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Higher Business Management

Business Decision Areas II:

Human Resources
Human Resource Management

The role and importance of Human Resource Management

Irrespective of the size or objectives of an organisation, the most valuable resource it possesses is its
workforce. Without workers who are both efficient and effective, the long-term success of an
organisation cannot be assured. The human resource of an organisation is its entire workforce – from
managing director to part-time cleaner. Each person is employed to perform specified functions which
play their part in the overall success or failure of an organisation.

It is the human resources employed by an organisation which generate wealth through the provision of
services or the production of goods. Consequently, just as machinery and buildings need to be
protected if they are to work properly, time and care must be taken if an organisation is to secure and
retain the human resources that it requires. It is the responsibility of the Human Resource Management
department to devise and implement the organisation’s policies and strategies for managing its human
resources in a way that will satisfy both the objectives of the organisation and the objectives of the
human resources it employs.

Human Resource Management (HRM) refers to that part of an organisation’s activities


designed to attract, train, develop and maintain an effective workforce.

Human Resource Management is a relatively new term and has only come into use over the last 20
years or so. Traditionally, the function of dealing with employees was described as Personnel
Management. Many organisations, in fact, continue to use this term.

In many cases, Human Resource Management and Personnel Management are used to mean the same
thing. For example, some organisations which continue to use the term ‘personnel department’ describe
its work as ‘managing the human resources of the organisation’. Despite this, HRM is often seen as
different from Personnel Management:

• HRM takes a more strategic view than Personnel Management. It is concerned with making sure
that the management of people fits in with the strategic objectives of an organisation and, like all
other departments’ is also involved with deciding what the organisation’s strategy should be. In the
past, personnel departments often played no part in deciding strategic objectives.

• HRM is more integrated than Personnel Management. It is responsible for bringing together all the
elements of managing human resources and making sure that they fit together in a coherent way.
Traditionally, the various elements undertaken by a personnel department were seen as separate tasks.
As a result, they were often carried out in isolation; for example, new employees would be recruited
without any consideration being given to their future training and development.

Overall, therefore, HRM differs from Personnel Management in that it takes a much more strategic and
integrated approach, although the activities it performs are much the same. This is why the terms are
often used interchangeably. In this text we shall use HRM because it is becoming the more widely used
term.

The HRM function within organisations

The range and nature of the skills and specialisms available within the Human Resource Management
function of an organisation depend on a number of factors. These include:

• the size of the organisation;

• the nature of the labour force employed by the organisation;

• the status of the HRM department in the organisation;

• the values and expectations of senior management.

Normally all but the smallest organisations will have their own specialist Human Resource
Management department. However, the management of the human resources of the organisation is not
carried out solely by the HRM department. Line managers, such as team leaders, have responsibility for
the activities of the workforce and work closely with them on a day-to-day basis. As a result, they
undertake a range of Human Resource Management activities. The extent of these varies between
organisations, but examples of HRM activities that line managers might undertake include:

• drawing up job descriptions,

• selecting new staff,

• training (e.g. induction training for new staff),

• performance appraisal,

• planning future staffing requirements,

• handling grievances,

• implementing HRM policy, e.g. equal opportunities (line managers are expected to be aware of all
legal requirements affecting HRM).

Human Resource Management, therefore, is a central component in the duties of all managers
irrespective of their job title or functional responsibility.

The HRM department in an organisation is likely to fulfil a number of different roles:


The executive role

Here, the HRM department is seen as the ‘expert’ in matters relating to Human Resource Management
and makes decisions about what should be done in this area. For example, the HRM department will
ensure that organisational policies are developed in line with legal requirements, will decide to produce
information booklets on training, etc.

The audit role

In this capacity, the HRM department monitors organisational activities to ensure that HRM policies
are being properly implemented by all concerned.

The facilitator role

This role requires the HRM department to facilitate the work of other managers in the organisation and
help them to acquire and use the skills, techniques and attitudes that they need to make sure that HRM
policies are implemented throughout the organisation. For example, team leaders could be given
training to help them respond to, and deal with, complex relationships between team members that may
involve HRM issues such as grievances, equal opportunities, human resource planning, etc.

The consultancy role

In this role, the HRM department provides advice and guidance to managers at all levels on matters to
do with the management of people.

The service role

This requires the HRM department to be the provider of useful information on HRM matters. This is
most important in times of change when the organisation needs to make sure that it is up to date with
what is happening, for example with changes in legislation on issues like equal opportunities, or with
developments in HRM practice or 360-degree feedback.

TEAM ACTIVITY

Using these notes, any textbook and if access is granted, the internet, Prepare a short
presentation answering the following question:

“Explain the role and importance of Human Resources to an organisation of you choice.”

Select an organisation you know well so you can share examples with everyone.

The activities of the Human Resource function

The Human Resource function can be seen operating at 3 levels of management – strategic, tactical
and operational.
Strategic activities

Strategic activities are concerned with long-term planning. In order to achieve corporate objectives it
will be necessary to:

• formulate personnel policies that clearly state how things will be done across the organisation as a
whole;

• devise guidelines for the implementation of policy;

• ensure that the work of the HRM department helps to achieve corporate goals, i.e. defining
corporate culture, and cultivating and communicating this culture to employees.

Tactical activities

Tactical (or advisory) activities refer to the provision of attainable pathways which when followed will
enable an organisation to achieve its strategic objectives. Tactical activities include:

• Human Resource planning;

• recruitment of particular groups of staff;

• staff training and development;

• promoting effective industrial relations.

Operational activities

Operational activities refer to the ways in which policy is implemented on a day-to-day basis. For
example, in order to implement a tactical activity such as ‘a programme for staff training and
development’, it may be necessary to carry out the following operational activities:

• identify what the training needs are;

• invite employees to indicate their willingness to participate in training;

• select the most suitable applicants;

• arrange absence cover for trainees;

• develop training materials and deliver these.

The elements of Human Resource Management

HRM covers a range of activities that can be described as the ‘elements’ of Human Resource
Management. They include:

• Human Resource planning;


• recruitment;

• selection;

• training and development;

• employee relations;

• development and monitoring of policies and procedures relating to human resources, e.g.
discipline, grievance, appraisal, health and safety, terms and conditions of employment;

• maintenance of personnel information and record keeping.

Each will be discussed in turn.

Human Resource Planning (H.R.P)

H uman Resource Planning (H.R.P) is the process of forecasting the


workforce requirements of the business for future years. It looks at how many
employees the business will require in the future, as well as the type of employee that
will be required (e.g. graduate trainees, skilled-manual and supervisors). H.R.P. also
ensures that the ‘right’ employee is in the ‘right’ job, to ensure maximum efficiency and
effectiveness of the workforce.

Clearly the process of H.R.P. requires that the business make estimates of the number
of workers that it believes it will require at all levels in the business in the future. This
can be done in a number of ways:

1. Using past data (e.g. if the workforce has grown at 4% per year over the past 3 years, this trend may
well continue).

2. Analysing the expected levels of customer demand and sales (e.g. more employees will be required if
the number of customer orders is estimated to rise significantly).

3. Estimating the level of labour turnover. For example, if the number of employees that are expected
to leave the business next year is 50 (due to retirement or transfers), then the business will have to
recruit many new employees to replace those that are leaving.

4. The views of the management (the management are often in the best position to estimate the number
of new employees that will be required in their department or division).
5. Expected changes in working practices. For example, if a manufacturing business is wishing to change
its production technique from labour-intensive to capital-intensive, then it is not likely to require many
new employees in the future.

Business may decide to meet any requirements for employees at the supervisory and
management levels from within the existing workforce. This can be done by promoting
those employees who have already demonstrated their potential and effectiveness in
their current posts. These employees have the advantage of already knowing about the
systems and the routines of the business, but they would still require the relevant
training and development in order to prepare them for their new, more senior positions.

Alternatively, the business may decide to fill these (and more junior) positions from
outside the business.

FACTORS AFFECTING AVAILABILITY OF EXTERNAL LABOUR FOR A BUSINESS:

1. The rate of unemployment in the area.

2. The extent of the infrastructure in the area (e.g. price and availability of housing or
availability of public transport).

