HSC BUSINESS STUDIES HUMAN

RESOURCES
ROLE OF HUMAN RESOURCE MANAGEMENT
Human resource management refers to the management of the total relationship
between an employer and employee in the workplace. It includes functions such
as recruitment, equal opportunity, training, development, separation and how
they can be aligned to the business goals.
HRM is one of the most important business functions as staff costs are often
more than 60 per cent.

STRATEGIC ROLE OF HUMAN RESOURCES

The strategic role of HR is to ensure that productivity of a business can achieve

its fullest potential because the employees of the business are effective and
efficient in the way they go about their tasks.
The benefits of adopting a strategic role to HR are the development of a highly
skilled workforce and the employment of a workforce relevant to the
organisational needs of the business
An increasing no. of business takes a strategic approach to HR by:
-

Seeing an effective workforce as a way of adding values to all areas of the

workforce
Focusing strategy to retain, reward and motivate effective and efficient
workers to achieve the business goals

Over the next decade, the major challenges for HR management are:
-

Retaining and developing talented staff

Improving leadership
Managing the ageing population
Succession planning

INTERDEPENDENCE WITH OTHER KEY BUSINESS FUNCTIONS

HR and operations
The operations function & Human resources department work closely to ensure
that the business has recruited staff with the relevant skills and experience
necessary to produce the product. The human resource department will monitor

the performance of employees involved in the production of goods and services

and hence implement training and development initiatives
HR and marketing
Research gained from marketing provides an indication of the type of staff that
needs to involved in bringing the product to the customer. HR needs to hire and
train employees for marketing.
HR and finance
The information gathered from the finance function such as earnings,
productivity and customer satisfaction provides tremendous insight into staffing
needs of a business. HR is also required to hire and train competent staff in the
finance department.

OUTSOURCING ***
- HUMAN RESOURCE functions
- USING CONTRACTORS DOMESTIC, GLOBAL

Outsourcing refers to the contracting out of particular functions of the business

to an external specialist in order to undertake one or more KBFs.
HR is the second most frequently outsourced function after information
technology.
Reasons For Outsourcing the Human Resources Function
The Human Resources Function:
-

Provides the ability to access staff whose specialty is HRM. These staff
would have a better understanding of issues can advise the firm on the
most appropriate strategy
Allows managers to focus on the core business operations. This means the
firm can focus on production & attending to the needs of its customers
The decision can generate cost savings as this reduces the need to
employ full time staff for Human relations

Issues with outsourcing the HRM

company which was
understanding of the key

between staff and their

must continue to be
ensure that
relationships still has to
A contractor is an external
to a business. It may be an
business.
Contracting is generally
non-core functions, allowing
the broader aspects of

There is the
chance that the
chosen may lack an
aspects of the
business E.g.
Business Culture
The key relationship
line managers
developed within
the business to
the work on
be handled
provider of services
individual or a
recommended for
staff to focus on
managing a firm.

KEY INFLUENCES

STAKEHOLDERS EMPLOYERS, EMPLOYEES, EMPLOYER

ASSOCIATIONS, UNIONS, GOVERNMENT ORGANISATIONS, SOCIETY

Employers
Are individuals or organisations that pay others to work for their business. They
are often the owners and take responsibility in the organisations goals. They are
vital as they provide employment opportunities and determine wages and
working conditions.
In large businesses:
-

Managers are appointed by Shareholders to take on this responsibility &

consult with owners to develop strategies
Human resource departments are also hired. Human resource
departments are a specialist unit in a business that has as its main role
the management of the issues involved in the employment relationship.
Their roles would include working with other departments to recruit the
appropriate staff and implementing a range of training and development
programs to cater for the changing staffing needs.

Employees
An individual who provides his or her skills to a business in return for a regular
source of income. This may be full-time, part-time or casual.
They were traditionally just workers, but are now considered in the decision
making process, hence allowing for increased motivation and workplace
efficiency.
Currently, Employees are seeking a greater recognition of the role that leisure
and family have in their lives. Thus employees, with the assistance of trade
unions have encouraged employers to introduce a number of initiatives aimed at
developing family-friendly practices (i.e. provision of childcare centres)
Employer Associations
-

Organisations that aim to promote the interests of employers within the

business environment.
They lobby governments to develop policies that enhance the interests of
the employers. Examples are the Business Council of Australia and NSW
Nurses Association.
Represent interest of employers in specific areas such as negotiations with
employees and unions, and acting as lobby groups for the interest of their
members.

