FURTHER HRM A2 Business Studies

Productivity Gaps... Read the case study on Pg You will be asked to comment on the points to think about

What if FURTHER HRM? OK, so you should know the basics of HRM from last year... The importance of the role of the HRD and it’s role... FURTHER HRM will be looking at: Measuring and improving employee performance Monitoring and applying labour legislation Managing industrial relations between workforce and management

Measuring and Monitoring EE Performance So, how would you assess the level of employee performance in a business? Labour Productivity Absenteeism Labour Turnover Customer Complaints Wastage Levels – to some industries! Reject Rates – to some industries! How to measure the top 3 !!!

Labour Productivity Measurement of Labour Productivity... Total Output in time period (eg 1 year) Total Staff Employed What will managers be looking for? Reducing rates due to increased efficiency/higher productivity What will be happening to labour cost per unit? Hopefully dropping! (assuming a fixed wage rate!) How can this improve the competitiveness of a business? Lower costs than rivals could mean you can afford to lower your prices What might the reasons be for increased productivity? Motivated Staff Reliable Capital Equipment Training Involving workers in the “process” (Kaizan, QC’s) Better running of the business - getting more efficient internally Motivated Staff Reliable Capital Equipment Training Involving workers in the “process” (Kaizan, QC’s) Better running of the business - getting more efficient internally How might you measure performance in the Service Sector? Transport? Hotels? Banking? How might you measure performance in the Service Sector? Transport? Hotels? Banking? A2... REMEMBER... When analysing Quantitative data, it is sometimes not entirely reliable? Consider EXTERNAL factors outside your control... Supplier strikes Competitors having better machinery/equipment A2... REMEMBER... When analysing Quantitative data, it is sometimes not entirely reliable? Consider EXTERNAL factors outside your control... Supplier strikes Competitors having better machinery/equipment

Absenteeism Rates Measurement of rate of absence as a proportion of the employee total No of Staff Absent x100 (%) Total No of Staff Industries most affected are the ones that provide Customer Service Why is absenteeism so costly to a business? Bad customer experience = non returning customers  Cost of replacement staff! Temp workers don’t come cheap (neither does overtime!) Motivational Factors... Which theorist relates to absenteeism being a measurement of motivation? Motivational Factors... Which theorist relates to absenteeism being a measurement of motivation? HERTZBERG... “hygiene” factors could cause a lack of motivation, resulting in poor attendance... Poor working conditions = illness Being observed closely = stress HERTZBERG... “hygiene” factors could cause a lack of motivation, resulting in poor attendance... Poor working conditions = illness Being observed closely = stress

Labour Turnover Measurement of rate at which employees are leaving the business No of staff leaving (year)x100 (%) Ave number of staff employed An organisation employs 200 staff, and 30 leave in the year = 15% Is this high or low? Reasons for high turnovers could be?  Poor retention policy  Poor recruitment policy  Low morale/contentment  Low unemployment All will depend on the industry and type of job! Restaurants? Part time/students! Scientists/lawyers... All will depend on the industry and type of job! Restaurants? Part time/students! Scientists/lawyers...

Labour Turnover But, there are benefits of having a high labour turnover! Can replace lazy or less skilled staff with more efficient and productive ones New ideas and creativity are generated Rationalisation – business policy – some organisations will chose to keep staff turnover high to reduce numbers... BUT – remember it can be very costly for the whole replacement process!

So, how can you improve performance? Firstly, find out WHY performance is not as efficient! Spending money on more effective and expensive machinery will not help it is management/training issue! So, what can help? Regular appraisals – agree targets – if targets aren’t met ??? Training – challenge and motivation QC’s – responsibility and suggested solutions Financial incentives $$$$$$ - profit sharing/share options REMEMBER – LINK ALL OF THIS TO MBO !!! Theory Y approach – delegate and involve workers Theory X approach – imposed instructions and tasks

The State and Industrial Action... How does the State intervene in Industrial Relations? IR Laws Arbitration Councils It’s own policies (the government is a big employer!) Most people feel it is their right to be part of a union, so the State needs to be able to control how they are run and organised! It is the responsibility of the government to protect workers and provide improving Industrial Relations conditions!

Labour Management Relations... There are 3 approaches to labour-management relations : 1. Autocratic Management – “take it or leave it” What will happen if you were not happy with your working conditions and complained? What if you are on a short term contract or employed day to day? Will you have any rights? Some countries still operate with very weak labour protection legislation  - workers have not protection for conditions of work/pay etc You will need to EVALUATE this form of management! What are the advantages? Lower Costs through low wages BUT – there are drawbacks...  No labour security – for workers = low motivation! No time to train workers to a good standard No common objectives – or don’t know what they are !!! No participation or involvement for workers to help improve the businesss  No labour security – for workers = low motivation! No time to train workers to a good standard No common objectives – or don’t know what they are !!! No participation or involvement for workers to help improve the businesss

The State and Industrial Action... 2 COLLECTIVE BARGAINING Very powerful unions that represent whole or large parts of an industry – for higher wages or conditions of employment Strong foothold during times of low unemployment and a growing economy, as managers can’t easily replace the workforce! Can be very powerful and can uphold a business from producing or running all together – if most workers decide to strike  You might need to EVALUATE this form of management! Consider... National Agreements – not suitable for small businesses (costs) Strikes = disruption = reduced output = loss of sales = reduced profits Unions can result in lack of investment – workers unwilling to retrain Loss of industry to more accommodating overseas countries like Japan!

The State and Industrial Action... 3 LABOUR/MANAGEMENT COOPERATION Actively involving union and workers in decision making Less confrontation – more productivity Fewer strikes MBO more harmonious – agreed targets and happy workers Can be a more competitive business – very important in an ever changing and demanding global economy

How can Unions get what they want? Types of Industrial Action Negotiations Go Slow- working at a minimum pace than usual to put “light” pressure on the employer. Can be costly for the business – particularly if a seasonal product! Workers might lose out on bonuses paid for productivity Work to Rule- only do what your contract states! Overtime bans – costly for manufacturing during busy periods Strike Action – Business closure – most extreme

How can Employers get what they want? Ways of getting profit and growth... Negotiations PR – media can gain public support – pressure the unions to settle Threaten redundancies! Pressure unions to agree terms BUT – bullying ??? Change of Contract - when up for renewal, write in guaranteed overtime working conditions and minimum work rates! Closure – Shut the business down! Extreme, but could be cheaper! Lock-Outs- short term closure – don’t pay workers for a while! They will pressure the unions to agree a settlement!

So, which side of an industrial dispute has the greatest power and influence? This is what you will need to consider should an exam question come up regarding IR power and influence... When would the union and employee be the strongest? When would the employer be the strongest?