HSC Business Studies Jimmy Ngo Year 12 - 2013
10.4HSC topic: Human resources RIPESStudents learn
about:dtyuRole of human resource managementstrategic role of human
resources Human resource management refers to the management of the
total relationship between an employer and employee in order to
achieve the strategic goals of the business. HRM is often used as a
substitute term for industrial, employment or workplace relations.
It is a strategic approach that incorporates all aspects of
managing the employer-employee relationship in the workplace
including functions such as recruitment, development, etc. Thus,
enhancing the firms ability to gain a sustainable competitive
advantage. HRM sees employees as assets rather than costs &
encourages open communication + goal orientation. Staff costs are
generally at least 60% of operational costs. Recently, governments
have tried to assist firms in becoming more competitive by creating
more flexible legal framework for HRM.interdependence with other
key business functions The HR department works closely with
operations to ensure that the business has employed staff with the
relevant skills and experience necessary for the production of
goods + services. A major role of HR is to hire and train employees
for the marketing function, employing staff members skilled in
developing products which meet the needs + wants of customers.
Finance works with human resources in terms of being used to
measure performance, gathering data on earnings, productivity and
customer satisfaction which reflect the staffing and development
needs of the business. Line managers are responsible for the
management of staff contributing to the prime function if the
business e.g. production manager, service manager, sales manager,
etc. outsourcinghuman resource functionsusing contractors domestic,
global Outsourcing - the use of outside firms to undertake one or
more key business functions. Globalisation & technological
change have increased the pressures to be competitive. Often used
to obtain better functional quality + lower cost service than would
be provided internally. Outsourcing, especially offshore (global
subcontracting) significantly reduces costs for some firms. Major
areas outsourced in AU are facilities/property management,
financial processes (e.g. payroll, internal auditing) and most
commonly human resources functions. Top outsourcing reasons (from
most to least) reduce costs [productivity], focus on core
functions, improve quality, increase speed to market, foster
innovation & conserve capital. Human resource functions allows
firms to focus on core functions when HR functions like
recruitment, training and induction of staff are outsourced.
Outsourcing also used to review business practices + implement
strategies to transform the business. Common HR areas outsourced
for review + development include change management &
benchmarking. A contractor is an external provider (individual or
business) of services to a business. Primarily used to create cost
savings or access greater capabilities to improve competitive
advantage. Contractors are particularly used for processing
business functions. Contracting generally recommended for non-core
functions, allowing staff to focus on broader aspects of firm
management. Major risks include cost overruns (increase), quality
loss, difficulty in coordinating activities, and difficulty in
monitoring quality + performance in outsourced activities. In 1
major AU firm, outsourcing maintenance to avoid industrial problems
led to loss of its competitive advantage. Previously proactive in
managing maintenance but became more reactive in hands of its
contractors + breakdowns in production proved to be costly. Most
common forms of outsourcing - labour hire/employment agencies,
dependent contractors, independent contractors & outsourcing
suppliers.
Domestic subcontracting allows firms to focus their resources on
essential business functions, leaving some of detailed support or
compliance-related activities to specialists. Thus, allows firm to
acquire benefits of new perspectives such as leadership
development. It is very commonly used nowadays + firm avoids need
to employ additional in-house staff, along with all the overhead
expenses involved. Contracting/subcontracting carries risks
including the potential loss of direct customer contact, which may
impact on long term sales. Where internal capabilities are lost
through outsourcing functions, the timelines + effectiveness of
communication & problem solving may be diminished, particularly
if critical incident or breakdown occurs. Global subcontracting
during last decade, due to global competition + the GFC, many firms
turned to offshore contractors in India & the Philippines to
reduce costs. Others used outsourcing to eventually operate in new
foreign markets, to get more acquainted with market needs before
expanding with a greater presence in the market. Process
outsourcing dominant form of outsourcing of repetitive,
easily-measured and documented work (e.g. recruitment,
multi-country payroll management, complaints, etc.) Project
outsourcing most commonly found in areas such as HR, marketing,
design, IT & research. Involves much greater use of
intellectual property + strategic business knowledge; tends to be
long-term, difficult to measure & quality cannot be fully
anticipated more risk. Global outsourcing carries risks including
difficulty controlling the quality + reliability of service,
cultural differences (language), security issues (sharing
confidential info), lack of remedies for breach of contract (under
foreign legal systems), often high labour turnover & high
quality staff may be replaced by less qualified staff (declined
quality of service). Potential advantages include expand
flexibility/capacity, cost savings, access new networks, allows
business to focus resources on main functions, train staff &
improve legal compliance. Potential disadvantages include less
integrated organisation, hidden costs, loss of security +
confidentiality, reduce business learning through reliance &
less direct client contact. Disadvantages need to be weighed up
against benefits (cost savings + better productivity).Key
influencesstakeholders employers, employees, employer associations,
unions, government organisations, society Stakeholders are people
who have an interest or concern in the business, and in this case,
the human resources process. They have common interests in the
survival and success of the business; though have differing views
which may bring up conflict. Employers and employees are the major
stakeholders in a business. An employer, for legal purposes
exercises control over employees, has responsibility for payment of
wages and holds the power to dismiss employees. They are involved
in developing programs that focus on improving business
performance. Employers responsibilities are increasing as recent
legislation encourages them to negotiate agreements + resolve
disputes in workplace. But, employers have been widely criticised
in many management surveys for failing to address issues in
effectively managing employees. Under recent legislation, employers
have gained more power to make agreements relevant to individual
workplace/enterprise. Not all employers support government policy
enough to engage in full confrontation with unions + employees, as
costs of such engagement may be high, with prolonged industrial
disputes. An employee is a worker under an employers control.
Control may involve the location of the workplace, the way in which
work is performed and the degree of supervision involved. On
average, employees are more educated + skilled than in the past.
Businesses hoping to retain qualified staff need to be committed to
developing staff + training plans, rewards & opportunities for
greater employee involvement. Around 1/3 of employees are keen to
get more work-life balance. Changing structure of work over last
decade has affected employees access to work. E.g. inexperienced
young people struggle to obtain full-time jobs especially in
services sector. Labour shortages are looming due to ageing
population in AU so prospects for older & younger workers +
women are improving. Under Labor Governments Fair Work Act 2009,
collective bargaining is encouraged + expected to reduce some of
the more unpopular trade-offs workers were forced to accept under
Liberals Work Choices. Employer associations are organisations that
represent and assist employer groups. They are usually respondents
to the award (which is cited in the awards) covering the employees
of their members, and covering employers in the same or related
industry. Examples AiG (AU Industry Group), AU Medical Association,
ACCI, etc. Originally created by employers as counter-party to
unions, to represent employers in the creation of awards through
the conciliation + arbitration system established in 1904. Assisted
employers in formulating policies + processed logs of claim served
on their members by unions. A log of claims is a list of demands
made by workers (often through union) against their employers.
These demands cover specific wages & conditions. Employers may
also serve a counter-log of claims on the union. Today, their main
role is to act on behalf of employers. They also: Provide advice on
matters such as awards, unfair dismissals & discrimination
issues. Make submissions to safety net wage cases + negotiate
agreements. Lobby governments + other organisations with views +
interests of employers, industries & trade. Unlike unions, they
represent employers on a broader range of issues. Like employers,
their objectives are similar, and include increasing profit,
minimising costs & being competitive. Trade unions are
organisations formed by employees in an industry, trade or
occupation to represent them in efforts to improve wages and the
working conditions of their members. Union membership peaked at 51%
in 1976, falling to 46% of all employees in 1986. It has fallen
dramatically ever since reaching the current level of 20% of the
workforce. Major reasons for the decline in union membership are
globalisation, recent legislative changes, privatisation of public
businesses and the growth of service industries. Trade unions work
with employees to demand for better wages and working conditions,
job security and participation on decisions. Their activities can
give rise to workplace disputes which can result in industrial
action taking place in order to reach their objectives. Over time,
government organisations have significantly affected the industrial
relations system as a result of their key roles, as follows:
Legislator: pass laws in parliaments, which provide legal framework
for industrial relations. Legislation had led to growth of judicial
system & institutions + processes used by employers &
employees to conduct bargaining + resolve disputes. Employer:
employ almost 1/3 of AU workers (e.g. teachers, police force).