Unions
-

Organisations that represent groups of employees on issues such as pay

and conditions, health and safety, and job security.
Role is to provide support, advise and represent employees when making
collective agreements, wage negotiations and industrial conflicts, and act
as a pressure group to highlight workers concerns.
Peak body is Australian Council of Trade Unions (ACTU).

Government Organisations
-

Establish the legal framework by which employers, employees and trade

unions coexist and operate within the employment relationship.
Establishes independent organisations such as NSW Industrial Relations
Commission and Fair Work Australia to support this legal framework. These
organisations regulate and support HR to ensure compliance with the law.

{Fair Work Australia Organisation established under the Fair Work Act 2009
(Cth). Their primary function is to encourage the prevention and settlement of
industrial disputes between employers & employees through a process of
conciliation and arbitration}
Society

A stakeholder is an individual or group with an interest in an organisation

and its activities. Society as a whole has an interest in the outcomes of HR
processes in businesses.
Issues such as discrimination and harassment are becoming publicised.
Businesses must act consistent with the views of society.

LEGAL THE CURRENT LEGAL FRAMEWORK

o THE EMPLOYMENT CONTRACT COMMON LAW (RIGHTS AND
OBLIGATIONS OF EMPLOYERS AND EMPLOYEES), MINIMUM
EMPLOYMENT STANDARDS, MINIMUM WAGE RATES, AWARDS,
ENTERPRISE AGREEMENTS, OTHER EMPLOYMENT CONTRACTS
o OCCUPATIONAL HEALTH AND SAFETY AND WORKERS
COMPENSATON
o ANTIDISCRIMINATION AND EQUAL EMPLOYMENT OPPORTUNITY

The employment relationship is subject to a considerable number of regulations

and laws. Over the years, the government has established the legal framework
by which employers and employees are encouraged to coexist cooperatively. The
current legal framework that governs most issues relating to employment in
Australia is the Fair Work Act 2009 (Cth) and the Fair Work Regulations 2009
derived from the Act.
The employment contract creates obligations for both employer and employee,
and all businesses operate within a legal framework of common law and statute
law that is, law passed by federal and state parliaments in Acts.
An employment contract is a legally binding, formal agreement between
employer and employee.
An employment contract creates rights and responsibilities for employers and
employees. These are enforceable by laws, such as those governing:
-

a safe workplace etc.

Contracts can be contracts of service, which is the standard employer-employee

relationship or contracts for service, where a contractor such as a builder will
perform a specific job for a set time.
COMMON LAW Rights and Obligations of Employers and Employees
The common law is developed by courts and tribunals.
Obligations

Employee
- Look out for employer
interests
- Obey employer

Employer
- Pay employees fairly
and as agreed in the
contract

instructions (must be
reasonable and lawful)
- Perform work with due
care
- Disclose information
they receive that is
relevant to the
employer as well as
access to processes
they invent.

Rights

- To work in an
environment that does
not unreasonably
damage their physical,
emotional or mental
well-being

- Must not act to

damage employee
reputation or humiliate
them, including
providing honest future
references
- Duty of Care
(Reasonable care for
the safety of
employees) i.e
Providing a safe work
environment
- To dismiss employees
in certain situations;
must be wary of unfair
dismissal laws though.

