Chapter 7

Unit 2.1 Introduction to human resource management

''A thousand workers, a thousand plans."
- Chinese Proverb

H uman resource management (HRM) is the management function of

deploying and developing people within an organization to meet its
busine objectives. This entails interrelated roles, such as:
Human resource planning ( also known as workforce planning)
 The recruitment, selection and induction of new employees
 Training and development of employees

 Performance management and staff appraisals

 Reviewing pay and remuneration packages

 Disciplinary, grievance and disciplinary procedures

 Looking after the welfare (wellbeing) of employees.

Workforce planning i n the UK on a salary of £40,000 ($56,000) who left

after just 8 can be short term or long term, although it is an ongoing process
month costs the business £132,000 ($185,000) - equivalent to for most
businesses: 330% of the salary of that person.

Short term human resource planning deals with the existing and upcoming
demands of an organization, such as employing workers to replace staff who
are due to resign, retire or go on maternity or paternity leave.
Long term workforce planning looks at the human resource needs of the
business in the foreseeable future.
Human resource planning can be achieved by looking at:

-Historical data and trends - This could include data about the changes in the
size of the workforce over the past few years or the proportion of staff on part-
time contracts or flexible working hours. However, past data and trends are not
necessarily indicative of what will actually happen in the future.
Sales and income levels - Higher levels of income and spending in the
economy will lead to more jobs being created.
-Labour turnover rates - These measure the number of employees who leave a
firm as a percentage of its workforce, per year (see Chapter 10). The higher the
staff turnover rate, the more workers a firm will need to recruit and train.

-The flexibility and workload of employees - A highly flexible and skilled

workforce may be able to cope if there is a sudden shortage of staff. In a firm
where people are over specialised and where workload is mounting, it might be
more appropriate to employ more people.
-Demographic changes - Government data regarding changes in the
demographics of the workforce, such as the changes in the number of female
workers in the economy or the number of graduates, can help managers to
forecast their human resource needs.

Human resource planning consumes a lot of time and money. Market

analyses consistently show that poor recruitment practices cost businesses a
huge amount of money, resources and time, including the time spent
correcting the mistakes made by their staff.

human resource planning is an essential role of any business and its

strategy. If managers do not make the most of their human resources, the
organization will face a number of problems (the 5 Rs):

Recruitment - Higher costs of recruitment, induction and training.

Resources - Increasing amounts of resources and management time spent on

dealing with personnel problems, rather than on achieving organizational
objectives.
 Reservations - Lower morale and higher levels of uncertainty suffered by
existing staff who experience continual change mean that employees are more
reserved and less productive.

Returns - Lower levels of labour productivity, profits and competitiveness.

Reputation - Poorer corporate image as the business cannot retain or

motivate its staff.

I Internal and external factors that influence human resource

planning {
Internal factors (those within the control of the business, such as
flexi-time) and external factors (those beyond the control of the
business such as immigration) both influence
human resource planning.

(i)Demographic change
The supply of human resources in a country is affected by demographic
changes in the workforce. Demography is the statistical study of population
characteristics and trends.
The net birth rate - This is the difference between the number of births and
deaths for a given period of time
The net migration rate -This measures the difference between the
number of people entering a country (immigrants) and the number of
people leaving (emigrants). If the net migration figure is positive, the
supply of human resources will tend to increase.
The retirement age - This is the legal age when people can stop work
and claim money from their pensions. If the retirement age is raised, it
automatically increases the number of people in the labour force
Females entering or returning to the workforce - An increase in the
female participation rate will boost the supply of human resources in
the economy. In many societies, there has been an increase in the
number of women working part-time. This gives businesses and staff
greater flexibility in determining working hours.
 A distinct demographic change in high-income countries is
increased longevity, i.e. people, on average, are living longer. Coupled
with a declining birth rate in these countries, an ageing population
(when the average age of the population increases) has the following
effects:

-Increased dependent population - The dependent population consists

of people who are below the legal working age
Reduced labour mobility - Younger people tend to be more geographically
and occupationally mobile. They h a v e fewer reservations about moving to
different places and jobs, including those based overseas. Labour immobility
reduces the flexibility and international competitiveness of a country's
workforce.
-Change in employment patterns - With more people going to university,
the average age of people entering the workforce has also risen. Coupled
with an ageing population, this means that businesses are more likely to
retain staff beyond their retirement age due to labour supply shortages.
Some firms might even consider relocating overseas if domestic labour
supply is insufficient or not suitable. Hence, the shortage in labour
supply caused by an ageing population will affect workforce planning,
recruitment and training.

