Role of HR Management

Strategic Role of HR Management

HR management is a strategic approach that incorporates all aspects of managing the

employer-employee relationship in the workplace in order to achieve the strategic
goals of the business
Since staff costs generally make up a minimum of 60% of business costs, an
increasing number of businesses are taking a strategic approach to HR management
by:
o Seeing an effective workforce as a way of adding value to all areas of business
performance
o Focusing on the use of specific HR management strategies to retain, reward
and motivate effective and skilled employees to achieve the business goals
The government has recently tried to assist businesses in becoming more competitive
by creating a more flexible legal framework for HR management
In the near future, the major strategic challenges for HR management are:
o Challenges of developing and retaining talented staff
o Improving leadership development
o Managing the ageing workforce
o Succession planning
In overall terms, the strategic role of HR management is to ensure that the
productivity of a business or its output per person can achieve its fullest potential
because the employees are effective and efficient in the way they go about their tasks
The overall objective of HR management is to develop an environment where the
chances of employees successfully carrying out their tasks in the business are as high
as possible
This clearly places the focus of strategic HR management on the output or results that
the business and its employees achieve

Interdependence with other KBFs

In smaller businesses, the general manager and employees may share HR

management responsibilities, as well as other responsibilities
Best fit area of HR management suggests a close relationship between HR and other
KBFs, so long as they are all aligned with the business overall strategy
HR contributes to operations through planning staffing needs, acquisition, training &
development and conflict resolution, since generally most employees of a business are
part of the operations function
Same goes for marketing, in which HR should hire the most competent people to take
their product(s) to the target market
The relationship between HR and finance goes two ways:
o HR provide finance with staff they need
o Finance give data to HR about which areas of the business are
underperforming

Outsourcing

Businesses outsource KBFs for many reasons:

o To concentrate on core business activities
o To reduce costs
o To improve quality
o To reduce production times
o To ensure compensation if a task is inadequately performed
After IT, HR is the second most outsourced KBF
Disadvantages of outsourcing HR include:
o Cost savings not always achieved
o Employee unrest
o Lack of compatibility with external provider
o Loss of control
o Reasons for outsourcing are unclear
If a business decides to outsource HR, it needs to establish clear objectives, through a
well-defined contract with the outside provider. It should also aim to make the
transition as smooth as possible
Contract OF service = employee; usually exclusivity clause
Contract FOR service = contractor; free to work for others once contract has been
completed or even several contracts at once
Businesses may engage contractors because:
o They may wish to fill a temporary position
o Fewer on-costs
o Employment ceases once job is done
Problems with contractors may include:
o Time lags
o No business loyalty
It is best for businesses to use domestic contractors when outsourcing HR, as there are
many legal requirement associated with HR, as well as the issue of time zones which
may arise if HR is outsourced offshore
Offshore outsourcing may be a viable option for global businesses, with the
advantages including:
o Cost advantages due to lower labour costs and exchange rate differences
o Utilising specific skills and expertise

Influences on HR Management
Stakeholders in HR Management Process

Employees and employers are obviously the two biggest stakeholders, but are also
influenced by other stakeholders such as trade unions, employer associations and
governments
It is not uncommon for management to spend over half their day on HR matters
Recent legislation is encouraging negotiation of agreements and resolution of disputes
within the business emphasising the role of employers in the HR management
process
Recent surveys of employees have founds that people management is the single
most common failure of employers; 2.5 times more common than any other failure
In recent times employees have generally become more educated, have begun to
demand more challenging work and the process of churning has become much more
common
25% of employees want to change jobs in next year; 1/3 want a greater work-life
balance
The casualization of the workforce has seen many more younger, female and older
workers struggle to gain access to employment
There is a labour shortage looming due to the ageing population
AWAs were abolished by Kevin Rudd and collective bargaining has been reemphasised, reducing some of the responsibility of individual employees in the
bargaining process
Employer associations were originally created in 1904 in response to trade unions
Their main role is to act on behalf of employers in collective bargaining and industrial
tribunals/courts
Unlike unions, HR and IR make up only a small part of the role of employer
associations
Trade unions are organisations formed by employees in an industry, trade or
occupation
Australian system for resolution of industrial disputes given trade unions an official
bargaining position in the making of industrial agreements (ie collective agreements)
Rates of union membership are rapidly declining (10% of 15-24yo employees), with
rates of union membership highest among male public sector workers
In response to declining membership rates, trade unions are increasing the range of
services they offer to include such things as discounted legal representation and
superannuation
Reasons for declining membership include:
o Community attitudes favour individual approach
o Poor image in media
o Legislative changes reducing union power
o Collapse of central wage-fixing
o Globalisation
o Privatisation of public businesses
o Decline in average workplace size
o Shift away from secondary jobs and growth of tertiary industries
o Growth in casual and part-time work

o Feminisation of workplace
The government plays several roles in relation to HR management and IR:
o Legislator our elected representatives pass laws in parliament which provide
the legal framework for IR, as well as courts and tribunals for dispute
resolution
o Employer federal and state governments employ almost 1/3 of the entire
workforce, and are often seen as pacesetter in IR (eg introduction of EEO)
o Responsible economic manager the government will at times take action to
preserve the economy that will have an adverse effect on IR, such as laying off
public sector workers
o Administrator of government policies the federal Department of Education,
Employment and Workplace Relations responsible for implementing the
legislation they enact
o Corporations power in s51 of the Constitution allows the federal government
to legislate on IR for incorporated businesses, and in recent times they have
used this to reduce the powers of IR tribunals and encourage decentralised
bargaining
o The Fair Work Act 2009 (Cth) saw states surrender their IR powers to the
federal government (except WA) with the aim of creating a national system,
simplifying the process for businesses spanning multiple states

