Unit 2_Chapter 3 FURTHER HUMAN RESOURCE

MANAGEMENT.
This chapter further covers the functions of HR department.
Measuring and improving employees performance
Monitoring and applying labour legislation
Managing industrial relations between the workforce and
management.
MEASURING AND MONITORING EMPLOEE PERFORMANCE.
P!!r Per"!r#an$e.
Poor performance is simply when an employee does not meet one or
more of given clearly stated objectives. Poor performance can be
grouped into as follows
1. ehaviour ! The employee e"hibits an undesirable behaviour
#"amples of undesirable behaviour
o Turning up late to work
o Taking e"cessive breaks
o eing abusive
$. Performance ! the employee does not meet the minimum
%uality or productivity e"pectation.
o &ot meeting minimum productivity
o Producing poor %uality outputs.
o &ot meeting consumer service standards.
'ou will note that attitude is not mentioned as an e"ample of poor
employee performance. Management Tip( )n employee is not a poor
performer if they do not meet all of the e"pectations if they are
meeting or e"ceeding most and falling short on a few then they are
a good performer with a few development needs. The appraisal
process is a waste of time and resources if it is not followed!up with
feedback sessions.
MEASURES OF EMPLOEE PERFOMANCE.
Many businesses spend a signi*cant proportion of their total costs
on their workforce +e.g. interviewing costs, training, pay, and fringe
bene*ts-. usinesses will, therefore, wish to discover if the money
that they have invested in their workforce has been spent e.ciently
and if it has improved the e/ectiveness of the employees.
1. La%!&r T&rn!'er. This measures the number of employees
who leave a business per year, e"pressed as a percentage of
the total number of workers employ 0t is calculated using the
following formula(
1
) high labour turnover rate could be a sign that the workforce
has low levels of job satisfaction and motivation. This could be
due to poor wages, poor management techni%ues, or better
remuneration packages being o/ered by competitors This high
rate will inevitably lead to the business having to spend a
large amount of money on recruitment and training of new
employees. High labour turnover is more likely in areas of low
unemployment too, as there may be many better paying and
more attractive jobs available in the local area. 1ome
industries have higher labour turnover rates than others 2 in
law practices and scienti*c research the labour turnover rates
are low. The increase in part time and temporarily jobs
especially in fast food restaurants leads to high labour
turnover rates that can e"ceed 1334 in one year.
$. A%(enteei(#. This measures the proportion of the workforce
who are absent from work in a particular period of time. 0t is
calculated using the following formula(
0t can also be worked out by e"pressing the total number of
days lost through absenteeism as a percentage of the working
days of a whole year. 0deally, the business would wish the
*gure to be as low as possible, since a high *gure could
indicate that the employees have low rates of morale, job
satisfaction and motivation.
) high rate will inevitably lead to the business having to spend
a large amount of money on training and paying temporally
workers who are performing the jobs of the absents
employees. 1ta/ absenteeism is disruptive to any business
especially one providing consumer services. The hygiene
factors according to Hert5berg may make absenteeism worse.
6or e"ample poor working conditions could lead to illness or
over supervision could lead to worker stress hence
absenteeism.
7. La%!&r Pr!)&$ti'it*. This re8ects the e.ciency of the
workforce, and it is measured by the amount of output per
worker. 0t is calculated using the following formula(
2
0t can be argued that labour productivity is the most important
measure of employee e/ectiveness, since it directly a/ects
the average cost of production and, therefore, the
competitiveness of the business.
)n increase in labour productivity will bene*t the business
since it means that more output can be produced for a given
amount of inputs, hence the production cost per unit will fall.
Productivity data are usually compared with results from
businesses in the same industry as well as recording changes
in labour e.ciency over time. There are several reasons why
labour productivity might increase over time.
0mproved sta/ motivation and higher levels of e/orts.
More e.cient and reliable capital e%uipment
etter trained sta/.
