Business Unit 2 Study Guide PDF

Unit 2 Human Resource Planning Study Guide 2.1) Introduction to HRM i. Role of HR Management Human Resources (HR): people that constitute the workforce of an organization HR Management: one of the four business functions that corresponds to the process of...

Unit 2 Human Resource Planning Study Guide 2.1) Introduction to HRM i. Role of HR Management Human Resources (HR): people that constitute the workforce of an organization HR Management: one of the four business functions that corresponds to the process of organizing people and maximizing their efficiency - It is argued to be the most important business function and the most important type of business inputs, especially for service industries. (tertiary and quaternary sectors) Role of HR: Efficiency: making sure employees are as productive as possible Minimizing risk: HR planning & HRM anticipates the staffing Staff Retention: how many employees stay in the workplace in a given time period (staff turnover is the opposite) Developing Organization Structure: making sure employees have a sense of belonging and understand their role PD & Training: PD means professional development, HRM makes sure all employees are adequately trained and know how to do their work Motivation: making sure there are appropriate financial and non-financial rewards for all employees Change Management: making sure change goes smoothly Recruitment & Selection: hiring the best-fit employees Redundancies and dismissals: ii. Factors that influence HR planning HR Planning: a systematic process of anticipating the staffing needs of the organization - Not only about expansion, also downsizing (redundancies and dismissals) - All companies no matter the size, large firms or sole traders, all need HRP - Can be strategic, operational, or tactical  - HRP is the link between HRM and strategic goals: if a company wants to achieve something, it needs to manage its workforce with the help of HR Internal Factors Leadership styles Strategies and objectives: what a company wants to achieve and how it achieves it Finance: budgets and limited resources → changing any of these factors might impact HRP External Factors Demographic Change: aging population, life expectancy, birth rates, etc Labor mobility: extent to which workers are flexible enough to move to different locations (geographical mobility) and / or their flexibility in changing to different jobs (occupational mobility). Professional Migration: moving to another country for work, etc Flexitime: 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. Gig economy: refers to labor markets where workers are typically on short-term, temporary contracts or carry out freelance work as independent contractors. iii. Change Change: the alteration of current work practices, having to do things differently - Human beings naturally don’t like change - However, not to change means not to evolve Kubler Ross Change Curve: 1. Denial 2. Anger 3. Depression 4. Bargaining 5. Acceptance “Change Theory”: Self interest: Employees don’t understand how change benefits them personally and don't care about distant and intangible benefits for the organization, thus are reluctant to change Misunderstanding: sometimes the change benefits the employees but are badly explained and thus misunderstood the situation Low Tolerance: having to change means to stop doing things that are secure and safe, which some employees can’t bare Different assessments of situation: different people see the same situation in different perspectives, for example what a boss sees as an opportunity is seen as a threat to employees Strategies to drive change smoothly: Education & Communication: smoothest way to adapt to change, train and prepare employees to be the drivers of change. However, there isn’t always time for that Participation & Involvement: if employees are empowered and apart of decision making process in an organization, they are more likely to demonstrate loyalty and flexibility to change as they feel they are apart of it Facilitation & Support: being supportive and caring to employees as they might be afraid to change routines Negotiation: reconsideration of current incentives, financial and nonfinancial rewards, and make mutual concessions for the benefits of implementing change - works well for highly skilled and experienced employees Co-optation & Manipulation: if the four methods above dont work, then managers will find employees who have influence over others and try to appoint them as a certain role to help promote and implement the desired change. Coercion: Applying dismissals and loss of certain benefits. Doesn’t allow employees to adapt to change, just forces them to immediately accept. In the long-term, can cause unloyalty 2.2) Organizational Structures i. Key terms Delegation: the passing on and entrusting of certain tasks from managers to subordinates - Win-win: managers focus more on strategic decisions, employees feel that they are trusted (not a financial reward) Span of control: the number of subordinates (employees) who are directly accountable to a manager - Wide (flat): fewer layers, lower managerial costs, effective communication, large teams, hards to control - Narrow (hierarchical): more layers, more costly, prolonged communication, “us and them” culture, easier to control Hierarchy: organizational system that is based on ranking - Adv: clear and easy to understand, creates a sense of belonging - Dis: Isolation between departments, inflexible Chain of command: a system by which orders and instructions are passed down in an organization - The more levels of hierarchy there are, the longer the chain of command is, meaning decisions can take a longer time to be approved  Bureaucracy: the execution of tasks that are guided by excessively complicated administrative rules and procedures - Filling in the reports, tedious paperwork, long chains of command, formality, impersonal attitudes, high degree of accountability - Inflexibility, hinders creativity and risk-taking, slows down decision making - Adhocracy - opposite of bureaucracy Centralization: the concentration of power and decision-making in a single authority (one person or group of people) - Adv: quick decisions, sense of direction, control, efficient in critical situations - Dis: added pressurews/stress for senior management, inflexibility, power plays, delays in decision making (waiting for boss to approve), demotivating (no reward for initiative) Decentralization: the transfer of power and decision making from a single authority to several people/groups - Adv: engaging, motivating, promotes teamwork - Dis: increased admin costs, time-consuming, hard to trace mistakes, potential loss of control Delayering: the process of removing one or more levels in the hierarchy (≠ downsizing) - Reduces costs, improves communication speed, encourages delegation and empowerment - Dis: creates anxiety and sense of insecurity, overloads staff, prolongs decision-making (because there are more decision-makers) Matrix Structure: a system whereby employees report to several managers and work in cross-departmental teams. - Functional structure is traditional and hierarchical - Matrix and functional structures can coexist and overlap inside one organization - Common for project-based work: when HR are not organized around departments but around projects ii. Organization charts Organizational charts: a graph the represents the structure of an organization showing the relationships of accountability and responsibilities - An arrangement of professional relations Accountability: who is held responsible for each particular job Responsibility: shows who is in charge of whom and in what role Things you can see: Functional departments Chain of command Span of control Levels of Hierarchy Types of Org. Charts: Flat (horizontal) Tall (vertical) By product / function / region iii. Organizational structures vs external factors Structures: Hierarchical, matrix, horizontal (flat), vertical (tall), by product, by function, by region, project based (HL), Shamrock (HL) External Factors: Steeple Factors to consider: SLAP: stakeholders, long-term & short-term implications, advantages & disadvantages, priorities (mission, vision, goals, objectives) Communications Sustainability Leadership Costs iv. Change (HL only) Project-based organizations: a type of organizational structure that has an HR based on projects and not departments - Not the same as matrix structure, but very often one implies another - IT, construction, oil exploration, and other one-of-a-kind activities - Teams from different departments assemble and disassemble/reassemble upon completion Shamrock Organization: a type of structure that divides the work force into 3 “leafs” depending on how essential they are: - Core: full-time professional workers that are crucial - Outsourced (contractual): subcontracted to specialist businesses - Temporary (peripheral): workers employed only when needed Advantages: Reduces unnecessary costs, increasing competitiveness. Greater flexibility to adjust employee numbers based on organizational needs. Use of contractual workers avoids the costs of redundancies during market downturns. Retaining a multi-skilled core workforce allows focus on core activities. Outsourcing non-core functions to specialists cuts costs further by avoiding full-time employee benefits. Disadvantages: Creates uncertainty and anxiety among workers. Flexible contracts can face legal challenges in regions with strict labor laws. 2.4) Motivation and Demotivation i. Motivation theories Motivation: reasons for behaving in a certain way, desire/effort/passion to succeed and reach certain achievements - Intrinsic Motivation: motivation from within - Extrinsic Motivation: motivation driven by external factors, rewards absence of punishment - Motivated staff = job satisfaction, high productivity, high quality output, higher profitability - Demotivated staff = job