Unit 2.1 Introduction to Human Resource Management PDF

Chapter 7 Unit 2.1 Introduction to human resource management ''Athousand workers,a thousand plans." - Chinese Proverb Contents 2.1 Introduction to human resource...

Chapter 7 Unit 2.1 Introduction to human resource management ''Athousand workers,a thousand plans." - Chinese Proverb Contents 2.1 Introduction to human resource management SL/H L content Depth of teaching Role of human resource management AO2 Internal and external factors that influence human resource planning. AO2 For example: (i) demographic change, (ii) change in labour mobility, (iii) immigration, (iv) flexi-time and (v) gig economy Reasons for resistance to change in the workplace AO2 Human resource strategies for reducing the impact of change and AO3 resistance to change © IBO,2022 Role of human resource Disciplinary, grievance and disciplinary procedures management (A02} Looking after the welfare (wellbeing) of employees. H uman resource management (HRM) is the Human resources are important to an organization as they add management function of deploying and developing value to its output (see Chapter 1). This can be achieved by people within an organization to meet its business increasing labour productivity (output per worker), improving objectives. This entails interrelated roles, such as: product quality, creating new ideas and providing better customer service to enhance the overall purchasing experience Human resource planning (also known as workforce of customers. Consider, for example, the differences in your planning) experience as a student with and without an experienced and GI u.,.._ C dedicated classroom teacher. :I GI The recruitment, selection and induction of new employees 5t E GI GI._ OI Many entrepreneurs argue that human resources are an C ftl ftl C Training and development of employees organization's most valuable resource. Employing the right E ftl :s E people helps businesses to achieve their organizational ::c Performance management and staff appraisals objectives. To do this, a firm needs to use human resource planning (or workforce planning) - the management process Reviewing pay and remuneration packages of anticipating and meeting an organization's current and future staffing needs. The workforce refers to the number of employees 95  Topic 2: Human resource management in an organization at any one point in time. Workforce planning in the UK on a salary of £40,000 ($56,000) who left after just 8 can be short term or long term, although it is an ongoing process months costs the business £132,000 ($185,000) - equivalent to for most businesses: 330% of the salary of that person. Short term human resource planning deals with the existing and upcoming demands of an organization, such as employing workers to replace staff who are due to resign, retire or go on maternity or paternity leave. Long term workforce planning looks at the human resource needs of the business in the foreseeable future. For example, the Walt Disney Company recruited and trained employees up to two years before Hong Kong Disneyland was opened. Figure 7.1 - Effective human resource management helps to Human resource planning can be achieved by looking at: keep costs down Historical data and trends - This could include data about Nevertheless, human resource planning is an essential role of the changes in the size of the workforce over the past few any business and its strategy. If managers do not make the most years or the proportion of staff on part-time contracts or of their human resources, the organization will face a number flexible working hours. However, past data and trends are of problems (the 5 Rs): not necessarily indicative of what will actually happen in the future. Recruitment - Higher costs of recruitment, induction and training. Sales and income levels - Higher levels of income and spending in the economy will lead to more jobs being Resources - Increasing amounts of resources and created. management time spent on dealing with personnel problems, rather than on achieving organizational Labour turnover rates - These measure the number of objectives. employees who leave a firm as a percentage of its workforce, per year (see Chapter 10). The higher the staff turnover Reservations - Lower morale and higher levels of uncertainty rate, the more workers a firm will need to recruit and train. suffered by existing staff who experience continual change mean that employees are more reserved and less productive. The flexibility and workload of employees - A highly flexible and skilled workforce may be able to cope if there is a Returns - Lower levels of labour productivity, profits and sudden shortage of staff. In a firm where people are over- competitiveness. specialised and where workload is mounting, it might be more appropriate to employ more people. Reputation - Poorer corporate image as the business cannot retain or motivate its staff. Demographic changes - Government data regarding changes in the demographics of the workforce, such as the cu u.,. changes in the number of female workers in the economy._ C :s cu or the number of graduates, can help managers to forecast Business ManagementToolkit ~E cucu.. en their human resource needs. To what extentmightthe useof STEEPLEanalysis(see C n, Chapter 46) be used for strategichuman resource n, C E :s "' E Human resource planning consumes a lot of time and money. planning? :::c Market analyses consistently show that poor recruitment practices cost businesses a huge amount of money, resources and time, including the time spent correcting the mistakes made by their staff. For example, a recent report by the Recruitment and Employment Confederation showed that for an employee hired 96  2.1 Introduction to human resource management Internal and external factors part-time. This gives businesses and staff greater flexibility in determining working hours. that influence human resource planning {A02) A distinct demographic change in high-income countries is increased longevity, i.e. people, on average, are living longer. Internal and external factors that influence human resource Coupled with a declining birth rate in these countries, an planning, for example (i) demographic change, (ii) change in labour mobility, (iii) immigration, (iv) flexitime and (v) gig ageing population (when the average age of the population economy. increases) has the following effects: © IBO, 2022 Increased dependent population - The dependent population I nternal factors (those within the control of the business, consists of people who are below the legal working age, such as flexi-time) and external factors (those beyond the those out of work and the retired population. They are control of the business such as immigration) both influence 'supported' by the working population of taxpayers. With human resource planning. an ageing population, fewer people will be working in proportion to those who have retired, which adds further pressure on taxpayers to contribute towards government {i} Demographic change expenditure to support the dependent population. The supply of human resources in a country is affected by demographic changes in the workforce. Demography is the Reduced labour mobility - Younger people tend to be more statistical study of population characteristics and trends. geographically and occupationally mobile. They have Businesses need to understand these changes so that they can fewer reservations about moving to different places and respond appropriately with their human resource strategies. jobs, including those based overseas. Labour immobility Demographic changes can be caused by changes in various reduces the flexibility and international competitiveness of factors, including: a country's workforce. The net birth rate - This is the difference