Chap 7.

4: HRM Strategy

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I. Approaches to HRM
The medium- to long-term plan put into ac3on to accomplish the business's human resource
(HR) goals is known as a human resource strategy. It is a crucial component of every
company's human resource management strategy (HRM)

Hard HR strategy
Hard HRM refers to a stringent and inconsiderate approach to human resource management. Its
features are as follows:
• Using personnel as a resource as effec<vely as possible.
• The pays given are as liAle as possible.
• Employees are obtained as cheaply as possible.
• They are controlled and then made redundant when necessary.
• More likely to be under autocra'c leaders.
• Has a nega<ve impact on mo<va<on levels

Advantages
• Managers able to retain greater control
• Less delega<on results in faster processes and decision-making.
• Allows for cost-saving and generally low costs

Disadvantages
• Failure to develop a long-term rela<onship with the employees
• Can result in subpar work and failure to achieve company goals.
• Can lead to significant labour turnover and demo<vated workers

So= HR strategy
SoD HRM refers to a much more considerate, lenient, and valuable approach to human
resource management. Its features are as follows:
• Trea3ng employees as an asset valuable to the business.
• Employee growth and development are given top priority, boos3ng long-term business
poten3al and success..
• Most likely to be adopted by democra3c or laissez-faire leaders.
• Promotes more mo3va3on and a sense of community inside the organisa3on.

Advantages
• Increased poten<al to aAract and retain skilful and valuable employees
• Enhances the brand's reputa<on and the company's goodwill
• Empowerment boosts output per worker and elevate the standard of work
• Higher mo<va<on leads to low labor turnover

Disadvantages
• Costs of training can increase liabili<es and indirect costs
• Costs will be incurred in order to raise pay rates and working condi<ons.
• Less able to adapt to shiKing market condi<ons.

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Comparing the two approaches of HRM

Hard HRM So= HRM

Pay is consulted between workers and

Low pay
managers

Very limited control over working life and Control given over working life through
business decisions delayering and empowerment

Only top-down communica3on Emphasis on training and development

Leaders tend towards theory X view of Leaders tend toward theory Y view of
workforce workforce
Internal recruitment and promo3on from
External recruitment to fulfil business needs
within developing the workforce for the
giving short term solu3ons
long term.

Judgemental appraisal Developmental appraisal

II. Flexible workforces

Workforces with a higher propor3on of temporary or part-3me workers than full-3me
workers. Businesses have chosen to have workforces that include a rising number of part-
3me, temporary, home-based, and employees whose hours can change each week.
Employing a flexible workforce can provide a company a compe33ve edge. A flexible
workforce can be adapted to the demands of the company. The company can hire more
personnel to enable it to enhance produc3on when demand and sales are high. When
business is slow and sales are low, it avoids was3ng money by keeping idle personnel on
staff.

Types of flexible workforces

Temporary workers
Employed for a predetermined amount of <me, frequently at busy <mes when more staff is needed.
When it's important to retain compe<<veness by matching the size of the staff to an<cipated sales,
this strategy is frequently taken into account. Example: People in the tourism industry and staff
employed at theme parks.

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Part-'me workers
Only hired for a frac<on of the typical work week, such as two to three days per week. Part-<me
employment requires working about 20 hours per week because a complete work week is typically
40 hours long. Example: Students working part-<me jobs in restaurants.

Core and peripheral workers

The periphery workers are only employed on a temporary or part-<me basis as needed.
In this manner, a company can adapt to shiKing market condi<ons by hiring more people as
necessary while retaining workers who make significant contribu<ons to the intellectual capital and
subsequent success of the company..

Annualized hours contracts

A predetermined amount of hours must be worked by employees annually. However, depending on
the workload during a specific season or <me, their working hours may go up or down. Example:
People working in agriculture and hor<culture.

Zero-hour contracts
Employees are employed by a business but are only paid and expected to do work when agreed by
both the par<es involved (employer & employee). Example: Event caterers, office cleaners, delivery
workers, people responsible for elderly care services.

