Business Studies - 1.3.4 Managing People Notes PDF

1.3.4 Managing people 14 Approaches to staffing a) Staff as an asset; staff as a cost Businesses have staff members employed, apart from the owner. The size of a business can be measured according to the number of people they employ: - Small business: 1 - 49 people...

1.3.4 Managing people 14 Approaches to staffing a) Staff as an asset; staff as a cost Businesses have staff members employed, apart from the owner. The size of a business can be measured according to the number of people they employ: - Small business: 1 - 49 people - Medium-sized businesses: 50 - 249 people - Large businesses: 250 people or more Different businesses have different approaches to viewing their staff. Some consider them as assets while others view them as costs. This influences the productivity of their staff. Staff as an asset The businesses who view their employees as an asset value them and are concerned for their welfare. They will try to retain their staff, thus they ensure to challenge, acknowledge and reward their employees in order to retain them. They also ensure to give above-average wages to ensure that quality staff is retained. They will try to meet the needs of their employees by providing: - Acceptable remuneration - Reasonable holidays, sick leave, maternity leave and pensions - A safe and comfortable working environment - Training - Job security and social opportunities - Recognition and professional relationships - Clear and effective leadership - Chances for promotion - Opportunities to solve problems and be creative Staff as a cost Like any other cost, employers will try to minimise their time on employees as possible - Paying just the legal national minimum wage - Using a zero-hours contract - Less investment in training - Providing minimum legal rights for any leave  - Penalties for employees who may (come late / add cost to the business, etc) - Using cheap recruitment methods This method may reduce costs, however, it may increase costs through lack of motivation from employees Staff turnover and conflicts may increase b) Flexible workforce: Flexible workforce: a workforce that can respond in both quantity and type to change in market demand A business can increase flexibility of their workforce using the below methods: multi-skilling Multi Skilling: the process of increasing the skills of employees This is a method of enhancing the skills and responsibilities of the employees, so that they can respond to changes much faster Ex: receptionist being trained to answer questions apart from her department for faster response to customers This may lead to increased performance as staff may feel valued However: - it may lead to expectations from employers towards the staff to work harder without extra pay. - if they are not adequately trained in the new skills, it may lower productivity part-time and temporary Part time workers work for not more than around 30 hours per week Students often work part time, and it is known that they are less likely to become tired, thus productivity increases. The business becomes more flexible as they can observe demand patterns and hire part time workers to work only on busy days such as the weekend Temporary workers are those employed for a limited period of time Ex: for a particular event such as the olympics zero-hour contracts Aka ‘casual contracts’ zero-hours contract: a contract that does not guarantee any particular number of hours’ work This means: - Workers are on call to work when the employers need them - Employers do not have to give them work - Employees do not have to work when asked  Often used in hospitality industries / fast food restaurants and substituting for an absentee Zero-hour contracts have certain rights such as being entitled to minimum or living wage - Holiday - Rest breaks - Protection against discrimiation - Illegal wage deductions Employers prefer this method as it is cheap and much flexible to get employees on call when they need them in short notice. Workers get experience without having to sign full time contracts However, it can be illegal in some countries as it is considered too much of exploitation as employers have too much power over the staff. flexible hours and home working Flexible hour working is when employees are given the opportunity to choose which times they want to work. They will be given a set of minimum hours to work, but when they work is up to them. This benefits the business as it can be open for longer hours, than a fixed time period. Home workers: people who work regularly from home This benefits the business with less office costs and better productivity. Less need for transportation would encourage more staff to work However, it may lead to communication issues outsourcing Outsourcing: getting other people or businesses to undertake work that was originally done in-house It allows the business to focus on its main tasks and capabilities and lets others carry out the surrounding work. Productivity improves as it may be taken over by specialists which would reduce mistakes and thereby costs - Capacity can also be increased however: - Dependency on suppliers may lead to poor productivity if suppliers do not perform productively - Staff may respond negatively to their jobs being threatened Advantages and disadvantages of flexible workforce Advantages Disadvantages Businesses can expand and contract quickly Less loyalty depending on market changes compared to firms with permanent staff that require legal procedures Specialist work which are small can be Outsourced work may be of poor quality outsourced which would lower costs, rather which damages reputation than hiring a whole employee Temporary staff cost less when needed for