6.1 Setting human resource objectives
Definition of HR objectives:
– specific goals or targets of relating to the management and
performance of human resources in a business
Human Resource Objectives
Employee engagement and involvement
– delegation and involvement —> motivation —> labour productivity
– potential innovations in production process —> productivity and
efficiency
○ drawbacks: may be more time-consuming
Talent development
– giving talented employees opportunities in management —>
improvement for the business
– motivation —> higher employee retention —> minimise recruitment
costs
Training
– employees feel more valued —> less defects —> lowers costs and
increases profits, as well as higher quality goods / services
– improved skill set —> higher confidence in work —> labour productivity
increases
○ drawbacks: costs affecting profitability, other factors may affect
motivation as well
Diversity
– equal opportunities for recruitment —> larger pool and access of
skilled labour —> increased labour productivity
○ drawbacks: may be more time-consuming to evaluate choices
– good welfare —> motivation —> labour productivity
– diversity —> good reputation for business —> potentially higher
incentive to purchase?
Alignment of values
– common goals in the workplace —> builds community in the workplace
—> motivation —> labour productivity
– make sure service provided across different parts of the business are
consistent
○ drawbacks: holding sessions for this sacrifices potential
productivity
Number, skills and location of employees
– careful management of employees —> good capacity utilisation,
making sure employees aren’t overstretched —> motivation :) —>
labour productivity :))))
– minimises redundancies by effectively managing workforce
,Internal influences on HR objectives
Finance
– financial constraints limiting amount able to invest on human capital
– financial strategies (e.g. outsourcing training to reduce costs)
Marketing strategies
– e.g. new product development —> require recruitment of more labour,
changes in allocation of workforce, etc.
Operational strategies
– e.g. introduction of more capital machinery—> lay off employees —>
demotivation and fear among workforce
Corporate objectives
– e.g. cost reduction —> redundancies in HR , job reallocation
External influences on HR objectives
Social changes
– lifestyle requirements (e.g. achieving flexible working practises, work-
life balance)
Economic changes
– e.g. unemployment rates impacting labour supply in the market, hence
impacting pay rates
Technological changes
– e.g. rapid growth of social networking —> decrease need of in store
workers?
Political and legal changes
– e.g. introducing minimum working time, employment rights
Hard v.s. soft managerial approach
Hard approach
– Treats employees like every other asset of the business
● identify workforce needs of the business and recruit & manage
accordingly (hiring, moving, firing)
○ minimal communication, from the top down
○ little empowerment and delegation
○ taller organisational structures
○ focuses on financial motivational methods (Taylor’s scientific
approach)
○ suits autocratic leadership
Advantages:
, – More cost-effective (possibly), especially if labour is used efficiently
– Quicker decision-making by seniors
Disadvantages:
– Higher absenteeism, higher labour turnover, difficulties with employee
retention
– Potential damage to business reputation
Soft approach
– Treats employees as the most important asset of the business and a
source of competitive advantage
● concentrates on the needs of employees: their roles, rewards,
motivation, etc.
○ strong and regular two-way communication
○ competitive pay with performance-related rewards
○ greater use of non-financial motivational methods (e.g.
empowerment, delegation)
○ focus on job design & job satisfaction
○ flatter organisational structure
○ suits democratic leadership style
Advantages:
– Higher levels of motivation & productivity
– Benefit to business reputation as a great place to work
– Lower absenteeism, lower labour turnover and higher labour retention
Disadvantages:
– Higher employee costs may leave business at a competitive
disadvantage
6.2 Analysing Human Resources Performance
. Labour productivity
○ Formula: Output / Labour input
. % of employee cost from turnover/revenue
○ Formula: Employee costs / Revenue
. Labour cost per unit
○ Formula: Employee costs / Output
Definition of HR objectives:
– specific goals or targets of relating to the management and
performance of human resources in a business
Human Resource Objectives
Employee engagement and involvement
– delegation and involvement —> motivation —> labour productivity
– potential innovations in production process —> productivity and
efficiency
○ drawbacks: may be more time-consuming
Talent development
– giving talented employees opportunities in management —>
improvement for the business
– motivation —> higher employee retention —> minimise recruitment
costs
Training
– employees feel more valued —> less defects —> lowers costs and
increases profits, as well as higher quality goods / services
– improved skill set —> higher confidence in work —> labour productivity
increases
○ drawbacks: costs affecting profitability, other factors may affect
motivation as well
Diversity
– equal opportunities for recruitment —> larger pool and access of
skilled labour —> increased labour productivity
○ drawbacks: may be more time-consuming to evaluate choices
– good welfare —> motivation —> labour productivity
– diversity —> good reputation for business —> potentially higher
incentive to purchase?
Alignment of values
– common goals in the workplace —> builds community in the workplace
—> motivation —> labour productivity
– make sure service provided across different parts of the business are
consistent
○ drawbacks: holding sessions for this sacrifices potential
productivity
Number, skills and location of employees
– careful management of employees —> good capacity utilisation,
making sure employees aren’t overstretched —> motivation :) —>
labour productivity :))))
– minimises redundancies by effectively managing workforce
,Internal influences on HR objectives
Finance
– financial constraints limiting amount able to invest on human capital
– financial strategies (e.g. outsourcing training to reduce costs)
Marketing strategies
– e.g. new product development —> require recruitment of more labour,
changes in allocation of workforce, etc.
Operational strategies
– e.g. introduction of more capital machinery—> lay off employees —>
demotivation and fear among workforce
Corporate objectives
– e.g. cost reduction —> redundancies in HR , job reallocation
External influences on HR objectives
Social changes
– lifestyle requirements (e.g. achieving flexible working practises, work-
life balance)
Economic changes
– e.g. unemployment rates impacting labour supply in the market, hence
impacting pay rates
Technological changes
– e.g. rapid growth of social networking —> decrease need of in store
workers?
Political and legal changes
– e.g. introducing minimum working time, employment rights
Hard v.s. soft managerial approach
Hard approach
– Treats employees like every other asset of the business
● identify workforce needs of the business and recruit & manage
accordingly (hiring, moving, firing)
○ minimal communication, from the top down
○ little empowerment and delegation
○ taller organisational structures
○ focuses on financial motivational methods (Taylor’s scientific
approach)
○ suits autocratic leadership
Advantages:
, – More cost-effective (possibly), especially if labour is used efficiently
– Quicker decision-making by seniors
Disadvantages:
– Higher absenteeism, higher labour turnover, difficulties with employee
retention
– Potential damage to business reputation
Soft approach
– Treats employees as the most important asset of the business and a
source of competitive advantage
● concentrates on the needs of employees: their roles, rewards,
motivation, etc.
○ strong and regular two-way communication
○ competitive pay with performance-related rewards
○ greater use of non-financial motivational methods (e.g.
empowerment, delegation)
○ focus on job design & job satisfaction
○ flatter organisational structure
○ suits democratic leadership style
Advantages:
– Higher levels of motivation & productivity
– Benefit to business reputation as a great place to work
– Lower absenteeism, lower labour turnover and higher labour retention
Disadvantages:
– Higher employee costs may leave business at a competitive
disadvantage
6.2 Analysing Human Resources Performance
. Labour productivity
○ Formula: Output / Labour input
. % of employee cost from turnover/revenue
○ Formula: Employee costs / Revenue
. Labour cost per unit
○ Formula: Employee costs / Output