0ncreased worker involvement in problem solving to
speed up methods of production. #.g 9ai5en and :uality
circle groups.
0mproved internal e.ciency. #.g. no waiting for new
supplies of materials to arrive.
6or the hotel industry, it;s very di.cult to increase labour
productivity especially at the lu"ury end of the market where top
%uality services for guests depends on hiving sta/ always on call.
The only opportunity for a hotel owner to improve labour
productivity is to use 0.T as much as possible in the support
services of booking ,billing and ordering supplies.
<. +a(te ,e'e,(. =>aste= products refers to lost and damaged
raw materials, poor %uality output which has to be reworked
and output which has to be discarded due to its poor
workmanship. 0t is calculated using the following formula(
0f a business has a high percentage of =waste= products, then
this could be due to a poorly trained workforce with low levels
of both motivation and job satisfaction. 0n this case, the
business should ensure that the employees are all ade%uately
trained for their speci*c tasks, and investigate any other
reasons for the poor %uality of the output. 0t is vital that the
reasons for this are discovered %uickly, since the e/ect on
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customer loyalty and reputation could be disastrous if the
business supplies poor %uality output to its customers.
?ther measures of employee performance include( reject rates,
consumer complains as a proportion of total customers served and
the days lost through strikes within a business.
STATEGIES TO IMPRO-E EMPLOEES PERFORMANCE.
The *rst step is to *nd out why the performance is poor. There is no
point in spending a large amount on more e.cient machines to
increase e.ciency if the main reason for low productivity is poorly
trained and unmotivated team of workers. However there is an
agreement that the application of soft HRM is likely to succeed in
motivating sta/ and in raising their levels of commitment loyalty
and performance. The need to consider the worker as a resource to
be nurtured and develop so that the full e"tent and range of his or
her abilities can be apply to the work situation. There are long term
bene*ts of improving performance of e"isting workers by using a
variety of strategies. They include(
Regular appraisal of performance against agreed pre!set
targets 0f need be, further trained can be advised or
disciplinary action can be taken.
Training to increase e.ciency and o/ering opportunity for
general educational %uali*cations to stretch and challenge
every worker.
:uality circles 2 small groups of workers encouraged to take
responsibility for identifying and suggesting solutions to work
related problems.
@ell production and autonomous work groups where teams of
workers are given multi skilling training and the opportunity to
take responsibility for a complete section of work.
6inancial incentives linked to the pro*ts of the business or an
o/er of a stake in the ownership of the company such as
share!option schemes.
MANAGEMENT . O./ECTI-ES. 0M.O1
This system is designed to motivate and coordinate the workforce
by dividing the organisations overall aim into speci*c targets for
each division, department and individual. 0f this process is
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undertaken after discussions and agreement with personnel at each
level of the organisation, than it can be a very e/ective way of
delegating authority and motivating sta/. This approach is in line
with theory ' approach as opposed to where the targets are
imposed from above 2 theory " approach. 0ndividual targets for
performance may be established during the annual appraisal
process and these should be agreed with each worker for ma"imum
e/ect.
Possible bene*ts of M? include(
This form of sta/ involvement is a key feature of job
enrichment and should help provide a motivating force.!
through delegation.
#ach manager and subordinate will know e"actly what they
have to do. This will help them priories their time. 0t will also
enable them to see the importance of what they do to the
whole organisation.
y using the corporate aim and objectives as the key focus to
all departmental and individual objectives everyone should be
working to same overall target. This will avoid con8ict and
should ensure a consistent and well coordinated approach.
?bjectives act as a control device. y setting targets agreed
with people who have the authority to reach them, managers
are able to monitor everyone;s performance and measure
success or failure. 2can be use in appraisal.
Possible problems of M? include(
The process of dividing corporate objectives into divisional,
departmental and individual targets can be very time
consuming.
?bjectives can become outdated very %uickly and *"ing
targets and monitoring progress against them can be less
than useful if the economic or competitive environment has
changed completely.