Legislati
ve

Executiv
e

Judicial

Fair Work Govt

Dispute
Act 2009
departm
resolutio
ents and
n
IR
through
regulatio
courts &
ns
tribunals
Legislation and Test Cases

Conciliation and Arbitration Act 1904 (Cth) created Commission with power to
prevent and settle industrial disputes
Harvester case 1907 established basic wage
Equal pay case 1969 equal pay for equal work

Racial Discrimination Act 1975 (Cth) no harassment or discrimination on the basis

of race allowed in workplace
Sexual Discrimination Act 1984 (Cth) no harassment or discrimination on the basis
of sex allowed in workplace
Workplace Relations Act 1996 (Cth) revised framework for enterprise bargaining
Workplace Relations Amendment Act extremely decentralised wage negotiations ie
Work Choices
Fair Work Act 2009 (Cth) national framework for IR; all states except WA surrender
powers to federal govt; established 10 National Employment Standards and FWA;
emphasis on collective bargaining
Articles 23 and 24 of UDHR establish the right to work and right to reasonable leisure
time for all human beings
Employment issues central to voting patterns of society
Trend towards offshore outsourcing will lead to higher unemployment in some sectors
Demand for safety and wellbeing at work have risen quite significantly eg EEO, antidiscrimination, OHS

Legal Influences

Fair work Act 2009 (Cth) enacted a new legislative framework for IR across the
nation
Unregistered individual common law contracts remain a common option for
individual employment, with many being offered on a take it or leave it basis
Since the 1980s we have seen a shift towards a decentralised system, with increasing
emphasis on collective bargaining at a workplace level
An employment contract is a legally binding, formal agreement between an employer
and employee, and while it is not mandatory for it to be in writing, a written contract
offers greater protection for both parties and thus it is quite uncommon for an
employment contract to not be in writing
As is the case for all common law contracts, an employment contract must contain:
o Intent to enter into legally binding contract
o Mutual benefit (consideration)
o Offer and acceptance
o Both parties have capacity to enter into contract
o Must be genuine and not pressured
o No clauses contravening the public interest
Over time, common law has established obligations for both employers and
employees
Employer obligations include:
o Providing work
o Payment of income and expenses
o Meet requirements of IR legislation, including unfair dismissal
o Duty of care
Employee obligations include:

o Obey lawful and reasonable commands

o Use care and skill
o Act in good faith
Ten National Employment Standards established in 2010:
o Max 38hrs per week + reasonable overtime hours
o Right to request flexible working arrangements
o Annual leave
o Parental leave
o Personal leave
o Community service leave
o Long service leave
o Public holidays
o Notice of termination & redundancy pay
o Provision of Fair Work info statement
Minimum wage is reviewed annually by FWA (currently $15.51 per hour as at July
2011)
Over the past 20 years the awards system has been simplified dramatically, with the
number of different awards going from over 4,300 to just 122 under Fair Work Act
A modern award is an industry/occupation based award covering all private sector
employees within the industry/occupation and mandating minimum wages and
conditions
Enterprise agreements are collective arrangements made at a workplace level between
employer and a group of employees about pay and working conditions
The Fair Work Act specifies three types of enterprise agreements:
o Single enterprise agreements 1 employer and group of employees
o Multi-enterprise agreements 2+ employers and group of employees
o Greenfields agreements made by new enterprise before any people covered
by agreement are employed
Key features of enterprise agreements include:
o Cover pay and working conditions
o Must be approved by FWA
o Must be equal to or better than award
o Max length 4 years
o Must contain a flexibility and variation clause
Strict rules apply to bargaining process to ensure good faith from both parties,
including:
o Serious attempt to negotiate in timely manner
o Genuine considerations of ALL offers
Individual contracts of service exist when an employer and employee individually
negotiate a contract covering pay and conditions
Independent contractors, aka consultants/freelancers, undertake work for other under
a contract for service, but do not have the same legal status as an employee
Over the past decade there has been a steady increase in casual and permanent parttime contracts