Often regarded as pacesetters of responsible IR relation policies
(such as introduction of maternity leave). Responsible economic
manager: operating at macro-level, they are keen to ensure
non-inflationary, stable economic growth & high
employment/living standards. At times, there may conflict between
economic goals which impact IR. E.g. cut spending through
reductions in the size of public sector workforce to reduce budget
deficit increases unemployment). Administrator of government
policies on industrial relations: through established agencies
& departments, governments are able to implement legislation
they enact. Representative of AU in the international arena, in
foreign affairs, trade and international labour matters: AU is a
foundation member of the ILO & represented on its governing
body. Social justice legislation passed = related to discrimination
& human rights. Governments have attempted to increase powers
to regulate IR system through use of External Affairs +
Corporations powers given under Constitution of Australia.
Following abolition of Work Choices legislation, came the
introduction of the FWA act. To simply IR + improve efficiency,
national system of IR = created since 2007 under Labor. Statutes
are laws made by federal and state parliaments; for example, laws
relating to employment conditions. These provide framework for
awards + agreements, the resolution of disputes & require
employers to meet OH&S requirements, maintain workers
compensation insurance, provide all employers with superannuation +
annual or long-service leave, ensure employment practices in
workplace are free from discrimination & give each new employee
(covered by national IR system) a Fair Work Information statement
(employee rights). Examples of federal legislation include - Fair
Work Act 2009, Workplace Relations Act 1996, and Sex Discrimination
Act 1984. Governments also establish agencies to monitor these
regulations, including Fair Work Australia, Anti-Discrimination
Board & Equal Rights for Women Agency. The national IR system,
implemented under the FWA 2009, is administered by the Federal
government. It covers all employees of constitutional corporations
(foreign corporations + trading or financial corporations formed
within limits of the Commonwealth) in all states & most private
employees formerly covered under state awards + most private
employers. Key elements of new framework include ten National
Employment Standards (NES) developed to provide basic protections
to employees & protection against unfair dismissal. The 122
modern awards is an industry/occupation-based award which covers
all private sector employers + employers who perform work that
falls within their scope. They replace all existing national system
awards (except those applying to a single enterprise). They do not
cover employees earning higher incomes. Industrial tribunals exist
at federal + state levels to enforce laws established by
government. Fair Work Australia is a tribunal with primary
functions like settling disputes through conciliation, supervising
the making of agreements or awards + awards simplification, hearing
appeals & handling unfair dismissal cases. Awards are legally
enforceable, formal agreements made collectively between employers
+ employees & their representatives at industry level
(determined by an industrial court or tribunal + set out minimum
wages & conditions employees). Award simplification - process
of reducing the number of matters in each award & eliminating
inefficient work practices. Minimum Wage Panel is responsible for
hearing annual wage cases + setting minimum wages for employees in
the national workplace relations system. Under the Constitution,
the Federal Court of AU has judicial power (interpret + apply laws)
to determine disputes about existing rights & make decisions
about these matters. It handles cases relating to industrial action
& breaches of industrial laws, interprets industrial
legislation & is able to impose penalties for breach of an
award or order (e.g. discrimination). SOCIETY has a number of
expectations regarding employment conditions. In 1948, the General
Assembly of the UN, consisting then of 56 countries, passed the
Universal Declaration of Human rights recognising importance of
work to peoples lives + need for fair & just conditions +
rights for those at work. Community demands for safety + wellbeing
at work have increased over recent decades, as has pressure to
eliminate discrimination against female, indigenous and disabled
members in the workforce. For businesses, it means balancing
between need to reduce its biggest cost (labour), as global
competitive pressures increase, and the needs of employees
(particularly those with dependent families). legal the current
legal frameworkthe employment contract common law (rights and
obligations of employers and employees), minimum employment
standards, minimum wage rates, awards, enterprise agreements, other
employment contractsoccupational health and safety and workers
compensation antidiscrimination and equal employment opportunity
The current legal framework which influences HRM consists of
statute law, law created by parliament, and common law, laws made
by judges in courts. Changing community + workers expectations on
social justice (involves firms having being responsible or behaving
in fair + ethical manner towards employees, customers & broader
community), safety & environmental issues are increasingly
reflected in legislation. AU has shifted from a strongly
centralised IR system (collectivist approach in which disputes are
referred to industrial tribunals, like FWA, for conciliation +
arbitration) in 1980s to more decentralised IR system (employers +
employees negotiate wages & working conditions in workplace,
through collective/individual bargaining without tribunal
involvement). The current legal framework is enforced by Fair Work
Australia, which was introduced due to the Fair Work Act 2009. They
act as the nations workplace relations tribunal, carrying out a
range of functions including the provision of a safety net of
minimum conditions, facilitating in good faith for enterprise
bargaining, regulating the taking of industrial action and
resolving workplace disputes through conciliation, mediation and
arbitration. It is the role of the employers and employees to gain
conditions above the award through negotiation, and then sign into
a contract. The employer aims to improve productivity and
flexibility and the employee aims to improve the benefits received.
An employment contract is a legally binding, formal agreement
between employee and employer. These contracts set out the rights
and obligations that both the employee and employer have to uphold,
as well as how the employee will be rewarded and the work
requirement and conditions they will receive. Common law is
developed by courts and tribunals - has established various rights
& responsibilities for employers + employees. Under it,
obligations the employer has includes: Providing work Meaning that
they are not allowed to stand down employees when there is no work,
and must pay correct wages even if work is not provided. Payment of
income Are required to pay the income stipulated in the award,
enterprise agreement and contract, and reimburse employees for
expenses obtained during work. Meeting industrial relations
legislation Providing a workplace and work practices (like equity
policies) free from any form of discrimination, adhering to legal
requirements, and ensuring that workers are protected against
unfair dismissal. Equity in the workplace is the provision of equal
opportunities for all employees to gain access to jobs, training
& career paths in the workplace. Duties of Care Employers are
bound under various state and federal Occupational health and
safety acts to provide reasonable care for the safety of employees.
Additionally, employees also have obligations including: Obeying
lawful and reasonable commands When they do not obey commands they
are at risk of dismissal. Reasonable orders do not expose employees
to harm. Performing their job with care and skill Not behaving in a
negligent manner. Act in good faith - must not disclose
confidential information/trade secrets to another employer
(especially to a competitor when changing jobs). The National
Employment Standards set out in the Fair Work Act contain 10
minimum standards that employers must comply with: Maximum weekly
hours of work 38 hours a week as well as reasonable additional
hours. Requests for flexible working conditions In the case of
parents and carers to allow them to meet their family commitments.
Parental leave Up to 12 months unpaid leave plus the right for
another 12 months. Annual leave 4 weeks paid leave per year.
Personal/Carers/Compassionate leave 10 days paid leave, and two
days unpaid carers leave if required, and 2 days compassionate paid
leave if required. Community service leave Unpaid leave for
voluntary emergency activities and up to 10 days paid leave for
jury service. Long Service leave A transitional entitlement for
employees. Public holidays Paid day off for public holidays. Notice
for termination and redundancy pay - Up to four weeks notice of
termination and up to 16 weeks redundancy pay. Provision of a Fair
Work Information Statement Provided by employers to address major
employment matters and bodies. Awards are legally binding documents
containing minimum conditions for an industry or occupation,
addressing issues like work flexibility, pay rates, overtime &
penalty rates. Award coverage is high in hospitality, retail &
community services. An employees base rate of pay is either
determined by an award or agreement that covers the employee, or
the national minimum wage to $589.30. Fair Work Australia reviews
the national minimum wage and awards annually through National Wage
Cases and takes into consideration of the performance of the
national economy and relative living standards. Enterprise
agreements are collective agreements made at a workplace level
between an employer and a group of employees about the terms and
conditions of employment. Collective agreements are made between
employee(s) (or unions) and employer(s). There are three types of
enterprise agreements under the Fair Work Act 2009:
Single-enterprise agreements Made by a single employer and a group
of employees. Used when employees are engaged in a joint venture.