Flexi-'me
A contract that provides a fair enough work-life balance as employees as expected to work a set
number of hours based on their own conveniences. Employees are beYer able to give 3me to their
personal and professional life separately and hence have improved levels of produc3vity.

Homeworking
There is no need for employees to commute to work because they may do their jobs where they
already reside. This not only makes it more affordable for the staff, but it also enables the company
to lower per-unit prices through a reduc3on in overhead. Technology advancements have made this
type of working incredibly convenient and commonplace.

Job sharing
A job arrangement in which two part-3me employees, each working for a predetermined
period of the week, together perform the du3es of a full-3me employee.

Compressed working hours

A flexible work arrangement that permits individuals to condense their typical work week
into fewer days. Employees consent to work a specific number of days each week, but they
may need to put in more 3me each day to make up for it.

GIG economy
The rise in temporary, flexible, or freelance labour that doesn't come with a promise of a
defined number of hours or salary. Such personnel are categorised as contractors rather
than employees. For a business, this can be an effec3ve way of controlling labor costs.
However, for the workers, work-life balance can be disrupted due to an unfixed number of
working hours, and their incomes are also insecure.

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Advantages of flexible working contracts
1. Suitable for people who have other commitments and are only available at specific hours
2. Can help employees meet a work-life balance
3. Allow companies to hire skilled workers without having to pay for training.
4. Keeps labor costs hence low enhancing price compe<<veness
5. able to build a reputa<on for offering flexible working op<ons
6. Reduc<on in training and other non-wage labor costs
7. Reduc<ons in the cost of employees' travel to work
8. Suitable for those who only work at certain <mes

Disadvantages of flexible working contracts

1. Employee pay will be smaller than that of full-<me employment.
2. Insecure employment and uncertain earnings
3. Lack of employee growth and development
4. Certain flexible contracts might undermine workers' performance and mo<va<on.
5. Effec<ve communica<on may be difficult to achieve
6. Issues with communica<on can arise between employers and employees.

III. Methods of measuring employee performance

Poor employee performance can have long-term effects that are damaging to the goals and
objec<ves of the company. Therefore, it is essen<al to periodically assess employee
performance and take steps to enhance it as determined appropriate by the firm and its
managers.

Some methods of measuring employee performance include:

A. Labour producJvity

Labor produc3vity evaluates the output per employee of a firm and is a key indicator of
employee success. Over a given period of 3me, the quan3ty of each employee increases in

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direct propor3on to labour produc3vity. This may be the simplest gauge of an employee
group's performance, because it affects a company's costs and, consequently, the prices it
can charge. The amount of output produced by produc3ve workers increases over 3me, and
this is a metric that is reasonably simple to compute.

The quan3ty and quality of capital equipment accessible to the workers, as well as their
skills and level of mo3va3on, all affect labour produc3vity.
Advantages of high labor produc<vity include:
• Ability to meet high demand
• Improved profits due to increase in sales
• Higher wages and beAer working condi<ons
• With growth in labor produc<vity, an economy is able to produce increasingly more goods
and services for the same amount of work.

B. Labour turnover

A indicator used to assess the rate of employee departures from a company over a given
3me frame, oDen one year. The cost for management to hire new staff rises as labour
turnover does, and corporate performance suffers as a result.

High levels of labour turnover may result from low pay and insufficient training, which lower
employee morale. Another factor is inefficient hiring prac3ses, which lead to the hiring of
the wrong personnel. Re3rement and redundancy are two more causes.

However, there are occasions when having a certain level of staff turnover is advantageous
for bringing in fresh talent and ideas. As a result, some managers could try to strike a
compromise between labour turnover and hiring expenses.

C. Absenteeism

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The rate of employee absence in rela3on with the total number of people employee by an
organiza3on. It is a good measure of employee morale and mo3va3on as there is no good
reason given for the employee’s absence.

