2.1 Human Resource Planning

Unit 2 – Human Resources

YR12 IB BUS MGT

• Human resource management refers to the management function of using and developing people within a business in order to meet the objectives of the organisation.

• Also known as ‘workforce planning’

• This is the management process of anticipating an organisation’s current and future staffing needs.

• It includes the number of employees required and the type of worker sought.

Carrefour

Liverpool FC Management

• Historical data and trends. Such as the change in size of the workforce over the past few years.

• Sales and income levels. Employers will require more workers if the level of customer demand is rising.

• Labour turnover. This measures the number of employees who leave a firm as a percentage of its workforce per year. The higher the staff turnover the more people the firm will need to recruit.

• Demographic changes. E.g. Data showing changes in the number of female workers or the number of graduates can help forecast HR needs.

• Technological changes. Advances in technology, such as e-commerce, can bring both opportunities and threats. E.g. people can work from home, however, capital intensive firms may not require as many workers in the future.

• What about external influences?

• The net birth rate: the difference between the number of births and deaths per period of time. Countries with a high birth rate will have a larger supply of human resources.

• The net migration rate: the difference between the number of immigrants to emigrants.

• The retirement age: the legal age where people can stop working and claim money from their pension. Countries with an increasing number of elderly people may increase the retirement age. In Hong Kong there is no retirement age.

• The flexibility of the workforce: businesses with multi-skilled people tend to have a more flexible workforce. Businesses that employ a large proportion of part-time workers use their workforces flexibility to quickly change according to the needs of the business.

• The level of unemployment: (economic factor) high unemployment means a high labour supply.

• Women: A more positive attitude to female workers boosts the supply of human resources.

• Mobility of labour: This refers to the extent to which labour can move to different locations or job roles

• The internal workforce: if the current workforce can adapt to change, then it may not have to hire externally

• Competition: existing and potential workers will consider the packages on offer from rival firms.

• Cost of living: cost of housing etc. may deter people from locating in certain areas.

• Cost and availability of transport: Businesses located within good transport networks will attract a larger supply of workers.

• Unemployment: high in an area means a business will be able to pay a low wage rate.

• At times, there may be surplus Human resources. During off-peak for example, many temporary or part time workers are not required. This increase the available labour supply. If there is excess labour supply the business has two real choices:– Redundancy – their services are no longer

required so their job disappears– Redeploy – relocate workers to other

departments or to parts of the organisation in need of extra staffing

• One demographic change in modern society is the longevity of the population which has led to an ageing populations. E.g. the average age of the population increases. The effects include:

• Increased dependent population – this includes those who are below the national working age and those above retirement age.

• Reduced labour mobility – labour immobility reduces the flexibility of a countrys workforce making it less internationally competitive

• Changes in consumption practices – different age groups have different spending patterns. Therefore an ageing population can create opportunities to cater for more mature groups.

• Changes in employment patterns – with more people going to university than ever before the average age of people entering the workforce has also risen. Coupled with ageing population this means that firms are more likely to retain staff beyond their retirement age due to labour supply shortages. If domestic supply falls too short business may consider international relocation?

Recruitment & Selection

• Labour is arguably the most important of the four factors of production. Therefore effective recruitment and selection is essential to a business.

• The recruitment and selection process is both time consuming and expensive.

• A vacancy can arise because of the following:– Expansion of the business– Replace staff who have left

Summary of the recruitment process

1. Job analysis2. Job description and person specification3. Advertise the vacant post4. Short-list5. Interview6. Aptitude test7. Check references8. Offer job9. Sign contract of employment10. Carry out induction training

Job advertisement

• The aim of this is to get as many people as possible to apply for the post.

• Advertisements are often placed in trade journals, local and national newspapers.

Job description

• This outlines the details of a particular job.

• It will include the job title and the roles and duties to be undertaken.

• A good job description will leave scope for an employee to be flexible (link to organisational change)

Person Specification

• This document gives the profile of a perfect candidate.

• It will include qualifications, skills and experience.

• Some jobs state physical attributes.

– Both the person specification and job description are used to establish training needs.