1etting targets does not guarantee success despite what
some managers might believe. 0ssues such as ade%uate
resources and sta/ training must also be addressed if the
original targets are to have any real meaning or are to act
as true motivating goals.
LA.OUR LEGISLATION THE ROLE OF THE STATE IN
INDUSTRIAL RELATIONS.
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The government intervenes in industrial relations in the following
ways(
Through industrial!relations laws.
Through agencies set up to improve industrial relations such
as arbitration councils.
Through its own policies as a major employer.
@reating the conditions for improving industrial relations and the
protection of the employee is the responsibility of government.
0mproved industrial relations lead to higher productivity and
improved international competitiveness of industry and higher
standards for the whole country.
COOPERATION .ET+EEN +OR2FORCE AND MANAGEMENT.
There are potential con8icts of opinion and interests between
owners of a business and the employees. The owner aims to achieve
satisfactory pro*ts levels by keeping costs including labour costs as
low as possible. ?n the other hand wage costs are often major part
of total business cost and workers will seek to obtain high pay and
shorter working hours. ?ther areas of dispute include( business
change such as relocation or new technology and rationalisation and
business chang.e
More details found on page $31 Table 11.$ of @ambridge
international usiness 1tudies.
To a certain e"tent, con8ict and di/ering objectives are inevitable
between labour and management within business. There are three
approaches that may be adopted by management and labour to
deal with con8ict situations. Much will depend on the culture and
legal structure of the country in which the business operates.
They include(
1. A&t!$rati$ Mana3e#ent St*,e +ith A Ta4e It Or Lea'e It
Attit&)e T! +!r4er(.
>orkers might be employ on very short term contracts 2 even on
daily basis o/ering no security at all. 0f a worker objects to the
condition of work, then the attitude of management is often to *re
the worker and replace them with another person, who might be
desperate for work that they will not raise any objections.
0t might lead to very low labour costs but drawbacks include(
&o labour security and low levels of motivations.
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1ta/ will not have the opportunity to be trained due to
fre%uent job changes
There are no common objectives established between labour
and management.
&on!e"istent job enrichment and no sta/ involvement or
participation so no contribution from workers to important
decisions which can lead to better results.
2. C!,,e$ti'e %ar3ainin3 %et5een p!5er"&, tra)e &ni!n(
an) #a6!r e#p,!*er( an) their a((!$iati!n(.
This is when representatives of unions and national employers
negotiate wage levels and working conditions for the whole
industry or for large section of it. These collective negotiations
made trade union leaders very powerful as they were able to
threaten and actually call for strike action from all of their
members and this could bring the entire industry to a halt. Aue
to low unemployment rates at that time the system worked.
>orkers wages rose and their conditions of work generally
improve. The problems of such methods were(
&ational agreements were not always suitable or a/ordable
for smaller businesses.
1trikes and other industrial action caused disruption and
lost output and sales.
Powerful union resistance any changes that might
adversely a/ect their members and this led to a lack of
investment in and development of key industries.
0ndustries began to lose competitiveness and markets to
*rms in other countries where more 8e"ible labour 2
management relations lead to greater coordination and
less confrontation for e"ample Bapan.
3. C!!perati!n %et5een ,a%!&r an) #ana3e#ent7
re$!3ni(in3 that (&$$e(("&, $!#petiti'e %&(ine((e( 5i,,
%ene8t a,, partie(.
Recent management thinking has been not to seek to oppose
workers suggestions and those of their union leaders but to
actively involve them in important decision making and
operational issues. This leads to less confrontation far fewer
strikes and a great deal of harmony and working toward common
goals. Cabour management relations based on mutual respect,
understanding and common aims are much more likely to lead to
a competitive and productive business that will be able to survive
the added strains of a globalised economy. 0ndeed sta/
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involvement could become a signi*cant fact determining the long
term success of business in rapidly changing market conditions.
TRADE UNIONS AND THEIR ROLES.