Multi-enterprise agreements Made by two or more employers and a
groups of employees. Used when employees share common funding and
work collaboratively. Greenfields agreement Agreements made by one
or more relevant unions. The key features of enterprise agreements
are: Covers rates of pay, penalty rates and overtime, allowances,
hours of work, personal and annual leave, any matters related to
the relationships between the employer, employees and
representative organisation involved, and how the agreement will
operate, including the expiry date. Enterprise agreements must be
approved by Fair Work Australia, who must be satisfied that a
general agreement has been made is better than the relevant modern
award. The better off overall test (BOOT) requires that each of the
employees to be covered by the agreement is better off overall than
under the relevant modern award. Individual contracts exist when an
employer and an individual employee negotiate a contract covering
pay and conditions. These contracts are more common in the private
sector, particularly by a non-union enterprise, and at a
professional and managerial level. The conditions they provide need
to equate with the minimum provisions of related awards. They may
be verbal or written. Many are informal and offer much less
protection for both parties than other agreements. Independent
contractors, often known as consultants or freelancers, undertake
work for multiple clients; however, they do not have the legal
status of an employee. Their contract duration has a set term or
once a specific project is completed. During this time, they
control their work and can delegate others. A contractor carries
out the risk of the job, including covering their own
superannuation, tax and leaves. Casual employees have contracts
with employers for short-term, irregular or seasonal work. Due to
their lack of entitlements, they often receive a 20-25% loading for
extra pay. They are entitled to some benefits if employed
regularly. Many employers prefer casuals as it reduces costs for
recruitment/dismissals & on-costs (additional costs involved in
hiring employees above the cost of their wages. These costs
traditionally add around 25% of cost of wage & include sick
leave, holiday leave, leave loading, superannuation, retirement
& redundancy payments). Part-time employees work less than 35
hours a week and have access to employment entitlements though on a
pro-rata basis. The Work Health and Safety Act 2011 (NSW),
replacing the National Occupational Health and Safety Commission
Act (1985) states that: Employers must ensure the health, safety
and welfare at work for all employees by providing a safe system of
work. All employers must take out workers compensation insurance.
Employers must ensure that employees are not exposed to safety
risks. Ensuring employees who engage in bullying will be fined.
WorkCover inspectors may inspect the workplace. WorkCover must be
notified of any serious injuries or deaths in the workplace. Safe
Work Australia was established to conduct research and develop
national standards, codes of practice and common approaches to
WHS/OHS legislation. They have worked with the state governments to
harmonise WHS laws. An ideal business will undertake regular safety
audits, benchmark their performance and implement comprehensive
safety programs. These WHS laws have been implemented to ensure
that employees are given a safe environment to work in. Workers
compensation provides a range of benefits to an employee suffering
from an injury or disease related to their work. It is also
provided to families of injured employees when the injury/disease
was caused by, related to, their work. When an accident occurs, the
employer has a legal obligation to ensure the injured worker
receives all medical and rehabilitation care & does not suffer
from loss of income, otherwise they are at risk of the employee
claiming compensation or suing under common law. Workers
compensation is an ethical issue face by businesses, and the
implementation of laws ensure that employees are not disadvantaged
if they receive work related injuries. Discrimination occurs when a
policy or a practice disadvantages a person or a group of people
because of a personal characteristic that is irrelevant to the
performance of work. Anti-discrimination are the measures taken
into stopping the unjust treatment of groups of people based on
demographic factors. Anti-discrimination legislation has been
enacted to protect employees from direct and indirect
discrimination in all aspects of the human resources process.
Employers need to therefore comply with this legislation and audit
all policies and practices to ensure they do not discriminate.
There are many forms of legislation implemented to deal with this,
including: Sex Discrimination Act 1984 (Cwlth) Anti-Discrimination
Act 1977 (NSW) Affirmative Action (Equal Employment Opportunity for
women) Act 1986 (Cwlth) Agencies are also available to support and
monitor the legislation, and this includes the Australian Human
Rights Commission and the Anti-Discrimination Board (NSW).
Businesses can eliminate discrimination through implementing a
number of strategies such as writing and communicating policies,
making sure there policies and procedures are clearly documented,
and training managers and staff about issues of cultural diversity.
Equal Employment opportunity (EEO) refers to equitable policies and
practices in recruitment, selection, training and promotion. EEO
ensures that the best person for the job is chosen. The concept
allows everybody to have the same opportunity. Employers with more
than 100 employees that all have received a higher education must
develop an affirmative action program and submit a report to the
Equal Opportunity for Women in the Workplace Agency to ensure that
it complies with EEO legislation. The aim of this program is to
remove discriminatory employment barriers and promote equality.
Affirmative action refers to measures taken to eliminate direct and
indirect discrimination, and for implementing positive steps to
overcome the current and historical causes of lack of equal
employment opportunity for women. To improve equity in the
business, managers can implement strategies such as: Develop a code
of practice to communicate a business commitment to EEO.
Benchmarking to analyse the effectiveness of the business EEO
strategies. Implementing a system to gather, monitor and evaluate
statistics on employment.economic Economic cycle refers to the
fluctuations in the level of economic growth due to either domestic
or international factors. Derived demand demand for labour
(employees) is determined by demand for goods + services within the
economy. During periods of economic growth, if labour shortages
occur, employers compete for employees by offering higher wages.
Unions may use their stronger bargaining power to demand
significant wage increases, which then puts upward pressure on
costs + prices. Thus, this causes inflation (which is a constraint
on economic growth). During economic downturns, the demand for
goods + services falls. So firms are forced to reduce the size of
their workforce & limit their ability to provide large wage
increases. Structural change refers to a change in the nature and
pattern of production of goods and services within an economy. This
includes a significant growth in the level of services in an
economy compared to other sectors. Structural change occurring in
the economy has led to rapid employment growth in services sector
(accounts for 86% of total employment). Employment is growing in
industries like property, business, retailing, trades, tourism,
educational services, hospitality & community + personal
services. Traditionally, some of these were dominated by women. As
sectors develop, recruitment, selection & remuneration have
become important industrial issues. With an ageing population,
flexible staffing arrangements, retention & mentoring increase
in importance. Effective training + staff empowerment are critical
to business success in such customer-based service industries. In
manufacturing, removal of protection (tariffs + quotas) has
increased business exposure to international competition.
Subsequent fall in manufacturing employment has been hastened by
rapid technological change. Globalisation refers to the integration
between different countries and the increased impact of
international influences on all aspects of life and economic
activity higher profitability. Reduced protection has increased
competitive pressures on businesses since TNCs now reside with
domestic firms. Many firms outsource their non-core functions
offshore or subcontract production to effectively compete. Firms
are increasingly prepared to relocate production units in places
where dispute levels, labour and regulatory costs are lower.
Increasing role for international organisations (e.g. ILO) + trade
blocs (e.g. EU & WTO) to promote trade between countries that
adhere to social justice principles.technological Technological
change is the major source of improvements in productivity,
communication & competition between businesses. It has
accelerated structural change, created new jobs whilst made others
redundant. Changes and improvements in technology continually
increase the costs of training and retraining staff. This has
negative implications in the short term, though the use of new
technology can improve productivity and lower costs in the long
run. Businesses can restructure and re-engineer their networks,
allowing them to be offshore due to electronic communication.
Additionally, technology has also allowed many employees to work at
home.social changing work patterns, living standards Social
influences are the attitudes, beliefs, and values that society
holds that influence human resources, and this includes changing
work patterns and living standards.CHANGING WORK PATTERNS Over last
2 decades, there has been dramatic growth in part-time + casual
work, largely due to growth in finance, retail, hospitality &
community service industries. Most part-time workers do not want
additional hours but rather work that offers flexibility in
balancing their work & personal lives. By May 2010, men
employed part time = 17% while women = 46%. Career flexibility and
job mobility have increased. Around 14-16% of employees are
considered job mobile & only 44% of full-time employees have
work for current employer for more than 5 years. Most mobile are
aged 20-24, AU born, of English speaking background, and found in
retail or hospitality industries. Many leave full-time positions
after developing specialist skills + experience to become
independent contractors or consultants. Increasing feminisation of
workforce = reflected in rising female participation rate (refers
to proportion of women aged 15-69 employed or actively seeking
work) 59% in 2011. Their influence on workforce is reflected in
increasing calls for work-life balance & recent improvements in
parental + carers leave conditions. Ageing of the workforce refers
to the growth in the average age of the population due to sustained
lower fertility and increasing life expectancy. As a result, there
are proportionally fewer children under 15 in the population, and
more in older age groups. Likely to see significant shortage of
skills in community over the next few years. Flexible working
arrangements will be critical in utilising thus this ageing
population, particularly women, who are concentrated in health,
education & society + culture. Businesses + governments will
need to respond by enhancing the skills of the population &
create incentives to encourage staff to postpone retirement. Early
retirement the average age of retirement from full-time work has
increased & is 53, however, participation in part-time work is
much higher suggesting older employees using gradual withdrawal
approach to retirement. Most common reasons are eligibility for
superannuation or for health reasons.