Job advertisement

• This will often include – Hours worked– Rate of pay– Fringe benefits (non-monetary rewards)– Contact name and address– Deadline

• Often advertised internally and externally

5 TRAPS

• A good job advertisement should be: -– Truthful– Relevant– Accurate– Positive– Short

• Why do job advertisements differ from country to country?

The application process

• Application form

• CV

• Covering letter

• Why might a firm ask for an application form to be completed rather than a CV?

• It is common today for firms to use an online application form.

The selection process

• Once the application forms or CVs have been received the HR manager will short-list the candidates, using the job description and person specification.

• The next stage is to invite short-listed candidates to interview

Recap

• What is the 10 stages to the recruitment process?

• What is the purpose of a job description?

• What is the purpose of a person specification?

Testing

• What are the limitations of interviews?• Because of the limitations of interviews testing is

often used.– Psychometric tests are an assessment of a person’s

personality. It measures an applicants personality– Aptitude tests these test the skills of an applicant, for

example typing speed– Intelligence tests these test the mental ability of a

candidate, such as numeracy and literacy.– Trade tests these examine a candidates skill level which

cannot be determined from an interview, for example news readers will have a voice test.

References

• These are written statements about an applicant from an independent source, such as a previous employer.

• Referees will be asked to confirm the strengths and weakness of a candidate.

• This check confirms the information on the CV is correct.

The contract of employment

• Job title• Job role and job specification• Date the job starts and ends• Hours and days of work• Rate and method of pay• Holiday and sick pay entitlements• Pension scheme arrangements• Outline of disciplinary procedures• Period of notice that must be given when

employment is terminated by either party• Names and signatures of both parties

Interviews

• 2 way process

• Gives the employer a chance to meet the candidate face to face (in person or video conferencing)

• A suitable environment must be selected

• Can range from one interviewer or a panel

• Time consuming

• Can you think of any limitations to interviews?

Alec Roger.s seven point plan

Munro-Fraser’s five-fold system

Physical make-up, appearance and speech

Impact on others, mannerisms and physical make-up

Attainments, education and training Qualifications, acquired knowledge

General intelligence, reasoning and accuracy

Innate (natural) abilities, ability to comprehend

Specialised aptitudes Motivation, determination to succeed

Interests, hobbies sports Emotional adjustment, ability to handle stress and get on with people

Disposition, outlook temperament

Circumstances, ability to work unsocial hours

Types of questions

• Behaviour-based questions are used to assess an applicant’s behavioural pattern and initiative. E.g. “explain an example of when you…”

• Situation-based questions are used to assess an applicants judgemental ability. E.g. “If one of your team-members were constantly late what would you do?”

10 common interview questions

1. Why do you want the job?2. What do you know about the organisation?3. What makes you think you will fit into the organisation?4. What are your key interests and how might these help you in

this job?5. What are your key strengths?6. What are your main weaknesses and what have you done

about them?7. What was the most difficult person you worked with and how

did you manage this?8. What leader/person do you admire the most and why?9. Describe your key responsibilities in your last job10. Why did you leave your last job?

Interview do’s and don’ts

Do’s Prepare- research the organisation and its

industry; plan how to get to the venue on time! Read your letter and CV. Prepare questions

Dress appropriately- First impressions count Practise interview skills

Don’ts Be Late! Be critical

Task

• In pairs write model answers to the 10 common questions

• Extension work- come up with 3 of your own interview questions

Employment rights (HL)

In November 2000, Coca-Cola was made to pay out $192.5 million in lawsuit allegations that they treated black workers unfairly.

Ant-discrimination legislation

• These laws make it illegal to show prejudice against individuals because of their gender, race, religion, disability, marital status or age.

• The laws should help to provide equal opportunities to everyone in society.

• Sex discrimination laws: in 2001 1.6 million female workers alleged that men were favoured over women for promotion and pay.

• Racial discrimination laws: mean it is illegal to discriminate employees because of their nationality, ethnic background or the colour of their skin.

• Disability discrimination laws: mean it is unlawful for employers to mistreat a person because him or her has a disability.

Positive discrimination

Modelling agencies can recruit only women Chinese restaurants can only employ

Chinese people An all girls school can employ a female PE

teacher.

Something to think about!

Positive Discrimination in the Police Force

Equal pay legislation

• This means it is illegal to pay people differently if they are doing the same job.

