Unit 6 - decision making to improve human resource performance
The value of human resource objectives -
Human resource objectives are the goals / targets that a business’ HR function seeks to achieve
- Managers can judge the performance of the business
- Managers can assess the achievements of the workforce / provide guidance
- Managers can set a standard for employees - to meet the needs of customers
- Can help managers to identify any problems within the business at the earliest stage
Types of human resource objectives:
1. Labour productivity - quantity of products that employees are producing
2. The number and location of the workforce e.g. move overseas / introduce technology
3. Employee engagement and involvement
4. Training
5. Talent development - fulfilling the potential of employees
6. Diversity - a diverse workforce = the business can understand the needs of a market
7. Alignment of values
Employee engagement - describes the connection between a business’ employees and its mission /
goal / objectives
Employee involvement - people are able to have an impact on decisions and actions that affect
their working lives
Influences on human resource objectives and decisions -
Internal influences:
- Corporate objectives
- Attitudes and beliefs of the senior managers
- Hard HR approach - treating employees as a resource
- Soft HR approach - employees are seen as the most value asset to the business
- Type of product
, Unit 6 - decision making to improve human resource performance
External influences:
- The technological environment - some developments have replaced labour
- The economic environment - e.g. growing / declining market
- The social environment - ethical / environmental considerations
- The competitive environment - reducing costs / price wars
- The political environment - government laws etc
Analysing human resource performance -
1. Labour productivity = total output / no. of employees
A higher productivity figure is preferable → increased profit margins / reduce prices
whilst maintaining profit margins can lead to increased sales + revenues
- Labour productivity data ignores wage rates
- Overall productivity depends on other factors too e.g. labour vs capital intensive
2. Unit labour costs
Measures the labour cost per unit of output produced
They are determined by: 1) cost of employing workers 2) the speed at which they make
the product
Unit labour costs tend to have an inverse relationship with labour productivity (if labour
productivity increases, labour costs will decrease)
- Lower unit labour costs are preferable
- Reducing labour costs does not improve price competitiveness if other costs e.g.
overheads are rising quickly
3. Employee cost as a percentage of turnover = employee costs / turnover x 100
Influenced by:
- Productivity rates of the workforce
- Wage rates
- Non wage employment costs
- The management of capacity
4. Labour turnover = no. of staff leaving during year / average no. of staff x 100
Measures the proportion of a workforce leaving their employment over a certain period of
time
High rates of labour turnover → more people are leaving their jobs
- Low wages
- Inadequate training
- Poor morale
- Demographic factors e.g. worker is moving homes
- Pregnancies → maternity leave
- Redundancies
5. Labour retention = no. of employed for more than one year / average no. of staff x 100
The extent to which a business holds on to its employees
The value of human resource objectives -
Human resource objectives are the goals / targets that a business’ HR function seeks to achieve
- Managers can judge the performance of the business
- Managers can assess the achievements of the workforce / provide guidance
- Managers can set a standard for employees - to meet the needs of customers
- Can help managers to identify any problems within the business at the earliest stage
Types of human resource objectives:
1. Labour productivity - quantity of products that employees are producing
2. The number and location of the workforce e.g. move overseas / introduce technology
3. Employee engagement and involvement
4. Training
5. Talent development - fulfilling the potential of employees
6. Diversity - a diverse workforce = the business can understand the needs of a market
7. Alignment of values
Employee engagement - describes the connection between a business’ employees and its mission /
goal / objectives
Employee involvement - people are able to have an impact on decisions and actions that affect
their working lives
Influences on human resource objectives and decisions -
Internal influences:
- Corporate objectives
- Attitudes and beliefs of the senior managers
- Hard HR approach - treating employees as a resource
- Soft HR approach - employees are seen as the most value asset to the business
- Type of product
, Unit 6 - decision making to improve human resource performance
External influences:
- The technological environment - some developments have replaced labour
- The economic environment - e.g. growing / declining market
- The social environment - ethical / environmental considerations
- The competitive environment - reducing costs / price wars
- The political environment - government laws etc
Analysing human resource performance -
1. Labour productivity = total output / no. of employees
A higher productivity figure is preferable → increased profit margins / reduce prices
whilst maintaining profit margins can lead to increased sales + revenues
- Labour productivity data ignores wage rates
- Overall productivity depends on other factors too e.g. labour vs capital intensive
2. Unit labour costs
Measures the labour cost per unit of output produced
They are determined by: 1) cost of employing workers 2) the speed at which they make
the product
Unit labour costs tend to have an inverse relationship with labour productivity (if labour
productivity increases, labour costs will decrease)
- Lower unit labour costs are preferable
- Reducing labour costs does not improve price competitiveness if other costs e.g.
overheads are rising quickly
3. Employee cost as a percentage of turnover = employee costs / turnover x 100
Influenced by:
- Productivity rates of the workforce
- Wage rates
- Non wage employment costs
- The management of capacity
4. Labour turnover = no. of staff leaving during year / average no. of staff x 100
Measures the proportion of a workforce leaving their employment over a certain period of
time
High rates of labour turnover → more people are leaving their jobs
- Low wages
- Inadequate training
- Poor morale
- Demographic factors e.g. worker is moving homes
- Pregnancies → maternity leave
- Redundancies
5. Labour retention = no. of employed for more than one year / average no. of staff x 100
The extent to which a business holds on to its employees