LIVING STANDARDS Australians have very high living standards -
such include OH&S, regular wage increases, performance bonuses,
fringe benefits, and leave & superannuation benefits. However,
there are firms which seek to undercut conditions through excessive
outsourcing + casualisation of workforce or by shifting operations
offshore to reduce costs this will be challenged by unions keen to
avoid erosion of employees living standards. A 2010 report,
Shifting Work and Working Life in Australia, prepared for the ACTU,
indicates that there been major concerns for Australians about
living standards + working life over the last few years. They are
concerned about issues regarding increasing income inequality in
AU, casualisation of workforce, increasing pressure to manage
finances in lives as governments retreat from welfare + encourage
individual responsibility & work-life balance.ethics and
corporate social responsibility Ethics and corporate social
responsibility refers to the obligation where a business has to
work with the full range of stakeholders to assist in the
betterment of society. Ethical business practices are those
practices that are socially responsible, morally right, honourable
and fair. Unethical practices can lead to low productivity or
industrial disputes. Many firms are realising the benefits of a
more committed workforce and good public reputation achieved
through embracing ethical principles of CSR. Socially responsible,
ethical employer recognises that: Good working conditions +
environment should motivate + retain staff, performance = maximised
when staff feel valued + rewarded for efforts, an effective
workplace benefits from strong relationships + teamwork & a
high level of CSR is crucial for a good public image. Ethical
framework must be developed for workplace, in collaboration with
major stakeholders may include a code of conduct and a code of
ethics. A code of conduct is a statement of acceptable and
unacceptable behaviours in a business. A code of ethics is a
statement of a firms values and principles. Benefits accruing from
ethical practices are increasingly evident form research and
include: Staff retention + absenteeism rates improve as staff feel
more valued + motivated. Business costs are reduced + business
performance is enhanced. Significant marketing + business
opportunities best practice employers enjoy regular publicity in
the media, in journals & on the internet. Best practice refers
to business practices that are regarded as the best or of highest
standard in industry. Working conditions ethical employer are
expected to achieve safe + fair working conditions that improve the
welfare of employees. This is achieved through: Compliance with
social justice + industrial legislation covering all aspects of
HRM. Improving communication and fostering teamwork + empowerment
of staff. Establishing a code of practice for customers, employees
and suppliers. A code of practice is a statement of principles used
by a business in its operations. It generally refers to practices
that are seen as ethical or socially responsible. Global
competitive pressures has been reflected in rapid growth of
precarious employment predominantly casual + part-time leading to
loss of job security, long shifts and no leave entitlements
reducing living standards of employees. Exploitation of adult
workers through outsourcing + subcontracting locally and offshore
is often raised as a major ethical issue. Many people are concerned
about the nature of child labour globally, even though the business
is saving on costs. Ethical businesses have demonstrated CSR
through strategies through strategies such as regularly undertaking
audits of their factories abroad and working with agencies to
support ethical practices in their local + offshore operations.
E.g. In clothing industry, traditionally renowned for sweatshops,
firms seek accreditation from agencies like Ethical Clothing AU.
Processes of human resource management It is crucial that the HRM
functions & processes are aligned with the strategic direction
of the business. Two major HR aspects need to be planned in all
businesses: Short + long-term HR needs for the business, through a
HR inventory of the business. Needs are influenced by business
development plans & strategy, nature + location of development
& external factors government policies, economic, technological
change, social trends, etc. Strategy needed to meet these needs may
include recruitment, downsizing, outsourcing specific programs to
build new capabilities, improve competitiveness & transform
culture.acquisition Acquisition is the process of attracting and
recruiting the right staff for roles in a business. Initially,
business must identify the need of recruiting to see whether it
would be efficient + better for the business, or if training
existing employees will be better. This is a major factor due to
employing new staff into the business can incur significant costs.
Management need to determine whether the benefits outweigh the
costs & other alternatives. Acquiring the suitable staff is
critical in managing HRM processes. It involves analysing: Internal
environment particularly business goals + culture. The focus may be
on cost containment, growth, downsizing, improved customer
service/quality, etc. It influences the demand for specific skills
& helps define types of staffs suitable for the firms culture.
External environment includes economic conditions, competition,
technology, and legal, political, and social factors. Once needs
are determined, options are considered including managing for
shortage or surplus of staff. Job analysis/design is required to
meet needs of new positions they are undertaken through staff
interviews, observations & reports from performance appraisals
+ evaluations. Job specifications can then be developed for
applications through recruitment. Recruitment is the process of
locating and attracting the right quantity and quality of staff to
apply for employment vacancies or anticipated vacancies at the
right cost. Employee selection involves gathering information about
each applicant and using that information to choose the most
appropriate applicant. Effective recruitment (either internal or
external) + employee selection involves A fair, non-discriminatory
and legally compliant selection policy and process. Ensure that
they hire motivated applicants which have goals and values which
are aligned with the business and its culture. Implementing
placement strategies to ensure that the applicant maximises the
productivity of the business. Placement involves locating the
employee in a position that best utilises the skills of the
individual to meet the needs of the business.development
Development is the process of developing and improving the skills,
abilities and knowledge of staff, through induction, ongoing
training and further professional development. Research shows that
employees who feel competent in performing their jobs and are
recognised for their achievements are more motivated and satisfied
at work. Development focuses on enhancing employees skills through:
Further professional learning, mentoring or coach and performance
appraisal + management to allow them to take advantage of
opportunities to develop a career with the business. Development in
the long term will reduce costs (through increasing labour
productivity) and therefore increase profitability. An induction
program is planned to introduce a new employee to the job, their
co-workers, the business & its culture. Most employees, who
leave a business, depart in the first three months so the need for
support is greatest when employee is new. A well-prepared program
gives employees a positive attitude to job/firm, builds confidence,
stresses major safety policies + procedures & their
applications & helps establish relationships with co-workers.
Ultimately, it is training given to new employees to enable them to
do their job effectively. The aim of training is to seek a
long-term change in employees skills, knowledge, attitudes and
behaviour in order to improve work performance (productivity) in
the business. A businesss ability to remain competitive can be
affected by the extent of offered training. The key features of an
effective training program includes the following:1. Assess the
needs of the individual (e.g. skills), of the job (competencies
required) and of the business (culture, goals, etc.). Assess if
skills + knowledge need to be further developed.2. Determine the
objectives of training program for the business, job and
individual. Management input + support at this stage is critical to
a successful training program.3. Consider the influences. Internal
include attitude of employees to training, staffing, financial
& physical resources available to operate program. External
includes any new research on relevant training issues &
government programs or support available for training. 4. Determine
the process that is: the content of the training program, learning
principles to be applied (including participation, repetition,
demonstration & feedback), learning methods to be applied (such
as lectures), location of training program (on or off-site) &
the participants involved employees, supervisors, HR managers &
external consultants.5. Evaluate the program strategies include
tests + surveys, both prior to training + after training,
performance appraisals, benchmarking of key indicators, etc.
Evaluation can be done over time in terms of changes in key
indicators (e.g. cost of sales, sales volumes, etc.) Today,
organisational (development) structures are less hierarchal and
flatter in structure. Flatter structures may have improved employee
autonomy and efficiency but have reduced promotional opportunities.
HR managers need to use strategies to retain talented staff: Job
enlargement increasing the breadth of tasks in a job. Job rotation
(multiskilling) moving staff from one task to another over a period
of time. Job enrichment increasing the responsibilities of a staff
member. Job sharing where two people share the same job.
Self-managing teams in which roles + decisions are determined by
their members. Mentoring and coaching where a leader or more
experienced member of staff provides advice and support to another
person developing skills in the area. Mentoring and coaching are
increasingly used to motivate + develop staff with leadership
potential. Mentoring is a mutually agreed role, which suits
experienced staff keen to transfer knowledge & skills through
succession planning. It is more focused on building a personal
relationship that encompasses the life experience of both parties.
Often those being mentored select their mentors + are free to
accept or reject advice offered. Coaching is focused on improving
skills + performance & on helping individual manage specific
work roles more effectively. Coaches may be provided by the
business or may be sought by those seeking further development.
Performance appraisal is a process of assessing the performance
of an employee, generally against a set of criteria or standards.