3. Government incentives and subsidies (paying the training costs for the business).

4. The availability of workers with the necessary skills and qualifications.

5. The number of competitors in the area.

PROBLEMS WITH HUMAN RESOURCE PLANNING ARE:

1. Will the ‘new’ employees mix effectively with the existing workforce?

2. Changes in the external environment (e.g. a recession) could lead to the business
having to make redundant several of the recently-appointed employees.

It will always be difficult for a business to accurately forecast the number of new
employees that it will require, because both the business-world and the internal
requirements of the organisation are very dynamic.
The Shamrock Organisation, right, is a modern concept in business, whereby firms are
made up of regular core workers which are supplemented by part-time staff and contractors.

New Working Patterns

Manpower plans have to be amended to account for changes in working patterns. The traditional view
of employment is of a full-time permanent contract with a single employer. Whilst this still applies to
many firms and employees, increasing numbers are being employed under new working patterns. The
labour market is more flexible nowadays, with 2 workers in 4 outside permanent employment. The
benefits to a firm include lower total labour costs and a more flexible workforce. Trade union
representation and negotiating power are also reduced. The following are the main new working
patterns.

Part-time Work – although part-time seasonal work is traditional in the agriculture and tourism
industries, part-time work has grown in importance in the rest of the economy. Firms such as the Burton
Group and British Home Stores have converted many full-time posts into part-time ones; up to two-thirds
of the staff of Sears plc are now part-time.

One UK worker in four is now a part-timer. Many ‘women returners’ are employed on a part-time
basis: in 1992 only 6 per cent of men, but 45 per cent of women were part-time workers. People
employed for less than 16 hours a week do not enjoy the same employment-related rights (eg
redundancy payments) as full-time staff, employers can avoid NI contributions to low-paid part-time
workers, and the existence of more part-timers and weaker unions has made it easier for firms to shed
staff.

Flexible hours – the number of workers of ‘flexitime’ has increased: a core time band (eg between 10 am
and 4 pm) is established when all employees must be present, with the rest of their weekly hours being
flexible to suit individuals themselves.
Shift Work – continuous 24-hours operation is appropriate for many industries. Employees may rotate
shifts or may be based on ‘permanent nights’. Although the hourly labour costs will rise the increased
production helps account for fixed costs, and so unit costs still decrease.

Job Sharing – two or more employees may decide to share a full-time post, with the employer’s
agreement. One benefit to the firm is the likelihood of increase cover at times of sickness or absence.

Fixed Contracts – a firm might recruit staff on a short-term contract, perhaps to carry out a project.
This is often found in the construction industry and is now used in many other areas, for example in
recruiting certain managers and senior staff. Benefits to the firm include greater control over labour
costs, the opportunity to bring in ‘new blood’, and a highly motivated employee where the ‘carrot’ of a
renewed contract exists. Firms may also employ people on a consultancy basis to complete a project. In
such cases the person is self-employed and the consultancy will be terminated once the project is
completed.

Sub Contracting – this is when a firm lets out work to an external company. It is also referred to as
Outsourcing. Types of jobs commonly subcontracted include printing and publishing, computer technical
support, general cleaning, window cleaning, and security.

In-House - When work is carried out within the company. it does have several benefits: The in-house

Why produce in-house?

Keeping the work within the organisation does have several benefits: The firm has more control over
costs (both wages and materials) and can cut their cloth accordingly. They also have control over
quality and importantly, delivery dates. Relying on other people to meet deadlines always carries an
element of risk. Look at the Scottish Parliament building: over-budget and delayed!

Confidentiality is also kept within the firm since no outsiders are privy to information with regards to
the company’s activities.

Why use subcontractors?

If a firm does sub-contract work out it may be due to several factors: the company may not be
specialists in the work needed to be carried out; the cost of undertaking the task may be too expensive
and is more cost effective to hire someone else’s services and/or equipment, in particular relating to
ICT and Computer Technical Support within firms. The company may be working at the factory’s
maximum capacity and rather than let orders go, they can use other firms to meet demand. If an order is
a one-off and unlikely to be repeated, perhaps due to the size of the order, then again work may be
carried out.

Strengths of Subcontractor

Normally the external firm will have more experience in the particular job or skill required, and
properly trained individuals capable of higher performance than in-house employees. They also will
have more up-to-date equipment and machinery. For example a school could produce its own
Yearbook, but to save production costs and be guaranteed of a large order completed to a deadline by
professionals, they may let a printing firm carry out the work.
Benefits of outsourcing to the firm

When firms use subcontractors they achieve other benefits in addition to having the task done more
expertly. The firm can ‘stick to the knitting’, in other words concentrate on what they excel at. It also
frees up workers’ time, especially managerial time, which can be spent on another project.

Customer supply and demand can be matched better without resulting in excess capacity being left idle
during quiet times.

In terms of facilities it also means that they may not have to update machinery to do a particular job
and again can free up resources within the factory. Stock levels can be reduced, as finished orders will
be delivered at an agreed date to the customers. This can result in a Just-in-time system being used.
Finally, the firm can diversify into other products by using the subcontractors’ strengths.

Advantages Disadvantages

RECRUITMENT AND SELECTION

The recruitment and selection process commences when the business realises that there
is a vacancy in the organisational hierarchy which needs to be filled.

People leave their posts due to getting promoted, getting a job with another
organisation, getting fired, retiring or taking a career break due to personal
circumstances.

Firstly, job analysis has to be conducted to identify whether a position is needed at all.
Then a job description needs to be written, this outlines the job title, as well as the tasks and the
responsibilities that will be covered by the successful applicant. Once this is completed, then a job
specification needs to be written, this goes beyond a description of the job, and it lists the physical and
mental attributes that will be desirable or essential for the successful applicant (such as the level of
intelligence, their disposition and their interests).

The H.R.M. department will then need to write an advertisement for the job and to place
it in a variety of media (newspapers, job centres, job agencies, the internet, radio, and
internal notice-boards), in order to get as many people as possible to apply for the post.

The advertisement will include the hours of work, the pay and fringe benefits, the job
title, the relevant experience and qualifications that are required, and a contact name
and address. It is likely that the job will be advertised within the business as well as
through external media. The advantages of recruiting from within the existing
workforce include the fact that a shorter training and induction period is necessary, as
well as far less time and money being spent on the whole process.

The H.R.M. department will then need to send out application forms to, and request
Curriculum Vitae (CVs) from, all those people who write to the business expressing a
desire to apply for the job.

It is vitally important that the application form is tailored to the specific post that is
being advertised, as well as asking questions that are relevant, legal, inoffensive and
essential. Once these application forms have been completed and returned to the
business (often with a CV and a covering letter) then the short-listing process will ensue,
this involves analysing the CVs and the application forms and deciding which applicants
appear to be most suitable for the post. Once this is done, then the H.R.M. department
will contact the successful applicants and ask them to attend an interview.

INTERVIEWS

The interview process is very time-consuming but is, nevertheless, an essential factor in
getting the ‘right’ person for the ‘right’ job. A good interviewer will have studied the job
description, the job specification and the job advertisement before interviewing the
applicants, as well as studying their application forms, CVs and covering letters in order
to know as much information as possible about the applicants before the interview
commences.

A good interview needs to be well structured, uninterrupted, and conducted in a friendly


manner, with the use of open-ended questions which will give the applicants the chance
to talk openly about themselves. The interviewer must listen carefully to the applicants’
comments and make notes as necessary.
At the end of the interview, the applicants must be given the opportunity to ask
questions about the job and about the business, and then the interviewer must inform
the applicants when they will be notified of the decision.

It is likely that applicants for a job will be interviewed by a number of people. This can
be in sequence (i.e. the applicant will have one interview quickly followed by another) or
it can be simultaneous (i.e. the applicant will be interviewed by a panel of people).
Whichever method of interviewing is chosen, the purpose remains the same, to select
and appoint the ’best’ applicant for the job.

It is possible that the business may choose to use a variety of tests to complement the
interview process, in order to measure the applicants’ intelligence, their performance in
certain scenarios, and their personality traits.

Once a business has selected the most suitable applicant for the available post (often
involving much discussion between the different interviewers), then he/she will be
appointed.

This will involve the new employee being given a Contract of Employment, which is a
written statement covering the terms and the conditions of employment (e.g. date
employment commences, job title, pay, hours of work, holiday and pension entitlements),
as well as the process for disciplinary and grievance procedures.

