Human resource management

Last time

Before we start: last time, in Size of business, objectives and stakeholders, you learned these points. Here they are again on one card. Keep them in mind, because today builds on them.

Managing people

People are often a business's most important resource. Human resource management plans the workforce, recruits and trains it, and manages relations with it. This lesson covers workforce planning, recruitment, training, appraisal, labour turnover, and relations with trade unions.

Workforce planning

Workforce planning forecasts how many workers, with what skills, the business will need, and plans how to get them. It considers sales forecasts, technology, labour turnover, and the labour market. It may lead to recruitment, training, redeployment or redundancy.

Recruitment and selection

Job description and person specification; advertising internally or externally; shortlisting; interviews and tests; appointment. Internal recruitment is cheaper and motivating; external brings new ideas and a wider pool. Good selection reduces labour turnover and training costs.

Training and development

Induction for new staff; on-the-job training; off-the-job training. Benefits: productivity, quality, flexibility and motivation. Costs: time, money, and the risk that trained staff leave for competitors.

Appraisal and morale

Appraisal reviews an employee's performance against targets, and identifies training needs. Morale and welfare matter: low morale raises absenteeism and labour turnover. Flexible working, such as part-time and remote work, can raise morale and widen the labour pool.

Labour turnover

Labour turnover is the number of staff leaving in a year divided by the average number employed, times 100. If 12 staff leave out of an average of 80, labour turnover is 15 per cent. High turnover raises recruitment and training costs, and may signal low morale.

Employment contracts and law

Contracts set out pay, hours, duties and notice. Some workers are on temporary or zero-hours contracts. Laws cover minimum wages, health and safety, discrimination and unfair dismissal. Redundancy is when the job is no longer needed; dismissal is for the employee's conduct or performance.

Trade unions

A trade union represents workers in collective bargaining over pay, conditions and job security. Unions can help management by giving one voice to negotiate with, and improving communication. But industrial action, such as strikes, can disrupt operations and raise costs.

Removing union involvement?

Some managers argue removing unions would speed decisions and cut costs. But unions can reduce conflict by channelling grievances, and removing them may harm morale and trust. In large organisations such as railways, good union relations may be more effective than removing unions.

Mistakes that lose marks

Mistake one: calculating labour turnover with the wrong denominator. Mistake two: confusing redundancy with dismissal. Mistake three: evaluating HR policies without considering cost and context. The fix: correct formula, terms, and context.

The full-marks tip

The full-marks tip: use HR measures such as labour turnover with the correct formula. Evaluate HR decisions by cost, morale and the business's context.

On one card

So, on one card: human resource management. Keep it for revision.