Communication may be weak periods Training is not required for flexible workforce Temporary staff may not be skilled and is not compared to a permanent workforce as the guaranteed to do the job effectively responsibility is handed Productivity increases Core workers may be demotivated as they may want to feel settled with long term co-workers In some cases, peripheral workers may cost higher compared to permanent workers c) Distinction between dismissal and redundancy When they are dismissed or made redundant, it means employees are asked to leave, instead of choosing to leave work on their own. Dismissal This is when the employee is let go because of legal reasons such as misconduct or poor work performance. They will have to be notified in advance Sometimes it can be for unfair reasons such as joining a trade union. However, the employee can be restored to their former position if it was unfair. Redundancy This is when employees are let go because there is insufficient to no work for the employee to do This happens usually during a recession or when a business is struggling due to external factors d) Employer/employee relationships employee-employer relationships are formed the moment a person is hired This needs to be maintained in order to have a well environment for the employee to feel motivated and in return boost the productivity of the business However, this is hard to maintain as objectives of the 2 parties can be in conflict for the below reasons: - Rates of pay - The introduction of technology: employers may prefer this, while employees may be reluctant to learn to adapt to them or fear being replaced - Flexible working: employers prefer this, while some methods such as zero-hours contracts may be unpopular within employees as they may want a stable permanent job - Work conditions: employees may want good working conditions while employers may find it as additional cost to invest in The relationship can be shaped by the 2 following approaches: individual approach This is when employers develop a relationship with the employee on a individual basis This means that an individual employee will communicate directly with an individual representative of the employer for bargains such as pay rises, leaves, etc This method would lead to employees with better bargaining skills getting benefits than others It also calls an argument for how skilled human resource management representatives may be favoured compared to a normal employee bargaining. Thus may be better for the employee if a skilled body represents their needs. collective bargaining Collective bargaining: a method of determining conditions of work and terms of employment through negotiations between employers and employee representatives Examples of employee representatives may be trade unions They would have more strength and influence to negotiate for its membership For collective bargaining to take place: - Employees must be free to join trade unions - Employers must recognise them as legal representatives and make negotiations - Such bodies must be independent of employers and the state - Bodies should represent honesty in their members interests - employers and employees must accept negotiations without involving the law to make them A failure to reach agreement between parties may lead to industrial action Industrial action: disruptive measures taken by the workers to apply pressure on employers when disagreements cannot be resolved Ex: striking  Collective bargaining advantages Disadvantages Agreements are transparent and legally More bureaucracy enforceable May be more cost effective to have just Views of employees may not always be one set of negotiations instead of represented accurately by trade unions personalised ones to different employees More respected by both parties Negotiation costs can be high Outcomes may be fairer as both parties Failure to agree can have serious have equal power consequences Unfair treatments such as favourites and Owners may feel their freedom to manage bullied employees may be avoided is compromised Employee representatives are democratically elected 15 Recruitment, selection and training a) Recruitment and selection process: What is recruitment and selection? recruitment and selection is the process of hiring employees that are fit for the business A business may need to recruit employees because: - The business is expanding and more labour is needed - People are leaving and they need to be replaced - Positions have become vacant due to promotions - To cover temporary staff absence Stages in the recruitment process 1. Identify the number of staff needed: with the help of the business plan 2. Prepare job description and person specification 3. Advertise the job using appropriate media 4. Evaluate and shortlist candidates for interview 5. Carry out interviews 6. Evaluate interviews and make appointments 7. Provide feedback for the ones that did not get selected Recruitment documents Job description Job description: a document that shows the tasks, duties and responsibilities expected of a worker for a particular job The main purpose of this is to show clearly what is expected of an employee. Person specification Person specification: a personal profile of the type of person needed to do a particular job This provides the details of the qualifications, experience, skills, attitudes and any other characteristics that would be expected from the employee to be appointed. This is used to shortlist applications. The ones that do not meet the person specification can be ignored. This ensures that only people who meet the requirements apply for the job to make the recruitment process less time consuming.  