dissatisfaction, low productivity, low quality output, less profitability Taylor's Scientific Management: Managers in charge of everything (planning, direction, control) Division of labor and specialization Performance-related pay: the more one works, the more one gets Workers have to be selected scientifically: based on their abilities, not on managers subjective preferences Disadvantages: Mental output is hard to measure, not suitable for some professions Not all people are motivated by money The more educated people are, the more they want to have a say in how things are done Implies repetitive tedious work and being told what to do Advantages: Although the theory is over 100 years old, it still works Works well for people who are money-driven  Works for low-paid, low-qualified labor In line with some cultures Maslow’s Hierarchy Of Needs: 5 needs: physiological, security, social, esteem, and self-actualization First you need to identify which stage of the hierarchy you are in, then you will understand which part motivates you (the level right above the one you are currently in) Physiological: basic needs - shelter, clothes, food Security: physical security (away from danger) and long term security (finance) Social: communicative needs, socialize Esteem: recognition and achievements Self-actualization: being the best of the best Disadvantages: Impossible to motivate all workers using the same hierarchy of needs Levels of the hierarchy are impossible to measure. Where is the limit/border? The order of needs might be different, as well as the number of levels What motivates Jeff Bezos? Are all self-actualized people unhappy? Advantages: Easy to use Can be applied to all industries Straight forward Can be used to motivate employees intrinsically Herzberg Motivation-Hygiene Theory: Hygiene Factors: aspects of work that do not motivate but must be met to prevent dissatisfaction: organizational rules, regulations, polices, working conditions, pay Motivator Factors: factors that lead to the psychological growth of workers and hence increases satisfaction and performance at work: achievement, recognition, responsibility, advancement Motivation can be achieved through: - Job enlargement - more variety in tasks (but not more challenging) - Job enrichment - more complex and challenging tasks to maximize potential and sense of achievement - Job empowerment - delegating decision-making power to workers Disadvantages: Can be applied to low-skilled, low-paid labor (enrichment and empowerment wont work) Herzberg's research was based on accountants and engineers only Not all employees will be motivated by enlargement/enrichment as it implies more work and responsibilities Advantages: Hygiene factors open a new perspective: “why are employees demotivated?” instead of “what might motivate employees?” Promotes the individual needs: what motivates one, does not motivate the other  Considers the complex nature of motivation: what motivates today, might not motivate tomorrow McClelland's Acquired Needs Theory Employees have 3 needs: - Achievement: desire to succeed, master skills, and achieve goals - Affiliation: need to be around others and be loved/admired - Power: desire to lead and inspire others Disadvantages: Most people have all 3 needs that take turns at different times Even though the best managers are people with Power needs, it doesn’t actually make them the best. The happiest ones are with affiliation needs Advantages: The focus of the theory is beyond identifying needs, it's also about developing/acquiring needs Employees get tasks based on their needs Deci & Ryan’s Self-Determination Theory 2 types of motivation - Autonomous: when you do something because you want to (intrinsic or extrinsic) - Controlled: when you do something for reward They don't conflict each other and one can be transformed in the other The most motivated employees internalize controlled motivation, make it autonomous 3 types of needs: - Competence: need to succeed, achieve, and develop - Relatedness: care for and be cared for by others, be part of a group - Autonomy: self-endorsed behavior, need to be in charge of own choices and make decisions Disadvantages: Hard to identify how much of each need different employees require Many employees are only driven by rewards and aren’t able to internalize motivators if there's no personal benefit Advantages: The needs are universal and apply to everyone Theory promotes self-determination of employees, thus shifting the emphasis to developing intrinsic motivation Adam & Vroom’s Equity Theory Adam’s Equity and Expectancy theory: - Inputs: contributions made by employees - Outputs: financial and non-financial rewards - Employees compare their efforts and rewards to those of their colleagues - They become demotivated if their inputs are greater than their outputs  Vroom’s Expectancy Theory: - People act certain ways because they expect certain outcomes for their behavior. If there are no desired outcomes, employees