Recruitment Process

T he Human Resources department is usually responsible for


recruiting new staff and for training them to do their job. When job vacancies arise, it
draws up documents for specific purposes, organises and runs interviews. The Human
Resources department has to follow certain procedures before a job can be advertised.
This page will explain these different stages in detail.

Vacancy occurs - Three reasons why a vacancy may arise in a business:

retirement
promotion
to go to a new job
The Human Resources manager then draws up a job description - The job description should contain
these basic details about the vacancy:

the job title


the position in the organisation chart
a list of duties

Person specification drawn up - The person specification represents the ideal qualities of the person
required to fill the vacancy:

qualifications
experience
personality

The job is advertised- The Human Resources manager needs to consider the following:

what details need to go in the advert


where the advert should be placed

Candidates apply for the job - The advert tells candidate what to send in:

a letter of application or a completed application form


a copy of their curriculum vitae or CV. The CV contains personal information about their
qualifications and interests.

Application forms filtered to create shortlist of candidates being considered - If you compare these
documents you can assess whether the person has the right skills for the job:

the CV
the job application form
the job specification

Arrange the interviews - Why are the candidates interviewed? Whether a person gets the job or not
depends on their performance at interview

The interview is held - What are the interviewers looking for?

good answers to all the questions


the candidates' attitude and dress
body language

Follow up references - What is a reference? The names and addresses of people who can provide details
of your performance with a previous employer or give evidence of your good character

Appoint candidate to the job - What happens if references are not satisfactory?
the job offer will be withdrawn and offered to someone else
it might be necessary to re-advertise

RECRUITMENT AND SELECTION


The Apprentice: Recruitment and Selection
The vacancy of Teacher of Business Education has arisen due to a member of staff leaving
the school.

You are a recently graduated Teacher who currently finds themselves unemployed.

The class will be divided into two main categories:

Applicants
SMT

The SMT will prepare the Job Description and the Person Specification while the
Applicants prepare their CV.

Once completed the Job Advert will appear and applicants will be given an application form
to fill in.

Once applications forms are completed they will be returned to the SMT who will then short-
list the applicants and invite for interview. Unsuccessful candidates will form an audience
and take notes on what they are going to witness.

The Chair of the Panel will be a specially invited guest and whose decision is final.

The interviewees will be rated on their appearance, their ability to answer questions and their
body language.

At the end of the interviews the candidates will be asked back in to be given feedback and
one lucky person will get the job!

Job description: Teacher of Business Education


Organisation: Hamilton Grammar High School

Job title: Teacher of Business Education

Line manager: Mr M McGowan

Hours: Full-time

Duties

To teach a range of Business Educuation subjects from S3-S6 (including ICT in S1-
S2)

To plan lessons and mark students’ work

To set and mark tests and examinations for Business Education students

To report on individual pupil progress to parents by attending parents evenings

To take responsibility for a tutor group

To attend all after school meetings as directed by the headteacher

To undertake any other duties that are reasonably asked of the employee

Curriculum Vitae
Name: Address:

Date of Birth:

Telephone Number: Nationality:

National Insurance Nos:


Education
School Dates

Qualifications
Subject Exam Board Date Grade

Work Experience
Place Date Details of Work

Hobbies/Interests
Referees:

Candidate ref:
Standard Application Form
Employer applied to:
(SAF)
Personal Details (please print this section) P
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Title Surname First Name(s) (indicate (*) the one you are known by

Home Address Home Address Term Address

Postcode Postcode Postcode

Telephone: Telephone: Telephone:

E-mail: E-mail: E-mail:

Dates at above: Dates at above: Dates at above:

Nationality Nationality

Do you need a work permit for permanent employment in the UK? YES  NO  D
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Education - Professional, Postgraduate, First Degree/Diploma

From - To Higher Education Institution From - Award and Title of Award Results (expected/awarded)
To (HND/Degree/Dipl/Msc/
Month/year
Month/year
PhD etc) List main subjects below title

Education - Prior to Higher Education

Please list date (year)/qualification/subjects (grade) of all of the highest level examinations that qualified you for your Higher
Education course(s) (A/AS Levels/Scottish Higher/Irish Leaving/Access/GNVQ/Baccalaureate etc). Include all examinations taken at
this level whatever the outcome.
Number of Standard Grade passes (Grade C Date(s) gained Grade for Maths Grade for English Number of A/A* grades
& above) Language

Employment and Work Experience

Please describe briefly any work (whether paid or unpaid) which you have undertaken. Highlight(*) the two most relevant and note
what you achieved..

From - To Employer From - To Job Title/Responsibilities Achievements


Month/year
Month/year

Personal Interests/Achievements

Use the space below to describe with dates (year) any part-time activities. Include organising, leading or group activities. Those
requiring initiative, creativity or giving intellectual development are also of interest.

Specific Evidence

The following questions are designed to encourage you to provide specific abilities. Your examples can be taken from your education, work experience, placements or spare-time
or other voluntary activities but do not write solely about course-work.

Planning, implementation and achieving results:

Describe a challenging project, activity or event which you have planned and taken through to a conclusion. Include your objective,
what you did, any changes you made to your plan and state how you measured your success.

Influencing, communication and teamwork:


Describe how you achieved a goal through influencing the actions or opinions of others (perhaps in a team context). What were the
circumstances? What did you do to make a difference? How do you know the result was satisfactory?

Analysis, problem solving and creative thinking:

Describe a difficult problem that you have solved. State how you decided which were the critical issues, say what you did and what
your solution was. What other approaches could you have taken?

Additional Information

Please write here any additional information, not covered elsewhere which will strengthen your application.

Where did you hear of us/see an advertisement?

Specific Skills

1. List any languages that you know indicating level of proficiency (basic/working knowledge/fluent/mother tongue).

2. Specify your experience with any generic computer packages/programming languages (limited/working knowledge/extensive).

3. Indicate any other specific relevant skills (laboratory techniques, graphics skills etc).

Career Choice

Explain why you have applied for the job function(s) that you noted on the first page. Offer evidence of your suitability (e.g. courses
undertaken, work shadowing, skills, strengths and experiences). Emphasise why you consider yourself to be a strong candidate.

Health Declaration

Please give details of any health matters of relevance to the work applied for (see note within Guidance Notes and Monitoring Data).

Referees

Academic Referee Other Referee

Name: Name:

Position: Position:
Address: Address:

Telephone: Telephone:
Declaration

Signed ………………………………….. Name (please print)……………………………………. Date……………………


Mock interview questions


Job: teacher

What qualities do you feel you can bring to the job?

Are you good at managing classes or groups of pupils?

Do you enjoy forming relationships with pupils?

What do you think your strengths are for the job?

Have you had any experience or involvement with pupils already?

Do you have lots of patience?

When are you available to start?

In your opinion – what is the worst part of being a teacher?

Are you hard working? Can you give me an example of when you worked really hard towards
a goal or deadline?

What motivates you in your everyday life?

What hobbies and interests do you have?

Tell me a little bit about yourself

Candidate interview sheet

Interviewee name

Comment on: 1) Presentation (tie, shirt, shoes) 2) First impressions 3) Quality


of answers 4) Relationships between interviewer and interviewee
Overall comment

Interviewee name

Comment on: 1) Presentation (tie, shirt, shoes) 2) First impressions 3) Quality


of answers 4) Relationships between interviewer and interviewee

Overall comment

Interviewee name

Comment on: 1) Presentation (tie, shirt, shoes) 2) First impressions 3) Quality


of answers 4) Relationships between interviewer and interviewee

Overall comment

STAGES IN RECRUITMENT & SELECTION


Name: _________________Date:

1.

2.

3.

4.

5.

6.
7.

8.

9.

Selection Methods

Once the job has been advertised and applications have flooded in, the next step is to filter out the
people not suitable for the job. Then, when you have the right candidates, how do you eliminate the others
to find the right candidate?

The main selection methods used are:

Mental and Physical Ability (IQ) Tests


Achievement Tests
Employment Interview
Reference Checks
Assessment Centres

Mental and physical ability tests (IQ)

When properly applied, ability tests are among the most useful and valid tools available
for predicting success in jobs and training across a wide variety of occupations. Ability
tests are most commonly used for entry-level jobs, and for applicants without
professional training or advanced degrees. Mental ability tests are generally used to
measure the ability to learn and perform particular job responsibilities.