Workplace/OHS legislation is in the process of being made uniform across Australia

to improve business productivity
In NSW, the relevant legislation is the Work Health and Safety Act 2011 (NSW)
The Act dictates that employers are trained and supervised in their work
All employees must have workers compensation insurance, and are also responsible
for taking reasonable care for the health and safety of others
In NSW, Work cover is responsible for WHS/OHS matters, including inspections,
prohibition and improvement notices and matters pertaining to workers compensation
cases
Common law redress can be sought where the employer or another employee can be
sought where the employer or another employee has been negligent or breached their
duty of acre, leading to serious injury or death
Workplace discrimination occurs when a policy or procedure disadvantages a person
or group because of a personal characteristic is irrelevant to the performance of the
work
Anti-discrimination legislation has been enacted to protect against employees from
direct and indirect discrimination in recruitment, selection, training, promotion, pay,
termination and access to other benefits
Responsibility of employers to prevent discrimination includes:
o Comply with legislation, including:
HREOC Act 1986 (Cth)
Affirmative Action (EEO for Women) Act 1986 (Cth)
Sex Discrimination Act 1984 (Cth)
Racial Discrimination Act 1975 (Cth)
Anti-Discrimination Act 1977 (NSW)
o Audit all policies and practices to ensure they are free from direct and indirect
discrimination
Despite this legislation, almost 60% of discrimination cases relate to employment
matters
The Fair Work Act introduces a range of formal, informal and internal actions that
people who suffer workplace discrimination can take
Businesses can promote a workplace free from discrimination by:
o Writing and communicating policies to prevent discrimination and harassment,
including a code of conduct
o Giving all employees clear access to these policies
o Training HR management and staff in cultural diversity issues and pays to
prevent and/or deal with discrimination
o Regular evaluation of anti-discrimination policies
EEO means that all employees and prospective employees have fair and equal access
to jobs, benefits and services provided by an employer
EEO aims to encourage the development of fair work practices, unbiased management
decisions, recognition and respect for the diversity of people and a better work
environment

Anti-Discrimination Act 1977 (NSW) makes equal employment opportunity

mandatory as it states that discrimination on the basis of race, gender, marital status,
disability, age or sexuality is illegal
Australian Human Rights Commission Act 1986 (Cth) explicitly mandates that
employers must ensure fairness in employment opportunities for everyone
Despite most businesses having affirmative action policies in place, a 2008 study by
EOWA found that 23% of employees believe that the sexes are not treated equally in
the workplace and 45% agreed that workplace can be a bit of a boys club

Economic Influences

Demand for labour derived from demand for products and thus the economic cycle
influences the jobs available and the pay being offered
Structural change has seen redundancies in the manufacturing sector and rapid
increases in tertiary jobs (86% Australian jobs) as well as jobs in the resources sector
Ageing population will cause problems with labour supply in future
Removal of tariffs, subsidies and quotas has seen death of manufacturing industries
due to international competition

Technological Influences

Communications technologies are allowing businesses to form work teams across

different geographical locations and for employees to telecommute ie to work from
home using telecommunications
New technologies will require ongoing training of staff and development of labour
skills to use new technology to maximise productivity
Instantaneous nature of new communications technologies has created expectations
that employees are on-call 24/7

Social Influences

Shift towards part-time and casual work, majority of which are women
Greater career flexibility and job mobility with only 44% of full-time employees
having been with their current employer for 5 or more years
Recent improvements in parental and carers leave benefits have seen increased female
participation in the workforce
Skills shortage in near future caused by ageing workforce will require upskilling of
the population and continued growth in the role of women in the workforce
Somewhat contradictory to the issue of the ageing population is the trend towards
early retirement (average age just 53), however many of these retirees retire gradually
and/or return to part-time work later on
Global pressures from less-developed nations are threatening the hard-won benefits
that comprise Australias high living standards, however political parties recognise
their importance and are unlikely to remove them for economic benefit

Unions will continue to challenge businesses who try to avoid Australias many
benefits for full-time employment through offshore outsourcing and/or casualization
and sub-contracting

Ethics and CSR

There are many benefits to a business of having ethical and legal practices in HR
management:
o Positive business image and subsequent marketing opportunities
o EEO lower turnover rates and absenteeism
o Fines, claims and compensation costs reduced
o Improved business performance
o Motivated and valued staff
o Community support
o Pleasant working conditions
As a business sources its staff, resources AND customers from the community, it is
vital that the business is seen as being ethically and socially responsible
All businesses should establish an ethical framework in collaboration with major
stakeholders, including a code of conduct and code of ethics
Recent pressure to become competitive has seen an increase in precarious
employment, as businesses try to reduce their biggest cost centre (labour)
Offshore outsourcing raises ethical concerns regarding child labour and poor labour
regulation overseas
Businesses aiming to appear socially responsible will seek accreditation from
agencies such as Ethical Clothing Australia and Fair Wear Foundation (both for TCF
industry)

Unfair Dismissal

Unfair dismissal is when a worker has been dismissed or threatened with dismissal
and believes that this action is harsh, unjust and unreasonable
Unfair dismissal is supported by the Industrial Relations Act 1996 (NSW), under
which a worker can apply to the NSW IRC for reinstatement and/or compensation oif
they feel that have been unfairly dismissed
The NSW IRC may determine whether:
o There was a fair reason for the dismissal
o There was an opportunity for the employee to justify or explain why they
should be reinstated or compensated
o There was sufficient notification of unsatisfactory performance
At a federal level, unfair dismissal is covered by the Fair Work Act 2009 (Cth) and
administered by FWA
The Fair Work Act defines unfair dismissal as occurring when:
o The dismissal was harsh, unjust or unreasonable
AND
o The dismissal was not a case of genuine redundancy
AND

o The dismissal wasnt complaint with the Small Business Fair Dismissal Code
(if the claim relates to a small business)