There are several causes of absenteeism, including illnesses and workplace accidents. The
phrase is widely used to describe a scenario in which an employee rou3nely misses work
without jus3fica3on. As a result, it serves as a gauge for a workforce's mo3va3on and
morale. High absenteeism rates can significantly raise a company's expenses.

The higher the rate of absenteeism, the higher the business costs as labor produc3vity will
be reduced and it would take longer for the business to meet its long-term as well as short-
objec3ves

D. Health and safety

This indicator helps measure the absenteeism of employees due to health & safety reasons.
It is a good measure of the safety of the working environment, the condi3ons of which can
severely impact employee morale and health.

In addi3on to lowering employee morale, an unsafe workplace may also impair workers'
produc3vity. Absence brought on by workplace accidents and injuries raises a company's
labour costs and might generate nega3ve press.

A workforce with poor health and low morale is likely to be less efficient, hence affec3ng the
business and its aims adversely over a period of 3me.

Causes and consequences of poor employee performance

Causes
Poor employee performance can be aAributed to several factors, some of which include:
• Poorly designed jobs: jobs can be monotonous, have a limited range of du<es, or can be
too-stressful or <me-consuming.
• Autocra'c leadership and management styles: This prac<ce has a high degree of control
and has no degree of delega<on or empowerment which can make employees feel
controlled and unable to express crea<vity and freedom.

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• Demo'va'on: can be caused by low salaries, harsh working condi<ons, or a toxic work
environment.
• Insufficient resources: lack of investment in employee training and physical resources like new
machines.
• Ineffec've systems of recruitment and selec'on: ineffec<ve HRM can recruit employees which
do not possess the skills that the job requires in the first place

Consequences
The consequences of a poorly performing workforce are as follows:
• Compe<<ve disadvantage
• Poor reputa<on
• Poor long term performance
• Inability to meet departmental and organiza<onal goals
• Lack of innova<on

Strategies for improving employee performance

Training
By giving employees the necessary and new abili<es to execute the work at hand and keeping them
informed about current business trends and working innova<ons, training is an effec<ve technique
to raise employee performance within an organisa<on.

Advantages Disadvantages
Improve performance in terms of health &
Training can be costly
safety by acquain<ng workers
Can improve employee mo<va<on and Beneficial when employee performance can
confidence give a dis<nct USP

Improves business reputa<on as an Employees can leave once relevant skills are
organiza<on that cares for its employees acquired for beAer opportuni<es

MoJvaJon
The key to increasing worker produc<vity and lowering turnover is to mo<vate the workforce. A
company is more likely to prosper in the long run when its personnel is commiAed to working for the
advancement and fulfilment of organisa<onal goals.

Advantages Disadvantages
Too much delega<on can increase business Employees might form inner circles and rebel
risks against the management

Might have to redesign jobs or give monetary

Help reduce labor turnover and absenteeism
incen<ves hence can be costly

Help achieve business objec<ves and market Can reduce employee accountability and
compe<<veness efficiency if too much control is given up

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Pay systems
They aim to provide a monetary incen<ve in order to improve employee performance. A piece-rate
or a performance-related pay can be used to reward employees based on their output levels.
A newer approach is team pay which pays members based on the output levels that they achieve as
a team. As compared to individual merit pay, can provide addi<onal benefits like team-working and
improved organiza<on culture.

Advantages Disadvantages
Employees can become money-centric and not
Help improve sales in periods of high demand
focus on improvement

Can help achieve improved level of output i.e. Employees can focus on producing too much
improved labor produc<vity while compromising on quality

IV. Management by objecJves

A system implemented to increase mo<va<on and performance by breaking down organisa<onal
goals into more manageable divisional and departmental goals that help employees stay on track
and iden<fy their roles within the organisa<on.

A technique like this can involve workers in decision-making and help them understand their roles
and responsibili<es at work, which will greatly increase their mo<va<on to contribute.

