3.6 – Decision Making to Improve Human Resource Performance
Soft and Hard HRM
Soft management – Identifies workers as most important resource
Common features:
Democratic
Flat structures
High levels of training
Opportunities for promotion
Non-financial incentives
Long-term planning
High job security
Hard management – Identifies workers as just another resource
Common features:
Autocratic
Tall structures
Minimal training
Theory X
Financial incentives
Short-term planning
Low job security
1
, 3.6 – Decision Making to Improve Human Resource Performance
Human Resource Performance 1
Labour productivity – The output per worker over a period
Used to make decisions about pricing
t o t a l o ut p u t
nu m b e r o f w or k e r s
High labour productivity is usually good
Does not take wages into account
Does not take machinery / capital into account
Employee conditions and motivation are not considered
Unit labour costs – The labour costs per unit of output produced
Takes wages and non-wages costs such as insurance into account so it is accurate
l a bou r c o s t s
o ut pu t
Low unit labour costs are good
As labour productivity rises, unit labour costs should decrease (EoS)
Employee training increases unit labour costs in short-term but is good long-term
Lower labour unit costs may not outweigh other costs increasing
Absenteeism – The percentage of workers not at work over a given time frame
nu m b e r o f a b s e n t st a f f d a y s
t ot al st af f d a y s
Can be useful for setting motivation and health and safety targets
Human Resource Performance 2
2
Soft and Hard HRM
Soft management – Identifies workers as most important resource
Common features:
Democratic
Flat structures
High levels of training
Opportunities for promotion
Non-financial incentives
Long-term planning
High job security
Hard management – Identifies workers as just another resource
Common features:
Autocratic
Tall structures
Minimal training
Theory X
Financial incentives
Short-term planning
Low job security
1
, 3.6 – Decision Making to Improve Human Resource Performance
Human Resource Performance 1
Labour productivity – The output per worker over a period
Used to make decisions about pricing
t o t a l o ut p u t
nu m b e r o f w or k e r s
High labour productivity is usually good
Does not take wages into account
Does not take machinery / capital into account
Employee conditions and motivation are not considered
Unit labour costs – The labour costs per unit of output produced
Takes wages and non-wages costs such as insurance into account so it is accurate
l a bou r c o s t s
o ut pu t
Low unit labour costs are good
As labour productivity rises, unit labour costs should decrease (EoS)
Employee training increases unit labour costs in short-term but is good long-term
Lower labour unit costs may not outweigh other costs increasing
Absenteeism – The percentage of workers not at work over a given time frame
nu m b e r o f a b s e n t st a f f d a y s
t ot al st af f d a y s
Can be useful for setting motivation and health and safety targets
Human Resource Performance 2
2
