Unit 6 - HR

• Human Resource Management (HRM)


  Managing people in a business
• Purpose of HRM

  • Ensure a business achieves the maximum benefit from its employees at the minimum cost
  • Make sure the business has the right number of employees with the right skills, qualifications and qualities
• HR objectives

  Influenced by the objectives of the business as a whole
• How HR works with other departments

  • They help HR to anticipate workforce needs and react to them by recruiting new staff or providing training
  • HR needs to work with the finance department to determine a suitable budget for the department
• What HR decides


  • How to use employee skills
  • How to keep employees working for the company
  • How to train and reward employees
  • How to terminate employment
• Objectives help HR manage people effectively

  • Matching the workforce to business needs
  • Helping employees reach their full potential
  • Supporting employee/employer relations
• Matching the workforce to business needs

  1. Anticipate the future size of the workforce

  2. Decide what skill-level the workforce needs

  3. Decide whether to train current staff or recruit new workers from outside the business

  4. Work with other managers to decide where employees are needed

  5. Manage the HR budget
• Helping employees reach their full potential

  1. Invest in training to improve employee productivity

  2. Ensure employees have the right equipment

  3. Provide training and 'fast-tracking' schemes for talented employees

  4. Match workforce skill-levels to jobs
• Supporting employee/employer relations

  1. Listen and respond to employee concerns

  2. Give employees responsibility and involve them in decision-making

  3. Improve the relationship between employees and management to reduce absenteeism and labour turnover

  4. Ensure employee values align with employer values
• Internal factors that influence HR objectives:

  Other departments within the business influence HR. They give HR the information that they need to predict workforce needs.

  The amount of funding available within the business.

  The culture within the business influences HR objectives.
• Human Resource Data

  Data analysed before making HR decisions
• HR figures considered when making decisions

  • Labour productivity
  • Labour turnover
  • Absenteeism
  • Labour retention
• How HR figures are calculated

  1. Using a performance management system

  2. To check human resources are being used efficiently
• HR uses data

  To make plans for future human resource flow
• HR compares figures

  To competitors to see who is utilising human resources better
• Labour Productivity

  Affects HR decisions
• How to calculate labour productivity

  Output per period / Number of employees
• Increasing labour productivity

  HR may reward employees with bonuses and increased salaries
• Decreasing labour productivity


  HR may retrain staff, offer bigger incentives
• HR compares labour productivity


  To competitors to see if they need to improve
• Labour cost per unit

  Affects HR decisions
• Employee costs as a percentage of turnover

  Affects HR decisions
• Controlling employee costs


  A main objective of the HR department
• Reducing employee costs

  HR will try to avoid this if possible as it could demotivate the workforce
• Ethics of the business

  Important for HR when making decisions, even if it costs more
• Labour Turnover


  Measures the Proportion of Staff who Leave each year
• The higher the figure, the larger the proportion of workers leaving the firm each year
• Causes of high labour turnover

  • External causes (e.g. high unemployment levels)
  • Internal causes (e.g. poor motivation, low wages, lack of promotion opportunities)
• A poor recruitment process which selects incompetent candidates will also increase labour turnover
• Measures to reduce employee turnover

  • Increased delegation
  • Job enrichment
  • Higher wages
  • Better training
• Businesses need some labour turnover to bring new ideas in
• Labour turnover of 0% means no one ever leaves
• Ways businesses communicate with workforce

  • Directly to managers (small businesses)
  • Through employee representatives (larger companies)
• Factors affecting how workers are represented

  • Organisational size
  • Organisational structure
  • Leadership and management style
  • External factors (economy, legislation)
• Works councils

  1. Discuss general work issues (e.g. training, new technology, work methods)

  2. Improve employer-employee relations
• Quality circles


  Discuss ways of improving quality
• In 1994, the EU brought in European Works Councils for businesses based in multiple European countries
• Trade unions

  • Act on behalf of groups of employees when negotiating pay, working conditions etc.
  • Strengthen employee bargaining power
  • Allow employer-employee communication
  • Provide advice and assistance to individual employees
• Trade unions negotiate with employers

  1. Secure fair pay and productivity bonuses

  2. Negotiate reasonable hours and paid holiday

  3. Help get safe and civilized working conditions
• Trade unions take action in the workplace

  Encourage workers to go on strike