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The usefulness of MBO

Advantages Disadvantages
Some employees may find the sefng of targets
Greater mo<va<on level of employees
threatening

Improve communica<on within the There is a need for all employees to be

organiza<on commiAed to achieving the same overall goals

MBO can iden<fy managerial and employee Sefng goals for highly skilled staff can be
development requirements challenging

All employees may be able to sa<sfy some of Goals can easily become outdated, they may
the higher requirements listed by Maslow need to be renewed on a regular basis.

V. Role of technology in HRM

All different industries have been greatly impacted by the development of technology. The
management of employee data and group collabora3on within firms has also been
impacted.

Types of technology and HRM:

1. Data analyJcs: Use of AI and the subsequent availability of data through cloud-based
storage systems has transformed the amount and access of informa3on to HR
specialists.

2. Cloud compuJng: Helpful for storing vast amounts of data which can be made use of
by managers, HR professionals, and employees to encourage collabora3ve working.

3. Mobile technology: Increased and improved communica3ons between HR, current

employees, and poten3al employees.

4. Social media: Inexpensive medium of communica3on, team-building, and

recruitment and selec3on as well

5. The internet of things (IoT): Provide access to and gather data from employee
wearables and other devices through working with AI and cloud compu3ng.

How technological advances affect HRM

With the accessibility and broad adop<on of the HRM technologies men<oned above, HR
managers and experts are well-equipped and significantly more produc<ve in their daily

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opera<ons. In addi<on to making their work easier and much more profitable, technology
developments have also had a significant posi<ve impact on employees..
The most prominent ways in which HRM has been affected are:
• Replacement of physical files with databases that make record-keeping, searching,
and analyzing much easier.
• HR managers spend less <me on administra<ve tasks.
• It allows payroll and employee updates to be made much more quickly and
efficiently.
• HR managers can devote a greater amount of <me to strategic maAers like improving
the corporate culture or focusing on change management.

Recruitment and selec'on

One of the most expensive business procedures is hiring new employees, par<cularly when
it comes to senior professionals who play important decision-making and intellectual capital
roles. Newer technologies including AI and social media apps have reduced the costs of
recruitment to a great extent in the following ways:

• Applica<ons like Linkedin help recruiters and poten<al employees build connec<ons
easily.
• AI helps extensively in the scanning of several candidate applica<ons to pick out the best
and most desirable ones, quickly and much more efficiently.
• AI can help perform several func<ons like conduc<ng interviews through chatbots, and
evalua<ng the hard skills required to complete a job.

Managing employee performance

Employee performance was managed through appraisals, and those who performed well
were rewarded with raises or other incen<ves. Performance-management tools have been
developed thanks to technological improvements, which greatly simplify the process.. Their
features include:
• Tracking employee performance regularly
• Giving employees feedback on their own performance
• Update tasks to be performed from <me to <me
• Allow other employees to provide feedback to an employee’s performance
• Can include wearables worn by employees that keep a track of a certain task

Improved communicaJon between HR and employees

Modern <mes have made outdated prac<ses like email messaging obsolete due to newer
forms of communica<on channels. Older means of exchanging files and communica<ons,
such Hotmail, Yahoo, and others, have been superseded by new apps and soKware, like
Skype, Zoom, WeTransfer, and Slack.

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As <mes progress, the adop<on of newer technologies not only keeps a business up-to-date
but also makes communica<on between employees and managers much faster and more
efficient as they make use of newer soKwares that include many more features than the old
ones.

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 2021 – Jun - P32 - Q2 – Inolla - 8 marks

Q-Assess the effecJveness of Inolla’s approach to human resource management (HRM).

Human Resource Management is concerned with well-being of the workforce, as well as

mo3va3ng, recrui3ng, dismissing, managing them, etc.
The data in Table 1 shows that labor turnover increased from 20% to 30% within a year,
which is a 10% increase. which suggests that there is a fundamental problem that is causing
workers to leave, for example, lack of mo3va3on. Inolla will have to hire new workers.
However, this only adds to the cost of the business as Inolla will have to train and recruit
new employees. Furthermore, worker absenteeism has also increased to 2 days per worker.
This problem can also be aYributed to demo3va3on of the workforce and can be countered
by providing workers with more flexible job op3ons such as the ability to work part-3me or
sign up a zero hour contract with Inolla.