It is a systematic process is used to assess an employees
suitability for promotion and their potential value to the
businesss success. Performance appraisal involves four main
objectives: To provide feedback from management to employees
regarding work performance. To act as a measurement against which
promotion and pay rises can be determined. To help the business
monitor its employee selection. To identify employees training and
development needs. If most employees continually perform below
expectations, recruitment + selection process may be need to be
changed or extra training + development may be required. Although
many managers are uncomfortable with evaluating employees,
effective performance appraisal is a crucial function of good HR
management. Appraisals need to have criteria that are job related,
the appraising staffs have been trained and there is no
discrimination in the process. Employees more likely to value a
performance appraisal if they are allowed to discuss their
performance + challenge their evaluation.maintenance Maintenance is
the process of managing the needs of staff for health and safety,
industrial relations and legal responsibilities, including
compensation and benefits, of all staff. In HRM, maintenance
focuses on the processes needed to retain skilled staff. Staff
wellbeing is maximised through encouraging staff to participate in
decision making & giving employee some control over their work
lives. Employee participation strategies include involvement in
teams, collective bargaining, workplace surveys + activities these
fosters involvement in decision making. Offering family-friendly
programs that support work-life balance is critical in workplaces
such as telecommuting, part-time work & flexible working
hours.COMMUNICATION AND WORKPLACE CULTURE Effective HRM depend
heavily on the strength of a businesss communications systems. Poor
communication is reflected in workplace conflict + high turnover
rates. Common methods of communication are regular team meetings
between managers, or supervisors, and employees; staff bulletins +
newsletters and social functions. Email is often criticised for
being source of misunderstandings + tension if protocols are not
established for constructive communications + timelines for
feedback. Strategies that focus on building trust + direct
communication between people are critical in preventing conflicts
& escalating issues. Communication should help in building a
positive workplace culture.EMPLOYEE PARTICIPATION Firms encourage
employee participation to improve communication, empower employees
& develop their commitment to improving quality + efficiency.
Businesses benefit from employee experience + knowledge on job, and
improvements they suggest are often critical to a businesss
competitiveness + success. More effective participation is fostered
through regular team meeting/briefings to discuss customer
feedback, company trends & issues these build shared purpose +
firm identity. Other strategies include participation through
membership of board of directors, joint consultative committees
& employee surveys + feedback from performance
interviews.BENEFITS May be monetary or non-monetary and extent of
benefits available will reflect the resources of the business &
the nature of its activities. Typical benefits include flexible
working arrangements, paid training opportunities, travel
allowances, health insurance, subsidised gym membership, housing
& company car. Firms carefully consider value of these benefits
in terms of retention of staff + workplace culture, as they are
expensive + some attract an employer-paid fringe benefits tax
(FBT). Fringe benefits tax (FBT) is a tax employers must pay on
certain benefits they provide to their employees or their employees
associates such as a family member. It is based on the taxable
value of the various fringe benefits provided. Benefits considered
for FBT include airline transport, housing loans, car parking, etc.
Westfield AUs benefits study assistance, online textbooks, business
improvement awards. FLEXIBLE AND FAMILY-FRIENDLY WORK ARRANGEMENTS
Around 1/3 of AU employees cite need for work-life balance as major
consideration in future work choices. Employers are responding with
more flexible working arrangements to attract + retain staff. Such
arrangements are reflected in the New Employment Standards.
Flexible working conditions allow firms to work more efficiently or
allow employees to better balance work & family
responsibilities. Typical flexible working conditions are:
Remuneration (reward) options, flexible working hours, career break
schemes, job sharing, work-from-home arrangements, family leave and
part-time work arrangements. Family-friendly programs are effective
in retaining staff in longer term as they recognise the
interdependence of work & family life + reduce problems
involved in managing family responsibilities. Such programs also
create a positive image of the firm in the community.
LEGAL COMPLIANCE AND CORPORATE SOCIAL RESPONSIBILITY Employers
are required by law to ensure that HR procedures and policies
comply with existing legislation, including anti-discrimination,
OH&S, taxation, IR & agreements. Bullying + sexual
harassment (along with workplace conflict + high workloads) are
causes of stress at work causes high levels of absenteeism,
turnover, low productivity and morale. Major focus of maintenance
is for HR managers to minimise the exposure of the business to risk
by implementing a range of proactive + preventative strategies in
health + safety, anti-discrimination & conflict resolution.
Bullying is common in industries with high numbers of vulnerable
employees such as apprentices, young staff or migrant workers. It
can be minimised by: Providing information about workplace bullying
cover common forms (e.g. verbal abuse). Inducting + training
employees in company policy, procedures to deal with bullying and
consequences of bullying. Providing training to increase cultural
awareness. Promoting culture that is based on open communication,
respect, fairness and trust. Having a member of staff (appointed by
the staff) to handle complaints + grievances.separation Separation
is the process of employees leaving voluntarily, or through
dismissal or retrenchment processes. Voluntary separation may take
the form of resignation, relocation, voluntary redundancy or
retirement. Involuntary separation may take the form of contract
expiry, retrenchment or dismissal. Involuntary separation should
comply with legislation, awards & agreements. Redundancy and
retrenchment refer to employees losing their jobs, where the
employees job or work no longer needs to be done. It may be
necessary due to a lack of work, as in the case of a fall in demand
for a product or service, or the position may have been
restructured or replaced by technology. Acceptable situations for
redundancy include closure of the workplace site, completion of
project on which employee worked, lack of contracts or orders for
work, downturn in consumer demand or need to reduce staff due to
financial difficulties in business. Matters in determining who is
retrenched length of service, performance standard, future
potential and whether some staff are willing to leave voluntarily.
Managers should consult with staff prior to termination &
support them with outplacement to ensure a smooth transition that
does not adversely affect remaining workers morale.
DISMISSAL & UNFAIR DISMISSAL Dismissals are a form of
separation where employees do not act in good faith and are removed
from the business. Summary dismissal is an instant form of
dismissal that applies to employees involved in gross or serious
misconduct such as theft. Termination for misconduct must meet the
test of being fair + reasonable, given the circumstances. FWA will
generally determine whether reasons were sound & whether
employer had made reasonable efforts to investigate allegations +
allowed employee the right to respond to the allegations. Dismissal
can be based on poor performance or redundancy due to
organisational restructuring, a downturn in business or
technological change making job redundant. Recently, businesses
have tried to minimise costs & improve productivity through
reducing staff numbers, flattening management structures &
making greater use of technology widespread restructuring +
managerial policies have contribute to industrial disputes. In
terms of dismissing an employee due to poor performance, businesses
need to: Give employees written warning about their poor
performance over a period of time. Give them advice + support so
they have the opportunity to improve. Notify employees of reason
for termination & an opportunity to respond. In the case of
redundancy, employer may be asked to show that: Employees job was
no longer needed; that the redundancy is genuine. There was no
appropriate work available elsewhere within the organisation.
Employee consulted about alternative redeployment options in the
business. Unfair dismissal occurs where an employee is dismissed by
their employer and they believe the action is harsh, unreasonable
or unjust. Selecting staff for dismissal can be risky + requires
awareness of legislation & industrial agreements. Documentation
of processes undertaken is also required to avoid claims of unfair
dismissal. Fair Work AU provides these grounds for such claims for
employees. Unfair dismissal occurs where an employee makes a remedy
application and FWA finds that: The dismissal was harsh, unjust or
unreasonable. The dismissal was not a case of genuine redundancy.
The dismissal was not consistent with Small Business Fair Dismissal
Code where the employee was employed by a small business. Employees
are able to claim unfair dismissal if: Business has more than 15
employees [full-time or equivalent] who have been employed for more
than 6 months. This includes casuals with 6 months service.
Processes for dismissal have not been carried out correctly.
Employer has the right to object to a claim on the basis that it is
frivolous, not submitted in an appropriate time frame, not
reasonably likely to succeed, not a case of unfair dismissal or
that the person making the claim is not eligible. Firms can be
badly hit by such claims many have found need for procedural
approach frustrating, particularly the need to give employees time
to improve after the warning. Many businesses have preferred to
avoid risk by hiring casuals + contractors. Others have tightened
employment contracts & included job descriptions, probation
periods & measurable targets to allow for dismissal of staff if
required. They are keen to avoid unfair dismissal claims which
create bad publicity lose customers. For many, it has been regarded
as cheaper and less time consuming to settle claim, regardless of
whether or not it is valid. The separation process is important in
HRM as not complying with legal standards can have serious
financial consequences.Strategies in human resource
managementleadership style The classical authoritative, autocratic
(directive) approaches focuses on planning, organising and
controlling. In this approach there is no role for contributions by
employees in terms of making decisions, and the leadership is best
used when decisions must be made quickly and when management has
suffice information to solve the problem. This style is usually
used in low skilled jobs where employee input is not needed. This
maximises productivity for businesses. The behavioural approach is
most commonly seen in a participative or democratic leadership
style and sees management as leading, motivating and communicating.