between the Changes in consumption patterns - Different age groups number of births and deaths for a given period of time, have different spending patterns. Children, for example, usually per year. Countries with a high net birth rate will, may spend a large proportion of their money (or that of in the long term, have a larger supply of human resources. their parents!) on toys and schooling. Retired people are likely to spend a larger proportion of their money on The net migration rate- This measures the difference between holidays and healthcare related goods and services. Hence, the number of people entering a country (immigrants) an ageing population can create different opportunities for and the number of people leaving (emigrants). If the net businesses to cater for more mature age groups. migration figure is positive, the supply of human resources will tend to increase. Change in employment patterns - With more people going to university, the average age of people entering the workforce The retirement age - This is the legal age when people has also risen. Coupled with an ageing population, this can stop work and claim money from their pensions. If means that businesses are more likely to retain staff beyond the retirement age is raised, it automatically increases their retirement age due to labour supply shortages. Some the number of people in the labour force (those of legal firms might even consider relocating overseas if domestic working age). Many economies, faced with an increasing labour supply is insufficient or not suitable. Hence, the GI u.,.._ C number of elderly people, have increased the retirement shortage in labour supply caused by an ageing population :I GI age. For example, Germany and Belgium have plans to will affect workforce planning, recruitment and training. 5t E GI GI._ OI gradually increase their retirement age to 67 for both men C ftl ftl C and women by 2029 and 2030 respectively. E ftl :s E ::c Females entering or returning to the workforce - An increase in the female participation rate will boost the supply of human resources in the economy. In many societies, there has been an increase in the number of women working 97  Topic 2: Human resource management Question 7.1 - 332 million Americans In October 2006, the population of the USA reached a new milestone figure of 300 million, making it the third most populated nation on the globe. The last milestone of 200 million people was recorded in November 1967. The population had exceeded 332 million by 2021, with the population increasing by 1 person per 18 seconds. Some people question America's ability to sustain its population growth, given that it is the largest consumer of the planet's scarce resources, despite its ageing population. There are also concerns as forecasts show that the population will reach 400 million by 2050. (a) Define the term ageing population. [2 marks] (b) Explain two threats created by the demographic changes in the USA. [4marks] (c) Explain two business opportunities provided by the demographic changes in the USA. [4marks] (ii} Changes in labour mobility The mobility of labour is the extent to which people can move The cost of living in particular places, such as the higher to different locations (known as geographical mobility) and their cost of housing and other expenses in city districts, can flexibility in changing to different jobs (known as occupational deter people from relocating to these areas, thus limiting mobility). The more mobile workers are (both geographically the potential supply of labour. and occupationally) the higher the supply of labour tends to be. Labour can be geographically mobile, especially within a Language and cultural differences also tend to limit the country, but there are limitations: international mobility oflabour ( see immigration oflabour below). Friends and family ties tend to be the key constraint for cu u.,. most people's geographical mobility. The degree of occupational mobility will depend on numerous._ C :s cu factors, which include: ~E cucu Relocation costs (moving expenses) such as re-mortgaging.. en C n, real estate and consideration of different house prices or Occupational mobility tends to be greater with acquired n, C E :s "' E the cost of rent. attributes of a worker (such as educational attainment, :::c qualifications, skills, experience and training). Fear of the unknown means that people might prefer 'home comforts' (familiarity). Uncertainties can be daunting for As mentioned above, younger people tend to be more many people, such as uprooting the family and finding new occupationally mobile as they often change careers. Mature schools for the children. workers may think they are too 'old' to retrain or may have 98  2.1 Introduction to human resource management more financial commitments so are less willing to take {iii) Immigration risks by changing careers. In a globalized world, ever more people are migrating for work purposes. The United Nations defines a migrant worker as "a Some workers are immobile because they are highly person who is engaged in a remunerated activity in a State of specialised in their area of expertise, such as brain surgeons which he or she is not a national", i.e. anyone working outside and aircraft pilots. These people may find it more difficult their home country. For example, millions of Filipino and to seek employment opportunities in other industries. Indonesian women work overseas as domestic helpers in countries such as Singapore, Malaysia, Saudi Arabia and the If employers discriminate against people's age, gender, United Arab Emirates. Net migration measures the difference religion or race then this will also hinder the occupational between the number of people entering a country (immigration) mobility of workers. Changes in employment laws and the and the number of people leaving (emigration). enforcement of anti-discrimination employment practices will therefore improve labour mobility. Migrant workers contribute to the economic growth of the host country through their production, consumption and the Changes in labour mobility have intensified the number of payment of taxes. Many migrant workers also remit a significant people working in the gig economy (see below). Part-time proportion of their pay back to their home country, thus staff also help to provide more workforce flexibility. In many benefiting the country of origin. There are numerous reasons countries, an increasing number of people work part-time. This for the migration of workers, such as: is partly due to the greater number of females and full-time students (at university and college) opting to work part-time as Pay and remuneration - Many multinational companies well as the benefits of labour flexibility. attract migrant expatriate workers, especially those in senior posts, by offering them better pay and remuneration A key advantage to a business hiring more part-time staff is that (such as relocation allowance, subsidised housing, medical they are cheaper to employ. Part-timers are generally entitled cover and education allowance for those with children). to lower remuneration (pay and benefits) compared with their Migrant workers might also choose certain countries for full-time counterparts and are easier to replace if need be. There their low tax rates (see Table 7.1). is also a large pool of people that can work part-time. This helps to keep wages relatively low and gives businesses greater Employment opportunities - Unemployment and poverty flexibility. For example, it is easier to adjust working hours to may prompt many workers in low-income countries to accommodate fluctuations in demand. Hours can be reduced seek employment elsewhere. At the same time, high- during off-peak periods and raised again during busier