• It is possible to pay people more if they have higher qualifications and greater experience.

• Geographical considerations are also possible, why?

Health and Safety at Work

• Health and Safety at Work Acts (HASAWA) cover the provision of safe and adequate working conditions.

• Adequate facilities such as washrooms and lighting.• Training must be provided so that workers know

how to operate equipment and machinery in a safe manner.

• Costs of implementing HASAWA is high, however the company should benefit long term from lower absenteeism and less claims for accidents at work.

Statutory benefits

• Statutory Sick Pay- Payment to a worker who is off sick. Firms may request a doctors note.

• Statutory Maternity Pay- Payment made to female workers who are expecting a baby. They are also guaranteed their position on their return to work.

• Statutory Paternity Pay- Payment made to male workers whose partner is expecting a baby. However, they receive a shorter time.

• Adoption leave- As above• Statutory Holiday Pay- Payment made to employees during

statutory holidays such as Christmas and New Year.• Retirement Pension Scheme- Contribution made by

employees for when they retire also known as superannuation.

National Minimum Wage (NMW)

• As of Jan 2010 – UK= £5.73 per hour for workers aged 22 years and older

– A development rate of £4.77 per hour for workers aged 18-21 inclusive

– £3.53 per hour for all workers under the age of 18, who are

no longer of compulsory school age

• NMW means that all businesses must pay no less than this rate of pay.

• NMW is normally stated per hour.

Wal-Mart Case Study

• 1) What employment rights became issues for Wal-Mart?– Race Relations Act– Sex Discrimination Act– Equal Pay Act– National Minimum Wage– Statutory Benefits

Wal-Mart Case Study

• 2) Justify why employers such as Wal-Mart need to be aware of employment legislation?– Public Relations Image – Consumers will

stay loyal to the company if they see the company being loyal to their employees rights

– Investors – Shareholders and possible future investors may want to see the company adhering to the law before they invest

Wal-Mart Case Study• 2) Justify why employers such as Wal-Mart

need to be aware of employment legislation?– Staff Motivation – current and future staff will not

be very productive if their rights are being violated– Overall, based on the huge settlements Wal-

Mart has had to pay out to employees in the past, it is extremely important Wal-Mart becomes aware of the employment legislation, mainly to improve the overall image of the company for staff, customers and shareholders

Starters

• http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module2/ObtainingWorkers/RecruitmentProcess/The%20Recruitment%20Process.html

• http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module2/ObtainingWorkers/JobOrPerson/Job%20or%20Person.html

• http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module2/ObtainingWorkers/RecruitmentLawsDragDrop/frame.htm

Focus Questions

• 1. What is internal and external recruitment?2. What are some methods of appraisal?3. How does training effect a company?4. What are the employment trends?

Internal Recruitment - Advantages

• Cost Effective

• Less down-time

• Less Risk

• Motivational

Internal Recruitment - Disadvantages

• Fewer Applicants

• Time Consuming

• Dead Wood

• Internal Politics

External Recruitment Methods

• Newspaper Adverts• Specialist trade Publications• Internet Advertising• Employment Agencies• Job Centres• Headhunting• University Visits• Direct Contacts

External Recruitment - Advantages

• New Blood

• Wider Range of Experiences

• Larger Pool of Applicants

External Recruitment - Disadvantages

• Time Consuming

• Expensive

• Greater Degree of Uncertainty

Internal and external recruitment

Definition Advantages Disadvantages

Internal Filling a vacancy with a worker who is already employed in the business

•Know strengths and weaknesses•Already committed to business•Less training required•Cheaper and quicker•Motivating for staff to progress

•May cause resentment with colleagues•No new ideas brought in•Leaves another vacancy behind

External Filling a vacancy with a worker who is not already employed in the business

•New ideas brought in•Larger pool of applicants•Avoids resentment among colleagues

•Expensive and time consuming•Training often needed•Worker may not fit into business•Demotivating for staff

External Recruitment

Appraisals

• Is a form of assessment

• What does it Assess?– An employee’s performance– Usually carried out on an annual bases

Why do we even appraise?!?!

Reasons for Appraisals

Typical Questions in Appraisal Meetings

• What has gone well for you this year? What has not gone so well for you?