Participative leadership is where emphasis is placed on group
consensus and in generating new idea, and is used when the
knowledge and skill of staff are valued and may suggest effective
ideas. Delegative leadership is where management allows employees
to make decisions in some aspects. This is used when managers trust
their staffs ability to make the right decisions due to their skill
and knowledge. The use of this leadership style allows for
employees to feel valued within the business. The contingency
approach uses the most appropriate approach depending on the
situation and changes in circumstances. It is evident that
employees in AU do not appreciate constant supervision of their
work, as occurs in an authoritarian/directive management style. AU
managers use a range of styles that incorporate elements from most
management styles and are more focused on achievement +
performance. Most appropriate uses shown below:Leadership
StyleAppropriate use for style
Directive [autocratic] - Emphasis on immediate compliance from
employees.In a crisis, to kick start a turnaround or with problem
employees.
Visionary [authoritative]- Emphasis on long-term vision &
leadershipWhen changes require a new vision or when a clear
direction is needed.
Affiliative emphasis on the creation of harmony.To build buy-in
or consensus or to get input from valuable employees.
Participative [democratic] emphasis on group consensus and
generating new ideas.To build buy-in or consensus or to get input
from valuable employees.
Pacesetting emphasis on accomplishment of tasks to high
standards.To get quick results from a highly motivated and
competent team.
Coaching [developmental] emphasis on the professional growth of
employees. To help an employee improve performance or to develop
long-term strengths.
AU managers are different to those overseas in that they are not
common users of autocratic approaches, since AU tends to have more
of an egalitarian culture. job design general or specific tasks
Offering an interesting job is the first step in recruiting +
retaining talented staff. Job design - process of designing the
content of a job and how it will interact with other jobs and
employees, so as to motivate and retain an employee and achieve the
businesss goals. Job design has long been dependent on job analysis
which is an ongoing process which is a detailed analysis of all the
tasks, responsibilities, personal attributes and reporting
relationships needed in a position. Employees are more motivated
& likely to share ideas if they have autonomy, have clear task
identity, are well trained & feel competent, and receive
feedback that allows them to be recognised and develop further.
Feedback is demotivating when it is controlling, although feedback
that is informative and constructive is motivating. Employees
motivated when they are able to plan, schedule & determine how
to do a job. Job design involves a number of steps:1. Analyse the
existing work situation using observation, feedback &
organisational data.2. Identify technical, managerial &
administrative tasks to be performed.3. Identify needs +
aspirations of employees for new positions.4. Decide how the job
will fit in with the work group.5. Consult with key stakeholders +
modify as required.6. Implement changes slowly, provide training,
consult & use feedback to modify.7. Include procedures for
review of progress.8. Assess + review progress, discuss with
employees. Job design is a useful method in developing the
knowledge & leadership skills of employees identified for
future promotion in succession planning. The common job design
methods are:
Specialisation in job design involves jobs being broken down
into specialist skills areas in order to improve knowledge +
skills, to increase output, to reduce errors & labour costs and
to control quality. Job analysis is crucial in selecting tasks and
designing such jobs. Job specialisation on its own rarely leads to
greater challenges or job satisfaction, as word tends to be more
repetitive & employees have little input into their work. There
is less social interaction or sharing ideas with others & often
no identifiable end product. Heavy specialisation is believed to
reduce the ability to absorb knowledge & may even limit
knowledge sharing. In a specialised approach, management assumes
greater control.recruitment internal or external, general or
specific skills Recruitment is the process of locating and
attracting the right quantity and quality of staff to apply for
employment vacancies or anticipated vacancies at the right cost.
Effective recruitment + selection allow the most appropriate
applicant to be selected. A diverse workforce would include
employees from diverse cultural and ethnic backgrounds, who were
able to demonstrate the ability to speak in more than one language,
and to demonstrate cultural awareness and sensitivity in their
interactions with people from other cultures. As businesses become
more global in orientation, recruiting a diverse workforce at all
levels is becoming more important in communicating effectively with
a wide customer base & in demonstrating CSR which is highly
valued by consumers + employees. Poor recruitment process leads to
increased costs + lower productivity by increasing: Training costs
[unqualified staff], industrial unrest, labour turnover &
absenteeism rates, etc. Internal recruitment involves filling job
vacancies with people from within the business. Sources include
employees, former applicants + employees, and they may be invited
to apply through intranet postings, word of mouth, etc. A popular
source = employee referrals. External recruitment involves filling
job vacancies with people from outside the business. Obtaining
employees through traditional methods such as advertisements or
referrals. The fastest growing recruitment methods today are via
social networking sites like FB. Some firms cite online company
videos as having response rates of up to 18%, far exceeding that of
other recruiting strategies. This is important for firms that
constantly recruit staff.
GENERAL SKILLS General skills, attitudes and behaviour allow
employees to be good cultural fit for firms. Key general skills
include flexibility + versatility, social confidence, positive
attitude, motivation, ability to work as a team or independently,
leadership and decision-making. They are important since many jobs
today require individuals to work independently & undertake
various tasks. General skills are now generally more
service-orientated, making social + information skills increasingly
important.SPECIFIC SKILLS Most businesses concerned about skill
shortages & target employees with specific skills to fill in
gaps within the firm. Such skills may be developed through
education and training. Many businesses are recruiting overseas or
using outsourcing to overcome skill gaps, particularly through
skilled migration programs such as the 457 temporary programs.
Employee poaching is the practise of enticing employees to work for
another business.
training and development current or future skills Training aims
to develop skills, knowledge and attitudes that lead to better
performance. Training is critical in AU today as businesses report
big labour market problems including shortage of skilled labour,
mismatch between skills needed and skills available, etc.
Development is focused on enhancing the skills of the employee to
upgrade their skills in line with the changing and future needs of
the business. Encourages employees to take advantage of
opportunities to develop career with the firm. Business benefits by
retaining employees skills & gaining a competitive advantage.
In choosing nature of training + development, firms need to use
systematic process to evaluate the needs of the business, supply of
skills in economy, demand for such skills & changing nature of
work + general pattern of employment. Businesses will need to
consider these options in terms of training and development: Invest
in further in-house training and development, recruit staff for
specific skills, retain experts who retire on part-time basis,
retain women through flexible work structures, share with other
firms or do work for other firms (insourcing), outsource functions
to specialist firms, sponsor overseas migrants for areas of major
shortages and build alliances. Insourcing refers to delegating a
job to someone within the business, as opposed to someone outside
the business. Future jobs in AU such as robotics or genetic
counselling will require future skills. The business has to make a
decision when implementing a training program whether to train
their employees current or future skills. By training and
developing their current skills, the business can improve the
quality and productivity of their activities, therefore reducing
costs in long term. By preparing employees for work in the future,
although being more expensive, encourages individuals to develop
long term careers with the business, protecting them from skill
shortages.performance management developmental or administrative
Performance management is a systematic process of evaluating and
managing employee performance in order to achieve the best outcomes
for a business. Value of performance management includes: assess
legal compliance, justify staffing decisions, identify training +
development needs, provide feedback + recognition, assess
performance against standards & identify opportunities for
productivity improvement. The two objectives of performance
management are evaluating an individuals performance and using that
information to develop the individual. Performance appraisal +
management systems are designed to meet 2 purposes for a business
developmental and administrative. DEVELOPMENTAL: using data to
develop individual skills + abilities of employees, so they improve
effectiveness in roles, overcome weaknesses & are prepared for
promotion. Best achieved through periodic feedback + shared
discussion that is empathetic + goal focused. ADMINISTRATIVE:
provides information, often following an annual appraisal, which
can be used by management for planning in HR functions such as
training or development. The focus is on collecting data to manage
HRM function more efficiently.BENEFITS OF EFFECTIVE PERFORMANCE
MANAGEMENT
Performance appraisal + performance management systems often
regarded as surveillance systems and are dreaded by employees. They
are more readily accepted by employees when they are designed
collaboratively with key stakeholders. Effective performance
management is fostered when businesses: Have clear job
descriptions, match people with the right skills to the role &
culture of business and set mutually agreed goals + performance
standards. Provide appropriate induction, training &
development so staff can experience growth. Provide effective
training for those leading performance appraisal & management.