) tra)e &ni!n is a group of workers who join together in order to
protect their own interests and to be more powerful when
negotiating with their employers.
#ach employee who wishes to join a trade union must pay an annual
fee, which contributes towards the cost and e"penses that the trade
union incurs when it provides services to its members, and supports
industrial action by the workers.
Tra)e &ni!n( ha'e a n&#%er !" ai#(9
1. To improve the pay of its members.
$. To improve the working conditions and the working practices
of its members.
7. To support the training and the professional development of its
members.
<. To ensure that their members= interests are considered by the
employers when any decisions is made which will a/ect the
workforce.
D. Provide legal services to members who claim unfair dismissal
or poor conditions of work.
There are "!&r #ain t*pe( !" tra)e &ni!n in the U29
1. Genera, Uni!n(. These are for skilled and unskilled workers
performing di/erent jobs in di/erent industries +e.g. cleaners,
clerical sta/ and transport workers-.
$. In)&(tria, &ni!n(. These are for di/erent workers in the
same industry +e.g. the &ational Enion of Miners +&.E.M-,
covering workers at all levels in the hierarchy-.
7. Cra"t Uni!n(. These are fairly small unions for skilled
workers, performing the same or similar work in di/erent
industries +e.g. musicians-.
<. +hite:$!,,ar Uni!n(. These are for =white!collar= +or
professional- workers who perform the same or similar tasks in
di/erent industries +e.g. teachers, scientists-.
PA .ARGAINING
Trade unions are most closely associated with negotiating with the
employers of a business on behalf of their members over the issue
of pay. This is known as the ;pa*:%ar3ainin3 pr!$e((;, and it is an
e"ample of collective bargaining.
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The *rst stage in this process is for each side +the employer and the
trade union- to decide on its objectives )s well as deciding the
amount of a pay rise, both the trade union and the employer will
also need to decide how the money will be distributed amongst the
members of the trade union +i.e. will the pay rise be a =blanket=
coverage giving every employee a *"ed percentage rise, or will
di/erent groups of workers receive di/erent percentage pay risesF-.
6urther to this point, will the pay rise be awarded in a lump sum per
employee, or will it be staged over timeF
The second stage involves both sides +the trade union and the
employer- presenting their arguments at a =pay!talk= discussion. A
tra)e &ni!n 5i,, p&t in a ;pa* $,ai#;, which will be base on one
or more of the following points(
1. )n increase in the cost of living +i.e. in8ation- re%uires that
workers have a pay rise in order to maintain their purchasing
power.
$. )n increase in labour productivity rates will mean more sales
revenue and pro*ts for the businessG this e"tra pro*t should
be shared with the workers by giving them hire rates of pay.
7. ) pay rise is re%uire in order to recruit and retain the =best=
workers that the business can *nd.
<. 0f workers are using new machinery and working practices,
then they need to be compensated for this e"tra work by
being given a pay rise.
The e#p,!*er 5i,, p&t "!r5ar) a ;pa* !<er;, which they believe
will re8ect the current trends in the labour market +i.e. the rates of
pay which are being o/ered by rival businesses-, as well as
maintaining the competitiveness of the business +i.e. not increasing
their costs by a large percentage-.
The third and *nal stage involves a negotiation process between the
trade union and the employer. 0n order for this to be a success, both
sides will be re%uired to compromise and be prepared to accept less
than their original objectives.
0t must be remembered that there are many other issues that a
trade union will negotiate for its members other than pay rises +e.g.
length of the working week, working conditions, and proposed
redundancies-.
NEGOTIATION AT DIFFERENT LE-ELS.
&ational level 2 union leaders can discuss pay and working
conditions at a national level with employers association.
These agreements would then be apply in all businesses
belonging to the association. ) national agreement may fail to
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take into account the low pro*ts made by one business or the
high cost of living in one region.
usiness level 2 1uch take place when a company negotiates
with union o.cials to establish pay and conditions for all its
workers in that country. These deals might not re8ect the
problem one factory might be having in recruiting sta/ or the
higher productivity levels of one plant.
