Functions & Evolution of HR Management - 2.1
Human Resource Management = the management of the employer-employee relationship in the
workplace
- Includes recruitment, training, development, separation & how these are aligned to achieve
business goals
Workforce Planning = the method used by a business to forecast how many and what types of
employees are needed now & in the future
➔ Short-term planning = aims to fulfill more immediate needs (vacancies from
retirement/maternity)
➔ Long-term planning = accommodate strategic changes (expansion of organization)
➔ Important when there is a question on strategic planning
Steps in the Development of Plan:
1) Determine business strategic goal
2) Assess current employees
3) Analyze demand for employees
4) Analyze supply of employees
5) Compare demand & supply data
6) Develop & implement workforce plan
Forecasting Employee Demand
Past Data ➔ Use of time series to predict future employee needs
➔ Complicated & scientific approach
➔ Based on growth/reduction of employee numbers in past = backward
looking
Productivity of ➔ Manufacturer calculates average productivity using formula
Workers ➔ Simple method & can help forecast more efficient method of
production = raise productivity
➔ Doesn’t consider economies of scale & only suitable for
manufacturing businesses
Management ➔ Seek input from management at all levels & determine future
Knowledge employee needs
Calculating Staff ➔ Labour turnover rate formula can predict number of employees who
Turnover may leave, retire or be promoted
Factors Influencing Employee Demand
1) Changes in goods & services demand
, 2) Technological developments
3) Changes in business goals
4) Changes in organizational structure
5) Changes in product techniques
Supply of Employees
Internal Source of Labour - When employees are available within the organization
- Dependent on: available staff training, labour turnover &
vacancies created, encouragement for internal promotion
External Source of Labour - When employees have to be recruited from outside an
organization
- Dependent on: rate of unemployment, availability of
housing, demographics, cost of recruitment
Labour Turnover
★ Refers to the proportion of employees leaving within a given time period (usually a year) which
can indicate firm stability
★ It is a percentage
Labour turnover rate = number of employees leaving / number of employees in business x 100
➔ Indicates how many people need to be rehired & what they need to do to retain staff
Causes of High Labour Turnover
Avoidable Cause Unavoidable Cause
Dissatisfaction with payment Family Circumstances
Poor working environment Marriage
Job dissatisfaction Birth of children
Lack of facilities (medical, recreational & Retirement
transport)
Redundancy
Costs of High Labour Turnover
Cost Description
, Recruitment - Recruitment process is costly when finding new employees
Loss of productivity - Recruiting new employees causes a loss of productive potential
- Need to possibly train new employees
Inefficiency, machine - Can take time for new employees to master job to high standard
breakdown & waste
Training - Time consuming & distracts current employees from tasks
Company reputation - High labour turnover may make it difficult to recruit talented employees
External Factors Affecting Workforce Planning
External factors = outside of organisations control & have an impact on size/availability of potential
employees
External Factor Description
Competition - Challenging to recruit qualified employees if similar organizations offer
similar jobs & strategies must be used to retain current employees
- Big organization = easier to attract potential employees
- Small business = have to advertise vacancies & attend job fairs to find
employees
Payment - Existing competition affects wages (higher salaries to attract qualified
employees)
- High unemployment & abundant labour supply = lower salaries
- Must be ensure pay is fair to avoid dissatisfaction of employees
Legislation - Many countries have laws that prohibit discriminatory job ads & recruitment
- Laws around employee medical records & insurance
- Must be up to date with legislation to avoid fines
Technology - Business may downsize employees with new technology
- Can change nature of work place = more flexible
Population & - Ageing population = older workers for work with high expertise or retiring
demographics
Economy - High rates of unemployment allows for a large pool of labour
- High national rates of unemployment = workers more willing to travel to find
a job & accept lower salaries
Availability of skills - Depends on area (e.g. Silicon valley has computer specialists)
Government training & - Gov may be involved in training & provide subsidies for a firm to relocate
subsidies - Reduces labour costs & competitive advantage
, Internal Factors Affecting Workforce Planning
Internal Factor Description
Organization Structure - Organizational chart can identify positions required & that are redundant
- Helps with planning on how to address gaps
Budget - Number of employees needed can depend on product demand
- Increased revenue = money to recruit & pay employees
Promotion - HR must keep track of vacancies to train other employees & promote them to
higher positions
- Helps retain qualified employees
Working Practices - Could change working practices for employee flexibility
- Working hours, encourage team-work
Recruitment Process
Identification Identification = realizes it needs a new employee (changes to internal factors)
Process 1) Job Analysis = study of what the job entails & details of skills, training and
tasks needed to carry out the job
2) Job Description = simple ‘word picture’ of the job & communicates
expectations (job title, main tasks)
3) Person specification = derived from the job analysis & description which
defines the qualities/qualifications needed for the individual to fill the vacancy
4) Job Evaluation = an assessment of the value of the job in relation to other jobs
to differentiate the payment for jobs
5) Internal or external recruitment = weighs up the pros and cons of each
Application Process Application = decide how to find best applicants for job
1) Job Advertisement = internally to promote existing employees or externally
in employment agencies, online media, etc (considers place of ad & content)
2) Application form/resume = processes applications & are standardized +
legally binding
3) Internal (uses HR department) or external agency = weighs up the pros and
cons of each
Selection Process Selection = selection of most suitable candidate for job (Influenced by: seniority of
vacancy, country, available resources, organization structure)
1) Shortlisting = done on basis of applicant quality, interview & legal
requirements
2) Testing = aptitude (knowledge & potential), psychometric (personality) and/or
team based
3) Interview = could be face to face, multi-stage, etc
4) Job Offer = occurs at the end of the selection process & involves employee