times. income countries that experience economic growth have an increased need for labour, especially low-skilled workers. However, part-time employees tend to feel less valued and therefore are less loyal to a business. This can negatively affect Seasonal factors - Agricultural workers, for example, might the level of motivation, productivity and labour retention. migrate during off-peak seasons to find employment in Furthermore, a huge amount of time and resources are needed other countries. to hire, induct and train new part-time workers. As labour turnover tends to be higher among part-timers, this on- Domestic instability - Political instability, the lack of going process can be expensive and uses up a lot of valuable security and limited business opportunities in the domestic management time. It may therefore be more cost effective for economy are key drivers for migrant workers. some businesses to hire full-time workers from the outset. GI u.,.._ C Higher standard of living - Migrant workers seek a better :I GI lifestyle so immigration can provide such possibilities. iE GI GI._ OI Theory of Knowledge{TOK) Working overseas may provide better career prospects for C ftl ftl C Why is it that despite having a lower average life migrant workers and more educational opportunities for E ftl :s E expectancy and the existence of equal opportunities their children. ::c laws, no country allows men to retire earlier than women? 99  Topic 2: Human resource management Table 7.1 -Tax rates (max% rate, for selected countries) Two common forms of flexitime are teleworking and Country Corporate Income tax Sales tax homeworking. Teleworking, coined by management tax consultant Jack Nilles in 1973, refers to working away from Australia 30 45 10 the office by using electronic forms of communication, such Canada 15 33 5 as telephones, the Internet and email. It is popular in the India 40 30 18 USA, Canada, Sweden, Finland and the UK. The trend has been partly due to increasing problems commuting in central Mexico 30 30 16 business districts but mainly due to the technological advances. New Zealand 28 39 15 Examples of businesses that commonly use teleworking include Poland 19 32 23 insurance firms, banks, market research firms and airlines. Romania 16 10 19 These businesses have 'call centres' where a dedicated team of Spain 25 24.5 21 workers deal with customer enquiries and complaints on using Turkey 22 35 18 telecommunications technologies. This frees up management Vietnam 20 35 10 time at individual branches as they do not have to deal with so many enquiries from customers. Teleworkers can be mobile, Source: adapted from http://www.worldwide-tax.com/ such as salespeople who spend a significant amount of their time commuting and visiting clients. Despite attempts to achieve effective human resource planning, external influences affect the accuracy of the forecasts. This Homeworking is an aspect of flexitime whereby people work is because businesses are constantly exposed to the forces of from their own homes. According to the International Telework change (see Chapter 46), such as an economic recession which Association and Council (ITAC), the number of people reduces the demand for human resources. working from home in the European Union pre-COVID-19 (during business hours) was approximately 15% but rose to {iv} Flexitime almost 40% by 2020. With advances in technology (such as wireless and mobile technologies) which allow employees to The traditional working hours for many industries was typically operate in almost any location, the number of homeworkers from 9am until 5pm on Mondays to Fridays. This rigid system and teleworkers will continue to rise post-pandemic. The no longer applies in the vast majority of businesses and advantages and disadvantages of teleworking and homeworking countries. One alternative is to use flexitime (short for flexible for employees and employers are outlined in Tables 7.1 and 7.2. time), a system which requires employees to work for a core period (say from 9am to 1pm) but the rest of the time is flexible. This means that employees have autonomy to determine when they will work, subject to them getting their work completed by set deadlines. For example, a worker who is required to work a 36-hour week might be able to work 9-hour shifts from Monday to Thursday and have Friday off. Flexitime is increasingly popular in the UK and USA, especially following the COVID-19 pandemic that spurred the growth in the number of people working from home (see Tables 7.1 and CII 7.2). Legislation in the UK, introduced in 2003, made flexitime u..,._ C :S CII more accessible to parents of young children. The law was st E.."' CIIC11 extended in 2007 to give carers of adults the right to request C n, flexitime from their employers. Offering flexitime can improve n, C E :s "' E a firm's image as it is seen to be providing equal opportunities to ::c staff who are unable to work standard hours due to their other important personal commitments. They also help to reduce the need for paying staff to work overtime. Flexitime can also be beneficial to employees as it gives them a greater degree of freedom to balance their work-life responsibilities. 100  2.1 Introduction to human resource management Table 7.1 -The advantages and disadvantages of teleworking and homeworking for employees Advantages Disadvantages Job opportunities, especially for those living in remote There is a huge reliance on the use and reliability of ICT areas. software and hardware. Suitable for those who have to care for family members, Workers, partly due to the nature of flexitime, often exceed such as parents of young children or carers of elderly their contracted working hours. parents. Workers might suffer from social isolation (including Flexible working hours. boredom). Benefits of not having to commute, such as travel costs, There is often less job security and less trade union time and stress. representation for workers. Autonomy in decision-making and choice of how to best Employees are likely to face distractions working at home, organize work. especially those with young children and pets. Possible income tax allowances for using personal property Teleworkers and homeworkers tend to suffer from a lack of for employment purposes. authentic training and career development opportunities Lower costs of technology mean that more people can afford to work from home. Table 7.2-The advantages and disadvantages of teleworking and homeworking for employers Advantages Disadvantages. Reduced overheads due to savings on prime locations and. Set up costs, such as the cost of ICT equipment, can be office space. very high.. Flexible and extended working hours can be offered to. Flexitime requires tight control in recruitment processes customers. as not everyone has the desired traits, such as initiative, experience and self-motivation.. Flexible working practices enable firms to adjust for peak and off-peak trade.. Management, monitoring and control are more difficult as workers are off-site.. Continuity of services from those hiring workers with young children or other dependents.. Technological breakdowns can cause major disruptions to flexitime workers.. Flexitime workers have lower absenteeism rates than office workers.. Flexitime is not always possible, such as insufficient working space at home or the lack of security and confidentiality of GI. Provides flexibility to deal with working time directives data being held at home. u.,... :I GI C (laws) that govern the maximum hours of work per time 5t E period. GI GI.. OI C ftl ftl C E ftl :s E ::c 101  Topic 2: Human resource management of core staff and employing more part-time workers also helps businesses to reduce their labour costs. Likewise, workers will have to be more flexible