Statutes are laws passed by parliaments and they take priority over common
law. They are often amended to reflect changing workplace conditions and
government policy. The current statute law that establishes employment
contracts is Fair Work Act 2009 (Cth), which provides a safety net of enforceable
minimum employment terms and conditions though the National Employment
Standards.
Minimum Employment Standards Fair Work Act provides a safety net of
enforceable minimum employment terms and conditions through the National
Employment Standards which sets out ten minimum workplace entitlements
which apply to all employers and employees in the national workplace relations
system. (Do we need to know the 10 Employment Standards?)
Minimum wage rates Applies to employees not covered by awards or
agreements whereby contracts must offer at least the minimum wage for it to be
valid. The Minimum Wage Panel determines the minimum wage at national level
for each industry, reviewing wage rates annually. The panels aim is to establish
and maintain a safety net of fair minimum wages.
Awards are legally binding documents containing minimum terms and
conditions of employment, in addition to any legislated minimum terms for an
industry or occupation. They must contain the minimum employment standards
and differ from industry to industry. Currently 15% of workers are covered by
awards. The process for making an award requires lodgement of a dispute
(paper or real) by a union or employer association, as the Constitution only
allows for dispute settlement at the federal level.
Enterprise Agreements are collective agreements made at a workplace level
between an employer and a group of employees about terms and conditions of

employment. Enterprise agreements are the main way working conditions are
determined in Australia and unions usually negotiate on behalf of employees.
Under the national system employees must be better off under an enterprise
agreement than the relevant award for it to be valid.
Other Employment Contracts:
o

Part time employment - An employee working a fixed set of

hours per week, but usually less than those of a full-time employee.
They are entitled to all benefits on a pro rata basis (the proportion
of hours).

Permanent employment - A person who is provided with

continuing employment within the organisation. They work between
35 to 40 hours a week. They are entitled to four weeks holiday per
week, and can be given overtime for working more than the
required amount.

Casual employment - Employees employed by a business for

short periods of time. They must work for a minimum of between
one to three shifts. They receive no holiday or sick leave
entitlements. The employer can choose when they work.

Fixed term contracts - The use of labour for only a specific period
of time. Both parties are in agreement to this time period.

Flexible employment usually refers to independent contractors.

The Occupational Health and Safety Act 2000 (NSW) establishes the
rights and responsibilities of employers in the workplace in regards to
employers and employees.

Workers Compensation - The Workers Compensation Act 1987 (NSW),

Workers Compensation and Workplace Injury Management Act 1998
(NSW) govern the process of employees gaining financial compensation
for injuries sustained at work.

Anti-discrimination legislation - Anti discrimination laws such as Sex

Discrimination Act 1984 (Cth), Racial Discrimination Act 1975 (Cth),
Human Rights and Equal Opportunity Commission Act 1986 (Cth) and the
Disability Discrimination Act 1992 (Cth) prohibit discrimination in the
workplace. Discrimination occurs when a policy or a practice
disadvantages a person or a group of people because of a personal
characteristic that is irrelevant to the performance of the work. The
Human Rights and Equal Opportunity Commission protect the interests of
the employee.

Equal Employment Opportunity (EEO) refers to equitable policies and

practices in recruitment, selection, training and promotion. EEO ensures
that the best person for the job is chosen, the business gains the person
with skills and abilities most appropriate to its needs, and a more positive
work environment is promoted. Anti-discrimination Act 1977 (NSW) makes
equal employment opportunity mandatory. The level of equity in a
business is reflected in the extent to which women and minority groups
have access to different occupations and positions within the business. It
is also reflected in the grievances expressed or legal action undertaken on
the grounds of discrimination or sex-based harassment.
Developing a code of practice and making equal opportunity awareness a
criterion in promotion and performance appraisal are two of the practical
strategies that can be used to improve affirmative action (Measures taken
to eliminate direct and indirect discrimination) and gender equity.

ECONOMIC

Economic Cycle
Business is the fuel that drives production, price changes, employment and our
standard of living. The level of economic activity in an economy is primarily
determined by the level of consumer and business spending.
Employment is fundamental for all economies. Labour is derived demand (ie.
Derived from the demand for goods and services)
In periods of strong economic growth there is an increased willingness for
employees to spend more of their income on consumer goods. Hence, labour will
be in strong demand and wages should improve, as more goods and services
need to be produced. In a recession, opposite situation would occur.
During periods of wage negotiations, employees will seek higher wages from
employers due to inflation. This leads to increases in the costs of production of
any business. Workers would need to be sacked making staff needing to increase
their workload.
Globalisation
- The integration of the worlds economies into a single market where goods and
services can be traded with ease.
- Due to more competition, workers are retrenched when their services are no
longer needed.
- Employees need to receive their legal entitlements if they are retrenched and
workplaces must be free of discrimination and harassment.