internal recruitment Internal recruitment: appointing workers from inside the business It is either advertised within the business through emails or notice boards. Or the person is chosen for a promotion or offered a post directly. Advantages Disadvantages It is cheaper as no adverts Rivalry may cause jealousy and negative energy Internal recruits might already be familiar May be hard to find the right fit compared to a with the working environment large pool of people from external Employer knows qualities and abilities of the employee compared to external recruitment May motivate existing staff to work harder as they know the employer is open to promoting staff external recruitment External recruitment: appointing workers from outside the business Advantages Disadvantages Brings in new and different ideas which Expensive may help grow the business Might attract larger number of applicants Cannot predict employee performance External recruitment can take place in a number of ways: - Word of mouth - Direct application: jobseekers send their application to employers who they want to work for. Once a vacancy has been open, the employer will take the application into consideration - Advertising - Private employment agencies: a separate business that the employer hires to find workers suitable for the business - Headhunting: where the employer makes a list of people he thinks is suitable for the position (usually a high rank) and talks to the people on the list for a potential vacancy. - Jobcentres: a place run by the government where the business can advertise their vacancies for lower positions as it attracts unemployed people  - Government-funded training schemes: where businesses take on trainees from government training schemes b) Costs of recruitment, selection and training The cost of recruiting new employees is often high. The main 2 costs incurred are: - Lost output while a replacement is found and inducted - Process costs of recruiting the new worker The main costs associated with recruitment and selection are: Recruitment and selection costs: The HR will incur costs when trying to identify how many number and types of staff they require, especially if it's for a large number of new employees Administrative costs may incur when changing job descriptions and person specifications Advertising costs Handling and sorting 1000s of applicants will incur costs and delay Interviewing will incur costs as senior workers interviewing will not be doing their regular jobs, thus incurring loss of output for the business. - If interviews take place on phone or post, further costs increase - Documents and rooms need to be purchased and printed Evaluation process also reduces output which increases cost Higher salaries for the new person employed may incur costs Training costs: Training courses and other resources for external training would be highly costly Loss of output if it's off the job training. Even if it is on the job, it may result in mistakes adding costs Employees leaving after training can lead to wasted time and money spent on training c) Types of training: Training: the process of increasing the knowledge and skills of a worker to enable them to do their jobs more effectively Some main objectives of training for different businesses are: - increasing workers productivity - Increasing workers skills by training them to use new technology - Educating workers of new methods of working - Making workers more flexible - Preparing workers for a new job in the business (promotion) - Improving standards of work to improve quality - Implementing health and safety policies - Increasing workers job satisfaction and motivation - For retaining high quality staff  Sometimes workers gain their own training without their employees asking them to. By joining courses such as masters of business administration courses. induction Induction training: training given to new employees when they first start a job This training helps new employees settle quickly into the business It attempts to introduce workers to the nature of the business and work practices on-the-job On-the-job training: train that takes place while doing the job on site. Methods: Learning from other workers: where the new worker sits next to another worker and watches and repeats from the worker. Mentoring: where an experienced employee is asked to provide advice to the new worker at any time Job rotation: where the worker works in different departments of the job to gain many experiences Traditional apprenticeship: this is where new employees train for a course of years while working. Once recognised as skilled, they would be employed as a full time worker Graduate training: large businesses offer specialised graduate training programs for their job Advantages Disadvantages Output is produced Output may be lost if trainees make mistakes Relevant as trainees learn by actually doing Stressful for the trainee to work with others the job cheap Trainers may get frustrated as they may be unpaid for training the new worker Easy to organise Could affect customers negatively (ex: if the job was a surgeon or train driver) off-the-job Off-the-job training: training that takes place away from the work area  This involves learning about the job from specialised trainers outside the business before working on site. Advantages Disadvantages Output is not affected if mistakes are made No output produced by trainee Workers learning cannot be distracted by expensive work Training can take place for longer hours / Some aspects of work cannot be taught off outside work hours the job Customers are not put at risk Trainees may feel some of the training is not relevant to them May take time to organise Benefits of training to stakeholders Managers: Workers will be better motivated and satisfied, thus