and adaptable. There is no longer such a 'job for life' and people have to be prepared to move between occupations and perhaps industries to maintain employment. However, a multi-skilled and flexible worker will be highly attractive to potential employers. Keyconcept Figure 7.2 - An increasing number of people are choosing to Discuss the ethical issues regarding the growing trend work from home or flexitime which enables an increasing number of people to work from home. Flexible work patterns, practices and preferences, such as teleworking, homeworking and portfolio working (see the 'gig economy' below), have meant that the average number of hours worked has increased. This has happened despite employment laws in some countries, such as within the European Union where there is a maximum working week of 48 hours. Charles Handy's theory of the shamrock organization (see Chapter 8) suggests that businesses will gradually use fewer core staff to improve their flexibility. For example, firms are increasingly outsourcing projects and using consultants as part of their human resource planning. Reducing the number Question 7.2 - McDonald's McDonald's is the most globalized fast-food restaurant in the world, with over 38,000 outlets in 120 countries. Part of its successful growth strategy has been the ability to adopt flexible work practices. A significant number of the workers at McDonald's are students hired on a part-time employment contract. In Australia, the company uses the catchphrase "Your money, Your hours, Your way'' as part of its recruitment plan. McDonald's actively encourages students to apply for jobs at their restaurants by using slogans such as "Freedom to earn and learn" and "Freedom to fit work around your life" on its website (https://mcdonalds.com.au/). In countries that encourage flexible work practices, McDonald's has been able to open some of its stores on a 24-hour basis. (a) (i) Define the term growth strategy. [2 marks] cu u.,.._ C :s cu (ii) Outline what is meant by part-time employees. [2 marks] ~E cucu.. en C n, (b) Examine the costs and benefits of flexible work structures to McDonald's and its employees. [6marks] n, C E :s "' E :::c (c) Discuss the likely consequences offlexible work practices on the human resource planning, recruitment and training at McDonald's. [10 marks] 102  2.1 Introduction to human resource management (v) Gig economy The gig economy refers to labour markets where workers are typically on short-term, flexible and temporary contracts. It also includes people who carry out freelance work as independent contractors. Workers in the gig economy do not have permanent employment contracts. Instead, they are often on-call or on-demand whenever needed to provide services to the firm's clients. The term comes from the performing arts where artists such as musicians and comedians are paid for individual appearances at events known as "gigs:' The gig economy typically involves gig workers and independent contractors connecting with clients or customers through an online platform. For example, customers might use DoorDash's online app to book food delivery to their place of work or residence. Other examples of gig economy services are shown in Box 7.1. There has always been a market for freelance and independent work, but the nature of disruptive technologies has rapidly expanded the size and scope of the gig economy. William Bridges wrote about similar trends in his book, Job Shift (1994). He used the term dejobbing to explain the increasing number of people becoming independent workers rather than the conventional meaning of being an employee. Figure 7.3 - Gig workers are independent contractors GI A Reuters report in 2017 found that 34% of the workforce (or u..,._ C around 60 million people) in America consisted of gig workers :I GI ~E and that this number is expected to rise steadily. A Mastercard GI GI.. en report published in 2019 predicted the gig economy in the US C Ill Ill C would be worth at least $455 billion in 2023. The outbreak of E Ill :IE the COVID-19 coronavirus caused a huge number of people to work from home, largely due to national lockdowns, which fuelled a sudden rise in the number of people working in the gig economy. 103  Topic 2: Human resource management Advantages of the gig economy include: The gig economy has also created many more opportunities for portfolio workers. This term was coined by Charles Handy Allows greater flexibility for workers, businesses and (1990), to refer to people involved in a number of different jobs consumers as each gig is adaptable to their needs at that carried out simultaneously, often on a temporary basis. For moment in time. It is particularly beneficial for flexible example, the portfolio worker might be completing a project lifestyles. as a freelance editor for one business, whilst conducting market research for another and providing management consultancy Workers also have the flexibility of working for a variety services for yet another organization. The portfolio worker of employers to suit their needs, rather than working full- charges a fee for each unit of work carried out. time with a single employer. Portfolio working and the gig economy help to increase the Costs are lower for businesses as they do not have to hire flexibility and mobility of an organization's human resources. as many full-time staff or pay employment-related benefits An advantage for the portfolio worker is that the variety of to so many people. experiences can contribute to a more fulfilling career. The key drawback, as with gig workers, is the lack of job security. Ad It enables contractors and freelance workers to make extra hoc employment opportunities mean that portfolio workers income, often quickly and with minimal costs. and gig workers might not have any contracts at a particular point in time whilst being very busy at other times with In theory, gig workers are in (more) control of their work- several projects being undertaken concurrently. For instance, life balance. plumbers, electricians and landscape gardeners tend to have many projects going on at the same time in the summer but are The limitations of the gig economy include: less busy during the winter months. As there are no employees or employers in the traditional sense, workers miss out on important aspects including job Exam tip! security and fringe benefits, such as health insurance and sick pay (see Chapter 10). People who work in the gig economy are independent workers, so it is incorrect to use the phrase'gig employee'. Although some countries impose a guaranteed minimum Instead, you should refer to those who work in the gig wage for gig workers in certain industries, gig workers do economy as'gig workers' or 'independent contractors'. not typically receive a regular income. Gig workers do not have a clear professional career path nor do they have the social support of colleagues and managers in the same way as full-time employees do. Key concept Independent contractors are expected to record and Is it ethical that workers in the gig economy are not file their own tax returns based on their gig income. By generally protected by employment laws in the same contrast, this bureaucratic task is done for employees by way as those who work for an employer? their employer. CII u..,._ C :S CII Gig workers often suffer from burnout due to working st E.."' CIIC11 C n, n, C multiple contracts, often at odd hours. Despite the flexibility, the lack of parameters at work means gig workers are often E :s "' E overburdened, tired and stressed. ::c Key concept Businesses take the risk of relying on an outsourced freelance What is the role of creativity in the gig economy? contractor who may or may not deliver the required service to the client or customer's satisfaction. This can therefore harm the corporate image of the business. 