TECHNOLOGICAL

Technology seeks to improve the quality of products and the efficiency

with which they have been produced

Technology is a key influence on HR because:

State of technology affects the labour needs of the business (i.e. loss
of employment as technology itself becomes the main tool of
production)

Technological advances may mean fewer workers are required; this

could affect the motivation and morale of the workforce

New technology may require new skills meaning retraining existing

workers and acquiring new workers. (Employee resistance to change as
workforce becomes reluctant to learning the use of new technology)

Influences the administration of HR management (online recruitment

and employee databases) Increased efficiency

SOCIAL CHANGING WORK PATTERNS, LIVING STANDARDS

Australian workplaces are now characterized by greater diversity in terms of

ethnic & cultural backgrounds and the desire by many employees to achieve a
balance between work and family.
Changing Work Patterns
The way in which Australians work has changed considerably over the past 10
years.
Increase in casualisation, outsourcing and female employment gives managers
more options ( i.e. labour is more flexible and plentiful)
Some trends in work patterns include:
o

Increased female employment Rising female participation rate

(59% 2011) Influence on workforce is reflected in increasing calls
for work-life balance

Workforce is now ethnically diverse

More part time and casual employment

More career changes

Service jobs have become more common

Population is ageing - likely to see a significant shortage of skills in

the community over the next few years

Living Standards
Less educated people, who lack skills and qualifications, may often be employed
in industries with low wage rates. Many of which would be scared to challenge
their employers for fear of losing their jobs.
As living standards rise, workers and the society expects better working
conditions as businesses have most likely profited from rising economic
prosperity (e.g. higher wages, flexible work hours). It may also lead to a shrink in
the size of the labour force in the short term as people return to studying which
in the longer term produces a more skilled workforce.

ETHICS AND CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility is defined as The continuing commitment by

companies to behave ethically and to contribute to economic development, while
improving the quality of life of the workforce and their families, as well as the
local community and society at large.
Examples of CSR include investing in community projects (Encouraging staff to
volunteer their time to participate in community-building activities), supporting
research initiatives & adopting environmentally friendly products
Ethical business practices are those practices that are socially responsible,
morally right, honourable and fair.
An ethical framework must be developed for the workplace, in collaboration with
the major stakeholders. Key principles may include ensuring equity in workplace
processes, legal compliance, and commitment to customers.
The benefits accruing from ethical practices include:
-

Staff retention and absenteeism rates improve as staff feel more valued
and motivated.
Business costs (such as recruitment and training) are reduced and
business performance is enhanced.
There are significant marketing and business opportunities best
practice employers enjoy regular publicity in the media, in journals and on
the internet.

Ethics and CSR can influence HR because:

o The business is treated like a citizen as it exists in society as well as
benefiting from it and so it should not exploit society for profit, this
is the logic behind the idea of CSR
o HR management must act in a way that is seen as ethical so that
its public reputation doesnt suffer

o
o

CSR also pressures HR management to introduce strategies that

value workers rights and wellbeing even if it means reduced profits
HR management decisions can stir up emotions in the society and
so by ignoring ethical influences the business may suffer reduced
sales as society expresses its anger
If a business consistently acts unethically, the government may
step up regulations to prevent such behaviour

PROCESSES OF HUMAN RESOURCE MANAGEMENT

ACQUISITION

The stage in the human resource cycle that involves identifying staffing needs,
recruitment and selection.

In order to examine whether it has the appropriate staff to meet the firms needs,
it needs to:
o
Identify the skills and number of employees required in the future
o Analyse its existing workforce

Identifying staffing needs- If staff cannot cope with changes, more employees
are needed.
o The job needs to be identified and analysed and a job description (a
written statement describing the duties tasks and responsibilities
associated with the job) needs to be created.
o A job specification (Written statement describing the key skills,
experience and qualifications needed for a job) must be made after.

