People management

Welcome to People Management!

In this chapter, we are looking at the most valuable asset any business has: people. Think of a business like a football team. You can have the best stadium (assets) and plenty of money (finance), but if the players aren't coached well, motivated, or in the right positions, you won't win many games. In Business 7138, Human Resources (HR) is all about managing those "players" to help the business succeed.

1. Human Resource Objectives and Planning

Businesses don't just hire people at random. They set HR Objectives—targets for their workforce. These objectives help the business stay competitive.

Common HR Objectives

• Number and skills of employees: Ensuring there are enough people with the right talents to do the job.
• Employee turnover: This measures how many people leave the business. High turnover can be expensive!
• Employee engagement: How connected and committed an employee feels to their work.
• Employee costs: Managing how much is spent on wages and recruitment.
• Equality, Diversity, and Inclusion (EDI): Ensuring the workplace is fair and represents different backgrounds.

Human Resource Planning

This is the process of looking at the current workforce and predicting future needs. If there is a "gap" (e.g., not enough tech experts), HR must decide how to fill it.
Example: If a supermarket wants to move to online deliveries, they need to plan for more van drivers and fewer shelf-stackers.

Forms of Employment

Businesses use different "shapes" of work to stay flexible:

• Full-time vs. Part-time: Standard hours vs. fewer hours.
• Permanent vs. Temporary: Long-term roles vs. short-term contracts (like seasonal Christmas staff).
• Zero-hours: The employer doesn't guarantee any hours, and the worker doesn't have to accept them. Very flexible, but can be controversial.
• Freelance: Self-employed people "hired" for specific projects.

Quick Review: Why be flexible? Flexibility allows a business to save money when it’s quiet and staff up quickly when it’s busy. It’s like having a "pay-as-you-go" phone instead of a fixed contract.

Key Takeaway: HR objectives aren't just about being "nice"; they are strategic goals designed to make the business more efficient and profitable.

2. Human Resource Data (The Maths Bit)

Don't worry if you find the numbers tricky at first! These formulas just help a business "measure" how well their people are performing. You will need to calculate and interpret these for your exam.

Key Formulas

1. Employee Productivity: Measures how much output each worker produces.
\( \text{Productivity} = \frac{\text{Total Output}}{\text{Number of Employees}} \)
High productivity usually means lower costs per item!

2. Employee Turnover: The percentage of the workforce that leaves in a year.
\( \text{Turnover (%)} = \frac{\text{Number of staff leaving}}{\text{Average number of staff employed}} \times 100 \)
Tip: A very high % might mean there's a problem with management or pay.

3. Labour Costs as a % of Revenue: Shows how much of the money coming in is being spent on staff.
\( \text{Labour Cost %} = \frac{\text{Total Labour Costs}}{\text{Total Revenue}} \times 100 \)
Service businesses (like hair salons) usually have a much higher % than factories.

Did you know? KPIs (Key Performance Indicators) are specific targets given to employees to track their progress, like a sales target for a car salesperson.

Key Takeaway: Using data allows managers to move from "I think the staff are happy" to "I know our turnover has dropped by 5%."

3. Organisational Design

This is about the structure of the business—who reports to whom and how decisions are made.

Span of Control and Hierarchy

• Hierarchy: The number of layers in an organisation (levels of management).
• Span of Control: The number of subordinates (workers) directly managed by one person.

Tall vs. Flat Structures:
- A Tall structure has many layers and small spans of control. Decisions take longer to travel from the top to the bottom.
- A Flat structure has few layers and wide spans of control. It’s faster and gives workers more independence.

Centralisation vs. Decentralisation

• Centralised: All major decisions are made at the "top" (Head Office). Good for consistency (like McDonald's).
• Decentralised: Decisions are shared with local managers. Good for reacting to local needs.

Memory Aid: Think of Centralised as "Control at the top" and Decentralised as "Delegating down."

Key Takeaway: There is no "perfect" structure. A small tech startup might be flat and decentralised to be fast, while a huge bank might be tall and centralised for security.

4. Leadership and Motivation

How do you get people to work hard and stay happy?

Leadership Styles

• Autocratic: The leader makes all decisions. "Do what I say." Good in emergencies.
• Democratic: The leader involves the team in decisions. "What do you think?" Boosts morale.
• Transformational: A visionary leader who inspires people to change and improve.

Motivation Theories

You need to know these three big names:

1. Taylor (Scientific Management): Believed workers are motivated only by money. He suggested "Piece Rate" (pay per item made).

2. Maslow (Hierarchy of Needs): Suggested we have a pyramid of needs. You can't motivate someone with "status" (top of pyramid) if they don't feel "safe" or have enough money for food (bottom of pyramid).

3. Herzberg (Two-Factor Theory):
- Hygiene Factors: Things that don't motivate us, but make us unhappy if they are missing (e.g., clean toilets, fair pay).
- Motivators: Things that actually make us want to work harder (e.g., achievement, interesting work).

Key Takeaway: Motivation isn't just about a paycheck. While Taylor focused on cash, Maslow and Herzberg showed that feeling valued is just as important.

5. Rewarding and Developing People

How do we pay and grow our talent?

Financial Rewards (The Money)

• Wages: Paid hourly.
• Salaries: Fixed annual amount.
• Commission: A bonus for every sale made.
• Performance-Related Pay (PRP): A bonus for hitting a specific target.
• Fringe Benefits: "Perks" like a company car or private healthcare.

Non-Financial Rewards (The "Feel Good" Factors)

• Delegation: Giving a subordinate the authority to perform a task.
• Empowerment: Giving employees more control over their working lives.
• Job Enrichment: Making a job more interesting by giving more challenging tasks.
• Flexible Working: Remote or hybrid work (working from home).

Common Mistake to Avoid: Don't confuse Job Enrichment with Job Enlargement. Enrichment is about making the job "deeper" (more responsibility), while enlargement is just making it "wider" (giving someone more of the same boring tasks).

Key Takeaway: A mix of financial and non-financial rewards is usually best for keeping a workforce happy and productive.

6. Employer and Employee Relations

Finally, how do bosses and workers get along?
Employee Voice: This is how workers can influence the business. This can happen through:
- Trade Unions: Groups that represent workers to negotiate better pay or conditions (Collective Bargaining).
- Works Councils/Forums: Internal groups where staff and managers discuss business issues.

Ethics in HR:
Modern businesses must follow a Code of Conduct. Key ethical issues include:
- Closing Pay Gaps (e.g., ensuring men and women are paid the same for the same work).
- Promoting Diversity and ensuring everyone feels they belong.

Key Takeaway: Good relations lead to fewer strikes and higher productivity. It's much cheaper to keep an existing employee happy than to hire a new one!