Changes in labour mobile

The mobility of labour is the extent to which people can move to different
locations (known as geographical mobility) and their flexibility in changing to
different jobs (known as occupational mobility). The more mobile workers are
(both geographically and occupationally) the higher the supply of labour tends
to be. Labour can be geographically mobile, especially within a country, but
there are limitations:
- Friends and family ties tend to be the key constraint for most people's
geographical mobility.
Relocation costs (moving expenses) such as re-mortgaging
- real estate and consideration of different house prices or the cost of rent.
- Fear of the unkown means that people might prefer home comforts
(familiarity). Uncertainties can be daunting for many people, such as
 uprooting and finding new schools for the children.
- Language and cultural differences also tend to limit the international
mobility of labour (see immigration of labour below).
- The degree of occupational mobility will depend on numerous factors, which
include: Occupational mobility tends to be greater with acquired
attributes of a worker ( such as educational a t t a i n m e n t , qualifications,
skills, experience and training).
As mentioned above, younger people tend to be more occupationally mobile
as they often change careers. Mature workers may think they are too 'old' to
retrain or may have.
Some workers are immobile because they are highly specialized in their
area of expertise, such as brain surgeons and aircraft pilots. These people
may find it more difficult to seek employment opportunities in other
industries.

If employers discriminate against people's age, gender, religion or race

then this will also hinder the occupational mobility of workers. Changes in
employment laws and the enforcement of anti-discrimination employment
practices will therefore improve labour mobility.
A key advantage to a business hiring more part-time staff is that they are
cheaper to employ. Part-timers are generally entitled to lower remuneration
(pay and benefits) compared with their full-time counterparts and are easier
to replace if need be. There is also a large pool of people that can work
part-time. This helps to keep wages relatively low and gives businesses
greater flexibility.
However, part-time employees tend to feel less valued and therefore are
less loyal to a business. This can negatively affect the level of motivation,
productivity and labour retention. Furthermore, a huge amount of time
and resources are needed to hire, induct and train new part-time
workers. As labour turnover tends to be higher among part-timers,
this on going process can be expensive and uses up a lot of valuable
management time.
 (iii) Immigration

In a globalized world, ever more people are migrating for work purposes.
The United Nations defines a migrant worker as "a person who is engaged
in a remunerated activity in a State of which he or she is not a national",
i.e. anyone working outside their home country. Net migration measures the
difference

Migrant workers contribute to the economic growth of the host

country through their production, consumption and the payment of
taxes. Many migrant workers also remit a significant proportion of their
pay back to their home country, thus benefiting the country of origin.
There are numerous reasons for the migration of workers, such as:
Pay and remuneration - Many multinational companies attract migrant
expatriate workers, especially those in senior posts, by offering them better
pay and remuneration
Employment opportunities - Unemployment and poverty may prompt many
workers in low-income countries to seek employment elsewhere. At the same
time, high income countries that experience economic growth have an increased
need for labour, especially low-skilled workers.

Seasonal factors - Agricultural workers, for example, might migrate during off-
peak seasons to find employment in other countries.

Domestic instability - Political instability, the lack of security and limited

business opportunities in the domestic economy are key drivers for migrant
workers.

Higher standard of living - Migrant workers seek a better lifestyle so

immigration can provide such possibilities. Working overseas may provide
better career prospects for migrant workers and more educational
opportunities for their children.
 (iv) Flexitime
The traditional working hours for many industries was typically from 9am until
Spm on Mondays to Fridays. This rigid system no longer applies in the vast
majority of businesses and countries. One alternative is to use flexitime (short
for flexible time), a system which requires employees to work for a core period
(say from 9am to 1pm) but the rest of the time is flexible.
Two common forms of flexitime are teleworking and homeworking.
Teleworking, refers to working away from the office by using electronic forms
of communication, such as telephones, the Internet and email.
Homeworking is an aspect of flexitime whereby people work from their
own homes. According to the International Telework Association and
Council.