HR Process

HR cycle:
o Acquisition identify staff needs; recruitment and selection
o Development training; development and performance management
o Maintenance monetary and non-monetary benefits; legal responsibilities
o Separation voluntary and involuntary
Two major aspects of HR should be planned in all businesses:
o Short and long term HR needs through HR inventory
o Strategy needed to meet these needs (eg recruitment or downsizing)

Acquisition

Analyse
internal and
external
factors

Corporate
objectives &
strateigc plan

Determine
variances
between
projected HR
supply and
projected
demand

Acquisition or
separation

Recruitment refers to the process of locating and attracting the right quality and
quantity staff to apply for employment vacancies at a suitable cost
Effective HR acquisition involves:
o Fair, non-discriminatory selection policies
o Aligning acquisition strategies with other strategies and, more importantly,
business goals

Development

Development involves enhancing the skills of an employee through training,

mentoring, coaching and performance management so they develop a career with the
business

Development needs change as an employees career develops eg early days focused

on new qualifications, later focus on managerial skills
An effective induction program allows a new employee to successfully adjust to the
job, their co-workers and the business
o Majority of employees who leave a business do so in the first 3 months,
highlighting the importance of an effective induction program
The aim of training is to seek long-term change in employee skills, knowledge and
behaviour in order to improve their performance
Around 50% of employees who have been with their current employer for >12
months have received some kind of education or training
Key features of an effective training program include:
o Assess job, business and individual needs
o Determine objectives of training program
o Consider and account for internal and external influences
o Determine and implement the process
o Evaluate the program in terms of HR indicators
Today, organisational structures are flatter, benefiting businesses through employee
ability to develop shared ides and solutions to problems
This has, however, reduced promotional opportunities, and as a result HR
management must implement strategies to motivate and retain staff eg:
o Job enlargement increasing breadth of tasks in a job
o Job rotation moving staff from one task to another over a set time period
o Job enrichment increasing an employees responsibilities
o Job sharing
o Self-managing teams
o Mentoring and coaching
Mentoring and coaching are increasingly used to motivate and develop staff with
leadership potential
The table below highlights the key differences between coaching and mentoring

Focus

MENTORING
Preparation for future roles

Role

Facilitator, guide and friend

Function
Time Frame
Structure
Benefits

Provide advice
Nil
Unstructured
Mostly individual; enhanced morale

COACHING
Building skills and overcoming
weaknesses
Specific to work function; assists in
individual goal setting
Share skills
Specific time-frame
More structured
Mostly to business; enhanced morale

Performance appraisal is a process of assessing the performance of an employee,

generally against a set of criteria or standards

It is used to identify potential areas for mentoring, coaching, leadership development

of performance management to enable the employee to contribute most effectively to
the business
Involves 4 main objectives:
o Provide employees with feedback regarding their performance
o Act as a measuring stick for pay and promotion purposes
o Help businesses monitor employee selection
o Identify training and development needs
HR management must be aware of the fine line between effective, useful performance
appraisals and demotivating criticisms
Some common performance appraisal tools include:
o Observations by supervisor(s)
o Employee-supervisor interview
o Reward for performance based on objectives
o Critical incident method
o Graphic rating system eg on a scale of 1 to 10
o Essay evaluation
o Performance ranking eg McDonalds drive-thru
o 360 degree feedback anonymous feedback from peers and/or supervisors

Maintenance

Maintenance focuses on the processes required to retain staff and manage their
wellbeing at work
Staff wellbeing is maximised through encouraging staff participation in decision
making, and giving employees a degree of control over their work lives, as well as
monetary and non-monetary benefits that suit both the employer and the employee
Effective work relationships depend heavily upon the strength of a business
communication system, and poor communication is often reflected in workplace
conflict and high staff turnover and/or absenteeism
Office layouts can be designed to create spaces for people to meet together for work
purposes and during breaks
Employees who participate in decision making are generally more committed to the
business
Employee participation strategies may include:
o Membership of an employee representative on the board of directors
o Partial ownership
o Joint consultative committees
o Collective bargaining
o Employee surveys and feedback from performance interviews
In terms of compensation, the business must observe its legal obligations (eg
minimum wage or award)
The compensation system serves to encourage employees to maximise their output,
and will often offer inducements such as quality and motivation

Adequate compensation is vital as if staff are underpaid, turnover rates will rise and
the acquisition process can be of significant cost to the business
Compensation must be fair and equitable both horizontally AND vertically
In terms of non-monetary benefits, there are many things that businesses SHOULD
offer, but there also certain things that businesses legally MUST offer eg
superannuation, annual leave
o National Employment Standards
Businesses must carefully consider the value of non-monetary benefits in terms of
staff retention and workplace culture, as they are often expensive and some attract the
employer paid fringe benefits tax eg air travel
Around 1/3 of employees cite work-life balance as a major consideration in future
wok choices, and employers are responding to this by offering flexible working
arrangements to attract and retain talented staff
All employers are required by law to ensure that HR procedures comply with existing
legislation
A major focus of maintenance is for HR management to minimise risk exposure by
implementing a range of proactive and preventative strategies