Plant level 2 each factory or administration centre agrees a
deal between union o.cials and local management 2
operating within *nancial criteria laid down by head o.ce.
0ndividual or team based bargaining is also possible and in
some instances is increasingly common as regular appraisal of
sta/ performance gives managers information on which to
base merit of performance related pay awards.
Enions have lobbied the government to introduce the minimum
wage and to enforce the #E >orking Time Airective that limits the
working week to a certain number of hours for most workers.
Enions have been seen as agents resistant to change. They have
been looked upon as having no vision of the future other that the
protection of members jobs, whilst attempting to increase members
living standards. 0n recent years unions have adopted a much more
corporative role with employers based on partnership and mutual
understanding. This is due to(
Hlobalisation has increased competition for most *rms and
union accept that low wage economies might be attractive
locations for employers if they do not corporate with them.
Enion membership is decline in most countries 2 they need to
be seen to act responsibly to win back members.
@onfrontation and long running industrial disputes cause *rms
to make losses and this bene*ts no one 2 unions now bargain
for win!win negotiated settlements which can be good for both
employers and employees.
UNION RECOGNITION.
This happens when an employer formally agrees to conduct
negotiations on pay and working conditions with a trade union
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rather than bargain individually with each worker ene*ts of union
recognition are(
#mployers would be able to negotiates with one o.cer from
the union rather than with individual workers.
The union system could provide an additional useful channel
of communication with the workers Two way communication in
the sense that workers problems could be raised with
management by the union and the plans of the employers
could be discussed via the union organisation
Enions can impose discipline on members who plan to take
hasty industrial action that could distract a business. This
makes such action less likely.
The growth of responsible, partnership unionism has given
employers an invaluable forum for discussing issues of
common interest and making new workplace agreement. Iery
often these will lead to increased productivity which should
help to secure jobs and raise pro*ts.
SINGLE UNION AGREEMENT.
This occurs when an employer recognises just one union for
purposes of collective bargaining. This is a strategy to reduce
con8ict at work. Ai/erent unions with a target of same members
may lead to inter!union disputes over which skills or grades or
workers should get the highest pay rise. 0t can reduce the 8e"ibility
of workforce if members of one union are prevented from doing the
work of other workers belonging to another trade union 2 this is
called demarcation dispute and reduces total productivity. @ollective
bargaining therefore is di.cult and time consuming. 1uch problems
can be avoided by recognising one union.
NO STRI2E AGREEMENT DEALS
>here unions agree to sign a no!strike agreement with employers in
e"change for greater involvement in decisions that a/ect the
workforce. Reasons for such a deal include(
0t improves the image of the union as being a responsible
representative body and this could encourage employees to
become members.
These deals are often agreed to in e"change for greater union
involvement in both decision making and in representing
employees in important negotiation. This has led to union 2
employer agreements to change working methods and
increase labour 8e"ibility that lead to higher productivity,
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higher pro*ts and higher pay and worker participation. 0t
known as win!win settlement.
INDUSTRIAL ACTION this refers to measures taken by the
workforce or trade union to put pressure on management to settle
an industrial dispute in favour of employees.
0f the negotiation process collapses +whether it was negotiating for
pay or for working conditions-, then there are a number of di/erent
methods of industrial action which the trade union can propose to
its members that they use in order to achieve their demands. 0t can
take the following forms(
1. N!n $!:!perati!n. Refusing to attend meetings and use new
machinery or processes.
$. +!r4 t! R&,e !r ;G! S,!5;. Refusing to perform any tasks
not in the contract of employers and keeping the output of
products to a minimum onus payments may be lost by
workers but at busy times of the year this action can be very
disruptive and costly for employers.
7. O'erti#e .an. Refusing to work any hours over and above
the re%uired weekly number of hours. Auring busy times of
the year, this can lead to much lost output for the employer.