• What are your key strengths & weaknesses?• What can be done to help improve your overall

performance?• Where do you see yourself in five years’ time?• What ideas do you have to help you improve or

develop as a team member?

Disadvantages of Appraisals

• Time consuming

• Confidential Feedback

• Hurt workers’ feelings

• Appraisals linked to pay

Methods of Appraisal• Upward Appraisal – employee appraises

someone more senior• Essay Appraisal – involves the appraiser

preparing a written statement about the appraisee

• 360 degree appraisal – involves the appraiser collecting the opinions about the appraisee from the people who work with the appraisee

• Rating System – examines different components of a job and then rates each specific part of the job on a scale – good to bad

Methods of Appraisal

Management By Objectives – involves assessing extent to which employee has met targets set by employer

Peer Appraisal – e.g. marketing manager appraising the finance manager

Self-Appraisal – involves employees appraising themselves based on predetermined criteria

Dismissal and Redundancies

• List as many reasons as you can why an employee may leave an organisation.

Dismissal and redundancy

As well as being responsible for attracting and recruiting workers the HRM department must also ensure the termination of employment contracts is carried out as efficiently as possible.

The 4 possible situations are: Dismissal Redundancy Retirement Resignation

Dismissal• The termination of the contract due to incompetence or a breach

of contract.• When dismissing a worker, a manager must have a good case

and be to seen to act fairly.• Incompetence- The employee may lack ability, qualifications or

effectiveness to carry out the job.• Misconduct- the employee may exhibit unacceptable behaviour,

such as being constantly or frequently underperforming in the job.

• Gross misconduct- The employee may commit a major misdemeanour, such as theft, fraud endangering others or turning up to work drunk.

• Legal requirements- If the worker does not have the necessary skills or requirements for the job, perhaps they were dishonest on their application form.

Unfair dismissal

Unfair dismissal occurs when an employee is dismissed without a valid reason.

In the event of unfair dismissal the employee has the right to appeal their case in court.

The two main causes of unfair dismissal are:- Discrimination: where an employer may

discriminate on race, gender etc. Constructive dismissal: where an employer has

made it very difficult for an employee to remain in their job.

Redundancy

• This occurs when the employer can no longer afford the keep the worker, or when the job ceases to exist.

• Voluntary redundancy- why may an employee ask to be laid off?

• Compulsory redundancy- where the employer chooses who is laid off. LIFO or retention by merit.

Task

• In December 2006, Ford Motor Company announced that it was to halve its hourly paid staff by making 38000 workers redundant. The motor giant stated that those workers had either accepted early retirement deals or redundancy packages, but would save the company around $5 billion a year. Ford has been struggling with fierce competition from foreign rivals such as Toyota. Lower demand for Ford cars and over production were cited as reasons for the retrenchments.

1. Distinguish between redundancy and dismissal [4 marks]2. Analyse how retrenchment might enable Ford to better achieve

workforce planning targets [6 marks]

Workforce planning at Ford

• Workforce Planning will require Ford to prepare its human resource needs by looking at the current and future staffing requirements (C1)

• Since Ford faced reduced demand, yet had overproduced, there is clearly a need to cut costs (P1). Retrenching hourly-paid staff means that the firm lets go of its least skilled staff. They are the easiest and cheapest to make redundant. If the situation improves for Ford, it would be easy to recruit hourly-paid staff to meet its workforce needs (A1) (C2)

Workforce planning at Ford

• Also, competitors abroad such as Toyota are reducing Ford’s market share (P2). The overproduction of cars would further reduce their market share because this would add to Ford’s costs, which in turn would lead to Ford increasing the price of its vehicles to cover the cost, meaning less sales and less market share (C2).

• Therefore, with declining sales and stockpiling it would not be rational for the American producer to retain its current workforce (A2)

Redeployment

• For larger businesses, rather than redundancies another option is redeployment.

• This means transferring staff from the department or branch that no longer needs his or her services.

• This method avoids redundancies but still can cause anxiety and de-motivation, why?

The mentor

• Often a mentor or buddy is introduced to the new recruit.

• This is a person the new recruit can turn to for advice.

Induction training

This is aimed at introducing new employees to the organisation. The programme may require a recruit to:

• Meet key personnel, such as the employee’s line manager and departmental team members.