will make it easier to work with them Workers will be flexible, thus making it easier for managers to organise the business Owners: Financial performance would increase with better productivity Success and competitive edge is gained Employees: Reduces anxiety about their work and provides more job satisfaction Will gain more skills to be used for the future and opens promotion opportunities Customers: Benefits from high quality products Improved customer service 16 Organisational design a) Structure: The ‘structure’ is the way in which positions within the business are arranged and is known as the ‘internal structure’ or ‘formal organisation’ of a business. Formal organisation: the internal structure of a business as shown by an organisational chart The organisational structure of a business defines: - Roles of employees and their titles - Route of how decisions are made - Who is responsible and who is accountable to whom, and for what activities - Relationships between positions - How communication takes place. (route of passing information) Structure is important to a business as it helps them delegate responsibilities to the right titles. hierarchy Some businesses create an organisational chart Organisational chart: a diagram that shows the different job roles in a business and how they relate to each other. Organisational charts shows: - How the business is split into divisions - Roles and titles of employees - Who has responsibility - To whom are people accountable - Communication channels - Relationships between positions Hierarchy: the order or levels of responsibilities in an organisation, from the lowest to the highest The hierarchical nature of the structure shows that employees have different levels of authority and responsibility VIN: don’t mix up authority and responsibility. Authority is the right to command and make decisions, while Responsibility is the duty to complete a task. Employees in the organisational hierarchy Directors: appointed to run the business on behalf of its owners and are in charge of making major decisions that will affect the owners Managers: they are responsible for controlling or organising within the business by making day to day decisions. Departmental and regional managers are common.  Team leaders: members of a team whose role is to resolve issues between team members and coordinate team efforts. They also represent the views of the team to the next higher level. Supervisors: they monitor and regulate the work in their assigned area Professionals: staff with high levels of qualifications and experience. (Ex: doctors) Operatives: staff with specific skills that execute the managers instructions General staff: staff with non specific skills. (ex: cleaners) chain of command Chain of command: the way authority and power is organised in an organisation. Where the route of how information is passed is represented. Businesses try to keep chains as short as possible so that miscommunications do not take place span of control Span of control: the number of people a person is directly responsible for in a business A wide span of control is when a person is responsible for more subordinates than a person with a narrow span of control A span of control greater than 6 may lead to difficulties arising centralised and decentralised Centralisation and decentralisation refers to the extent which authority is delegated in a business. Centralisation: a type of business where major decisions are made at the centre or core of the organisation and then passed down the chain of command Decentralisation: a type of business organisation where decision making is pushed down the chain of command and way from the centre of the organisation Often, businesses delegate work to subordinates because of the limit of work a superior can carry. Delegation: the passing of authority further down the managerial hierarchy *note that the disadvantages of both are the advantages of the other Advantages of centralisation Advantages of decentralisation Senior management has more control of Empowers and motivates workers businesses, so it is organised Orders for supply can be standardised within Reduces stress for management and gives branches which would benefit the business them time to focus on more important tasks from EOS Senior management would make much better Subordinates have higher job satisfaction as decisions as they can look at the business as they have the freedom to contribute to a whole rather than subordinates only looking decision making  at the best for their department. Senior managers may be more skilled and Decision making would be quicker as it would experienced when making decisions not have to be reviewed by seniors which allows the business to adapt to unforeseen circumstances much faster In times of crisis, a business may need strong Subordinates may have a better idea of local leadership from senior management knowledge and conditions affecting their area. Leading to well judged choices Communication may improve if there are Subordinates are prepared to take up roles of fewer decision makers authority and is given more experience b) Types of structure: tall Long chain of command Narrow span of control Delayering: removing levels of management from the hierarchy This may take place which would help improve communication in tall structures. However, existing employees will have to take over more tasks. Advantages of delayering Disadvantages of delayering Staffing cost will reduce as people will be Staff are made redundant so they have to removed pay them compensation (ex: 3 month salary) Chain of command becomes shorter, The company’s image will go down communication is faster Span of control will become wide, staff will Increase in