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KEY TOPleS

• Supply of human resources and demographic changes• Domestic and internationallabour mobility• Workforce planning• Recruitment, appraisal, training and dismissal• Changes in work patterns and practices: homeworking, teleworking and

portfolio workHigher Level Extension• Employment rights and legislation• Handy's shamrock organization

Note: Higher Level students will need to be able to analyse reasons forchanges in work patterns and practices and the consequences for employersand employees. (© IBO,2007)

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Chinese proverb

A thousand workers, a thousand plans.

14c8

-:he pply of human resources in a country is~=<cted by demographic changes in the workforce.De ogr ~. is the statistical study of populatione aracteristics, Businesses need to understand

~~e- so that they can responda _ro; ~G ¿:-.Demographic changes can be causedby chaages 3 --:aDOl:S factors:

• The net birth rate is the difference between -­number ofbirths and deaths per period of tír;Countries with a high net birth rate will, in ~=long term, have a larger supply ofhumanresources.

• The net migration rate measures the dífferez,between the number of people entering a

SUPPLy OF HUMAN RESOURCESANO DEMOGRAPHIC CHANGES

ExamTip!The term 'Iabour force' (or 'workforce') cameanone of two things, so it is irnportant tcput the term in the correct contexto'Workforce' can refer to the nation's labou­force, i.e. all those people available for vso:(the employed, the self-employed and theunemployed). It canalso refer to the peop :.=employed in a particular organization, i.e. _ ::firm's workforce.

the forecasts. This is because businesses areconstantly exposed to the forces of change (seeUnit 1.8), such as an economic recession whichreduces the demand for human resources.

Human resource management (HRM) refers ::the management function of using and developinrpeople within a business to meet the objectives o:the organization. This entails interrelated roles,such as:• Workforce planning (also known as humanresource planning)

• The recruítment, selection and induction ofnew employees

• Training and development of staff• Performance management and performanceappraisals

• Promotion and relocation of staff• Reviewing remuneration packages• Disciplinary and grievance procedures• Looking after the welfare of employees.

People are important to an organization as th=add value to its output. This can be achieved byincreasing productivity (output per worker),improving quality, coming up with new ideas an -providing better customer service to enhance theoverall purchasing experience of customers.

. theorists argue that people are a firms most~-a...t:ableresource. Employing the right people:'e ps businesses to achieve their aims andobjectives. To do this, a firm needs to use humanse ~ rce planning (or workforce planníng) - themanagement process of anticipating anorganization's current and future staffing needs.Anticipating the human resource needs of a firmcan be carried out by looking at:• Historical data and trends - such as the changein the size of the workforce over the past fewyears or the shift to part -time and flexibleworking hours.

• Sales and íncome levels - higher levels ofincome and spending in the economy willleadto more jobs being created.

• Labour turnover rates - measures the numberof employees who leave a firm as a percentage ofits workforce, per year. The higher the staffturnover rate, the more workers a firm will needto recruit.

• Demographic changes - government dataregarding changes in the demographics of theworkforce, such as the changes in the number offemale workers in the economy or the numberof graduates, can help managers to forecasthuman resource needs.

• Technological changes - advances intechnology, such as e-commerce, can bring bothopportunities and threats. There areopportunities for people to work from home, forexample. However, firms that are capital­intensive might not require as many workers.

Despite attempts to achieve effective workforceplanning, external influences affect the accuracy of

UCTION

In addition to the aboye, the supply of humanresources to a particular business also depends on:

• The internal workforce (employees whoalready work for the organization) - If theinternal workforce is highly flexible and canadapt to change (based on their skills, expertiseand experiences), then it might not be sonecessary to hire workers externally.

• The cost ofliving in a particulararea­Although more people tend to live in cities, thehigher cost of housing and other expenses maydeter others from locating in these areas,thereby reducing the potential supply of labour .

• The cost and availability of transportation -Businesses located in areas with goodtransportation networks tend to attract a largersupply of workers. Those living or working in

Box 2.1a Labour mobility

Labour can be geographically mobile, especiallywithin a country, but there are some limitations:• Friends and family ties tend to be the keyconstraint for most people's geographicalmobility.