Examples of some mental abilities are verbal, quantitative, and spatial abilities. Physical
ability tests usually encompass abilities such as strength, endurance, and flexibility.
General ability tests typically measure one or more broad mental abilities, such as verbal, mathematical,
and reasoning skills. These skills are fundamental to success in many different kinds of jobs, especially
where cognitive activities such as reading, computing, analysing, or communicating are involved.
Specific ability tests include measures of distinct physical and mental abilities, such as reaction time,
written comprehension, mathematical reasoning, and mechanical ability, that are important for many jobs
and occupations. For example, good mechanical ability may be important for success in auto mechanic and
engineering jobs; physical endurance may be critical for fire fighting jobs.

Although mental ability tests are valid predictors of performance in many jobs, use of
such tests to make employment decisions often results in adverse impact. For example,
research suggests that mental abilities tests adversely impact some racial minority
groups and, if speed is also a component of the test, older workers may be adversely
impacted. Similarly, use of physical ability tests often results in adverse impact against
women and older persons.

Achievement tests

Achievement tests, also known as proficiency tests, are frequently used to measure an
individual's current knowledge or skills that are important to a particular job. These
tests generally fall into one of the following formats:

Knowledge tests typically involve specific questions to determine how much the individual knows about
particular job tasks and responsibilities. Traditionally they have been administered in a paper-and-pencil
format, but computer administration is becoming more common. Licensing exams for accountants and
psychologists are examples of knowledge tests. Knowledge tests tend to have relatively high validity.
Work-sample or performance tests require the individual to actually demonstrate or perform one or
more job tasks. These tests, by their makeup, generally show a high degree of job-relatedness. For
example, an applicant for an office-machine repairman position may be asked to diagnose the problem with
a malfunctioning machine. Test takers generally view these tests as fairer than other types of tests. Use
of these tests often results in less adverse impact than mental ability tests and job knowledge tests.
However, they can be expensive to develop and administer.

Employment interviews

The most common assessment tool, the interview can range from being totally unplanned, that is,
unstructured, to carefully designed beforehand, that is, completely structured. The most structured
interviews have characteristics such as standardized questions, trained interviewers, specific question
order, controlled length of time, and a standardized response evaluation format.

At the other end of the spectrum, a completely unstructured interview would probably
be done "off the cuff," with untrained interviewers, random questions, and with no
consideration of time. A structured interview that is based on an analysis of the job in
question is generally a more valid predictor of job performance than an unstructured
interview. Keep in mind that interviews may contain both structured and unstructured
characteristics.
Regardless of the extent to which the interview is structured or unstructured, the skill
of the interviewer can make a difference in the quality of the information gathered. A
skilful, trained interviewer will be able to ask job-relevant follow-up questions to clarify
and explore issues brought up during the interview.

It is unlawful to ask questions about medical conditions and disability before a


conditional job offer. Even if the job applicant volunteers such information, you are not
permitted to pursue inquiries about the nature of the medical condition or disability.
Instead, refocus the interview so that emphasis is on the ability of the applicant to
perform the job, not on the disability. In some limited circumstances, you may ask about
the need for reasonable accommodation.

Where disability is concerned, the law requires that employers provide reasonable
accommodations (meaning a modification or adjustment) to a job, the work environment
or the way things are usually done so that qualified individuals with a disability are not
excluded from jobs that they can perform.

These legal requirements apply to all selection standards and procedures, including
questions and rating systems used during the interview process.

Following a structured interview format can help interviewers avoid unlawful or


inappropriate inquiries where medical conditions, disability, and age are concerned.

Reference checks

Reference checks are often used to verify education, employment, and achievement
records already provided by the applicant in some other form, such as during an
interview or on a resume or application form. This is primarily done for professional and
high-level jobs.

These verification procedures generally do not help separate potentially good workers
from poor workers. This is because they almost always result in positive reports.
However, use of these measures may serve two important purposes

They provide an incentive to applicants to be more honest with the information they
provide
They safeguard against potential negligent hiring lawsuits.

Assessment centres

In the assessment centre approach, candidates are generally assessed with a wide
variety of instruments and procedures. These could include interviews, ability and
personality measures, and a range of standardized management activities and problem-
solving exercises. Typical of these activities and exercises are in-basket tests,
leaderless group discussions, and role-play exercises. Assessment centres are most
widely used for managerial and high level positions to assess managerial potential,
promotability, problem-solving skills, and decision-making skills.

In-basket tests ask the candidates to sort through a manager's "in-basket" of letters, memos,
directives, and reports describing problems and scenarios. Candidates are asked to examine them,
prioritise them, and respond appropriately with memos, action plans, and problem-solving strategies.
Trained assessors then evaluate the candidates' responses.
Leaderless group discussions are group exercises in which a group of candidates is asked to respond to
various kinds of problems and scenarios, without a designated group leader. Candidates are evaluated on
their behaviour in the group discussions. This might include their teamwork skills, their interaction with
others, or their leadership skills.
In role-play exercises, candidates are asked to pretend that they already have the job and must interact
with another employee to solve a problem. The other employee is usually a trained assessor. The exercise
may involve providing a solution to a problem that the employee presents, or suggesting some course of
action regarding a hypothetical situation. Candidates are evaluated on the behaviour displayed, solutions
provided, or advice given.

Assessors must be appropriately trained. Their skills and experience are essential to the
quality of the evaluations they provide. Assessment centres apply the whole-person
approach to personnel assessment. They can be very good predictors of job performance
and behaviour when the tests and procedures making up the assessment centre are
constructed and used appropriately.

It can be costly to set up an assessment centre. Large companies may have their own
assessment centres; mid-size and smaller firms sometimes send candidates to private
consulting firms for evaluation.

Advantages and Disadvantages of Different Types of


Assessment Instruments Advantages and Disadvantages of Different Types of
Assessment Instruments Advantages and Disadvantages of Different Types of
Assessment Instruments
Advantages Disadvantages
Type of assessment
instrument
Mental Ability Are among the most useful predictors of Use of ability tests can result in
tests (IQ) performance across a wide variety of jobs high levels of adverse impact
Are usually easy and inexpensive to Physical ability tests can be
administer costly to develop and administer
Achievement/ In general, job knowledge and work-sample Written job knowledge tests can
tests have relatively high validity result in adverse impact
proficiency
Job knowledge tests are generally easy and Work-sample tests can be
tests inexpensive to administer expensive to develop and
Work-sample tests usually result in less administer
adverse impact than ability tests and
written knowledge tests
Employment Structured interviews, based on job Unstructured interviews typically
interviews analyses, tend to be valid have poor validity
May reduce adverse impact if used in Skill of the interviewer is critical
conjunction with other tests to the quality of interview
(interviewer training can help)
Reference checks Can be used to verify information previously Reports are almost always
provided by applicants positive; they do not typically
Can serve as protection against potential help differentiate between good
negligent hiring lawsuits workers and poor workers
May encourage applicants to provide more
accurate information
Assessment Centres Good predictors of job and training Can be expensive to develop and
performance, managerial potential, and administer
leadership ability Specialized training required for
Apply the whole-person approach to assessors; their skill is essential
personnel assessment to the quality of assessment
centres
Motivation

Having a motivated workforce is vital for most businesses, since it can lead to higher
rates of productivity, better quality output, and low rates of absenteeism and labour
turnover. The main factors which affect the motivation of workers are pay levels, job
security, promotional prospects, being given responsibilities, working conditions, fringe
benefits, participation in decision-making and working in a team.

FINANCIAL METHODS

There are many different methods of payment that a business can choose from, each of
which can have different effects on the level of motivation of the workforce. The main
methods are:
1. Time-rate (‘flat rate’) schemes.

This payment method involves the employee receiving a basic rate of pay per time period
that he works (e.g. £5 per hour, £50 per day, £400 per week). The pay is not related to
output or productivity. Any time that the employee works above the agreed number of
hours per week may make him eligible for overtime payments, often at ‘time and a half’
(e.g. £7.50 per hour instead of £5 per hour).

2. Piece-rate schemes.

This payment method involves the employee receiving an amount of money per unit (or
per ‘piece’) that he produces. Therefore his pay is directly linked to his productivity
level. However, it is possible that in order to boost his earnings, an employee may reduce
the quality and craftsmanship per unit, so that he can produce more output in a given
period of time.

3. Commission.

This is a common method of payment for salesmen (e.g. insurance, double-glazing,


telesales). The employee receives a very small percentage (say 0.5%) of the value of the
goods that he manages to sell in a period of time.