Separation
Separatio
n
Voluntary
Resignati
on

Dismissal

Retireme
nt

Involunta
ry
redundan
cy

Voluntary
redundan
cy

Involunta
ry

Once an employee reaches the age at which they are entitled to receive
superannuation payments and/or the pension, they will often make the decision to
permanently leave the workforce (ie to retire)
There is no standardised retirement age in Australia, however to be eligible for the
seniors pension one must be at least 67 years old
Employees may resign for a number of reasons, including:
o Finding a better job
o Wanting to temporarily leave the workplace (eg mother caring for children
after parental leave)
In most occupations, an employee must give a months notice of their intent to
retire/resign, however this varies depending on the job in question

Voluntary redundancy is usually offered to employees nearing retirement age, and it is

entirely at the discretion of the employee as to whether they accept the offer
Redundancy packages usually include:
o Payment for years service
o Payout of any withstanding leave
o Payout/rollover of superannuation
Involuntary redundancy only differs in that the employee does not choose it, and is
usually unrelated to performance but instead to a fall in demand from customers
Entitlements are usually the same for voluntary and involuntary redundancy
Dismissal occurs when an employer terminates an employees position at the
business, usually due to poor performance or serious misconduct
For a dismissal to be deemed fair, it is sufficient that an allegation of criminal activity
of OHS breaches has been lodged with the appropriate authorities
If an employee is dismissed because of poor performance, they MUST have been
given prior warning of being at risk of dismissal, and the reason for the dismissal
MUST relate to the employees ability to do their job

HR Strategies

HR strategies include:
o
o
o
o
o

Leadership style
Job design
Recruitment
Training and development
Performance management

o Rewards
o Global strategies
o Resolution of workplace
disputes

o Leadership Style

The leadership style adopted by a manager will depend on the type of business, the
personality of the manager and the circumstances requiring leadership
Autocratic leadership is usually found in businesses with a hierarchical structural and
classical-scientific management style
An autocratic leader:
o Is rigid in decision making with little to no employee participation
o Uses top-down communication
o Establishes defined lines of command
Despite its seeming antiquity, there are situations in which autocratic leadership will
benefit eg if a situation requires an immediate response
A laissez-faire manager exercises little to no control over their employees, allowing
them to sort out their own roles and perform their work with little management
intervention
This approach, in general, leaves employees with a severe lack of direction

In situations where a manager is leading a team of skilled, motivated staff who have
produced excellent work in the past (eg Google research teams) the laissez-faire
leadership style may be appropriate
A democratic leadership style encourages the cooperation of employees and
management in the decision making process so as to make mutually beneficial
decisions
A good democratic leader realises the benefits of employee participation but also
realises that there is a level of responsibility which cannot be delegated
Two-way communication systems are vital for successful democratic leadership
Democratic leadership is the most common leadership style among modern managers
o
o Total management control
management control
o Autocratic
Laissez-faire

Very little

Democratic

o
o Job Design

Job design refers to the 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 business goals
Job design has been long dependent on job analysis, which is a detailed analysis of all
tasks, responsibilities, personal attributes and relationships needed in a particular
position
Core elements of a well-designed job include:
o
o
o
o

Task
Challenge
Variety of tasks
Discretion and degree of
autonomy

o Flexibility
o Resources
o Opportunity for
achievement
o Social interaction

Job design involves a number of steps:

o Analyse existing work situation
o Identify tasks to be performed
o Identify needs of new employees
o Decide how the job will fit in the business
o Consult with key stakeholders
o SLOWLY implement changes
o Include progress review procedures
o Assess and review performance; discuss with employees

Common methods of job design include:

o Job rotation
o Job enlargement
o Job enrichment
o Semi-autonomous work groups
o Flexible work structures

Recruitment

Recruitment is the process of locating and attracting the correct quantity and quality
of staff to apply for employment vacancies at an appropriate cost
Recruiting a diverse workforce is important in communicating effectively with a wide
customer base and demonstrating CSR
Internal recruitment involves filling vacancies with people from within the business
while external is from outside

INTERNAL - ADVANTAGES
Staff motivation due to promotion
prospects
Builds commitment & loyalty
Business only needs to hire at base
level
Employees are aware of business
culture
Recognises and rewards staff for
effort and achievement
Cheaper and less chance of failure
INTERNAL - DISADVANTAGES
Will reinforce negative business
culture
Rivalry within business for positions
Demotivation of unsuccessful
applicants
No added skills/value to the business

EXTERNAL ADVANTAGES
Wider applicant pool
New ideas, perspectives and skills
Save on training by hiring applicants
with specific skills wanted
Dilution of internal politics
More diversity in employment
Building of brand through publicity

EXTERNAL - DISADVANTAGES
Risk of unknown staff
Lost productivity during orientation
and induction
Risk of legal claims
Animosity from internal applicants
Significant effort and time needed

Most businesses use a mix of internal and external recruitment to maximise

opportunities for new ideas and the use of existing business expertise
Australia has long had a skills shortage, leading employers to increasingly recruit staff
with general skills and upskilling internally to give employees the specific skills they
require

Training and Development

It is important for businesses to undertake extensive training to overcome the skills

mismatch in the labour market
Key features of an effective training program include:
o Assess the needs
o Determine the objectives
o Account for internal/external influences
o Determine the process
o Evaluate the program
Effective development programs ensure that talented and experienced staff are
retained by encouraging employees to take advantage of the opportunities to develop
a career with the business (ie to promote staff retention)
The rapidly changing nature of the workforce makes long-term training and
development decisions very difficult for businesses to plan, especially when many
people in university will end up in careers that dont yet exist