will not alter their behavior - Advantages: the belief that you will achieve your goal if you work hard - Instrumentality: potential benefits for achieving goal - Valence: an evaluation of potential benefits that determine behabior Disadvantages: Does not always work: sometimes people act against their best interests Inputs and outputs can not be quantified, as well as some rewards Subjective: people have different understandings of “fairness” and “rewards” Advantages: Provides a new perspective for managers: how employees see each other in relation to each other or how employees perceive rewards New approach: changing rewards/outputs in order to change behavior ii. Rewards and Training Financial Rewards: Salaries, wages, commissions, performance-related pay (PRP), profit-related pay, employee share ownership schemes, fringe payments Non-financial rewards: job enrichment, job empowerment, job enlargement, job rotation, purpose/the opportunity to make a difference, teamwork Training: the process of providing opportunities for workers to acquire employment-related skills and knowledge Professional development (PD) Can be short-term or long-term Can be a requirement and non-compulsory Advantages: Develops staff Disadvantages: Increases chances to find a new workspace Induction training: A type of training aimed at introducing new employees to the organization - Includes meeting key personnel, office tour, learning about new job role, company policies and practices - Adv: helps to settle in quicker, reduces potential mistakes, integrate into the corporate culture - Dis: job isn't done On-the-job training: A type of training that takes place on site - Adv: saves costs, job gets done, output is produced, chance to get to know colleagues, no need to travel  - Dis: mentors bad habits are passed on, job isn’t done well, mentor is not necessarily a good teacher Off-the-job training: A type of training that takes place off site - Adv: training by professional coaches, no distractions, certificate of attendance, recognition outside of workplace - Dis: expensive, not necessarily in line with company culture or objectives, usually after work hours or on weekends iii. Turnover, appraisal, recruitment (HL) Labor turnover: the rate at which employees leave a workplace and get replaced 𝑙𝑒𝑎𝑣𝑖𝑛𝑔 𝑠𝑡𝑎𝑓𝑓 = 𝑡𝑜𝑡𝑎𝑙 𝑠𝑡𝑎𝑓𝑓 × 100 Retention: the opposite of labor turnover If labor turnover is 30%, retention is 70% Appraisal: formal assessment of an employee’s performance over a particular period (usually annually) Usually through an interview Types of appraisal: formative, summative, 360-degree feedback Adv: helps to improve and increase productivity and document the progress Dis: might demotivate and stress out, might be biased and subjective Formative appraisal: “Forms” the employee Development appraisal Part of the learning process The main idea is to help learn, not to assess the results Summative appraisal: Measures performance against standards Summarizes achievements over a time period More “test-like” The main idea is to assess performance, not to help learn Usually the most stressful Self-appraisal: Opportunity for self-reflection Helps to identify achievements and areas for improvement The main idea is to identify one’s own needs, rather than provide a second opinion Usually the least stressful and the most motivating 360-degree feedback: Collection of feedback from all colleagues, all levels of hierarchy, sometimes even customers Opportunity to hear from people other than senior staff Recruitment: 1. Vacancy arises: A job opening occurs due to employee departure, business expansion, or new roles needed. 2. Job analysis: A detailed examination of the duties, responsibilities, and skills required for the job. 3. Job descriptions & person specification: The job description outlines the role’s duties, while the person specification details the qualifications, skills, and traits needed for the candidate. 4. Job advertisement: The job is marketed via internal/external channels to attract suitable candidates. 5. Receiving applications: The business collects and reviews job applications or résumés from interested candidates. 6. Short-listing: A process of filtering candidates to create a smaller pool of the most qualified individuals. 7. Interviews (and testing): Candidates are assessed through interviews and possibly additional tests (e.g., aptitude or personality). 8. Vacancy filled (rejection & contracts): The best candidate is offered the job, contracts are issued, and unsuccessful applicants are notified. Internal Recruitment: - Company website, email, board - Adv: cost effective, less down time, less risk, motivating - Dis: fewer applicants, “dead wood” (no fresh ideas), time-consuming, internal politics External Recruitment: - Newspaper, internet, agencies, job centers, university visits, employee referrals - Adv: wider range of experiences, larger pool of applicants - Dis: greater degree of uncertainty, time-consuming, expensive