104  2.1 Introduction to human resource management Resistanceto change in the There is also the possibility of ambivalence (the internal conflict surrounding change where some people do not necessarily workplace (A02, A03) voice their concerns) which could underestimate the actual Reasons for resistance to change in the workplace. AO2 degree of resistance to change. When people are in a group Human resource strategies for reducing the impact of situation, for example, they may conform to the majority view change and resistance to change. AO3 but would prefer to act differently themselves. Others might © IBO,2022 feel that if they are seen to actively resist change then they are overlooked in the future for any promotional opportunities within the organization. 0 ne of the major barriers to effective human resource management is the resistance to change in the Professor Kotter proposed the six change approaches model workplace. According to Professor John Paul Kotter for reducing the impact of change and resistance to change (1979) of Harvard Business School, there are four main reasons (also see Figure 7.4): why people are resistant to change in the workplace: 1. Education and communication - This approach aims to Self-interest often takes priority over organizational inform and educate workers (and other stakeholders) about objectives. People may be more interested in (concerned the change. Early communication and clarification can help with) the implications of change for themselves rather than stakeholders to see the rationale for change and establish a the benefits that change might bring for the organization. degree of trust. Perhaps more importantly, this reduces any Hence, they may feel that change simply involves too much unsubstantiated claims and rumours about the proposed extra effort. change. Therefore, clear and timely communication is critical for reducing the impact of change and resistance Low tolerance of change happens because people prefer to change. familiarity rather than disruptions and uncertainties. A lack of security is sensed when people are put out of their 2. Participation and involvement - This approach links with norms or comfort zones. There could also be an element several motivation theorists such as Maslow and Herzberg of fear from being made redundant, perhaps due to the (see Chapter 10) who argue that employee involvement introduction of new production techniques. Employees in decision-making can motivate and improve morale might also fear the challenges associated with adapting to amongst the workforce. Kotter argued that by involving change, such as not being able to work within an automated employees in the change process, perhaps by a series of environment. consultations, formal agreements and giving employees a sense of ownership of the change, they are more likely to Misinformation causes misunderstandings because the accept change instead of resisting it. This helps to get staff purpose of change has not been communicated effectively. agreement as workers have ownership over the decisions Staff often feel that change is not necessary, especially if being made, including the approved methods to make the things are going well - as the saying goes "If it isn't broken, change happen effectively. don't fix it''. Misunderstandings and uncertainties can also arise due to the anxieties of the unknown caused by 3. Facilitation and support - This approach is paternalistic misinformation. in style (see Chapter 9) as managers become supportive of staff during difficult times of change, thereby averting Different assessments of the situation occur when potential resistance to change. Managerial support can GI u.,.._ C there are different interpretations of circumstances, i.e. come in numerous forms, such as planning and timing the :I GI management and staff disagree on the purpose and merits 5tE change sensitively and effectively. For example, employees GI GI._ OI of change. Managers may feel that restructuring of the may need retraining to accommodate the new changes. C ftl ftl C workplace is necessary, for example, but workers might If change involves redundancies, then support systems E ftl :s E disagree as they are the experts in their roles and do not see need to be implemented to help workers find alternative ::c the need for such change. employment. Counselling employees to deal with their fears and apprehensions is another example. 105  Topic 2: Human resource management 4. Negotiation and agreement - This is the 'carrot' approach Additional human resource strategies for reducing the impact whereby managers use incentives to remove or limit of change and resistance to change covered in Chapter 13 (Unit resistance to change. This can be done by 'inviting' 2.7 Industrial/employee relations for HL only students). workers to accept amendments to their employment contracts to accommodate the new changes, for example. Key concept Alternatively, employees who resist change might be offered early retirement or redundancy incentives to leave Can methods such as manipulation and co-option the organization. At other times, managers may be willing or explicit and implicit coercion ever be regarded to compromise to provide an incentive for staff to settle for as ethical approaches to change management? Do the change. context and perspectives matter? 5. Manipulation and co-option - This approach involves bringing a representative of those resisting change into the change process. The purpose, in theory, is to give Key concept them representation but in fact the underlying reason is to convert the representative's thinking so that the advantages How do individuals, organizations and societies cope of change can be communicated to those resisting change with change in the modern business world? (whatever their reasons might be). These representatives, such as trade union leaders, are quite often given a symbolic role but the reality is that their view will not affect the desire of management to push for the change. This approach is, of course, seen as rather unethical and can backfire if those Business ManagementToolkit resisting change discover what the management team is Discusshowforcefieldanalysis(seeChapter55) canbe really trying to do. usedas a strategyfor reducingthe impactof change and resistance to changein business organizations. 6. Explicit and implicit coercion - This is the 'stick' approach to dealing with resistance to change and is typically used as a last resort. Managers can use coercion (intimidation tactics) to force workers into accepting change, by threatening disciplinary action, dismissals, job losses, redeployment (transferring employees to other jobs) or not Introduction to human resource promoting employees. Due to employment legislation that management and the key concepts exists to protect employees, coercion is likely to be carried out implicitly, if used by managers. Highly effective managers consider the impacts of change on human resource planning. For example, the forces of globalization and innovation that drive change in the business Educate world require human resource managers to think about how information communication technologies (ICT) contribute Intimidate (Coerce) Participate to workforce planning. Managers in multinational companies CII u..,._ C :S CII st "' Six Change Approaches / face growing challenges in coping with workforces that may be geographically spread across many different countries, with huge cultural differences and working in contrasting and E /.."' 