Provide regular + constructive feedback so staff can improve,
provide opportunities for internal promotion and provide support,
mentoring or coaching to support staff. Recognise & reward
employees for their achievements and use employee
surveys/feedback.rewards monetary and non-monetary, individual or
group, performance pay Rewards management is key strategy in
attracting, motivating and retaining employees. Monetary rewards
are those reflected in pay or having financial value. Non-monetary
rewards are those that do not have a financial value, such as
social activities or retirement planning. Intrinsic rewards are
those that the individual derives from the task or job itself, such
as a sense of achievement. Extrinsic rewards are those given or
provided outside the job itself. They may be monetary, for example
incentive payments, or non-monetary, for example flexible work
schedules. Intrinsic rewards associated with job (non-monetary)
include job aspects (such as interesting work, promotion, and
autonomy in job) + environment (like social activities or
recognition). Extrinsic rewards (monetary/non-monetary) include
direct rewards (wages, salaries, bonus plans) or indirect rewards
(fringe benefits insurance, holidays, company car, etc.) Rewards
are to be distinguished from benefits which are available to all
members of staff. Reward systems are increasingly linked to
performance management through enterprise bargaining and individual
contracts. In conclusion, an effective reward system is equitable,
clearly communicated, relevant, cost effective, simple to
administer and aligned with the businesss goals.INDIVIDUAL OR GROUP
REWARD Rewards are often related to individual performance. For
group rewards, all individuals are dependent on others and
efficient workplace systems to achieve high-quality performance.
Increasing use of group and team-based structures have increased
need for cooperation and made it difficult to distinguish
individual performance. Group incentives schemes are often used to
support a team-based culture. Gain-sharing plan involves the
benefits of improvements ad success (such as productivity
improvements, cost savings and sales or profit increases) being
reflected in rewards for teams such as shares, cash bonuses or
annual bonuses. Team-based reward system can result in free-riders
who contribute little to the performance of the team but receives
the reward nevertheless. A HR manager can assess the overall
effectiveness of systems through a grid, matrix or table.Rewards
ComponentReward Objectives
Base SalaryAttract and retain
Gain-Sharing PlanProductivity
Performance IncentiveRetain and individual contribution
Corporate Profit ShareAttract and company performance
SuperannuationAttract and retain
Other BenefitsRetain and employee security
Career PlanningEmployee security, productivity and retain.
Key issues to consider in designing a rewards/benefits system in
terms of business include: Business strategy, economic conditions,
organisational objectives of rewards, rewards of competitors,
relevant awards + agreements, NES, union power and profitability of
business. Key issues to consider in designing a rewards/benefits
system for individual employees are: Performance related incentive
plans for performance above standards or criteria, bonuses, piece
rates, commissions and production-related incentives. Job related
role + level of responsibility, scope of supervision, base pay,
interpersonal skills, knowledge & skills, experience and value
to company (e.g. links with key clients). Other individual
considerations group incentives, employees values (e.g. job
flexibility vs. career planning), specific job conditions and their
individual bargaining power. Unclear or unfair reward systems, or
where employees believe there has been favouritism, can lead to
internal conflict, loss of trust + motivation and higher levels of
labour turnover.PERFORMANCE PAY Performance pay is where wages and
salaries are linked to the individual performance in achieving
measurable goals. By using this method the business motivates
employees, thus improving performance by giving the incentive that
higher performing employees will be more appropriately
rewarded.global costs, skills, supply There are strong factors
pushing businesses to operate globally like the high cost of
skilled labour in Australia and a shortage in the supply of skilled
labour. Offshore skilled labour is available but not always
available as required in desired locations or quantities, due to
high levels of demand for lower cost labour in regions of lower
wage nations. The rapid growth of global outsourcing of routine +
repetitive tasks illustrates the potential for businesses to
develop strategies that access lower cost labour, modern
telecommuting technology and work practices, while complying with
regulations & pay scales in overseas. China, India and the
Philippines [with less stringent regulations] are popular for
outsourcing. In addition to labour costs, issues like business
risk, infrastructure, language skills are important influences on
the choice of location for offshoring + outsourcing. A business
planning to expand overseas needs to consider whether it wishes to
use a: A polycentric staffing approach uses host-country staffing
with parent-country staff in corporate management at its
headquarters. Although, this helps the company access good market
knowledge, is often cost efficient, and satisfies local pressure
for employment opportunities, it may limit management experience
for host-country staff. A geocentric staffing approach uses the
staff with the most appropriate skillset for a particular role and
location, and builds a pool of managers with global experience.
This can be a complex and expensive policy, however, due to local
employment regulations, relocation and retraining costs. An
ethnocentric approach uses parent-country staff in its business.
This may limit its ability to interact with customers and learn
from overseas markets. If a business is seeking to operate using a
lower cost structure, training in quality standards and performance
management will need to be updated. Compliance with overseas labour
market regulations is critical to avoid issues with local
governments and disruptions to the business. workplace disputes
resolution negotiation, mediation, grievance procedures,
involvement of courts and tribunals Disputes are conflicts,
disagreements or dissatisfaction between individuals and/or groups.
Disputes may be informal, formal, overt (e.g. lockout) or covert
(e.g. absenteeism) and can be costly to businesses at time of the
dispute but also its reputation + employees. Covert disputes are
conflicts that are only recognised by the business itself.
Employers + HR managers need to be aware of & respond to
workplace conflicts as they can progress to legal actions such as
formal (and overt) claims of harassment or bullying. Workplace
conflicts also lead to other problems such as higher levels of
absenteeism, low productivity, legal claims and high staff
turnover, which may be even more costly in long run. An industrial
dispute is a disagreement over an issue or group of issues between
an employer and its employees, which results in employees ceasing
work. Strikes refer to situations in which workers withdraw their
labour. They are most overt form of industrial action and aim to
attract publicity and support for the employees case. Strike action
is more common in public sector and in the mining sector. Lockouts
occur when employers close the entrance to a workplace and refuse
admission to the workers. In some lockouts, management attempt to
avoid a picket line of workers. Pickets are protests that take
place outside the workplace (associated with strike). Unionists
stop the delivery of goods and try to stop the entry of non-union
labour into the workplace. Legal claims for matters such as
discrimination or bullying are not included in these disputes. The
major causes of disputes recognised by the ABS are disputes
relating to negotiation of awards and enterprise agreements. These
issues typically include disputes about: Remuneration (e.g. wage),
employment conditions & job security issues (e.g.
retrenchment). Matters outside agreements also cause disputes, for
example: Health + safety, managerial policy (a common cause), union
issues & political/social protests.RESOLUTION OF DISPUTES The
key stakeholders involved in resolving disputes including
employees, employers, governments, trade unions, employer
associations, courts and industrial tribunals. Other stakeholders
are the Human Rights Commission (federal) - [monitors + reviews how
legislation to human rights is implemented. It can investigate and
conciliate complaints about discrimination in employment
opportunities or persons treatment in workplace. Refers complaints
of sex discrimination in awards + agreements for determination to
Federal Court] - and Anti-discrimination boards (state) - [work
closely with Human Rights + Equal Opportunity Commission to ensure
disputes about discrimination are resolved through provision of
information, investigation and conciliation. Can refer cases to
Administrative Review Tribunal for determination]. Each stakeholder
must attempt to bargain in good faith which means the parties meet
regularly with a willingness to reach an agreement. Dispute
resolution in AU has been heavily influenced by government
philosophies + evolving policies on industrial relations. The
Liberal Party = more supportive of free market principles while AU
Labor Party policies = more representative of political base - the
trade unions. Negotiation is a method of resolving disputes when
discussions between the parties result in a compromise and a formal
or informal agreement. This process can benefit involved parties by
increasing their knowledge of company policy, businesss objectives,
workers concerns and issues involved in implementing change. Most
AU disputes are resolved by negotiation without the intervention of
a third party. In such cases, employees return to work following
industrial action for pre-determined period. Mediation is the
confidential discussion of issues in a non-threatening environment,
in the presence of a neutral, objective third party. The third
party may be independent and agreed on by key parties in dispute,
or representative from business, tribunal or government agency such
as Fair Work Australia. As an alternative dispute resolution
technique, it is increasingly popular in Australia since it allows
parties to become empowered by resolving their own disputes and
reduces risk of disputes escalating or leading to expensive legal
costs or industrial action. Grievance procedures are formal
procedures, generally written into an award or agreement, that
state agreed processes to resolve disputes in the workplace. Most
businesses have established formal process (now required in modern
awards + other agreements) by which issues and complaints can be
handled. Effective grievance procedures require full description of
complaint to be made by employee with the complaint. The person the
grievance is made against should be given details of allegation +
an opportunity to provide their views. The process may deal with
individual or collective issues, and matters such as changes being
implemented in the workplace that will affect or cause conflict
between staff. It is a useful strategy for resolving issues before
they escalate.INVOLVEMENT OF COURTS AND TRIBUNALS Industrial
disputes that escalate to level of courts + tribunals are most
likely to occur when they have passed nominal expiry date or
negotiations have failed. When dispute has not been resolved
through negotiation at workplace, it may be referred to Fair Work
AU who will appoint a conciliation member to hear both sides.