Performance Management

Performance management is a systematic process of evaluating and managing

employee performance in order to achieve the best outcomes for the business
Developmental performance management focuses on using performance data to
develop the skills and abilities of employees so as to improve their degree of
effectiveness in their role
Administrative performance management focuses on the collection of data to improve
the management of HR in terms of business actions, rather than the business
employees
The table below summarises the benefits of effective performance management for
both the individual and the business:

BUSINES BENEFITS
INDIVIDUAL BENEFITS
Assists with HR planning
Assess rewards and benefits linked to
Indicates effectiveness of selection
performance
Builds self-efficacy as contributions
processes
Identifies needs in terms of
are recognised
Identify strengths and/or weaknesses
training/development and legal
Opportunity for employee to provide
compliance
Evaluation of rewards program
feedback
Identification of potential leaders
Recognition and reward for initiative
Builds best practice culture
Fosters promotion on merit
Performance management systems are often regarded as surveillance systems by
employees and are more effectively implemented when designed collaboratively with
key stakeholders, including the employees themselves

Rewards Management

There are 4 main ways of classifying rewards:

o Monetary
o Non-monetary
o Intrinsic
o Extrinsic
Rewards differ from benefits in that they are increasingly performance-based whereas
benefits are available to all employees
o Eg end of year bonus is reward whereas company discount is benefit
Team-based reward systems are becoming more popular as they encourage
cooperation and greater productivity, however this can lead to free-riders
Key issues to consider in designing individual reward systems include:
o Effect on performance of employee
o Significance of job to business as a whole
o Individual/personal factors eg bargaining power, group incentives
Reward system should aim to:
o
o
o
o
o
o

Motivate staff
Be equitable
Be clearly communicated
Be defensible
Be relevant
Be cost effective

o Align itself with business

strategy/goals
o Be simple to understand
o Be consistently applied to
all employees

o Global Strategies

Strong factors, such as the high cost and skill shortage of Australian labour are
pushing firms to operate on a global level for HR-related reasons
In general terms, it is much more common for firms to use lower-skilled labour in
those nations with lower labour costs, as there is a perception of lower quality in the
performance of highly-skilled labour offshore
A business planning to expand overseas needs to consider whether it wishes to use a
polycentric, ethnocentric or geocentric staffing approach:
o Polycentric parent nation remains responsible for HR management; host
nation supply staff
o Geocentric uses staff with most appropriate skillset and building a pool of
management with global experience
o Ethnocentric expand into overseas markets using staff from parent country
Adequate consideration must be given to training staff in quality standards and
performance management if the business is seeking to operate overseas using a lower
cost structure
Cultural awareness and language training from all staff need to be implemented to
foster effective communication and positive relationships between employees
o Workplace Disputes

Workplace disputes are conflicts within the business that affect the business
operations
Disputes can be either between employee(s) and their employer or between
employees themselves
The four main causes of workplace disputes are related to:
o Working conditions
o Pay rates
o Managerial policies/decisions
o Social/political factors
Covert workplace disputes are only recognised by the business itself, and are
characterised by:
o High rates of absenteeism
o Poor productivity and performance
o High staff turnover ratios
Conversely, overt workplace disputes involve some actions by the parties that clearly
demonstrates the disagreement, such as:
o Strikes particularly common in the public sector, involves employees
withdrawing their labour until their demands or a compromise are met
o Picketing protests that take place outside the workplace, usually during a
strike, preventing the delivery of materials into the workplace as well as the
entry of non-union labour
o Lockouts occurs when employers close the entrance to the workplace and
refuse admission to the workers

o Working to rule employees only follow the specific, exact instructions they
are issued eg teachers cease marking outside school hours
All industrial disputes are made to enforce/resist a demand or express a grievance and
are NOT related to any legal claim, such as discrimination or bullying
The key stakeholders involved in the resolution of industrial disputes are:
o Employees
o Employers
o Trade unions
o Employer associations
o Courts and industrial tribunals
Government policy heavily influences dispute resolution, as Liberal governments tend
to take more of a free market approach whereas Labor policies reflect the interests of
their political origins the trade unions
Common to both parties is the idea of dispute resolution at the workplace level, as this
is more cost-effective in terms of money and time for all stakeholders, however the
current Labor government has focused on collective and enterprise bargaining rather
than individual bargaining
A key requirement before any party can take protected industrial action (ie industrial
action for which they cannot be fired) is that there is evidence that both parties have
attempted to bargain in good faith
When an industrial dispute arises, there are a number of ways in which it can be
resolved:
o Negotiation
o Mediation
o Grievance procedures
o Involvement of courts and tribunals
Conciliation
Arbitration
Common law action
Negotiation is a method of dispute resolution whereby discussions between the parties
result in a compromise and an informal or formal agreement
A majority of industrial disputes are resolved through negotiation, many of which the
public is never aware of because of the internal nature of negotiations
Mediation is the confidential discussion of issues in a non-threatening environment in
the presence of a neutral third party
The third party can be agreed on by both parties or more often a representative from a
government agency such as FWA
Mediation is growing in popularity as it provides a similar procedure to the
involvement to courts and tribunals without the excessive cost and formality, while
also maintaining confidentiality to protect the reputation of businesses and trade
unions
Grievance procedures are formal procedures, usually contained within an award or
enterprise agreement, that establish agreed processes for dispute resolution within the
workplace