1 "" CIIC11 changing political and legal systems. C n, n, C Manipulate Facilitate E :s "' E Change also requires managers to increasingly seek and develop ::c a flexible workforce with employees who are able to adapt to Negotiate changes in the external business environment (see Chapter 46). For example, businesses that employ a large proportion of part- Figure 7.4 - Kotter's six change approaches to change time workers, such as fast-food restaurants and supermarkets, management are able to take advantage of workforce flexibility based 106  2.1 Introduction to human resource management on the needs of the organization. This is also a key reason REVIEWQUESTIONS for the sustained growth in the number of teleworkers and homeworkers in the services sector. 1. What is meant by human resource management? Managers are increasingly keen to know why people leave 2. What is human resource planning? their organization through the use of exit interviews. These are interviews conducted with staff who have resigned in order to 3. What are demographic changes and how do these influence establish the true reasons about why employees have chosen human resource planning? to leave the organization. For example, employers might think that the remuneration package offered is competitive, although 4. What is an ageing population and what are the consequences this might not be the view of the majority of the workers. of this for workforce planning? Data and information from exit interviews can then be used by managers to improve staff retention and strategic human 5. What is meant by labour mobility? resource planning and enable them to adapt to organizational change more effectively. 6. What is meant by net migration? Whilst there are costs associated with improving staff retention, 7. What is flexitime? most strategists believe that the long-term benefits are far greater. Theorists and entrepreneurs such as Charles Handy 8. How does teleworking differ from homeworking? (see Chapter 11) and Sir Richard Branson argue that human resources should be viewed as an investment and that training 9. What are the advantages and disadvantages of flexitime for and development are an essential part of any organization that employers? has a sustainable future. 10. What are the advantages and disadvantages of flexitime for employees? ATLActivity 7.1 {Researchskills) 11. What is the gig economy? Investigate how innovations such as Twitter, Facebook and Linkedln are changing the way that businesses 12. What are the advantages and disadvantages of the gig recruit workers. economy for employees? A good starting point is this article from The Hindu 13. What are the advantages and disadvantages of the gig BusinessLine: http://goo.gl/1 Fvl R2. You can also read economy for employers? about an innovative way to recruit casual, part-time and temporary workers, launched by the 23-year-old 14. What are the main reasons for resistance to change in the CEO of OneShift in Australia and New Zealand: http:// workplace? goo.gl/pcfgop 15. What are the main human resource strategies for reducing the impact of change and resistance to change? GI u.,.._ C :I GI 5t E Key concept GI GI._ OI C ftl ftl C With reference to an organization of your choice, E ftl :s E examine how ethics and change impact on its human ::c resource planning. 107  Topic 2: Human resource management KEYTERMS The mobility of labour is the extent to which workers are flexible enough to move to different locations (geographical An ageing population is a demographic change that tends to mobility) and/or their flexibility in changing to different jobs occur in high-income countries, with the average age of the (occupational mobility). population getting higher. Net migration measures the difference between the number of workers entering a country (immigration) and the number of people leaving (emigration). Portfolio workers are those who simultaneously carry out a number of different jobs, often for various contractors, usually on a temporary basis. Six change approaches is John P. Kotter's model for reducing the impact of change and resistance to change. It consists of six strategies or approaches: (i) education and communication, (ii) participation and involvement, (iii) facilitation and support, (iv) negotiation and agreement, (v) manipulation and co-option and (vi) explicit and implicit coercion. An ageing population has many implications for human Teleworking refers to working away from the office by using resource management electronic forms of communication, such as telephones, the Internet and email. Demography is the statistical study of population characteristics, using data such as birth rates, death rates, ageing populations Workforce refers to the number of employees at any one point and net migration rates. in time for a particular organization. Flexitime is a system that enables workers to have a degree of autonomy to determine when they work, so long as they complete their work by set deadlines. The gig economy refers to labour markets where workers are typically on short-term, temporary contracts or carry out freelance work as independent contractors. Homeworking is an aspect of flexitime whereby people work from their own homes. Human resource management (HRM) refers to the role of managers in planning and developing the organization's GI people. This is done through interrelated functions such as the u.,.._ C ::S GI recruitment and selection, as well as training and development ~E GI GI._ OI of employees. C n, n, C E ::s"' E Human resource planning (or workforce planning) is the :::c management process of forecasting an organization's current and future staffing needs. Migrant workers are people who move to other countries in search of better job prospects and opportunities. 108  Chapter 8 Unit 2.2 - Organizational structure ""Whateveraffects one directly,affects all indirectly.I can never be what I ought to be until you are what you ought to be. Thisis the interrelatedstructure of reality" - Martin Luther King, Jr. (1929 - 1968), Civil rights activist and Nobel Peace Prize (1964) Contents 2.2 Organizational structure SL/H L content Depth of teaching The following terminology in relation to different types of organizational A02 structures:. Delegation. Span of control. Levels of hierarchy. Chain of command. Bureaucracy. Centralization. Decentralization. De-layering. Matrix structure The following types of organization charts: A02,A04. Flat/horizontal. Tall/vertical. By product, by function, or by region Appropriateness of different organizational structures given a change in A03 external factors Changes in organizational structures (such as project-based organization, A03 Charles Handy's 'Shamrock Organization') (HL only) © IBO,2022 GI Organizational structure (A02) u.,.._ C :I GI 5t E 0 The following terminology in relation to different types of rganizational structure refers to the formal GI GI._ OI organizational structures: (i) Delegation, (ii) Span of control, (iii) interrelationships and hierarchical arrangements C ftl ftl C Levels of hierarchy, (iv) Chain of command, (v) Bureaucracy, (vi) of human resources within a business. Businesses E ftl :s E Centralization, (vii) Decentralization, (viii) Delayering and (ix) organize their human resources in various ways. In a small ::c Matrix structure. firm, such as a sole proprietorship, there may be an informal © IBO, 2022 organizational structure as the business owner carries out a range of functions including marketing, operations management and finance. Their roles change depending on the 109  Topic 2: Human resource management demands of the job at a particular point in time. The sole trader As an organization gets larger and more complex, it has to also carries out more mundane tasks such as being a salesperson become more structured for tasks and roles to be fulfilled in and a stock controller. However, in most businesses there is a a manageable and coherent way. Although businesses differ in need for a