workload for the remaining have more job satisfaction due to more staff delegation Organisation will become more lean, so Existing employees will feel insecure as high competitiveness and lower cost there is less job security flat Chain of command is short Span of control is wide Employees are free from strict control  matrix This type of structure takes different people from different departments and puts them in groups to complete projects and resolve problems. c) Impact of different organisational structures on business efficiency and employee motivation tall Advantages Disadvantages Span of control is small so managers have Management costs will be higher as there are more control over the subordinates with good more managers supervision, reducing errors. Clear route for promotion which may motivate Long chain of command so communication staff may be poor Slows down decision making May demotivate subordinate staff members flat Advantages Disadvantages Chain of command is short so communication Managers may lose control over their is better workforce because span of control is too wide leading to less discipline and low productivity Management costs are lower Managers may become overworked Decision making is quick Demotivation as there is not much route of promotion Employees may be more motivated as they are less closely controlled and are given responsibility for organising their own work  matrix Advantages of Matrix Disadvantages of Matrix Can help to break down traditional May be more stressful due to divided loyalties department barriers across the organisation as they report to 2 line managers (team as now people from different departments will leader and department manager) be communicating with each other Can allow individuals to use their skills within There may not be a clear line of different contexts and get more experience accountability for project teams, given the complex nature of matrix structures Meeting costs for discussions between Difficult to coordinate when drawn from departments are avoided as they are already different departments meeting every day ⇒ improves coordination Likely to last in greater motivation It takes time for matrix team members to get used to working in this kind of structure Encourages cross-fertilization of ideas across Team members may neglect their fuctional departments as different members can share responsibilities so Highly costly to get regular their knowledge with each other (skills learnt staff while projects are held through this from one department can be shared with structure others) Good way of sharing resources across departments Gives scope for staff in the lower levels to use their skills effectively Factors that influence the organisational structure of a business Size of the business The style of management Corporate objectives of if they want to expand their business, etc Adopting new technologies may lead to delayering 17 Motivation in theory and practice a) The importance of employee motivation to a business It is important for employers to satisfy the needs of their employees as without it, they would not be motivated to work Motivated: the desire to take action to achieve a goal. It is important to motivate employees as: - In the short term, lack of motivation can lead to reduced effort and commitment - In the long term, lack of motivation may lead to high levels of absenteeism, industrial disputes and low productivity Sometimes, employees can be motivated through fear of wage cuts or redundancy. This is called ‘negative motivation’. b) Motivation theories: Taylor (scientific management) Scientific management: a theory that suggests there is a ‘best way’ to perform work tasks. Taylor’s scientific principles were designed to reduce inefficiency of workers and managers. This was to be achieved by ‘objective laws’ that the management and workers could agree on. Taylor believed that money was what motivated workers. He felt that workers should receive a fair day’s pay for a fair day’s work and pay should be linked to output through piece rates. Taylor’s method designed to find out the best way showed the following steps: - Pick a dozen skilled workers - Observe them and note the elements and sequences adopted in their tasks - Time each element with a stopwatch - Eliminate any factors that are slowing down production / not contributing to the completion of the task - Choose the quickest method discovered and fit them in their sequence - Teach the worker this sequence. - Provide time for breaks. The result will be the ‘quickest and best’ method for the task - Supervise workers to ensure they are following it. Problems with Taylor's approach: The quickest and best way to complete a task may not take into account individual differences so it may not suit every employee to increase their motivation Taylor overlooked non-financial methods of motivation as he saw workers more as machines with financial needs than humans in a social setting. Maslow’s ideas contradict this theory, as the top 3 categories that he believed motivated workers were a sense of achievement, having achievement recognised and positive working relationships. Tight supervision can demotivate the staff Mayo (human relations theory) Initially, theories of motivation were based on scientific management. However, over the 5 year period, changes were made in a company named Hawthorne. (ex: changes in lighting and heat, incentive schemes, rest periods) One result showed that whatever changes were made increased the output of 6 women assembling telephone switches. This became to be known as the “Hawthorne effect” Hawthorne effect: the idea that workers are motivated by the recognition given to them as a group. The study showed that productivity