• A tour of the premises including the main work area.

• Learn about their new job role and other relevant duties and procedures.

• Look at company policies and practices, such as health and safety policy and fire procedures.

Types of training

Advantages Disadvantages

On-the-job – carried out at normal workstation

•Work is being done•Experience of actual business•Easy to arrange•Cheap

•Employees may be nervous•Mistakes can harm business•Lost work time of trainer

Off-the-job – away from normal workstation

•Easier to concentrate•Expert trainer so good standard•No impact on customers

•Expensive•No work being done•Don’t get experience of business

The benefits of Training• A better skilled and more

flexible workforce leads to targets being met.

• Less wastage and reworking resulting in greater efficiency

• Morale improves as workers progress in the organisation

• Better levels of customer service

• Prepares workers to adapt for organisational change.

Drawbacks of Training

• Large financial cost

• Loss of output

• Time to plan

• No guarantee will solve the business’s problems

Changing Employment Patterns and Practices

IB Business & Management

Unit 2.1

Introduction

• In modern societies there have been some notable changes in employment patterns and practices: -

• Business sectors - Less than 2% of people in UK, US and France work in agriculture whereas over 75% work in the service sector.

• Ageing population. The net birth rate has been falling, this mean the size of the future workforce will fall, however people are living longer, so the age of workers will rise – older, more experienced workforce

Flexible work structures- Businesses

• Greater flexibility in the workplace means businesses will use fewer core staff. This in turn will mean a larger number of part-time workers and people working from home. More flexible work structures will mean: -

• There is less likely to be a traditional organisation structure, with an increase of part-time staff.

• Flexi-time, staff such as consultants, contractors and part-time staff will be able to work the hours they choose.

• The recruiting of more flexible workers, in terms of location, working hours and skills.

• Retaining of core staff- Key employees who have outstanding skills or experience will be paid a premium salary

• Training, firms will be less likely to invest in training, except for their core staff.

Flexible work structures- Employees

• Workers will have to be more flexible, there is no such thing as a job for life. Examples of flexible working practices: -– Teleworking, this is where workers work away from the

employees or customers, using telephone, fax and email to communicate.

– E.g. Banks, insurance firms, airlines. These businesses set up a ‘call centre’ to deal with customer enquiries.

– Home working, this is another example of teleworking where people work form their own home.

Advantages of Teleworking & Homeworking

• Geographical distance, customers save time travelling to and from retail outlets

• The location of the call centre does not need to be in an expensive city centre

• Reduced absenteeism• Employees do not need to travel to and from work• Less formal working practices• Tax benefits• Childcare- £7300 per year for a 2 year old

(opportunity cost)

Disadvantages of teleworking and homeworking

• Employees

1) Heavy reliance of use of ICT

2) Teleworking is not always possible

3) Teleworkers often exceed legal limits of working hours

4) Suffer from social isolation

• Employers

1) Requires tight control in recruitment as not every one has the right profile

2) Management and control are made more difficult as staff are off-site

3) Technological breakdowns can cause major disruptions to the business

Portfolio working

• This is a person who is employed in a number of different jobs at the same time.

• How could this benefit the business?

• What could be a drawback for the worker?

Portfolio Working - DHL

Part-time employment

• This trend has increased because of the greater number of females and students who choose to work part-time.

• They benefit the business as they are often cheaper to employ and easy to replace.

• Can feel less values, what would the implications of this be to the business?

Flexitime

The traditional 9-5 job no longer applies to many businesses.

Staff will have a core period of the day

How would this benefit the employees?

Shift work is another option for businesses that could not work with flexitime.

Flexitime

• http://www.mcdonalds.com/us/en/careers/working_here.html

Task• McDonald’s successful growth strategy

has been the ability to adopt flexible working structures. The company uses the catchphrase ‘your money, your hours, your way’ as part of its recruitment plan. Most of the workers at McDonald’s are part-timer- mainly students and women. In Australia McDonald’s actively encourages students to apply for jobs by using slogans such as ‘learn while you earn’. Having a flexible workforce has enabled the fast-food giant to open some stores on a 24 hour basis.