4. Performance-related pay (PRP).

This is a method of giving pay rises on an individual basis, related to the employee
achieving a number of targets over the past year. This is common with managerial and
professional workers.

5. Profit sharing.

This involves each employee receiving a share of the profit of the business each year,
effectively representing an annual pay rise. It aims to increase the levels of effort,
motivation and productivity of each employee, since their annual pay-award will be
related to the profitability of the business. However, if the business makes low profits
(or even a loss) then this is likely to have a detrimental effect on the level of motivation
of the employees.

6. Share ownership.

A common form of payment in many PLCs is what is termed ‘share options’. This basically
involves each employee receiving a part of each month’s salary in the form of shares
(usually at a discounted price). This forms a profitable savings-plan for the employee,
and he can sell them after a given period of time. This should motivate the employees to
work harder and increase their efforts, since the share price will rise as the company
becomes more profitable, therefore increasing the capital gain on their shares.

Many of these different methods of pay are likely to be supplemented by fringe


benefits (or ‘perks’) such as private health schemes, pension schemes, subsidised meals,
discounts on holidays and travel, cheap mortgages and loans, company cars and discounts
when buying the company’s products. The total package of pay plus fringe benefits is
known as the remuneration package.

MASLOW, MOTIVATION AND NEEDS

Most people work to satisfy needs of one kind or another. Abraham Maslow developed
his hierarchy of needs based on research about what motivates people to work. He
suggested that there were 5 levels of need that influence a person's behaviour.

Basic needs: for food, drink and shelter

Safety needs: protection against danger, threat, deprivation

Social needs: the need for belonging, acceptance, friendship

Self-esteem needs: reputation, status

Self-actualisation: the need for realising one's own potential for continual self-development.

In a hierarchy the things at the top are more important than those at the bottom.
Maslow said the lower levels have to be satisfied first. Only when these needs have been
satisfied will the individual strive to satisfy the higher needs. For example, hungry, cold
people will seek food and shelter first. Once they are well fed and comfortable, they will
turn their attention to higher needs, for example the pleasure of being with colleagues.

How can a business provide for these needs?

Basic needs: A fair wage, a meal and rest facilities.


Safety needs: Job security, safe working conditions, pension schemes.

Social needs: Met by introducing team work and perhaps providing social facilities like a club or sports
pitch.

Self-esteem needs: This is about how others see us at work and can be provided for by rewarding staff
with status symbols like cars, offices and new job titles. Allowing staff to gain qualifications at work can
boost self-esteem too.

Self-actualisation: Achieving your full potential. A business must ensure that promotion is possible and
that there are opportunities to use initiative.

NON-FINANCIAL METHODS

There is no universal rule for motivating employees, and there are many methods which are used by
different managers to achieve the goal of a motivated and satisfied workforce. These include:

Delegation. This occurs when managers pass a degree of authority down the hierarchy to their
subordinates.

Empowerment. This involves a manager giving his subordinates a degree of power over their work (i.e. it
enables the subordinates to be fairly autonomous and to decide for themselves the best way to approach a
problem).

Job enlargement. This involves increasing the number of tasks which are involved in performing a
particular job, in order to motivate and multi-skill the employees.

Job enrichment. This is a method of motivating employees by giving them more responsibilities and the
opportunity to use their initiative.

Job rotation. This involves the employees performing a number of different tasks in turn, in order to
increase the variety of their job and, therefore, lead to higher levels of motivation.
Quality circles. This is a group of workers that meets at regular intervals in order to identify any
problems with quality within production, consider alternative solutions to these problems, and then
recommend to management the solution that they believe will be the most successful.

Teamworking. This is the opposite production technique to an assembly-line which uses an extreme
division of labour. Teamworking involves a number of employees combining to produce a product, with each
employee specialising in a few tasks. Cell production is an example of teamworking.

Worker participation. This refers to the participation of workers in the decision-making process, asking
them for their ideas and suggestions.

Works council. This is a type of worker participation and it consists of regular discussions between
managers and representatives of the workforce over such issues as how the business can improve its
processes and procedures (in production or marketing, for example).

Worker-directors. These are workforce representatives who participate in the meetings held by the
board of directors. Worker-directors are not very common in the UK, since employers often believe that
they can slow down the decision-making process, as well as ‘leaking’ confidential information to employees.

MOTIVATION PROBLEMS

S ymptoms of poor motivation amongst the workforce include high


rates of absenteeism and labour turnover, poor timekeeping, high rates of waste, low
quality output and an increasing number of disciplinary problems.

W hen a poor level of motivation exists in a workforce, then the


management should:

a) Develop a strong corporate culture and team-spirit.

b) Ensure that pay levels are fair.

c) Design more challenging jobs.

d) Introduce decision-making at lower levels in the organisation.


e) Give praise and recognition to employees for their efforts and achievements.

f) Ensure that communication flows are effective and that the relevant messages get to the relevant
personnel.

DOUGLAS McGREGOR: THEORY X and THEORY Y

Douglas McGregor describes two different attitudes that employers have towards employees.

Theory X says that workers Theory Y says that workers

x are lazy and don't want to work y like to work

x can't be trusted y want responsibility

x have no initiative or ambition y can be trusted

x must be watched all the time and forced to y will work hard for rewards, which are not only
work money

x work only for money


McGregor's advice to employers was that if they treated all employees like theory Y workers, they will
work harder and be more productive, because they are all naturally motivated. Theory Y says that
workers have a strong desire to participate in the decision-making process, an attitude we see more and
more in present day workers. If the employee is allowed to develop his potential, by making his work
exciting and challenging, the result is an increase in the effectiveness of the business.

Theory X style (authoritarian/autocratic) is suitable for factory supervisors or indeed army/police style
hierarchies. X is obsessive about controlling and directing the workforce.

Theory Y style is more prevalent in the creative arts and professions such as graphic designers,
engineering, architects. Y offers more individual freedom, and indeed empowerment.

In the news… Motivation in Practice

In and out of the news this year have been the large bonuses that are being paid out to
executives and company staff. In February, banking firm HBOS was reported as paying each
employee £7500 in bonuses (a total of £550m) after the achieving an 18% increase in sales
over the year (BBC, 28th February 2007). In March, Wal-Mart, often criticised for the poor
pay conditions provided to staff, was reported as paying out $529m (£270m) in bonuses to
800,000 of its US workers (BBC, 22nd March 2007).
The clothing retailer, Next, was also reported as offering large bonuses to top staff. They
were asked to match the £2 million they were collectively paid in bonuses with their own
money. The Times reports the bonus system:

“If the shares are below £20 in August next year — against the £15 when it was put in
place — they lose everything. But if the stock tops £24.50 by August 2009, the scheme
pays out fivefold, or ten times their personal stake” (The Times, March 23rd 2007).

The incentives available to some staff are often complex to calculate. Search engine giant
Google only paid its three executives salaries of 50p in 2006, accounts show (BBC, 4th April
2007). However these executives saw the value of the shares they own significantly increase
to a massive $31.5bn by the end of the year, whilst they also saw benefits, such as the use of
their own corporate jet.

However motivation isn’t always about financial rewards. Nick Read, chief executive of
Vodafone, recently spoke at a conference for talent-management professionals. He was
reported as criticising the approach taken by many leaders in their management of people.

He said:

“They should remember that these talented people are not necessarily looking for material
rewards. What they want is different types of experience. They want to be tested.” (The
Sunday Times, 1st April 2007).

In the Times 100 case study focusing on people management at Egg, the online bank, it
describes how employees are given control over the planning of their career and the
decisions made. Egg describes their approach to motivating their workforce as 'unleashing
the power of people'.

Study Questions:

With reference to relevant motivational theory, explain how: a) financial rewards might be able
to motivate workers
b) non-financial rewards might be as useful in a firm’s approach to motivate workers.
What types of non-financial reward might a firm use to motivate workers?

In the news … McJobs – an outdated definition

The term McJob was coined by the Canadian novelist Douglas Coupland in his 1991 novel
Generation X. It was used to describe a "low-prestige, low-dignity, low-benefit, no-future job in
the service sector" and its increased usage in everyday language lead to the term being
entered as a dictionary definition in 2003 (BBC, 9th November 2003). McDonald’s has
complained about the use of the term ever since it was recorded in the dictionary, but now
they have taken this a step further by launching a petition to get the definition changed (BBC,
23rd May 2007).