Human Resource Management = the management of the employer-employee relationship in the
workplace
- Includes recruitment, training, development, separation & how these are aligned to achieve
business goals
Workforce Planning = the method used by a business to forecast how many and what types of
employees are needed now & in the future
➔ Short-term planning = aims to fulfill more immediate needs (vacancies from
retirement/maternity)
➔ Long-term planning = accommodate strategic changes (expansion of organization)
➔ Important when there is a question on strategic planning
Steps in the Development of Plan:
1) Determine business strategic goal
2) Assess current employees
3) Analyze demand for employees
4) Analyze supply of employees
5) Compare demand & supply data
6) Develop & implement workforce plan
Forecasting Employee Demand
Past Data ➔ Use of time series to predict future employee needs
➔ Complicated & scientific approach
➔ Based on growth/reduction of employee numbers in past = backward
looking
Productivity of ➔ Manufacturer calculates average productivity using formula
Workers ➔ Simple method & can help forecast more efficient method of
production = raise productivity
➔ Doesn’t consider economies of scale & only suitable for
manufacturing businesses
Management ➔ Seek input from management at all levels & determine future
Knowledge employee needs
Calculating Staff ➔ Labour turnover rate formula can predict number of employees who
Turnover may leave, retire or be promoted
Factors Influencing Employee Demand
1) Changes in goods & services demand
, 2) Technological developments
3) Changes in business goals
4) Changes in organizational structure
5) Changes in product techniques
Supply of Employees
Internal Source of Labour - When employees are available within the organization
- Dependent on: available staff training, labour turnover &
vacancies created, encouragement for internal promotion
External Source of Labour - When employees have to be recruited from outside an
organization
- Dependent on: rate of unemployment, availability of
housing, demographics, cost of recruitment
Labour Turnover
★ Refers to the proportion of employees leaving within a given time period (usually a year) which
can indicate firm stability
★ It is a percentage
Labour turnover rate = number of employees leaving / number of employees in business x 100
➔ Indicates how many people need to be rehired & what they need to do to retain staff
Causes of High Labour Turnover
Avoidable Cause Unavoidable Cause
Dissatisfaction with payment Family Circumstances
Poor working environment Marriage
Job dissatisfaction Birth of children
Lack of facilities (medical, recreational & Retirement
transport)
Redundancy
Costs of High Labour Turnover
Cost Description
, Recruitment - Recruitment process is costly when finding new employees
Loss of productivity - Recruiting new employees causes a loss of productive potential
- Need to possibly train new employees
Inefficiency, machine - Can take time for new employees to master job to high standard
breakdown & waste
Training - Time consuming & distracts current employees from tasks
Company reputation - High labour turnover may make it difficult to recruit talented employees
External Factors Affecting Workforce Planning
External factors = outside of organisations control & have an impact on size/availability of potential
employees
External Factor Description
Competition - Challenging to recruit qualified employees if similar organizations offer
similar jobs & strategies must be used to retain current employees
- Big organization = easier to attract potential employees
- Small business = have to advertise vacancies & attend job fairs to find
employees
Payment - Existing competition affects wages (higher salaries to attract qualified
employees)
- High unemployment & abundant labour supply = lower salaries
- Must be ensure pay is fair to avoid dissatisfaction of employees
Legislation - Many countries have laws that prohibit discriminatory job ads & recruitment
- Laws around employee medical records & insurance
- Must be up to date with legislation to avoid fines
Technology - Business may downsize employees with new technology
- Can change nature of work place = more flexible
Population & - Ageing population = older workers for work with high expertise or retiring
demographics
Economy - High rates of unemployment allows for a large pool of labour
- High national rates of unemployment = workers more willing to travel to find
a job & accept lower salaries
Availability of skills - Depends on area (e.g. Silicon valley has computer specialists)
Government training & - Gov may be involved in training & provide subsidies for a firm to relocate
subsidies - Reduces labour costs & competitive advantage
, Internal Factors Affecting Workforce Planning
Internal Factor Description
Organization Structure - Organizational chart can identify positions required & that are redundant
- Helps with planning on how to address gaps
Budget - Number of employees needed can depend on product demand
- Increased revenue = money to recruit & pay employees
Promotion - HR must keep track of vacancies to train other employees & promote them to
higher positions
- Helps retain qualified employees
Working Practices - Could change working practices for employee flexibility
- Working hours, encourage team-work
Recruitment Process
Identification Identification = realizes it needs a new employee (changes to internal factors)
Process 1) Job Analysis = study of what the job entails & details of skills, training and
tasks needed to carry out the job
2) Job Description = simple ‘word picture’ of the job & communicates
expectations (job title, main tasks)
3) Person specification = derived from the job analysis & description which
defines the qualities/qualifications needed for the individual to fill the vacancy
4) Job Evaluation = an assessment of the value of the job in relation to other jobs
to differentiate the payment for jobs
5) Internal or external recruitment = weighs up the pros and cons of each
Application Process Application = decide how to find best applicants for job
1) Job Advertisement = internally to promote existing employees or externally
in employment agencies, online media, etc (considers place of ad & content)
2) Application form/resume = processes applications & are standardized +
legally binding
3) Internal (uses HR department) or external agency = weighs up the pros and
cons of each
Selection Process Selection = selection of most suitable candidate for job (Influenced by: seniority of
vacancy, country, available resources, organization structure)
1) Shortlisting = done on basis of applicant quality, interview & legal
requirements
2) Testing = aptitude (knowledge & potential), psychometric (personality) and/or
team based
3) Interview = could be face to face, multi-stage, etc
4) Job Offer = occurs at the end of the selection process & involves employee