Conciliation is a process where a third party is involved in
helping two other parties reach an agreement. The conciliation
member may require all parties to continue negotiations on some
aspects, reduce the influence of the dispute, or develop other
strategies to resolve the dispute. If conciliation fails, the
matter may be referred to arbitration. Arbitration is the process
where a third party hears both sides of a dispute and makes a
legally binding decision to resolve the dispute. A member or panel
of members hears both sides of the dispute in a more formal,
court-like setting. A judgement, like an order, is handed down
based on merits of evidence that becomes legally binding on all
parties. Orders may end restrictive work practice or behaviour or
require secret ballot of union members if strike action is
proposed. Fair Work AU can order that staff be reinstated or that
parties return to tribunal later for further negotiations. Orders
are decisions that require employees or employers to carry out a
direction from the tribunal. They may be inserted in awards of
agreements. Common law action is open to any party involved in or
affected by industrial action. Parties may make direct claims for
damages caused by the parties taking the action, or for breach of
contract resulting from such action. Employer may ask state Supreme
Court or Federal Court for stop order to prevent unlawful
interference with the employers trade of business. But, action is
costly + generally considered last resort. Common law in civil
courts available to those on individual common law contracts of
employment disputing matters not covered by legislation or
award.BENEFITS AND COSTS OF WORKPLACE DISPUTES
Effectiveness of human resource managementindicators corporate
culturebenchmarking key variableschanges in staff
turnoverabsenteeismaccidentslevels of disputationworker
satisfaction Indicators are performance measures that are used to
evaluate organisational or individual effectiveness. Benchmarking
is a process in which indicators are used to compare business
performance between internal sections of a business or between
businesses. This is then used as a basis for improvement.
Indicators gathered + collated in HR audits. A human resource audit
is a diagnostic tool used to evaluate HR policies and practices in
order to identify problems and develop solutions in attempt to
rectify problems. The most commonly used key performance indicators
benchmarked for the effectiveness of HRM include financial
indicators for each member of staff (sales per employee), labour
productivity (output per employee) and the syllabus indicators. For
indicators to be of value, results must be communicated and acted
upon by management in improvement plans.CORPORATE CULTURE A
corporate culture refers to the values, ideas, expectations and
beliefs shared by members of the business. Effective workplace
culture is derived from the quality of a businesss communications
systems and participation of employees in decision making.
Businesses experience success, through a positive workplace
culture, as shown in indicators like lower staff turnover, better
customer service, low levels of absenteeism + disputes, etc.
Strategies for business culture include building trust and those
that value employees ideas. BENCHMARKING KEY VARIABLES Benchmarking
is the comparing of the business performance (in terms of HRM, the
effectiveness of recruiting, training and productivity) with set
standards. The purpose of benchmarking is to compare a businesss
performance in specific areas against other similar businesses or
divisions, or against best practice businesses. The aim is then to
initiate changes to foster improvement. Methods of benchmarking
are: Informal benchmarking includes any strategies such as
networking through informal discussions with colleagues in other
businesses, undertaking visits to other businesses, researching
best practice online and attending conferences. Performance
benchmarking involves comparing the performance levels of a
process/activity with other businesses. Best practice benchmarking
involves comparing performance levels with those of other best
practice businesses in specific areas using a structured process to
gain skills and knowledge and to modify organisational processes.
Balanced scorecard benchmarking is used for measuring whether the
activities of a business are meeting its objectives established in
the strategic plan. It benchmarks key performance variables with
targets aligned with the strategic plan. The approach used for
benchmarking needs to be chosen for its suitability to the
businesss needs + resources as it can be a very costly &
time-consuming process. Benchmarking may focus excessively on costs
rather than long-term performance of HR. HR AUDITS can be used to
systematically analyse and evaluate HR activities and their
effectiveness. This audit can be performed in a number of ways:
Performance of divisions against another is benchmarked then
compared to industry to determine areas of weakness + for
improvement. An outside consultant conducts research to analyse
problems + suggest solutions. Legal compliance analysis undertaken
to determine areas of variance form laws + company policies. Also,
evaluation of key performance variables by management. Management
by objectives (MBO) approach used to determine areas of poor
performance. QUANTITATIVE MEASURES should be able to demonstrate
the actual effect of indicators in terms of costs & profits.
Key variables often include: Variances in labour budgets
(significant increase in labour budget costs indicate
inefficiency). Time lost/costs of injuries or sickness (rising
costs indicate health + safety issues). Percentage of goals
achieved and levels of labour turnover. E.g. of Key HR benchmarks
return on human investment ratio, total separation rate, etc.
QUALITATIVE EVALUATION involves detailed feedback + research on key
issues, which allows judgments to be made about changes in
behaviour or quality of service provided. Sources of info are
management feedback, surveys & focus groups about workplace
culture. Major variables that are benchmarked for continuous
improvement include: Increasing absenteeism + labour turnover
rates, analysis of industrial disputes + issues raised provides
useful feedback, feedback from performance appraisals and
stakeholders. CHANGES IN STAFF TURNOVER Staff turnover refers to
the separation of employees from an employer, both voluntary and
involuntary, through dismissal or retrenchment. [often shown as a %
of total staff numbers] Staff turnover in AU averages around 12-15%
annually (fluctuates with business cycle) with around half being
voluntary turnover due to resignation + retirement. In assessing
significance of turnover, it is important for firms to benchmark
their turnover against that of others in industry and to determine
type of staff leaving + their reasons. A common issue, which
results in high staff turnovers, is a poor business culture caused
by ineffective HR strategies such as job design, rewards
management, and training. However, staff may leave to seek new
opportunities or promotion as result of skills developed in a
particular industry may not be negative reflection on current
workplace. Costs of high labour turnover are great as they involve
high costs through payouts for entitlements, hiring, inducting
& training new staff. Productivity + service quality, corporate
skills & knowledge are lost, particularly if there has been
poor succession planning.ABSENTEEISM Absenteeism refers to employee
absences, on an average day, without sick leave or leave approved
in advance. High levels of absenteeism may indicate worker
dissatisfaction or conflict within workplace. In terms of lost
revenue, such unofficial expressions of conflict may be even more
costly to firms than official + overt forms of conflict. Firms need
to have much higher staffing levels to cope with high absentee
levels. Thus, revenue is lost from disrupted work = leads to lower
productivity + higher labour costs.ACCIDENTS Around 5.3% of AUs
12mil employees experience work-related injury or illness each
year. According to Safe Work AU, in 2010 there was 132 000 workers
compensation claims for serious work-related injuries or illnesses
involving 1 week or more off work, a permanent incapacity or
fatality. Equates to a rate of 14.1 claims of serious injury per
1000 employees. Most common types of workplace fatalities are
associated with road crashes, particularly for tradesmen +
transport workers while injuries are associated with lifting,
pushing and pulling objects or being hit by objects. Total cost of
work-related injuries and death in AU is more than $60 billion per
year in direct and indirect costs. OH&S indicators are
benchmarked internationally using various indicators such as: Lost
Time Injury Frequency Rates (LTIFRs). A lost-time injury is an
event that results in a fatality, permanent disability or time of
one day/shift or more lost from work.
Safe Work AU rates based on accepted workers compensation claims
that involved the loss of 1 or more working weeks (termed serious
claims). To minimise accidents, firms can implement best business
practices like: Regular safety audits + comprehensive safety
programs and use data to improve, build a culture of safety (using
visible policy statements, safety signs and reminders) and provide
careful induction + regular ongoing training for staff to ensure
they are aware of safety rules. LEVELS OF DISPUTATION The levels of
disputation in a workplace indicate the strength of relationships
between the workplace and their employees. A high level can attract
media attention or move through the legal system, affecting the
firms reputation and overall profits. Although strikes + lockouts
are officially recorded indicators of industrial disputation,
there