McDonald's senior vice president David Fairhurst states: “The current definition is extremely
insulting to the 67,000 people who work for us within the UK. It is also insulting for everyone
else who works in the wider restaurant and tourism sectors.”

There is support for McDonald’s petition from some academics. The Brighter Futures report,
authored by Professor Adrian Furnham of University College London, suggests that McJobs
are wrongly derided. The report suggests that many people in these jobs are often young and
that this first experience of work can have a positive experience on their lives. The BBC
suggests it can result in benefits ranging from “having increased self-esteem, to being cleaner
around the house, the benefits are both personal and practical” (BBC, 8th June 2006).

There is also evidence that McDonald’s is investing in its workforce. This includes branches of
McDonald’s becoming exam centres, as the organisation offers qualifications equivalent to
GCSEs in numeracy and literacy at work (19th September 2006). This could lead to improved
motivation of its workforce with benefits such as improved recruitment and lower labour
turnover.

There does seem to be some evidence that the definition of a McJob is becoming outdated.
However, there are other examples of service sector companies offering a wider range of
benefits to their workers. The Times 100 presents a case study of the Total Reward system
used at the Royal Bank of Scotland that includes financial and non financial rewards.

Study Questions

What are the benefits to McDonald’s of having the definition of a McJob changed?
With reference to motivational theorists, how might the provision to earn qualifications at work
increase motivation within the workforce?
What types of non-financial rewards are provided by the Royal Bank of Scotland to workers?

Training And Development

Learning is not a spectator sport. - D. Blocher

Once a new employee has been appointed to a business, it is likely that they will receive
induction training in order to help them settle into the new job. This induction training
covers the basics of the new employee’s job, as well as the background details and the
history of the business (e.g. number of employees and the range of products).

However, training is not limited to the new employees of a business. Training courses are
likely to be targeted at all employees in the business at various stages in their career
(e.g. management training courses, training on how to use new machinery and technology).

There are many reasons for the extensive use of training across the workforce of a
business:
1. Training can improve employee productivity.

2. Training can create a multi-skilled, flexible workforce.

3. Training can increase the levels of job satisfaction and motivation of the employees.

4. Training employees increases the chances of their promotion.

Training can be classified as either ‘on-the-job’ or ‘off-the-job’.

‘On-the-job’ training involves the employees receiving their training at the place of work
(using such techniques as work-shadowing, apprenticeships, and mentoring).

‘Off-the job’ training involves the employees attending courses away from their workplace (e.g. at
local colleges, conference centres and universities).

OTHER TYPES OF TRAINING INCLUDE:

“Sitting next to Nellie” – task demonstrated then trainee undertakes task

Coaching – trainee taken through step by step by trainer

Job Rotation – trainee learns tasks in different departments/jobs

Self-paced/distance learning – trainee receives resources and works on their own

It is also imperative that all training courses that are attended by employees are
evaluated in order to determine if the training course provides value for money for the
business. This evaluation is often carried out by asking the employees to complete short
questionnaires and provide feedback to the H.R.M. department.

IN THE NEWS… British Energy Cuts Training Time in Half

British Energy has an acute shortage of experienced nuclear staff and has cut the time
required to complete some of its basic training programmes by half. Some of the group’s
training programmes have been trimmed from 18 to nine months (The Times – 29
November 2007).

Jean McSorley, senior adviser to Greenpeace on nuclear issues said: “The idea that you
can just cut that in half is something you have to question. It has to have a bearing on
safety.” (The Times – 29 November 2007).

British Energy, which operates eight nuclear power stations, denied that this means a
lowering of standards, claiming that it puts safety at the centre of all its activities. It has
hired a company called KorteQ to help it overcome its skills shortage. The Head of
Operations at KorteQ said that its programme would g reatly reduce the length of time
required to train British Energy staff to Suitably Qualified and Experienced Personnel
(SQEP) level, a standard set by the Nuclear Installations Inspectorate (The Times – 29
November 2007).

A spokesman for the Health and Safety Executive, which monitors the standards of staff
at all nuclear sites, said that any doubts about their competence would lead to loss of
operating licenses and possibly prosecution (The Times – 29 November 2007).

Look at the Times 100 case studies on the work of National Grid and Marks & Spencer to
see the role and value of training and development in major organisations.

Study Questions:

Explain the value to an employer and to a new employee of ‘Induction Training’.


Discuss the importance of training and development programmes for its employees to a
company like British Energy.
At times of downturn in the economy or recession, companies often cut back on training.
Assess the long term effects of this for:

the country
a company
an employee

STAFF APPRAISAL

Appraisal – this is a report on how well an employee is progressing. It is usually carried out at
regular intervals (normally once a year) by the employee’s line manager. The process may require
the completion of an appraisal form by both parties which is then followed up with a formal
interview. It is important that the employee does not feel that they are on trial, otherwise an element
of distrust/resentment can enter the process. The appraisal may highlight training needs and the
potential of an employee for possible promotion. A successful appraisal may determine if an
employee will receive a bonus or be moved up the payscale.
"Staff appraisal" is better called "performance and development review". The purposes of this
review are generally stated as

to assess performance over the review period and examine the scope for improvement to current
performance
to assess training & development needs
to set performance objectives relating employee development objectives to unit objectives
to support career planning and progression discussions
(for probationers) to make retention decisions
to discuss the potential for "promotability" and job change
to assess/review "rewards" and motivation

It is a review stage of a process which begins with

clarification of role and performance expectations and directions.


involves a comparison of actual performance during the review period and discussion to set future
directions and scope for personal development
the review usually involves formal documentation for use in various employee reward, promotion and
development decisions.
the member of staff should be continously aware of their individual performance (related to
expectations) throughout the review period.
The review should not be the occasion for the member of staff to be confronted with how well he/she
has performed or not performed or to discover that the "goal posts" have moved without being told
during the review period.

It usually takes place between the employee and whoever he/she is responsible and accountable to -
generally their direct line manager. The emphasis is on "the organisation" (through the manager)
talking to each member of staff - as "an individual". Each manager, in essence, has to give time and
attention to each member of staff he/she is responsible for.

Even where there is a formal policy for giving systematic, job-related feedback on performance,
many appraisal encounters between a boss/subordinate result in frustrating and problematic
experiences for appraisers and appraisees. Yet companies and many participants say they obtain
considerable benefit from formal appraisal processes.

Types of Staff Appraisal Scheme

Prescriptions : Rating and forms based focusing on employee

competencies/behaviours
Results-based (against "agreed" targets)
360° appraisal (stakeholder feedback to the manager)
Self-appraisal and continuing professional development

Such prescriptions have origins in the work of Douglas McGregor and (for results-based appraisal)
on the work of Peter Drucker. Of McGregor's - Theory X and Y, the Theory Y model stresses the
importance of diagnosing the needs of individuals and integrating these with the needs of the
organisation. By satisfying individual needs, the organisations capacity for performance is
optimised.

McGregor advised that processes of job/role definition, targeting and planning (within staff
appraisal) coupled with a supportive, mutually evaluative boss-subordinate relationship - offer
potential for improved individual performance and development. Employee energy is thus focused
on business objectives as driven by competitive, quality, performance-based values. Theory Y
purposes and performance-related criteria link the business's objectives and goals to job holder
contribution.

Employers are recommended to adopt and maintain staff appraisal policies and reap the assumed
benefits -

a milestone in communication between manager and individuals in the staff group


better linking of business and unit priorities to how the individual delivers on job performance
nurturing of shared values, loyalties, motivation and commitment to work, personal identification.

STUDY QUESTIONS

What do you understand by the term ‘Appraisal’?


What are the benefits to both the employer and employee of an appraisal?
Explain the drawbacks of the appraisal system
In pairs, conduct an appraisal of your studies so far. Use the target booklet as a
starting point for a discussion about how you think you are peforming

Trade Unions

T YPES OF TRADE UNION

A trade union is a group of workers who join together in order to protect their own
interests and to be more powerful when negotiating with their employers.

Each employee who wishes to join a trade union must pay an annual fee, which
contributes towards the costs and expenses that the trade union incurs when it provides
services to its members, and supports industrial action by the workers.