Labor produc3vity is has also decreased from 2000 units to 1800 units which is a 20%
decrease. This means that perhaps due to low mo3va3on, workers are producing less
output, which is detrimental to Inolla as it increases cost of produc3on. In order to counter
this, Inolla will have to increase its output, which can be difficult to do as they are way
behind their target of reaching 400%.

Moreover, faulty units have increased form 2.0% to 2.5% which is a 0.5% increase. This
maybe due neglect and demo3va3on of workers as they produce the output- in this case-
electric scooters. In order to make sure these future problems to not arise again, Inolla will
have to fundamentally make some changes in its management style, for instance. Neten has
been the opera3ons manager since 2017 and he prefers using he hard approach which
causes problems such as demo3va3on resul3ng in increased labor turnover, lower
produc3vity and more faulty units.

These problems can be solved if either Inolla uses a soD approach in HRM or Neten is
retrained/ replaced by a newer manager. Workers at Inolla are only trained in the specific
skill they require making the work mundane resul3ng in demo3va3on and its consequences.
A solu3on to this problem is job enrichment which can be done through increasing
autonomy, skill and task variety, providing feedback, and so on. By not doing so, Inolla also
loses the opportunity to get new ideas/input front the workers themselves.

In addi3on, Neten should delegate workers. And include them in the decision making
process as this will result in a stronger workforce. Moreover, workers are paid a minimum
wage for reducing labour cost which is beneficial for Inolla. However, this may cause an
increased risk of poaching bringing in a greater disadvantage to Inolla. The defense against
job poaching is a solid employee reten3on plan that ensures that pay rates are compe33ve
and seeks a high level of employee engagement.

Inolla should allow its workers to join trade unions may provide benefits to Inolla as well.
Workers who belong to a union oDen feel that they have numerous advantages over other
workers, so they may stay with current employer to con3nue to enjoy those advantages.

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This reduces turnover and will bring stability to Inolla and the staff itself. Furthermore,
unionized opera3ons see an increase in overall produc3vity. The most experienced workers
stay on the job and avoid mistakes that lower produc3vity. Unionized workers can influence
working condi3ons under poten3ally dangerous circumstances. As unions typically
emphasize keeping workers healthy and injury-free. This can mean a lower rate of injury,
absenteeism and workers' compensa3on in occupa3ons in high-risk jobs such as working in
the factory for electric motor scooters. Lastly, union agreements can establish formal lines of
communica3on between workers and management that offer an effec3ve, two-way street
for raising issues and solving problems.

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 7.1 OrganizaJonal Structure
2018 – Nov - P31 - Q1 – Swish Umbrellas - 8 marks

Q- Analyse the advantages to SU of its workers being in a trade union.

Trade union is an organiza3on of working people with the objec3ve of improving the pay,
working condi3ons and providing legal support to their members. SU employes 380 people
to make umbrellas and 60% of them belong to a trade union and this percentage is
increasing. However, SU does not recognize the trade union which means SU is resis3ng to
conduct nego3a3ons on pay and working condi3ons with the trade union. This is causing a
higher rate of labor turnover and other difficul3es like recrui3ng.

SU would be able to nego3ate with one officer or leader from the trade union collec3vely
rather than with individual workers. As the leader would nego3ate with SU on behalf of all
the employees communica3ng each individuals concern. This saves 3me for SU as they
would not have to nego3ate with all 380 workers themselves. It also prevents workers from
feeling that one individual has obtained beYer pay and condi3ons than others. The union
system could provide an addi3onal useful channel of communica3on with the workers-two
way communica3on in the sense that workers problems could be raised with management
by the union and the plans of the employees could be discussed via the union organiza3on.
This will make SU employees feel listened to and it may lead to increase in their mo3va3on
levels and a fall in the rate of labor turnover.