more formal and organized structure as people have their formal organizational structures, the typical configuration different job roles and responsibilities (see Box 8.1). This helps consists of different levels of directors (or executives), managers businesses to function more efficiently, due to accountability and workers (see Figure 8.2). and responsibility. Accountability shows who is held responsible (or answerable) for each particular job or task, such as the marketing team being held accountable to the marketing director for their performance. Accountability allows senior managers to have better control over the running of their organizations. CEO Responsibility shows who is in charge of whom and in what role or capacity, such as the operations management Board of Directors director being in charge of all production workers. Roles Middle Management and responsibilities can be seen in an organization chart (see Figure 8.1). Supervisors and Team Leaders Figure 8.1 shows a typical structure for a secondary (high) school. The Headteacher (Principal) is at the top of the organizational Other Employees structure and is ultimately responsible for all the staff in the Figure 8.2 - Human resources in an organization school. Managers are responsible for their own teams, such as the Head of Modern Foreign Languages who is in charge of the language teachers. S/he is accountable to the Deputy Head (Vice Principal) in charge of the school curriculum. Likewise, the Coordinator of PSE (personal and social health education) is accountable to the Heads of Year and responsible for working with the form tutors. Head Teacher Deputy Head Deputy Head Deputy Head (Curriculum) (Pastoral) (Staffing) I GI u..,._ C :I GI ~E GI GI._ OI C n, n, C E ::s"' E E"mpeao t Head of MFL Staff Othe,s Head of Science Head of Humanities Head of Arts PSECo-otd;oatot 7 Heads of Year Caretaker Support Staff :::c Form Tutors Figure 8.1 - Example of an organization chart for a secondary school 110  2.2 Organizational structure To gain a better understanding of different types of Box 8.1 - Job roles within an organization organizational structures, the following terminology is stipulated in the syllabus: (i) Delegation, (ii) Span of control, (iii) Chief Executive Officer (CEO) or Managing Director Levels of hierarchy, (iv) Chain of command, (v) Bureaucracy, (MD) - The CEO represents the head of the Board (vi) Centralization, (vii) Decentralization, (viii) Delayering and of Directors (BOD) and is ultimately responsible for (ix) Matrix structure. implementing corporate strategy and the success of the business. 5/he is accountable to the company's BOD and shareholders. {i) Delegation Board of Directors (BOD) - Directors, or executives, As a business grows, managers need to relinquish some of their are responsible for the overall running of the business. roles and responsibilities because they are not able to effectively In a large company, there is likely to be a director control all aspects of the organization. This passing on of control responsible for each key functional area (marketing, and decision-making authority to others is called delegation. human resources, finance and accounts and operations It involves the line manager entrusting and empowering staff management). Collectively, these executives are part of to complete a task or project but holding them accountable the senior leadership team that advise and support the for their actions. The responsibilitystill remains with the line CEO. manager although the actual work is done by the authorised person to whom the work has been delegated. Middle management - Managers are typically responsible for a team of people and/or certain tasks. The art of effective delegation is one of the most important They are decision makers with responsibility for the skills of managers. Given time and other constraints, managers day-to-day operations of the business. They assist and cannot and should not deal with every single matter themselves. are accountable to the BOD. Managers take on roles Effective delegation (see Box 8.2) provides major benefits for and responsibilities that are delegated to them by the both managers and employees: directors. The manager saves time by not having to tackle every single Supervisors and team leaders - Supervisors and task, so can focus more on the strategic issues facing the team leaders carry out some, but not all, of the duties organization. of middle management. They are involved in making operational decisions (daily or routine decisions). They Delegation can motivate and develop employees who are directly responsible for workers in their teams. feel that they are trusted and that their contributions are important. Other employees (Operatives)- In a large organization, these people form the majority of the workforce. In By contrast, poor delegation causes confusion and a feeling of a school, other employees include the majority of inadequacy. This leads to demotivated and less productive staff, teachers (those not in a management position with resulting in a failure to achieve the tasks set. additional areas of responsibility). Operatives include the office staff (such as secretarial and administration staff), technicians, caterers for the canteen, caretaker, cleaners and janitors and security staff. GI 1.1..,._ C ::::, GI ~E GI GI.. en C ,a ,a C E ,a ::::sE Theory of Knowledge {TOK) ::c Why are there more male Chief Executive Officers in the corporate world than female CEOs? 111  Topic 2: Human resource management Box8.2 - SMARTERdelegation Common mistake Students often claim that delegation motivates Specific - Delegated tasks must be clearly defined so because of the associated financial rewards. However, that subordinates can carry them out effectively. delegation does not always involve monetary compensation, but is instead a form of empowerment Measurable - Results must be quantifiable to measure so can act as a non-financial motivator (see Chapter 10). the extent to which the delegated tasks have been achieved. Agreed - Both managers and subordinates must agree (ii) The span of control to the delegated tasks, including deadlines, in order to avoid any potential misunderstandings or conflict. They The span of control refers to the number of people who are should also agree on the amount of power and freedom directly accountable to a manager. Hence, the higher up a that goes with the assigned work. person is in a hierarchy, the wider their span of control tends to be. Although the CEO of a company is directly responsible Realistic - Delegated tasks must be reasonably to the Board of Directors, s/he is also indirectly in charge of achievable, otherwise workers will not be dedicated to all workers in the organization, including all of the directors. completing them. Hence, the CEO's direct span of control is narrow, but the indirect span of control in very wide. Time-bound - A timeframe must be set so that the delegated tasks are completed in a timely manner. An advantage of a wide span of control (see Figure 8.3) is that fewer layers are needed in the organizational structure. In this Ethical - Tasks must be delegated fairly to prevent example with 18 people, the CEO has two assistants who share dissatisfaction and resentment. Delegating only dull a (wide) span of control of fifteen employees. This helps with and unchallenging tasks simply demoralises and cost control as there are fewer managerial positions in the firm. demotivates staff. A flatter structure also means that communications between w the different levels of the hierarchy should be more effective (in a: Recorded - Tasks should be documented to provide terms of speed and accuracy). 