Trade unions have a number of aims:

1. To improve the pay of its members.


2. To improve the working conditions and the working practices of its members.

3. To support the training and the professional development of its members.

4. To ensure that their members’ interests are considered by the employers when any
decision is made which will affect the workforce.

There are four main types of trade union in the UK:

1. General Unions. These are for skilled and unskilled workers performing different jobs in different
industries (e.g. cleaners, clerical staff, transport workers).

2. Industrial unions. These are for different workers in the same industry (e.g. the National Union of
Miners (N.U.M), covering workers at all levels in the hierarchy).

3. Craft Unions. These are fairly small unions for skilled workers, performing the same or similar work in
different industries (e.g. musicians).

4. White-collar Unions. These are for ‘white-collar’ (or professional) workers who perform the same or
similar tasks in different industries (e.g. teachers, scientists).

Industrial Relations

The terms ‘labour relations’, ‘employee relations’ and ‘industrial relations’ refer to the
relationship between employers and employees. Employers have historically been in a
much stronger position – the ‘master and servant’ relationship, for example – which led
to the growth of organised labour. Employers have realised the value of formal
organisation and have responded by establishing their own associations.

Trade Unions

A trade union is an organisation of workers which has been established to represent


their interests.

Union rights

UK legislation up to 1980 concentrated on protecting unions; since 1980 the emphasis


has shifted to protecting the individual union member. Trade unions and their members
have rights under several main items of legislation:
The Trade Union and Labour Relations Act 1974 defines a union and a trade dispute.

The Employment Acts 1980, 1982, 1988 and 1990

require secret ballots to be held to get approval to take strike action, and for elections
to union posts;
allow a member to prevent the union from strike action if no ballot has been held;
protect members from disciplinary action if they refuse to take part in a strike;
make ‘closed shops’ and all forms of secondary action illegal;
allow damages to be awarded against union members who are not involved in a dispute but
who take secondary action.

The Trade Union Act 1984 make a union liable for damages if it has not carried out a
secret ballot to get approval from its members for strike action.

The Trade Union Reform and Employment Rights Act 1992 makes it unlawful for
employers to collect union dues without the written consent of workers.

Union aims

A trade union seeks to improve the working life of its members.

To do this it:

Advises, represents and protects members:

it advises on procedures following industrial accidents, represents employees at


industrial tribunals, and gives general legal advice
it ensures that members receive sick pay and other benefits to which they are entitled
it helps protect against redundancy, unfair dismissal, disciplinary action, discrimination,
etc.

Negotiates with employers for

improved pay and working conditions


improved pension and retirement arrangements
greater job satisfaction and better job security

Seeks to influence others

as a pressure group influencing employers and governments on legislation and other


matters
- regarding improved social objectives, such as full employment and better social
security

Union benefits

Membership of a trade union brings a number of benefits to its members

Improved

Working

Conditions

Protection

Against

exploitation

Representation

With

employers

UNION

MEMBERSHIP

CARD

Legal and technical


advice

Financial

Insurance

Services

Training and

Education services

Improvements

In pay

Many employers recognise the benefits that unions bring, and gain themselves from only
having to negotiate with a single body. Some industries had union membership
agreements requiring all employees to join a union – a ‘closed shop’ agreement – but the
1988 Employment Act made it unlawful to dismiss an employee who refuses to join a
union. (Employers are now free to also recruit workers who are not union members.)

Pay Bargaining

Trade unions are most closely associated with negotiating with the employers of a
business on behalf of their members over the issue of pay. This is known as the ‘pay-
bargaining process’, and it is an example of collective bargaining.

The first stage in this process is for each side (the employer and the trade union) to
decide on its objectives. As well as deciding the amount of a pay rise, both the trade
union and the employer will also need to decide how the money will be distributed
amongst the members of the trade union (i.e. will the pay rise be a ‘blanket’ coverage
giving every employee a fixed percentage rise, or will different groups of workers
receive different percentage pay rises?). Further to this point, will the pay rise be
awarded in a lump sum per employee, or will it be staggered over time?

The second stage involves both sides (the trade union and the employer) presenting
their arguments at a ‘pay-talk’ discussion. A trade union will put in a ‘pay claim’, which will
be based on one or more of the following points:

1. An increase in the cost of living (i.e. inflation) requires that workers have a pay rise in
order to maintain their purchasing power.
2. An increase in labour productivity rates will mean more sales revenue and profits for
the business, this extra profit should be shared with the workers by giving them higher
rates of pay.

3. A pay rise is required in order to recruit and retain the ‘best’ workers that the
business can find.

4. If workers are using new machinery and working practices, then they need to be
compensated for this extra work by being given a pay rise.

The employer will put forward a ‘pay offer’, which they believe will reflect the current
trends in the labour market (i.e. the rates of pay which are being offered by rival
businesses), as well as maintaining the competitiveness of the business (i.e. not
increasing their costs by a large percentage).

The third and final stage involves a negotiation process between the trade union and the
employer. In order for this to be a success, both sides will be required to compromise
and be prepared to accept less than their original objectives.

It must be remembered that there are many other issues that a trade union will
negotiate for its members other than pay rises (e.g. length of the working week, working
conditions, and proposed redundancies).

Advisory Conciliation and Arbitration Service (A.C.A.S.)

The Advisory Conciliation and Arbitration Service was set up by the government in 1975
as an independent body that helps to settle industrial disputes and claims of unfair
dismissal by employees. As the name suggests, there are three main services that are
offered by ACAS, advice, conciliation and arbitration.

A.C.A.S. representatives can be invited into a business by the two feuding parties
(employers and trade unions) in order to offer their advice to both parties on the
industrial unrest and the ‘best’ way to proceed in order to settle the unrest.

Conciliation is an attempt to get the two sides in an industrial dispute to resolve their
differences. A conciliator listens to the arguments of both sides, and then tries to
encourage the trade union and the employer to negotiate and compromise so that they
can reach a solution that is acceptable to both parties.

Arbitration is the process of resolving an industrial dispute by using an independent


person to decide the appropriate outcome. The arbitrator will look at the arguments put
forward by both parties, and then he will arrive at a decision. The decision can be legally
binding on both parties if this was agreed prior to the arbitrator’s decision.

Pendulum arbitration is a type of arbitration in which the arbitrator will decide


completely in favour of one party or the other, with no compromise or negotiation being
allowed. It is likely, therefore, that both parties (the employers and the trade union) will
make their demands more conservative and realistic than if the arbitrator was allowed
to choose an outcome which was somewhere between the two.

In the news…Royal Mail Strike – End in sight


The executive of the CWU (Communication Workers Union) agreed on 22nd October to
back a deal with the Royal Mail. The offer includes a 6.9% pay increase over 18 months
and is being put to a ballot of CWU members. If the members accept the offer, it will
bring to a close the first national postal dispute for over a decade and an end to the
series of strikes this autumn which has cost the Royal Mail ‘tens of millions’ of pounds
and provoked anger among small businesses (The Guardian, 23rd October 2007).

The dispute arose from issues of pay, pension reform and changes to working practices,
which were central to Royal Mail’s plans to modernise its operations and make it
competitive with other postal operators and other communications media (The Times,
4th October 2007). The CWU had believed it coul d lead to the loss of up to 40,000 jobs
(The Times, 30th January 2006).

Dave Ward, the CWU's deputy general secretary, said the agreement that had been
reached reflected: ‘the fact that change in the company will only be managed with the
union and the workforce. We have made significant gains on pay and related issues and
the union's role in negotiating change in the workplace has been strengthened.’ (CWU,
22nd October 2007)

John Hutton, the secretary of state for Business and Enterprise, urged CWU members to
support their union's recommendation. He told the all-party Trade and Industry select
committee that:
‘the dispute had caused “significant” damage to business and the wider economy’,
adding that: ‘Some bulk customers may receive compensation. In relation to the Royal
Mail we will not be clear about how permanent the damage has been for some time.’
Forbs.com/AFX News Limited, 22nd October 2007)

Small businesses also welcomed the agreement. Nick Dines, head of communications at
the British Chambers of Commerce, said: ‘This is good news for small businesses in the
UK who have essentially been held at ransom by the CWU. The strike has shown that
although in theory the monopoly on delivery has been broken, the reality is that there is
no cost-effective alternative to Royal Mail. Management and the union must ensure that
crippling strikes like this do not happen again.’ (The Guardian, 22nd October 2007)
Study Questions
What effects might arise for the public and the business community as a result of the
series of strikes at Royal Mail?
What are the benefits to employees of being a member of a union?
Discuss the importance to large national companies of good industrial relations
Evaluate the effect of the series of postal strikes on a mail order business, both short
term and long term.