increased because teams communicated and interacted better which increased motivation. Workers were also motivated by the interest shown in their work by researchers. Elton Mayo thus reported that if a business is aiming to maximise productivity, it must make sure that the personal satisfaction of workers is met by consulting workers. This is known as the human relations school today. He suggests that management should communicate with informal work groups to ensure that their goals fit in with the goals of the business. By allowing them to make decisions. Ex: McDonald’s has picnics, parties and McBingo for their employee's Problems with Mayo’s approach: It assumes that workers and management share the same goals, when in reality, there are possibilities for deep conflict. Good communication between workers and management may lead to workers finding out the salaries of higher positions which may create even more ‘barriers’ and dissatisfaction. It is biassed towards management as workers are tricked into being productive and may be a way of reducing trade union power. (as this is sort of like fringe benefits) Maslow (hierarchy of needs) Maslow’s hierarchy of needs: the order of people’s needs starting with basic human requirements to be fulfilled in order to motivate employees to work.  Maslow states that the needs at the bottom needs to be fulfilled in order to move to the next. He also states that the level of self actualisation is reached by very few. Self actualization: a level in maslow;s hierarchy where people realise their full potential Problems with Maslow’s approach Some levels do not appear to exist for certain individuals (not everyone has the same needs) Some rewards appear to fit into more than one class There is a problem in identifying when the level has been satisfied so it may be hard for the business to decide when to provide the fulfilment for the next need. Money is necessary to satisfy the above needs Herzberg (two-factor theory) Herzberg believes that there are 2 factors that either satisfies or dissatisfies workers. Motivators: things at work that result in satisfaction - Motivators are needed to provide job satisfaction - It is argued that it would make workers more productive Hygiene or maintenance factors: things at work that result in dissatisfaction - Improving hygiene factors should reduce dissatisfaction - These may not motivate workers. However, not improving hygiene factors may lead to a fall in productivity. Herzberg just like Maslow, believed that needs have to be satisfied for employees to be motivated However, herzberg argues that only the higher levels of Maslow’s hierarchy motivate workers His ideas are linked with job enrichment so that workers can experience more of the production process, allowing them to be more involved and motivated. Problems with Herzbrg’s approach Improving pay or conditions may be taken for granted and more conditions will be asked for in following years (ex: wage claims) Job enrichment may be expensive for firms (may be hard in recession) Herzberg’s claims have often failed. Perhaps its because different employees in different fields require different needs. c) Financial methods to improve employee performance: piecework Piece rates: a payment system where employees are paid an agreed rate for every item produced. Payment by results: payment methods that reward workers for the quantity and quality of work they produce. Advantages Disadvantages Recommended by Taylor this is not suitable for jobs that do not have distinct outputs. (ex: managers) Increases productivity, especially in the May lead to dangerous shortcuts, risking secondary sector harm of employees Rushing production may lead to poor quality commission Commission: percentage payment on a sale made to the salesperson Sometimes workers have a basic salary and a commission is added to that for any sales they make Commission based pay is designed to incentivise workers to sell products and increase sales bonus Bonus: a payment in addition to the basic wage for reaching targets or in recognition for service. Ex: sales team may get a bonus if the team meets a sales target Loyalty bonuses are paid at the end of the year to reward workers for staying with the company Advantages Disadvantages Only paid if targets are met - so money is May lead to disputes and rivalry between given only if it has been earned workers Motivates employees with healthy Those who try but never gets the bonus competition to reach targets effectively because of another employee may be demotivated Retains workers profit share Profit sharing: where workers are given a share of the profits, usually as part of their pay Advantages Disadvantages Motivates workers to produce quality If firms do not make profits after workers put products as they are to receive a share of the in effort, they can get demotivated. profits. - unites the goals of the firm and worker Shows staff they are appreciated which Individual effort is not recognised as their increases motivation as per maslow's profits made will be distributed to everyone hierarchy (love and belonging) Unlikely to motivate if profits are small performance-related pay Performance related pay (PRP): a payment system designed for non-manual workers where pay increases are given if performance targets are met. This is specifically designed to motivate workers and PRP gives workers extra pay for achieving targets The performance of an individual staff is reviewed against a set of criteria Staff usually have performance reviews with senior managers to determine their pay Advantages Disadvantages Widely used as it directly links performance PRP bonuses may be too low to provide with pay incentive for workers to be motivated