<. Pi$4etin3. 1tanding at the entrance to the workplace and not
allowing any person or vehicles to cross the =picket line= and
enter the workplace.
D. ;.,a$4in3;. Refusing to deal with certain employees or
suplliers because they have refused to participate in the
industrial action.
J. Stri4e(. This is often the last resort for a trade union. 0t
involves the employees stopping their work and leaving the
work place. 1trike action leads to the business shutting down
during the industrial action.
>hichever method of industrial action is implemented, the trade
union and the employees are using it in an attempt to reduce output
+therefore also reducing sales and pro*ts- and hoping that the
employer will give!in to their demands.
SETTLING DISPUTES.
The employer can use di/erent ways of achieving pro*t and growth
objectives by settling disputes with unions. They includeG
Ne3!tiati!n( 2 To reach a compromise solution through face to
face negotiations with unions leaders.
12
P&%,i$ re,ati!n( 2 use of media to try to gain public support for the
employers position in the dispute. This may put pressure on the
union to settle for a compromise solution.
Threat( !" re)&n)an$ie( 2 this puts pressure on unions to agree
to a settlement of the dispute but they might in8ame opinions on
the employees; side and could be looked upon as bullying and lead
to poor publicity.
Chan3e !" $!ntra$t( 2 if employees are taking advantage of their
employment contracts or work to rule or ban overtime, then new
contracts could, when the old new are due for renewal be issued
that insist on higher work rates or some overtime working.
C,!(&re 2 this leads to redundancies for all of the workers and no
output and pro*t for the business owners. This is a very e"treme
measure and would only be threatened or used if the demand of the
union would if agreed lead to a serious loss being made by the
business or factory anyway.
Cock!outs 2short term closures of the business or factory to prevent
employees from working and being paid. 1ome workers who are not
keen on losing pay for long periods may put pressure on their union
leaders to agree to a reasonable settlement of the dispute
The re,ati'e (tren3th !" &ni!n( an) e#p,!*er( pa3e 2=>
Ta%,e ??.3.! Kstudies 0nternational @ambridge )s and ) level.
AD-ISOR CONCILIATION AND AR.ITRATION.
The A)'i(!r* C!n$i,iati!n an) Ar%itrati!n Ser'i$e is an
independent body that helps to settle industrial disputes and claims
of unfair dismissal by employees. )s the name suggests, there are
three main services that are o/ered by )@)1, advice, conciliation
and arbitration.
).@.).1. representatives can be invited into a business by the two
feuding parties +employers and trade unions- in order to o/er their
advice to both parties on the industrial unrest and the =best= way to
proceed in order to settle the unrest.
C!n$i,iati!n is an attempt to get the two sides in an industrial
dispute to resolve their di/erences. ) conciliator listens to the
arguments of both sides, and then tries to encourage the trade
union and the employer to ne3!tiate an) $!#pr!#i(e so that
they can reach a (!,&ti!n that is acceptable to both parties.
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Ar%itrati!n is the process of resolving an industrial dispute by
using an independent person to decide the appropriate outcome.
The arbitrator will look at the arguments put forward by both
parties, and then he will arrive at a decision . The decision can be
legaly binding on both parties if this was agreed prior to the
arbitrator=s decision. The risk of arbitration setting the compromise
closer to one side than the other can lead to both groups
establishing e"treme negotiating positions a union might ask for a
rise of $34 rather than a more realistic *gure of 134 in the hope
that the *nal decision of the arbitrator may be in8uenced by the
high claim pay and will set a compromise of 134 which is what the
union was hoping to achieve anyway.
Pen)&,&# ar%itrati!n is a type of arbitration in which the
arbitrator will decide completely in favour of one party or the other,
with n! compromise or negotiations being allowed. 0t is likely,
therefore, that both parties +the employers and the trade union- will
make their demands more conservative and realistic than if the
arbitrator was allowed to choose an outcome which was somewhere
between the two.
THE END -
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