Recruitment- To accumulate a pool of potential candidates for a job. It is from

this pool that the business must make its selection. The business can fill a
vacancy by recruiting applicants internally (from existing staff) or externally (from
outside the business).
o Existing staff could receive a promotion, resulting in other staff to improve
their performance.
o The business can advertise externally for job applicants through methods
such as outsourcing to private employment agencies, interviews on
university campuses, and trainee positions may be offered to HSC
students to complete cadetship courses.

Selection- A screening process in staff acquisition. The information gathered

about job applicants is reviewed and the most appropriate applicant is chosen.
The individuals are assessed on their ability to interact with each other. The
process may involve:
o Interviews
o Application forms
o
Written tests, such as English

DEVELOPMENT

Training provides employees with the right knowledge and skills to perform their
job effectively and efficiently.
Development refers to activities that prepare staff to take greater responsibility
in the future. Developing staff often involves training.
The aim of training and development is to seek long-term change in employees
skills, knowledge, attitudes and behaviour in order to improve work performance
in the business.
Well-organised and well-presented training and development provides benefits
for both the employee and the employer

Technology creates the need for ongoing training

It is the task of the human resource manager to plan for the effective
introduction of new technology. Training needs must be identified well in advance
of any proposed technological implementation. This will ensure change happens
at a pace consistent with the capabilities and expectations of the workforce.
Types of Training
Methods of Training include:
Formal off-the-job training E.g. classroom activities,
Informal on-the-job training E.g. coaching
Action learning: learning by experience solving real workplace problems
Competency-based training: identifies skill strengths and areas where
further training is required E.g. medical education
Training should be viewed as an investment in the human capital of the business.

MAINTENANCE (Monetary/Non-Monetary benefits????)***

The maintenance element of the employment cycle is the provision of working

conditions to encourage employees to remain with the business.

By retaining productive and efficient employees who are loyal and display a high
degree of commitment to their work, a business is able to increase its
productivity, achieve high levels of morale, lower the rate of absenteeism and
reduce the costs of staff turnover.
A business can therefore offer a range of monetary and non-monetary benefits
as compensation for their labour.
Compensation refers to the payment or benefits (or both) an employee receives
in exchange for their labour.
The combination of monetary and non-monetary benefits is referred to as the
remuneration package.
-

Monetary rewards are financial incentives provided to complete a job.

This includes overtime payments, over-award payments {Minimum wage
rates & minimum working conditions are set out in an award},
superannuation, bonuses, share of profits, issuing of shares, commission,
performance-based pay and fringe benefits such as a laptop.

Non-monetary rewards include personal satisfaction gained from caring

from others and making a difference, job enrichment from interesting
tasks, leadership or educational opportunities and a positive work
environment that has effective management
One very important non-monetary benefit of recent times is affordable
daycare centres either within the business or subsidised by it. With
changes to family lifestyles and work patterns, many businesses attempt
to meet the personal needs of their employees

SEPARATION (*Need to redo voluntary and involuntary

redundancy)***

> The final stage in the employment cycle is the separation stage, in which
employees leave the workplace on a voluntary or involuntary basis. This stage
must be handled carefully and sensitively by the human resource manager.
- Voluntary separation:
Is where the employee decides to leave the business on their own free will and
includes:
O Retirement - The employee has decided to give up full-time or part-time work.
People may retire due to ill health, lack of motivation, or leisure activities.
O Resignation - When an employee leaves their jobs for reasons such as a need
for change in their lives or moving interstate. The employee needs to provide the
employer with notice of the intention to leave.

O Voluntary redundancy - Where an employees existing job is no longer required

by the firm, possibly due to changes in technology, a merger or takeover. These
individuals may have been offered a redundancy package. (Employees nominate
themselves for voluntary redundancy)
- Involuntary separation occurs when an employee is asked to leave the
business against his or her will. Apart from involuntary redundancy, the two
different types of involuntary separation are retrenchment and dismissal
> Involuntary redundancy - The termination of employment due to the firm
closing down or the job no longer being required due to rationalisation,
restructuring or new technology. There is a minimum scale for severance
payments for all permanent employees under NSW awards who work for an
employer with more than 15 employees.
> Retrenchment - is when a business dismisses an employee because there is
not enough work to justify paying him or her. For example, when production
levels are low, retrenchment notices will be given to selected employees.
> Dismissal - Occurs when the employer terminates an employees employment
contract due to the unacceptable conduct or behaviour of the employee. It can
be an instant or summary dismissal or a dismissal after a series of warnings. The
reason for dismissal must be based on the employees conduct or ability to do
the job.
Unfair Dismissal occurs when an employer dismisses an employee for
discriminatory reasons (i.e. race, absence from work due to illness).