Motivates workers to achieve goals and work Individual performance can be affected by productively according to the scientific external factors especially if the worker works management school in a team, so it may be unfair Fair and recognises individual talent If targets are difficult or impossible to achieve, workers can be demotivated Favouritism may be involved d) Non-financial methods to improve employee performance: delegation Delegation: the passing of authority further down the managerial hierarchy, by giving complex tasks to subordinates Employees feel they are being trusted with the manager's task, which motivates them. The responsibility of the completion of the task is still in the hands of the manager Delegation motivates workers if managers: - Only delegate when the workload is too high, or it would feel unfair (a burden) - Take time to explain the task and make sure the subordinate has the skill to complete it - Give subordinates complete authority to finish the task and make sure their colleagues are aware of the delegation - Do not interfere with delegated task - Provide support and resources that are needed to carry out the task consultation Consultation: listening to the views of the employees before making key decisions that affect them This makes employees feel as though their views are valued which motivates them. Advantages Disadvantages Changes are less likely to be resisted if staff May take too long and slows down the are consulted process of change Employees may have ideas of their own Some may argue that despite the views of the which can benefit the business workers being heard, it may then be ignored empowerment Empowerment: giving official authority to employees to make decisions and control their own work activities. Delegation may often be effective with the help of empowerment. This involves: - Recognising that employees are capable of doing more than they have in the past - Making employees feel trusted so they can do their jobs without constant checking - Giving employees control of decision making - giving employees self confidence - Recognising employees’ achievements - Developing an environment where employees feel motivated in their work  Advantages Disadvantages Employees are motivated ⇒ productivity Criticised as a way of simply cutting costs increases and reducing layers from a business Less stress and absenteeism More work for the same pay can demotivate workers Decisions may be made by employees who Cost of training may increase are more likely to make good choices than senior management who may not be in touch with that department Improves personal development of May make managers feel insecure, leading to employees less implementation of empowerment Efficiency increases team working This involves a group of employees being paired to resolve issues and produce efficiently Advantages Disadvantages Productivity increases due to combined talent May lead to hiding disagreements which can result in vague or bland ideas People can specialise and draw on the skills Arguments and disputes may aire reducing and knowledge of others in the team productivity Teams are often known to result in better A feeling of powerlessness as many people problem solving contribute Responsibility is shared so less burden per Teams doing everything together may result worker in unnecessary meetings Allows flexible working Some tasks are better accomplished individually Ideas may be created through group Team members may have different priorities discussions which could slow decision making  flexible working This method motivates workers as they have more freedom to choose their time of work and periods of leave. job enrichment Job enrichment: giving employees greater responsibility and recognition by ‘vertically’ extending their work role. This came from Herzberg’s 2 factor theory It gives more responsibility to a worker by giving challenging tasks that enhance their skills and motivates them. Advantages Disadvantages It makes workers feel as though they are Some workers who feel that the workload is rewarded for their contribution to the too much may be demotivated. Trade unions company which motivates them also discourages this as it may add stress. May lead to future promotion for such It is unlikely that all workers will react the workers same for job enrichment job rotation Job rotation: the periodic changing of jobs or tasks Advantages Disadvantages Reduces boredom and increases motivation Workers take time to settle into the new jobs which may offset increase in productivity Employer benefits from widely trained Some workers do not like the uncertainty of workforce their new jobs Expensive to train job enlargement Job enlargement: giving employees more work to do of a similar nature, ‘horizontally’ extending their work role Ex: instead of giving an employee a task to put wheels in a car, he could be assigned to put the entire product together  Advantages Disadvantages Prevents boredom as the workers is not Argued that it is simply giving workers more doing one repetitive task, but completing the of the same task - horizontal loading whole thing Job enlargement is beneficial in teams where Often not used and such repetitive tasks are workers are trained to do the whole job and carried out by machinery job rotation within the team takes place 18 Leadership a) Leadership: the distinction between management and leadership Functions of a manager: - Predict what will happen in the future - Plan to achieve their objectives - Organise resources - Motivates and communicates with staff Functions of a leader: - They are visionaries that understand where the organisation is today and what it should change to survive and grow - Good at carrying through