Disputes and Grievance Procedures

a) Collective – involving issues taken up on behalf of the employees by


their trade union representative (substantial or procedural). Usually
described as ‘disputes’.

b) Individual – involving an individual employee only. These are


described as ‘grievances’.

Disputes have a far greater impact on employee relations than grievances and are concerned with
disagreements between employees and their own employer and which are wholly or mainly about
matter directly affecting their terms and conditions of employment.

Grievances are disputes between an individual employees and his/her employer. To


handle this kind of issue, organisations will establish grievance procedures as below.
Such grievances are initiated by employees.

Stages of a Typical Grievance Procedure

Employees raises grievances with immediate supervisor

If matter not settled, it is taken to the next level of management, and the employee
may be accompanied by a friend or trade union representative

If the matter is still not resolved, it is taken to a senior management level, and the employee may take a
representative as before

If the employee is still not satisfied he may appeal to the Managing Director
Discipline procedures are classed as individual disputes and are designed to provide fair
treatment of ‘misbehaviour’ by employees. Discipline procedures are initiated by
management.

Termination of Contracts

The final role of the H.R.M. department is to make the termination of the employees’
contracts of employment as smooth and efficient as possible. There are a number of
different ways in which employees can have their contracts of employment terminated,
including:

1. Redundancy. It will be necessary at certain times (e.g. during a recession, or a decline in the industry)
for a business to ‘downsize’ its workforce (make a certain proportion of them redundant).

This process could be done in several ways, voluntary redundancy (where workers opt for
a redundancy package), compulsory redundancy, ‘last-in-first-out’ (where the most
recent appointments are the first to be made redundant), or retention by merit (where
the least effective employees are made redundant).

2 . Retirement. At the end of their working-life, employees will wish to


retire and stop offering their services to the business. In return, they will often receive a lump-sum
payout, as well as both their state pension and their private pension.

3. Transfers and Resignation. This occurs when an employee leaves the business and transfers their
services to another business (the employee may apply for a more senior job at another business).

4 . Dismissal. This is where the employee is deemed to have broken


their contract of employment, and told that their services are no longer required by the business. Fair
dismissal can be on the grounds of sexual harassment, racial harassment, bad timekeeping, sleeping on the
job, and destruction of business property.

However, if an employee feels that they have been unfairly dismissed (e.g. on the
grounds of pregnancy, ethnic background, or union membership), they can apply to have
the case heard at an industrial tribunal.

This is a small court that deals with claims of unfair dismissal and discrimination from
employees against their (former) employers. If the employee is successful in claiming
that they have been unfairly dismissed, then they are eligible for re-instatement in
their previous job, as well as a financial award (to cover loss of earnings, and pain and
suffering).

Employee Participation

Employee participation means many things to many people. Essentially it is about involving
non-managerial staff in the decision-making process of an organisation. It is, however,
the EXTENT of involvement in decision-making that is problematical.

Choices in Employee Participation

Consultation – Participation occurs when employees are consulted about decisions affecting their
working lives.

Job Enrichment – The employee is given more discretion to make decisions affecting his own job.

Participative Management Style – The initiative for participation rests with open management who employ
an ‘open’ approach to managing people where plant level councils may be set up where managers/employee
representatives discuss and jointly decide a wide range of strategic issues.

Collective Bargaining – Many people feel that collective bargaining should be extended to include
forward planning issues. The adversarial nature of the process may militate against its use as a form of
participation.

Works’ Councils – This idea is based on the West German approach that confers on employee
representatives the legal right of access to information from management on a wide range of issues and
the right of joint decision-making on all personnel matters.

Board Representation – This is participation at ‘policy-making level’. Employees can elect worker directors
whose power and influence will depend on the number of such directors on the board. In Germany,
Supervisory Boards include employee representation but there are no such members of the Management
Board (Executive Board). The EC is a firm believer in employee participation at Board level.

Quality Circle – This is a work group of 8-10 employees and supervisors who have a shared area of
responsibility. They meet regularly – typically, once a week, on company time and on company
premises – to discuss their quality problems, investigate causes of the problems, recommend solutions,
and take corrective actions. They take over responsibility for solving quality problems, and they
generate and evaluate their own feedback. But management typically retains control over the final
decision regarding implementation of recommended solutions.

Employee Stock Ownership Plans (ESOPs) – Employee stock ownership plans are company-established
benefit plans in which employees acquire stock as part of their benefits. Approximately 20% of Polaroid,
for example, is owned by its employees. Research has shown that ESOPs increase employee satisfaction.
In addition, they frequently result in higher performance. ESOPs have the potential to increase employee
job satisfaction and work motivation.

Legislation

In all areas of the activities of the business, but especially it seems within Human
Resource Management, the business must ensure that it abides by every piece of
legislation, regardless of the stakeholder group which the legislation protects (e.g.
employees and customers). The main pieces of legislation affecting the successful
operations of the Human Resource Management department are:

1 . The Employment Relations Bill, 1999 (stating that employees who have been in
employment with the same business for a period of one year have the right not to be unfairly dismissed).

2. The Employment Rights Act, 1996 (covering unfair dismissal, redundancy and maternity).

3. The Public Interest Disclosure Act, 1998 (covering employees who disclose confidential information).

4. The Health & Safety at Work Act, 1974 (covering working conditions and the provision of safety
equipment and hygiene).

5. The National Minimum Wage Act, 1999 (making it illegal for employers to pay less than £3.60 per
hour to its full-time staff who are aged over 21). As of 2004 National Minimum Wage is £4.50 for 22
years and over; and £3.80 for 18-21 year olds.

6 . The Equal Pay Act, 1970 (stating that pay and working conditions
must be equal for employees of the opposite sex who are performing the same work).

7. The Sex Discrimination Act, 1975 (stating that it is illegal to discriminate against an employee, or an
applicant for a job, on the grounds of their sex or their marital status).
8. The Race Relations Act, 1976 (stating that it is illegal for an employer to discriminate against an
employee, or an applicant for a job, on the grounds of their ethnic background).

9 . The Disability Discrimination Act, 1995 (stating that it is illegal for a business with 20 or
more employees to discriminate against an employee, or an applicant for a job, on the grounds of their
disability).

Create a Poster to be displayed outside the class that details the main elements of a piece of Legislation.

In addition to the poster, be able to answer how you think the law affects firms (both positive and
negative)

PAST PAPER QUESTIONS

1 Launching a new product or service may require the organisation’s existing staff to

undergo training.

(i) Identify the objective of such a training programme for the existing staff of an

organisation. (5 marks)

(ii) How does this type of training differ from an induction training programme?

(5 marks)

2 (a) Describe how employees in a large manufacturing company might be involved

in the decision-making process.

(b) Analyse the benefits of this involvement for both the employee and the

employer. (15 marks)

3 Some employees may feel that their employer is discriminating against them because all people doing
the same job are not receiving the same pay. Explain the steps employees cant take to have the situation
remedied. (9 marks)
4 What measures might an organisation introduce to develop good working relationships with
employees and trade unions? (6 marks)

5 Describe the constraints legislation may impose on an organisation. (10 marks)

6 Errors sometimes occur in manufacturing, e.g. a supermarket is unhappy about the quality of one
batch of lasagne which has been distributed throughout the UK.

Explain the role of the Public Relations Officer in dealing with this situation.

( 5 marks)

7 (a) Name 2 laws relating to health and safety in the workplace. (2 marks)

(b) Describe the ways that health and safety laws affect most organisations.

(7 marks)

8 When recruiting staff, what is the purpose of an interview and how should it be conducted to be as
effective as possible? (10 marks)

9 In addition to an interview, some firms give applicants special tests. Identify and describe 2 such
tests. (6 marks)

10 (a) Give examples of a possible key field in a staff database and explain how it might be used. (2
marks)

(b) Explain the uses which a Human Resource department might make of a staff database. (7 marks)

11 Quality circles are an example of industrial democracy. What are they and how might they benefit
an organisation? (6 marks)

**********TO DO –

insert appriaisal

activities for Grievance and Termination

activities for Employee Participation

include role plays, mind maps etc

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