efficiency.
Job empowerment - giving employees the power to do their job. The concept is closely linked to
motivation and customer service. Put simply, employees need to feel that their actions count.
Empowerment is a catch-all term that covers:

1. Giving authority to make decisions to front-line staff (e.g. hotel receptionist, call centre
assistant)
2. Encouraging employee feedback
3. Showing more trust in employees
This is a stage beyond delegation, giving employees more control over their working situation.

ADVANTAGES

1. Increasing the Productivity and Morale. Those who are given the responsibility to create
their own decisions can feel more trusted in which their contributions have a direct factor
in the success of the company. This can actually offer them to boost their morale.
2. Bigger Involvement Leading to Bigger Commitment. When employees are given greater
involvement by increasing their responsibility, they are able to become more involved in
the development of strategies for the organization. For this reason, it will enable them to
look at customers and colleagues a lot more differently. More so, they will increase their
commitment to the organization and its future. So, if employees are satisfied, it could
lead to more satisfied customers. This commitment will eventually lead to decrease in
staff turnover and reduced cost.
3. It also leads to creativity and innovation since the employees have the authority to act on
their own.
4. There is increased efficiency in employees because of increased ownership in their work.
5. Lesser need of supervision and delegation.
6. Employees when empowered become more entrepreneurial and start taking more risks.
Greater the risk, greater are the chances to succeed.
DISADVANTAGES
 1. Egotism / arrogance: Worker arrogance can create a big trouble for the supervisors and
the managers. There can be problems in delegating. Employees avoid reporting about
their work and feedback can be taken negatively.
2. Security: Since information comes and is shared by all, there are apprehensions about
leakage of critical data

Job enrichment : attempts to give employees greater responsibility by increasing the range and
complexity of tasks they are called upon to complete and giving them the necessary authority. It
motivates by giving employees the opportunity to use their abilities to the fullest.
Job rotation: involves the movement of employees through a range of jobs in order to increase
interest and motivation.
Job rotation can improve "multi-skilling" but also involves the need for greater training.
Job enlargement : involves the addition of extra, similar, tasks to a job.
In job enlargement, the job itself remains essentially unchanged. However, by widening the
range of tasks that need to be performed, hopefully the employee will experience less repetition
and monotony that are all too common on production lines which rely upon the division of
labour.
Team Working: The process of working collaboratively with a group of people in order to
achieve a goal. Teamwork is often a crucial part of a business, as it is often necessary for
colleagues to work well together, trying their best in any circumstance.