the process of change and notice an end goal when others may see chaos. - Good at motivating others to change themselves and their organisation In large businesses, it is often said that leaders create strategies while managers execute them In small businesses however, leaders are also involved in the execution of the strategies Characteristics of leaders: Effective leaders have a positive self-image with genuine ability and realistic ambitions. They ensure to appreciate both their strengths and weaknesses. Leaders can get to the core of a problem and commit to resolve it with radical solutions. Leaders are experts in particular fields and well read in everything else. They have excellent communication skills Creative and innovative by coming up with new solutions to problems Ability to sense change and can respond to it b) Types of leadership style: autocratic Autocratic leadership: a leadership style where a manager makes all the decisions without consultation. The group becomes dependant on the leader The group is often dissatisfied with the leader which results in little teamwork / poor motivation and the need for high levels of supervision. Autocratic leaders are needed in certain instances such as armed forces to follow orders instantly  paternalistic Paternalistic leadership: a leadership style where the leader makes decisions but takes into account the welfare of employees. They are similar to autocratic leadership where they make all decisions, however, unlike autocratic leaders, they take into consideration the welfare of their subordinates and employees. democratic Democratic leadership: a leadership style where managers allow others to participate in the decision making process. There are 2 ways of democratic leadership styles: - Persuasive: this is where a leader has already made a decision but takes time to persuade others that it is a good idea. - Consultative: this is where the leader consults others about their views before making a decision Advantages Disadvantages Research suggests that this style is effective Decisions take a long time to be reached as it can lead to better decisions being made People involved in the decision making are likely to be more committed and motivated as they feel heard laissez-faire Laissez-faire leadership: a leadership style where employees are encouraged to make their own decisions, within certain limits These leaders provide others with the right tools and resources needed and then moves away. This type of leadership works when their employees are highly skilled and motivated to complete tasks on their own. However, in most cases, people lack the knowledge and skill to make their own decisions and often need the extra push c) The difficulty of moving from entrepreneur to leader The changes in the different functions an entrepreneur needs to adapt to: The need for formality - As the business grows, entrepreneurs will need to communicate in formal platforms and conduct structured meetings - The business will also be structured in a formal organisational structure  The need for shared ownership: - Ownership is shared once the business grows as there will be a need for funding - Sole traders will now own the business with financiers and small investors Greater responsibility to others: - Entrepreneurs will now be accountable for many employees compared to before - Their decision making will determine the welfare of their workers - A leader may also have responsibility to other stakeholders The need for motivation and inspiration: - Leaders will need to gain motivational skills to ensure that their workforce stays on focus, because now there are more people working under them. The need for strategy and vision: - Once a business expands, the leader is often not in charge of running all aspects of the business such as marketing and production. There are specialist employed for that. - The leader's focus will change to presenting a long term vision and goal for the business. Difficulties in developing from an entrepreneur to a leader Adapting the mindset: - Often entrepreneurs like to be in control of everything. However, they have to learn to delegate and trust the specialists to do their job. - Ex: letting go of the lack of trust Stress: - Leaders may struggle with more stress as the business grows, as there will be more at stake. - Conflict is a cause of stress which leaders have to deal with Sharing ownership and control: - Some leaders may find it difficult to share ownership - They may also feel undermined which can cause conflict Trust: - Leaders find it hard to trust specialists to carry and run the departments - They may often feel manipulated or left in the dark when every information is not conveyed to them. Lack of leadership qualities: - Entrepreneurs who become leaders may lack the skills of communication and problem solving skills.  - They may to an extent have such skills as it is needed for entrepreneurs to be successful. However, they may lack the skill of applying it for bigger scale situations Overcoming difficulties Delegation and trust: leaders surround themselves with talented and trustworthy people Earn respect: leaders must go out of their way to treat their stakeholders well and gain their respect for them to be an effective leader Maturity and experience: leaders often need training to learn and adapt to the skills needed Education: courses can be done to help leaders become more skilled in areas such as communication and negotiation Reduce stress: calm leaders are more successful. To achieve this, leaders can: - Share feelings - Maintain a sense of humour - Avoid alcohol, drugs and tobacco - Have a balanced work/leisure lifestyle - Resting - Taking regular exercise - Having a balanced diet