• Relocation costs (moving expenses) such as re­mortgaging property and consideration ofdifferent house prices.

• Language and cultural differences tend to limitinternational mobility.

• Fearof the unknown means that people mightprefer 'home comforts' (familiarity).

The limitations on occupational mobility include:• Occupational mobility tends to be greater withacquired attributes of aworker (such aseducation, qualifications, skilis,experience andtraining).

• Younger people tend to be more occupationallymobile since they often change careers.Matureworkers may think they are 'too old' to retrain ormay have more financial commitments so arelesswilling to take risks by changing careers.

• Some workers are immobile because they arehighly-specialised in their areaof expertise.These people find it difficult to seekernployrnent opportunities in other industries.

• If employers discriminate on the basisof age,gender, religion or race then this will hinder theoccupational mobility of workers.

UNIT2.1: HUl\".ANRESOURCEPLA G

country (immigrants) and the number of peopleleaving a country (emigrants). If the netmigration figure is positive, the supply ofhumanresources will increase.

• The retirement age is the legal age when peoplecan stop work and claim money from theirpensiono If the retirement age is raised, it willautomatically increase the number of people inthe labour force, Le. those of legal working age.Many western economies, faced with anincreasing number of elderly people, haveconsidered increasing the retirement age. Forexample, in late 2010, France controversiallyraised its retirement age from 60 to 62. In othercountries, sueh as Hong Kong, there is nostatutory retirement age law, which serves toincrease the supply of human resources.

• The flexibility of the workforce refers tobusinesses or countries with staff who are able toadapt to change. For example, business es thatemploya large proportion of part-time workers,such as fast -food restaurants and supermarkets,are able to take advantage of workforceflexibility as the supply of labour can be quicklychanged according to the needs of the firmoThisis a reason for the growth in the number ofteleworkers (covered later in this Unit).

• Women entering or returning to the workforcewill boost the supply of human resources. Inmodern societies, there has been an increase inthe number of women taking on part -time jobs.This gives businesses and staff greater flexibilityin determining working hours.

• The mobility of labour is the extent to whichlabour can move to different locations (knownas geographical mobility) and their flexibility inchanging to different jobs (known asoccupational mobility). The more mobile thatworkers are (both geographically andoccupationally) the higher the supply oflabourtends to be. Box 2.1a outlines the factor s thatcan affect the level oflabour mobility.

149

In addition to the aboye, the supply of humanresources to a particular business also depends on:

• The internal workforce (employees whoalready work for the organization) - If theinternal workforce is highly flexible and canadapt to change (based on their skills, expertiseand experiences), then it might not be sonecessary to hire workers externally.

• The cost of living in a particulararea­Although more people tend to live in cities, thehigher cost of housing and other expenses maydeter others from locating in these areas,thereby reducing the potential supply of labour.

• The cost and availability of transportation -Businesses located in areas with goodtransportation networks tend to attract a largersupply of workers. Those living or working in

Box2.1a labour mobilityLabour can be geographically mobile, especiallywithin a country, but there are some limitations:• Friends and family ties tend to be the keyconstraint for most people's geographicalmobility.

• Relocation costs (moving expenses) such as re­mortgaging property and consideration ofdifferent house prices.

• Language and cultural differences tend to limitinternational mobility.

• Fearof the unknown means that people mightprefer 'home comforts' (familiarity).

The limitations on occupational mobility include:• Occupational mobility tends to be greater withacquired attributes of a worker (such aseducation, qualifications, skills, experience andtraining).

• Younger people tend to be more occupationallymobile since they often change careers.Matureworkers may think they are 'too old' to retrain ormay have more financial commitments so arelesswilling to take risks by changing careers.

• Some workers are immobile because they arehighly-specialised in their areaof expertise.These people find it difficult to seekemployment opportunities in other industries.

• If employers discriminate on the basis of age,gender, religion or race then this will hinder theoccupational mobility of workers.