1. Analyse the costs and benefits of flexible work structures to employers such as McDonald’s, and their employees (6 Marks)

2. Discuss the likely consequences of flexible working patterns on a firms workforce planning, recruitment and training. (8 Marks)

Analyse the costs and benefits of flexible work structures to employers such as

McDonald’s, and their employees (6 Marks)

• Flexible work structures generally include workers who choose the hours they want to work between a given minimum and maximum hour requirement (C1)

• A benefit for McD of this is that they can stay open 24 hours a day (P1) because workers are willing to work different hours in the day, which enables McD to give the best customer service they can (A1)

Analyse the costs and benefits of flexible work structures to employers such as

McDonald’s, and their employees (6 Marks)• A disadvantage is that workers may feel less

valued by the company if they do not have the benefits of a full time employee. (C2) This will be negative for McDonalds as their staff are already made up of a lot of students who do not care too much about the company (P2), but if they feel less valued too, this could cause them to be demotivated and McDonalds to give poor customer service (A2)

Discuss the likely consequences of flexible working patterns on McD’s workforce planning,

recruitment and training. (8 Marks)

• Workforce Planning is the process of anticipating an organisation’s current and future staffing needs (C1).

• If McD’s hires flexible staff, they will constantly have to take time out to interview and hire new staff because flexible staff (A1), especially students, will not stay at the business long (P1). This will be costly and timely for management (A1)

Discuss the likely consequences of flexible working patterns on McD’s workforce planning,

recruitment and training. (8 Marks)

• If McD’s hires flexible staff, they will be able to replace staff easily and hire cheap staff who only want to work certain hours a week (C2), which fits perfect for McDonalds who want to hire cheap students and teenagers (P2), and are such a profit driven company so they will be able to keep costs down (A2)

Discuss the likely consequences of flexible working patterns on McD’s workforce planning,

recruitment and training. (8 Marks)

• Overall, despite the cost and time wasted on constantly recruiting new and replacement staff, I think the consequences are generally positive for McDonald’s of hiring flexible staff as it enables them to keep costs low on wages and provide 24 hour service to customers (E2)

Charles Handy’s Shamrock Model 2.1 HL

Charles Handy’s Shamrock

First Group on the Shamrock

• The first group is a core of qualified professional technicians and managers, who have detailed knowledge of the business. They are rewarded with high salaries and associated benefits, in return for which they must be prepared to give commitment, to work hard and to work, if necessary, long hours.

Second Group on the Shamrock

• The second group consists of contracted specialists, who may be used, for example, for advertising, R&D, computing, and training. They are rewarded with fees rather than with salaries or wages. Their contribution to the organisation is measured in output rather than in hours, in results rather than in time.

Third Group on the Shamrock

• The third group - the third leaf of Handy's shamrock - consists of a flexible labour force (Peripheral), discharging part-time, temporary and seasonal roles. Handy says they must be managed in a way which recognises their worth to the organisation.

Task

• In December 2006, Ford Motor Company announced that it was to halve its hourly paid staff by making 38000 workers redundant. The motor giant stated that those workers had either accepted early retirement deals or redundancy packages, but would save the company around $5 billion a year. Ford has been struggling with fierce competition from foreign rivals such as Toyota. Lower demand for Ford cars and over production were cited as reasons for the retrenchments.

1. Distinguish between redundancy and dismissal [4 marks]2. Analyse how retrenchment might enable Ford to better achieve

workforce planning targets [6 marks]

Workforce planning at Ford

• Workforce Planning will require Ford to prepare its human resource needs by looking at the current and future staffing requirements (C1)

• Since Ford faced reduced demand, yet had overproduced, there is clearly a need to cut costs (P1). Retrenching hourly-paid staff means that the firm lets go of its least skilled staff. They are the easiest and cheapest to make redundant. If the situation improves for Ford, it would be easy to recruit hourly-paid staff to meet its workforce needs (A1) (C2)

Workforce planning at Ford

• Also, competitors abroad such as Toyota are reducing Ford’s market share (P2). The overproduction of cars would further reduce their market share because this would add to Ford’s costs, which in turn would lead to Ford increasing the price of its vehicles to cover the cost, meaning less sales and less market share (C2).

• Therefore, with declining sales and stockpiling it would not be rational for the American producer to retain its current workforce (A2)