STRATEGIES IN HUMAN RESOURCE MNAGEMENT

Management should seek to develop strategies that encourage and promote an
effective and rewarding relationship between staff and the business.

LEADERSHIP STYLE

Leadership style is the manner and approach in which leaders of a business

interact with staff. This interaction is based on:
-

Providing staff with directions

Implementing plans and organising staff
Motivating staff in a manner that promotes effective workplace
performance

Kurt Lewin identified three different styles of leadership, each offering managers
alternatives to the process of interacting with staff.

Autocratic leadership - Managers lead, based on the view that they are
responsible for telling their employees what they want done and how to
accomplish the task. Employees cannot contribute to the decision making
process. Decisions must be made quickly.

Democratic leadership - Also known as participative leadership.

Democratic leadership involves the leader including one or more
employees in the decision-making process. Employees are consulted
about what to do and how to do it. They encourage employees to become
empowered.

Laissez-faire leadership - Also known as free-rein or delegative

leadership. The leader allows the employees to make decisions.
Employees have the relevant knowledge and skills to make the decisions.
Managers trust the ability of employees to make the right decisions.

JOB DESIGN GENERAL OR SPECIFIC TASKS

Job design Key strategy of HRM

Where managers develop and specify the work activities of individuals or groups
within the business environment. It involves the process of determining the type
of tasks an employee needs to complete.
The goals of job design are to:
-

Satisfy the needs of the business with greater productivity from

employees
Efficiency and quality in operations
Satisfying the workplace needs of employees.

General tasks Employee is engaged in a variety of tasks which will help to

overcome boredom. Moving from task to task can avoid health and safety issues.
Specific tasks Business has increased performance. Employees become
skilled at performing a few tasks and output is higher quality as a result. The
disadvantage is that specific tasks become routine and boring.

RECRUITMENT INTERNAL OR EXTERNAL, GENERAL OR SPECIFIC

SKILLS

Recruitment (Fundamental aspect of HR) where management seek to

employ an individual for a vacancy that exists within the organisation.
Recruitment may be completed internally or externally
Internal recruitment occurs when the position is filled by existing employees
within the business.

 Advantages: It acts as an incentive for staff to improve their performance,

promotions as seen as a reward for effective work, employee has existing
understanding of the culture within the business
Disadvantage: Staff overlooked for the position may lose motivation
External recruitment occurs when the position is filled by an individual who
has not yet worked for the business.
> Advantage: Business is encouraging new ideas, new employees are not aware
of existing issues.
> Disadvantage: May take time to settle in, resentment from existing staff.
Some issues for the business to consider in the recruitment process are:
-

The need to replace staff: Management must consider if it able to spread

the workload over existing employees. This has the benefit of upskilling
existing employees and cost savings for employer
Use of specialised recruitment firms: This may allow a greater degree of
expertise to be used in the recruitment process.

General skills are transferable from one job to another. Key general skills
include flexibility, motivation, ability to work as a team/independently, leadership
and ability to work under pressure. General skills are important because many
jobs today require individuals to work independently and undertake many
different tasks. HRM value these skills as they generally indicate the employees
capacity and willingness to learn.
Specific skills are those that need specialist training at a school, TAFE,
university or other accredited educational provider. Most businesses are
concerned about skill shortages and still need to target employees with specific
skills to fill gaps in their business.

TRAINING AND DEVELOPMENT CURRENT OR FUTURE SKILLS

Training and development are an essential component to any successful

business. They are the means by which a business is able to provide employees
with an avenue to enhance their knowledge and understanding of various
activities related to the operations of the business.
Training involves educating an employee in the skills and processes of the job
they currently hold.
Training may take place through either formal or informal means
Formal training
When an employee takes on a role similar to students within the organisation
and are shown how to apply themselves to the new operations of the business,
then later assessed on their level of understanding. E.g. lectures, seminars

Informal training
When an employee is either shown or modelled the correct skills through the use
of a coach or mentor, or learning the work on the job.
-

Development involves selecting employees for educational programs

that focus on future roles.