The advantages and disadvantages of teleworking and homeworking for

employees
 Advanta Disadvantages
• ges especially
Job opportunities, for • There is a huge reliance on the use and
those living in remote areas. reliability of ICT software and
hardware.
• Suitable for those who have to care for
family members, such as parents of • Workers, partly due to the nature of
young children or carers of elderly flexitime,often exceed their
parents. contracted working hours.

• Flexible working hours. • Workers might suffer from social

isolation (including boredom).
Benefits of not having to commute,
such as travel costs, time and stress. • There is often less job security and
less trade union representation for
Autonomy in decision-making and workers.
choice of how to best organize work.
• Employees are likely to face
Possible income tax allowances for distractions working at home,
using personal property for especially those with young children
employment purposes. and pets.

• Lower costs of technology mean that • Teleworkers and homeworkers tend

more people can afford to work from to suffer from a lack of authentic
home. training and career development
opportunities
 The advantages and disadvantages of teleworking and homeworking for
employers

Provides flexibility to deal with working time directives

Advantages Disadvantages

. Reduced overheads due to savings on . Set up costs, such as the cost of ICT
prime locations and office space. equipment, can be very high.
. Flexible and extended working hours . Flexitime requires tight control in
can be offered to recruitment processes
customers. as not everyone has the desired traits,
. Flexible working practices enable
such as initiative, experience and self-
firms to adjust for peak motivation.
and off-peak trade.
. Management, monitoring and control
. Continuity of services from those
are more difficult as
hiring workers with workers are off-site.
young children or other dependents. . Technological breakdowns can cause
. Flexitime workers have lower
major disruptions to flexitime workers.
absenteeism rates than office
workers. . Flexitime is not always possible,such
. as insufficient working
(laws) that govern the maximum space at home or the lack of security
hours of work per time period. and confidentiality of data being held
at home.

(v) Gig economy

The gig economy refers to labour markets where workers are typically on
short-term, flexible and temporary contracts. It also includes people who
carry out freelance work as independent contractors. Workers in the gig
economy do not have permanent employment contracts. Instead, they are
often on-call or on-demand whenever needed to provide services to the
firm's clients.
Advantages of the gig economy include:

Allows greater flexibility for workers, businesses and consumers as each

gig is adaptable to their needs at that moment in time. It is particularly
beneficial for flexible lifestyles.
Workers also have the flexibility of working for a variety of employers to suit
their needs, rather than working full- time with a single employer.
-Costs are lower for businesses as they do not have to hire as many
full-time staff or pay employment-related benefits to so many people.

-It enables contractors and freelance workers to make extra

income, often quickly and with minimal costs.

In theory, gig workers are in (more) control of their work life balance.

The limitations of the gig economy include:

As there are no employees or employers in the traditional sense,

workers miss out on important aspects including job security and
fringe benefits, such as health insurance and sick pay (see Chapter
10).

Although some countries impose a guaranteed minimum wage for

gig workers in certain industries, gig workers do not typically
receive a regular income.
Gig workers do not have a clear professional career path nor do they have the
social support of colleagues and managers in the same way as full-time
employees do.
Independent contractors are expected to record and file their own tax returns
based on their gig income. By contrast, this bureaucratic task is done for
employees by their employer.

Gig workers often suffer from burnout due to working multiple contracts,
often at odd hours. Despite the flexibility, the lack of parameters at work
means gig workers are often overburdened, tired and stressed.
Businesses take the risk of relying on an outsourced freelance contractor who
may or may not deliver the required service to the client or customer's
satisfaction. This can therefore harm the corporate image of the business.