Since SU is deciding to move all the produc3on to new factory which is not sinng well to
many workers that do not want to be transferred to the new factory, those workers may
engage in strike ac3on which will disrupt the produc3on of umbrellas, leading to higher
wastage and greater costs. But trade unions can impose disciplinary measures on members
who plan to take hasty industrial ac3on that could disrupt a business-this makes such
ac3ons less likely.

Knowledge of working condi3ons in other businesses will help raise the standards of SU. If
trade union take necessary measures to make sure that beYer working condi3ons, fairer
treatment of employees and other employment laws like over 3me pay and maternity leave
etc are implemented. This would raise the standards of SU and it will also help improve
reputa3on and aYract ethical customers leading to higher sales. Job security would also
increase due to employment contracts ,that SU would benefit from as well, as higher
mo3va3on would lead to increased produc3vity and lower costs. Furthermore, it will lead to
lower absenteeism and labor turnover and easier recruitment since most workers are
aYracted to those firms that recognize trade unions.

The growth of responsible, partnership unionism will give SU an invaluable forum for
discussing issues of common interest and making new workplace agreements. Very oDen,
these will lead to increased produc3vity, which should help to secure jobs and raise profits.

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 2017 – Jun - P31 - Q1 - Tango Travel Company - 8 marks

Q - Analyse the benefits for TTC of using flexible working contracts.

Flexible working describes a range of employment op3ons designed to help employee

balance work and home life. It relates to working arrangements where there are variety of
op3ons offered to employees in terms of working 3me, working loca3on and the paYern of
working.

The benefits to TTC of using flexible employment contract is that it could gain the benefit of
cost advantage by hiring mul3-skilled and cheap labor in order to become compe33ve in the
industry and focusing on the low-cost strategy of all its opera3ons. This can be done by
recrui3ng employees on zero-hour contracts during seasonal increase in demand for holiday
packages or when the business is having its peak 3me of increased sales. Zero-hour
contracts would enable TTC employees to provide services to customers on a daily basis
which means that through e-commerce the business would be able to generate more than
40% of the sales as opening hours/services would be extended. This would also save the cost
of the business as it would not have to provide accommoda3on for its staff and only
minimum legal wage would have to be paid to the workers so this would not increase the
overheads of the business and would reduce its fixed cost since the business would be
temporary closed during off-season. However, training would have to be provided to
workers but it would enhance the image/reputa3on of the TTC in the long-run as its
employees would become skilled. This would also boost the morale and mo3va3on of
employees and they would provide quality services to consumers.

Another employment benefit to TTC is that it has a small core of full 3me employees in its
head office that is working for providing other services as well such as foreign currency or
car hire so if any immediate problems occur, the employees would be available to deal with
them so that customer 3me and cost should be saved and reputa3on of the business but
higher salaries would be paid to them as they are skilled as well as pensions and free
healthcare which would increase the cost of TTC but the benefit of these full 3me
employees is that they help in genera3ng new ideas for TTC so that it would become more
compe33ve in the industry and provide quality packages of holidays to employees.
Moreover, TTC can deal with them any3me to work on problems to discuss solu3ons and
services as they are on full employment contract.

Despite that some of the employees are recruited from Country X because of low income
countries that is because they only require basic legal minimum employment condi3ons
which would save the cost of the business and would lead to higher profitability. These
employees would not have to provide with basic health and other requirements which
would further lead to cost savings. These foreign workers could also flexibly work through
job rota3on by providing them with services such as cleaning, was3ng or driving so TTC
could generate USP by savings or becoming cost effec3ve.

This would lead to higher reputa3on and would enable them to become more compe33ve
into the market/industry. These employees can also provide part-3me services during

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seasons of increased demand so higher salaries would also be not paid to them which would
lead to higher profitability for TTC.

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