If business is aiming to develop skills for current needs, training is

appropriate but if the business is looking to the future, then development
is appropriate.

Induction (If required)

Process of providing new employees with the knowledge and skills necessary to
ensure they are familiar with the organisation and day-to-day operations of the
business
-

Most induction programs provide employees with some history of the

org. , company policies and a code of conduct
Employees are notified of leave arrangements, starting and finishing
times, dress codes

PERFORMANCE MANAGEMENT DEVELOPMENT OR

ADMINISTRATIVE

Performance management refers to the process of recognising the efforts and

contributions of employees to their work. It involves an ongoing process of
communication between a supervisor and an employee
Some benefits of performance management are that the employee has an
improved understanding of their role and what needs to be done, the employer is
able to identify any problems earlier and performance review and improvement
allows the employee to be aware of their personal goals.
Performance management is an ongoing process that can be describe through
three key stages:
Planning: This stage is focused on goal setting. Expectations are
developed between the employer and the employee regarding tasks.
Goals are established between the employer and employee, but they
must be realistic
Checking-in: An employer should regularly observe an employees
performance to provide feedback. This improves communication between
the management and employees and employee motivation through
recognition and rewards.
Assessment: Is the process of measuring the employees performance
against the objectives. They discuss employee accomplishments and
examine results against business and industry benchmarks.

REWARDS MONETARY AND NON-MONETARY, INDIVIDUAL OR

GROUP, PERFORMANCE PAY***

A rewards system can reinforce strategies to facilitate change or support

desirable corporate values, such as a focus on the customer.
Many businesses use a combination of monetary and non-monetary rewards so
as to motivate all employees to work to their potential and cooperate with each
other to achieve the goals of the business.
It is important to note that some rewards are part of their legal entitlements such
as superannuation, sick and annual leave
-

Monetary rewards are those reflected in pay or having financial value

and are beyond the employees minimum legal entitlements. (financial
incentives provided to complete a job) {ProVIDE EXAMPLES!!!)

Non-monetary rewards are those that do not have a financial value,

such as social activities, retirement planning or flexible work schedules.

Reward systems are also increasingly linked to performance management

through enterprise bargaining and individual contracts
Individual or group rewards involve a team of workers sharing rewards for
the performance of workplace tasks. There are many different schemes for group
rewards but profit sharing, payment by result and bonuses are the most popular.
Rewarding performance based upon group achievement has a number of
benefits ad negatives:
o

Benefits

encourages a greater sense of team work

employees become more motivated

Negatives

not all employees may apply equal effort

employees may have different personal goals

conflict may occur within the group

Performance Pay

Performance pay refers to the process of linking part of an employees income to

their performance at work. As the employee reaches targets and demonstrates
improved performance, they will be rewarded through increased pay.
This concept recognises that employee motivation comes from financial benefits.
Benefits of Performance Pay:

Performance may improve as employees work more

effectively.

it encourages unmotivated and inefficient individuals to

improve performance

Disadvantages of Performance Pay:

The performance of employees may be difficult to measure

for some jobs as it is influenced by external factors i.e.
attitudes of consumers

Some employees may simply seek non-financial rewards.

GLOBAL COSTS, SKILLS, SUPPLY

Costs Labour costs vary in different countries depending on size of workforce

and available skill level. Labour costs depend on demand for workers in
particular industries.
Skills India has become a preferred source of global labour due to good literacy
levels in English and technical skills. The South Korean workforce has good
technical skills but is not proficient with English. Indias main advantage is
information technology.
Supply - There are currently about 7 billion people in the world. The labour force
is declining in advanced industrialized areas such as Europe and expanding in
geographical areas such as Asia, Africa and North America.