portfolio workers. This term was coined by Charles Handy (1990), to refer to
people involved in a number of different jobs carried out simultaneously, often
on a temporary basis. For example, the portfolio worker might be completing a
project as a freelance editor for one business, whilst conducting market research
for another and providing management consultancy
An advantage for the portfolio worker is that the variety of experiences
can contribute to a more fulfilling career. The key drawback, as with gig
workers, is the lack of job security
portfolio workers and gig workers might not have any contracts at a
particular point in time whilst being very busy at other times with several
projects being undertaken concurrently.
Resistance to change in the workplace {A02, A03)
there are four main reasons why people are resistant to change in the workplace:
Self-interest often takes priority over organizational objectives
Hence, they may feel that change simply involves too much extra effort.
Low tolerance of change happens because people prefer familiarity rather
than disruptions and uncertainties.
Misinformation causes misunderstandings because the purpose of change has
not been communicated effectively. Staff often feel that change is not
necessary
Different assessments of the situation occur w h e n there are different
interpretations of circumstances.
Six change approaches

1. Education and communication - This approach aims to inform and

educate workers (and other stakeholders) about the change.
2. Participation and involvement - This approach links with several
motivation theorists such as Maslow and Herzberg who argue that employee
involvement in decision-making can motivate and improve morale amongst the
workforce.
3. Facilitation and support - This approach is paternalistic in style as
managers become supportive of staff during difficult times of change, thereby
averting potential resistance to change. Managerial support can come in
numerous forms, such as planning and timing the change sensitively and
effectively.
4. Negotiation and agreement - This is the 'carrot' approach whereby
managers use incentives to remove or limit resistance to change. This can be
done by 'inviting' workers to accept amendments to their employment
contracts to accommodate the new changes
5. Manipulation and co-option - This approach involves bringing a
representative of those resisting change into the change process. The purpose, in
theory, is to give them representation but in fact the underlying reason is to
convert the representative's thinking so that the advantages of change can be
communicated to those resisting change
Explicit and implicit coercion - This is the 'stick' approach to dealing with
resistance to change and is typically used as a last resort. Managers can use
coercion (intimidation tactics) to force workers into accepting change, by
threatening disciplinary action, dismissals, job losses
REVIEW QUESTIONS
1. What is meant by human resource management?
2. What is human resource planning?
3. What are demographic changes and how do these influence human resource
planning?
4. What is an ageing population and what are the consequences of this for
workforce planning?
5. What is meant by labour mobility?
6. What is meant by net migration?
7. What is flexitime?
8. How does teleworking differ from homeworking?
[Link] are the advantages and disadvantages of flexitime for employers?
[Link] are the advantages and disadvantages of flexitime for employees?
[Link] is the gig economy?
[Link] are the advantages and disadvantages of the gig economy for employees?
13. What are the advantages and disadvantages of the gig economy for
employers?
14. What are the main reasons for resistance to change in the workplace?
15. What are the main human resource strategies for reducing the impact of
change and resistance to change?
KEY TERMS
-Flexitime: is a system that enables workers to have a degree of
autonomy to determine when they work, so long as they complete their
work by set deadlines.

-The gig economy: refers to labour markets where workers are

typically on short-term, temporary contracts or carry out freelance
work as independent contractors.

-Homeworking: is an aspect of flexitime whereby people work from

their own homes.
-Human resource management (HRM) :r e f e r s to the role of
managers in planning and developing the organization's people. This is
done through interrelated functions such as the recruitment and
selection, as well as training and development of employees.
-Human resource planning (or workforce planning) : is the management
process of forecasting an organization's current and future staffing
needs.

-Migrant workers: are people who move to other countries in search of

better job prospects and opportunities.
The m o b i l i t y o f labour i s t h e e x t e n t t o w h i c h workers are flexible
e n o u g h t o m o v e to d i f f e r e n t l o c a t i o n s ( geographical mobility) and/or
their flexibility in changing to different jobs (occupational mobility).
-Net migration: measures the difference between the number of workers
entering a country (immigration) and the number of people leaving
(emigration).

-Portfolio workers: are those who simultaneously carry out a number of

different jobs, often for various contractors, usually on a temporary basis.
Six change approaches is John P. Kotter's model for reducing the impact
of change and resistance to change. It consists of six strategies or
approaches: (i) education and communication,
(ii) participation and involvement, (iii) facilitation and support,
(iv) negotiation and agreement, (v) manipulation and co-option and (vi)
explicit and implicit coercion.

-Teleworking refers to working away from the office by using electronic

forms of communication, such as telephones, the Internet and email.
Workforce refers to the number of employees at any one point in time for a
particular organization.