UNIT2.1: HUMANRESOURCEPLAN G

country (immigrants) and the number of peopleleaving a country (emigrants). If the netmigration figure is positive, the supply ofhumanresources will increase.

• The retirement age is the legal age when peoplecan stop work and claim money from theirpensiono If the retirement age is raised, it willautomatically increase the number of people inthe labour force, i.e. those of legal working age.Many western economies, faced with anincreasing number of elderly people, haveconsidered increasing the retirement age. Forexample, in late 2010, France controversiallyraised its retirement age from 60 to 62. In othercountries, such as Hong Kong, there is nostatutory retirement age law, which serves toincrease the supply of human resources.

• The flexibility of the workforce refers tobusinesses or countries with staff who are able toadapt to change. For example, businesses thatemploy a large proportion of part -time workers,such as fast-food restaurants and supermarkets,are able to take advantage of workforceflexibility as the supply of labour can be quicklychanged according to the needs of the firmoThisis a reason for the growth in the number ofteleworkers (covered later in this Unit).

• Women entering or returning to the workforcewill boost the supply of human resources. Inmodern societies, there has been an increase inthe number ofwomen taking on part-time jobs.This gives business es and staff greater flexibilityin determining working hours.

• The mobility oflabour is the extent to whichlabour can move to different locations (knownas geographical mobility) and their flexibility inchanging to different jobs (known asoccupational mobility). The more mobile thatworkers are (both geographically andoccupationally) the higher the supply oflabourtends to be. Box 2.1a outlines the factors thatcan affect the level of labour mobility.

adding pressure on taxpayers to contributetowards government expenditure.

• Reduced labour mobility. Young people tend tobe more geographically and occupationallymobile. They have fewer reservations aboutmoving to different place s and jobs, includingthose overseas. They are more likely to switchbetween different jobs. Labour immobilityreduces the flexibility and internationalcompetitiveness of a country's workforce.

• Changes in consumption patterns. Different agegroups have different spending patterns.Children, for example, may spend much of theirmoney (or that oftheir parents!) on toys andschooling. Retired people are likely to spend alarger proportion of their money on holidaysand healthcare related products. Hence, anageing population can create opportunities forfirms to cater for more mature age groups.

• Change in employment patterns. With morepeople going to university, the average age ofpeople entering the workforce has aIso risen .Coupled with an ageing population, this meansthat firms are more likely to retain staffbeyondtheir retirement age due to labour supplyshortages. Some firms might even considerrelocating overseas if domestic labour supply isinsufficient or not suitable.

150

300 million Americans

Question

At times, there may be surplus human resources.For example, during off-peak seasons manytemporary or part-time workers are not required.Thus, businesses will have two choices: make sorneworkers redundant (their services are no longerrequired so their job disappears) or redeploy(relocate) staff to other departments or parts of theorganization that may be in need of extra staffing.

One distinct demographic change in modernsocieties is the increasing longevity of thepopulation which has led to an ageing population(when the average age of the population increases).The effects of this indude:• Increased dependent population. The dependentpopulation consists of people who are below thelegal working age, those out of work and theretired population. They are 'supported' by theworking population who are taxpayers. With anageing population, fewer people will be workingin proportion to those who have retired, thereby

zez: -; - ea mar need to rely on private_ --=:':'~'-'~ v.hich could be costly. This could=..:relore reduce the potential supply of humanresources to businesses located in rural areas.T e rate of unemployment in the local area -:he bigher the rate of regional unemployment,+ e greater the available supply of humanresources.

In october 2006, the population of the USAreached a newmilestone figure of 300 miIlion, making it the third most populatednation on the qlobe. The last milestoneof 200 million people wasrecorded in November 1967.The USAis the only industrialisedcountry with significant population growth - a net increaseof oneperson every 11 seconds. However, many people questionAmerica's ability to sustain its population growth, given that it isthe largest consumer of the planet's scarce resourcesi despite itsageing population. Concerns mount as forecasts show that thepopulatlon will hit 400 mili ion by 2050.