WORKPLACE DISPUTES
o RESOLUTION NEGOTIATION, MEDIATION, GRIEVANCE
PROCEDURES, INVOLVEMENT OF COURTS AND TRIBUNALS

The process of resolving an industrial dispute can be complex & depends on the
willingness of stakeholders to cooperatively work together to reach a settlement.
The interests of employers and employees conflict at many times. Employers will
seek to use the services of labour at the lowest possible cost, while employees
will attempt to gain the best possible income and working conditions.
NEGOTIATION

The first stage in the resolution of a dispute. It involves a discussion between

both parties in an attempt to resolve the dispute.
Collective bargaining Common term used to describe negotiations over
workplace disputes within an organisation
Depending on the nature of the dispute, an employer association may also be
called on to assist the employer with negotiations.
MEDIATION
Occurs where an independent party with no ties to either stakeholder is asked to
assist and therefore may assist the conflicting stakeholders to reach a
settlement.
This party could suggest ideas or present issues in an alternative way.
GRIEVANCE PROCEDURES
The rules and procedures that employees, unions and employers must follow in
order to resolve a dispute. A grievance procedure policy:
o

provides a clear outline of the issues

illustrates the correct and appropriate processes when raising a

complaint

provides a mechanism that can be used to achieve a quick

resolution of disputes

Conciliation - When the Fair Work of Australia acts as a mediator and offers
suggestions in a dispute to resolve the problem. While all parties must make
every reasonable attempt to reach a settlement, the conditions of the agreement
are not legally binding.
Arbitration - The final stage of the dispute, it Involves a commissioner hearing
the cases put forward by both parties in an industrial dispute and then making a
decision, which is legally binding on both parties. The decision is legally binding
on all parties.
{Involvement of courts and tribunals includes Fair Work Australia (FWA), the
Australian Human Rights Commission & the NSW Industrial Relations
Commission}

EFFECTIVENESS OF HUMAN RESOURCE MANAGEMENT

INDICATORS
o CORPORATE CULTURE
o BENCHMARKING KEY VARIABLES
o CHANGES IN STAFF TURNOVER
o ABSENTEEISM
o ACCIDENTS
o LEVELS OF DISPUTATION
o WORKER SATISFACTION

An effective human resource management function is one where management

and employees work well together in their efforts to achieve the goals of the
business.
The effectiveness of the relationship can be examined from a number of
perspectives
Corporate Culture
Corporate culture refers to the culture within an organisation. It relates to the
values and beliefs within a business and directly impacts upon the relationship
between management and employees.
An effective corporate culture is one that is believed, demonstrated and acted
upon by management and employees.
Benchmarking Key Variables

Benchmarking is the process of measuring an employees performance against

established standards (i.e. output per worker)
If employees are unable to meet performance goals on a regular basis,
management must therefore examine why this is occurring. The reason may be a
lack of motivation or that the staff are not adequately trained which could in turn
lead to low productivity, poor quality product and consumer dissatisfaction.
Changes in Staff Turnover
Staff turnover refers to the rate at which employees leave a business. A high
level of staff turnover caused by voluntary separation is indicative of poor
employment relations within a business.
High staff turnover is costly to a business as it includes paying out a leaving staff
members entitlements, conducting a selection process and training the new
staff member. Moreover, the possibility of losing experienced and highly skilled
staff to competitors.
Absenteeism
Absenteeism refers to an employee being unable to attend work for reasons such
as illness or family responsibilities.
High levels of absenteeism disrupt work schedules, lead to lower productivity &
involve a cost in replacing the worker.
This places additional demands on existing staff and may cause even greater
hostility within the workplace.
Accidents
Workplace accidents can be measured in terms of the number per period etc.
Effective HRM ensures that occupational health and safety within a business is
paramount
Levels of Disputation
Monitoring the frequency and severity of industrial disputes in the workplace will
give an indication of the effectiveness of grievance procedures and dispute
resolution processes.
Effect of Disputes: The costs of industrial disputes and action increase the
number of working days lost & lower productivity & staff morale.
Worker Satisfaction
An effective human resource management structure will implement strategies to
measure worker satisfaction (i.e. surveys, group discussions)
Based on results, management must then examine methods to improve worker
satisfaction (E.g. Leadership styles).

Satisfied employees often work more efficiently and value the organisation that
they work for.