They are useful in reducing the risk of a minor disagreement progressing into a very
serious industrial dispute
Typical steps in a grievance procedure are as follows:
o Employee and/or representative present complaint to supervisor
o Middle management handle complaint in a meeting with the concerned
employee(s) and/or their representative(s)
o Top management and/or specialist grievance committee handle complaint in a
meeting with the concerned employee(s) and/or their representative(s)
o Matter is referred to external mediation, conciliation or arbitration
A dispute may be resolved at any stage of the process, however if it is not resolved it
progresses to the next stage of the process
When a dispute has not been resolved through negotiation or mediation, it may be
referred to FWA, who will usually appoint a conciliation member to hear both sides of
the dispute
Conciliation is a process whereby a third party is involved in helping two other parties
reach an agreement
It differs from mediation in that it is much more formal, and the third party has a
degree of expertise in the field of concern compared to a mediator
If conciliation fails, the final step in the dispute resolution is that of arbitration
Arbitration is a dispute resolution process whereby a third party hears both sides of
the dispute and makes a legally binding decision to resolve the dispute
FWA is the main government authority responsible for the conciliation and arbitration
of industrial disputes in Australia
A requirement of FWA before they become involved in an industrial dispute is that the
business had and attempted to use its grievance procedures before referring the matter
to FWA
Common law action is open to any party involved in an industrial dispute, who may
make direct claims for damages caused by another partys actions during the dispute
or for breach of contract resulting from such action
If a party engages in industrial action, such as picketing or a lockout during a nonprotected period, the affected parties are able to apply to the Supreme Court or
Federal Court for an injunction to prevent unlawful interference with the business
Common law action comes at a significant monetary cost, and as such is usually
viewed as a last resort in the resolution of industrial disputes
o C
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o F

o BENEFITS

Increased empowerment of

o COSTS

Lost production and sales

i
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o P
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s
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n
a
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o S
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o P
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all parties who own an

agreement, leading to
higher productivity, fewer
disputes and lower
turnover/absenteeism rates
Cost-cutting measures may
cause disputes but can also
be vital to the survival and
competitiveness of the
business
Issues of interest to
employees finally gain
employer attention
Better work relationships
resulting from better
understanding of work
problems
Higher employee
motivation and
involvement
Jobs can be saved in some
cases
Multiskilling of labour
through new training
opportunities and career
paths
Reform of workplace
conflict policies
Public attention to need for
worker protection
Improved economic
performance as a result of
economic restructuring

Restructuring and changed

work practices often
increase international
competitiveness

Damaged reputation
Closure and/or relocation
Families suffer significant
wage loss
High cost of legal
representation and fines to
businesses

Intensification of work due

to workplace restructuring
Decreased job security and
moral
Increased rates of
absenteeism, accidents and
product defects
Degradation of working
relationships
Community bitterness
towards unions and/or
businesses
Communities disrupted by
actions - QANTAS dispute
68000 passengers daily
Frequent, disruptive
conflict negatively impacts
on support for government,
particularly near an
election
Loss of national income in
extended disputes can
affect economic growth
Loss of export income
during dispute may often
become a permanent loss
of export market

o Effectiveness of HR Management

With managers reporting that labour costs account for over 60% of total costs and
people management issues taking up a majority of managerial time, the importance
of effective HR management cannot be overstated
Indicators are performance measures that are used to evaluate organisational or
individual effectiveness, and are often used to evaluate the effectiveness of HR
management
Indicators are only of use to a business if they compare their performance between
internal sections of the business and/or between other businesses a process known
as benchmarking
Typical indicators of the effectiveness of HR management include:
o Corporate culture
o Benchmarking key variables
o Turnover rates
o Absenteeism rates
o Accident rates
o Levels of disputation
o Levels of worker satisfaction
The role of HR management in relation to these indicators is to foster continuous
improvement by:
o Planning and setting goals for employees that are translated into related tasks
o Effective employee development to achieve such goals
o Evaluation of employee performance and the provision of coaching and
feedback
o Linking rewards to measures of performance
All businesses that are successful in the long-term achieve an appropriate balance
between concern for business success (profit and growth) and regard for employee
wellbeing
Better work relationships begin with an understanding of how to a develop a positive
workplace culture, which includes the values, ideas, expectations and beliefs shared
by members of the business
Indicators of a poor workplace culture include:
o High turnover
o Poor customer service
o High absenteeism
o Accidents
o Disputes and internal conflict
These problems are often reflected in poor business performance, lower sales and
ultimately lower profits
An effective business culture depends heavily on the quality of business
communications systems and the participation of employees in decision making
Features of a productive and effective workplace culture include:
o Higher than basic pay rate