0 u guidance and to aid recognition of them being accomplished. This also allows staff to be acknowledged and credited for their accomplishments. CII u..,._ C :S CII st E.."' CIIC11 C n, I + I t n, C E :s "' E Figure 8.3 - Wide span of control ::c 112  2.2 Organizational structure By contrast, a narrow span of control means that there are fewer Manager - The more skilled and experienced the manager, subordinates who are accountable to a manager (see Figure the more likely that s/he has a wider span of control. By 8.4). Here, the same number of people exists as in the previous contrast, junior managers have a narrower span of control. example (eighteen), except that they have been arranged with narrower spans of control. It is therefore easier to communicate Organizational culture - Narrower spans of control may with and control the team. Smaller teams might also be be required in cultures that require managers to closely more productive as there is likely to be better team spirit and monitor and control their subordinates. By contrast, cohesiveness. Larger teams tend to suffer from communication managers in democratic cultures tend to delegate and problems which may cause tension and conflict. However, due empower their subordinates, thereby allowing for a wider to more levels of management in the organizational structure, span of control. Such cultures prefer the term 'span of this configuration tends to be more costly. support'. Subordinates - Highly skilled staff are more likely to work in smaller, dynamic teams with their line manager having a relatively wider span of control. Google uses an innovative t approach, with a 60:1 span of control. I I ; I t I I I I I t l Task - Complex, urgent and important tasks tend to require a narrower span of control as communication will be more t T l t t T l T ' important, i.e. it is often more effective to have smaller teams where both accountability and responsibility can be t Figure 8.4 - Narrow span of control clearly identified. By contrast, products that can be mass- produced (see Chapter 36) means that less supervision is needed. Hence, the span of control can be widened as workers have relatively simple tasks that can be done with minimal supervision. So, what is the ideal span of control for a business? Management consultants have been debating this question for decades and stems from the works of Henri Fayol (1841 - 1922). It was VA. Key concept Graicunas (1898 - 1947), a Lithuanian management consultant, who first used empirical evidence to address the question of the How do the concepts of change and creativity impact optimal span of control. Graicunas suggested that the maximum on the optimal span of control for an organization? number of subordinates should be four (in most cases) or five to one manager. He argued that the span of control should be limited because "One of the surest sources of delay and confusion is to allow any superior to be directly responsible for the control of (iii) Levels of the hierarchy too many subordinates." The hierarchy in a business refers to the organizational structure However, there is no consensus on the optimal span of control. based on a ranking system. Those at the top of the hierarchy As the business environment continues to evolve, many include the CEO, Chairperson and the Board of Directors. At businesses have opted for wider spans of control. In essence, the other end, the least skilled employees appear at the bottom GI u.,.._ C the decision is judgmental. The degree of control granted to a of the organizational hierarchy. Each hierarchical level refers :I GI manager depends on several factors, which can be remembered to a different rank with its associated degree of authority and 5t E GI GI._ OI by the acronym MOST: responsibility. Figure 8.5 shows an organization with 5 levels in C ftl ftl C its hierarchical structure. E ftl :s E ::c 113  Topic 2: Human resource management Figure 8.5 - Hierarchical structure The person directly above an employee on the next hierarchical (v} Bureaucracy level is known as the line manager. For example, in Figure 8.5, those on level 5 (at the bottom) of the structure report directly Bureaucracy is the execution of tasks that are governed by to their line manager on level 4. A line manager is responsible official administrative and formal rules of an organization. for the day-to-day management of the people (known as Bureaucratic organizations are characterised by prescribed subordinates) who are directly on the next level below in the rules and policies, standardized procedures and formal hierarchy. hierarchical structures. Bureaucracy is often associated with excessive administration, paperwork and formalities. Within There are two main advantages of using hierarchical structures. an organization, this might include: First, they show clear lines of authority within the organization. This can improve the coordination and productivity of workers. the frequent requirement to fill out excessive or Second, hierarchical structures establish departments or teams cumbersome paperwork. to create a sense of belonging in the workplace so can act as a form of motivation (see Chapter 10). staff working in multiple departments and therefore having to report to several managers. However, hierarchical structures also have their limitations. Departmentalisation can mean workers are isolated from long, official chains of command. their official teams (see Chapter 12 for the benefits of informal communications for an organization). Hierarchical structures too many committees set up to investigate issues of concern also tend to be rather inflexible. This might prove problematic to the organization. when there are changes in the external environment that may require flexible structural changes in the organization. managers with duplicate or overlapping roles and responsibilities. {iv} Chain of command The chain of command refers to the formal line of authority through which communications and orders are passed down in an organization. This can be seen through a firm's organization chart. Businesses that have only a few levels of hierarchy have CII a short chain of command. By contrast, the chain of command u..,._ C :S CII is long in businesses that have many levels in its hierarchical st E.."' CIIC11 structure. C n, n, C E :s "' E For example, in Figure 8.1 (on page 110), if the Headteacher ::c wanted to get a message to all teachers of Spanish and French, the formal chain of command would be communication via the Figure 8.6 - Bureaucracy involves a lot of paperwork, policies Deputy Head (of Curriculum) to the Head of Modern Foreign and procedures Languages and to the Head of European Languages. 114  2.2 Organizational structure Karl Marx (1818 - 1883), a philosopher and political economist, (vi) Centralization argued that bureaucracy has a cost to organizations and society. Decision-making power can be either kept in the hands of a However, as a socialist, he believed that the cost could be few people or it can be shared out among the workforce. The justified if bureaucracy is enforced properly. Max Weber (1864 extent to which authority is concentrated or diluted within - 1920), a German economist and socialist, built on the work of an organization depends on the traits and skills of managers Marx, believing that bureaucracy was the ideal organizational and workers, the degree of trust and the corporate culture (see structure. He argued that bureaucracy can be synonymous with Chapter 11). efficiency because it is simply division of labour being applied to the administrative tasks within an organization. This is In a centralized structure, decision-making is made by a very why many private sector firms have dedicated administrative small number of people. These decision makers, usually the departments. He suggested that a bureaucratic organization is senior leadership team of directors, simp