o Creative perks, such as health and training

o Flexible and family-friendly practices
o High levels of training and mentoring
o Culture of trust through transparency, impartiality and equality
o Collaboration in decision making at all levels
o Fun atmosphere
The aim of benchmarking is to compare the effectiveness of HR within the business to
other businesses or other internal divisions, and then use this comparison as the basis
to initiate changes which aim to foster improvement in the area
There are four main ways in which businesses can undertake benchmarking:
o Informal benchmarking informal discussions with colleagues in other
businesses; online research and attending conferences
o Performance benchmarking comparing business performance levels with
other businesses
o Best practice benchmarking using a structured process to compare
performance levels in specific areas with best practice businesses with the aim
of gaining skills and knowledge which can be used to modify organisational
processes
o Balanced scorecard benchmarking used for measuring whether a business
performance is meeting the objectives established in the strategic plan
Most businesses do not rely solely on quantitative data, such as sales per employee,
but also consider qualitative information such as staff and employee feedback
A HR audit can be used to systematically analyse and evaluate HR activities in a
number of ways, through:
o An outside consultant conducting research and identifying problems and
suggesting solutions
o Management evaluating KPIs
o Analysis of legal compliance to determine any variance from legal
requirements
Quantitative measures that can be used to benchmark the effectiveness of HR
management include:
o Variances in labour budgets
o Time and money lost on injuries and sickness
o Comparison of performance appraisals with targets
o Percentage of goals achieved
o Levels of labour turnover
Qualitative evaluation involves detailed feedback and research on key issues,
allowing judgements to be made about changes in behaviour or service quality
Sources of such feedback may include:
o Middle management
o Surveys and focus groups of employees and customers
o Exit interviews
Businesses must also consider domestic and global trends in HR management when
planning strategies for the improvement of HR management

Staff turnover refers to both the voluntary and involuntary separation of employees
from a business and is often shown as a % of total staff numbers
The average staff turnover rate is around 12 to 15% and fluctuates in accordance with
the economic cycle
Industries such as hospitality and hotels experiencing extremely high turnover ratios
(up to 90% per annum), highlighting the importance of benchmarking their turnover
against other businesses in their industry
Factors contributing to staff turnover can be categorised as pull factors (external
factors attracting the employees) or push factors (internal factors repelling employees)
The costs of high labour turnover are quite high, including such things as redundancy
payouts and hiring/inducting/training new staff
In addition to these financial costs, there is also a loss of productivity, service quality,
corporate skills and knowledge associated with high labour turnover
Some level of turnover is healthy, as it brings new ideas which can stimulate
innovation, however a major increase in labour turnover is a warning sign of a larger
problem
Absenteeism is measured as the average rate of employee absences, on an average
day, without sick leave or other prior approval
High levels of absenteeism and/or lateness may indicate employee dissatisfaction
and/or workplace conflict
The financial cost of absenteeism is somewhat obvious in that the firm will be
required to employee more staff than it actually requires to cope with the high
absenteeism, and this financial cost is amplified through the loss of productivity and
sales revenue associated with the disruption to work caused by high levels of
absenteeism
Around 5.3% of Australian employees experience a work-related injury or illness
annually
Almost 400 claims for serious/permanent injury or fatality are made per day in
Australia
Employees in primary and secondary jobs are much more likely to experience
workplace accidents than professionals due to the physical nature of the work being
performed
Overall, the direct and indirect costs associated with workplace accidents in Australia
totals to approximately $60 billion each year
All businesses must adopt a systematic, legally compliant approach to managing HS
Best practice businesses will:
o Have regular safety audits and comprehensive safety programs
o Build a culture of safety and effectively communicate about health and safety
o Provide careful induction and regular training for staff to ensure awareness of
health and safety hazards
o Consult employees and OHS personnel on the health and safety implications
of proposed changes to the business
There are many, often costly, overt and covert manifestations of workplace disputes
than HR management must monitor and evaluate

Forms of industrial disputes that are not officially recorded include:

o Work bans
o Work to rule
o Go slow
o Sabotage
HR management must attempt to keep any industrial disputes discreet, as public
knowledge may be harmful to the business reputation
Careful investigation should indicate whether a particular dispute relates to the
policies and processes of the business or to specific individuals who may require
further training or development
Ongoing disputes are likely to be reflected in higher levels of staff turnover, industrial
disputes and staff absenteeism
Consultation with employees when considering changes to work practices is vital to
the avoidance of serious industrial disputes, as managerial policy is one of the main
causes of industrial disputes in Australia
Disputes are more common in larger businesses as relationships and communication
are less personal and there is a greater scope for distrust and misunderstanding
Over two thirds of Australian workers have never taken industrial action, however
covert manifestations are much more common
Employee satisfaction is a key factor in employee commitment, job performance and
staff turnover, and is most often measured through employee surveys
Employee feedback must be analysed confidentially and used by management to
track, communicate and act upon any issues that are presented
Pay is rarely a significant factor in determining worker satisfaction unless there are
significant disparities in rates of pay within the business
Employees who have good relationships with co-workers, enjoy their work activities,
receive relevant training and gain opportunities to grow are more likely to be satisfied
and remain with the business
Effective leadership and quality management are critical factors in employee
satisfaction and retention, particularly with the widespread view that management
talk the talk but dont walk the walk
It is the holistic approach to employees, which values and cares for them, that is the
most effective in building commitment, satisfaction and retaining effective employees
o
o