Jefine the term 'ageing population'. [2marks]O line two constraints and two opportunities, from a business perspective, provided by thede ographic changes in the USA. [4marks]

business requiring less labour. By contrast, lowcapital intensity (or high labour intensity)requires more workers to raise output. Forexample, if the waiting list for a national healthservice is to be reduced, hospitals will need torecruit more doctors and nurses.

• Work study is a scientific management tooldevised by F.W Taylor aimed at measuring thebest way to complete certain processes. Workstudy (or time and motion study) looks at thebest number of people needed to complete a taskefficiently rather than inaccurately estimatingthe number of workers.

• Derived demand means that the demand forlabour, like all other resources, depends on thedemand for the product that labour is used tohelp produce. For example, there is no need for aschool to hire German language teachers ifstudents do not opt for this subject. Likewise, asthe demand for personal computers andsmartphones increases, the demand for peoplewho manufacture these products also increases.

• Natural wastage occurs when a person leaves ajob (rather than being dismissed) but theposition is not filled, Le. the job is not replaced.This often happens when firms undergorestructuring. It can also happen when peopleresign from their jobs (perhaps to raise youngchildren or simply due to better opportunitieselsewhere) or when people retire.

Workforce planning consumes time and money,but can be beneficial in the long runo For example,a recent report in the South China Morning Postrevealed that poor recruitment practices in HongKong cost business es HK$39 billion (US$5bn) peryear. The same report showed that managers inHong Kong spent a fífth of their time c6rrecting themistakes made by their staff.

Before a business recruits new workers,managers usually carry out a job analysis, Thisinvolves scrutinising the different components of ajob, such as the routine tasks and responsibilities ofthe post holder, to determine what the job entails.Managers might also want to verify:

• the skills and training required to do the job

Workforce (or human resourceplanning) is the process of anticipating the currentand future demand for workers in an organization.It can be short term or long term:

• Short -term workforce planning deals with theexisting and upcoming demands of anorganization, such as employing workers tocover for staff who are about to resign, retire orgo on maternity leave.

• Long-term workforce planning looks at thehuman resource needs of the business in theforeseeable future. For example, Disneyrecruited and trained employees up to two yearsbefore the Hong Kong Disneyland and ShanghaiDisneyland theme parks were opened.

Planning the human resource needs of anorganization requires consideration of the demandfor labour, which depends on several factors:

• Historical data of changes in staffing allows abusiness to identify trends. For example, labourturnover rateswill inform a business of thenumber of people that leave the firm each year(expressed as a proportion of the workforce).Hence, a business can plan its recruitment needsbetter if employment patterns can be identified.However, past data is not always indicative ofwhat will happen in the future.

• The flexibility and workload of staffhelpsbusinesses to determine the demand for labour.For example, a highly flexible workforce may beable to cope if there is a sudden shortage of staff.In a firm where people are over-specialised andwhere workload is soaring, it might be necessaryto employ more staff. The skills and expertise ofexisting workers may mean that they can bereassigned to different jobs, as and whennecessary, thereby reducing the need to recruitnew staff. A restructuring of human resources,such as smaller hierarchical structures (seeUnit 2.2), will also affect the demand for labour.

• Capital intensity measures the amount ofcapital usage in comparison to other factors ofproduction. An automated business, such ascomputer manufacturing, might be able to raiseproductivity without the need to hire moreworkers. A change to automation will result in a

WORKFORCE PLANNING

UNIT 2.1: HUMAN RESOURCE PlAHNI G

152

The recruitment and selection of employees is vitalto the running of a business. Labour is one of thefour factors of production (see Unit 1.1) needed forthe provision of any good or service. Hiring theright people helps to ensure that businesses canfunction effectively. Since the recruitment andselection process is likely to be quite timeconsuming and rather expensive, managers mustensure the procedures are effective.

The recruitment and selection process (seeBox 2.1b) starts when a vacancy becomes available) .ithin the organization, perhaps due to expansionof the business or simply to replace staff who havede . ed to leave the organization. People might

RECRUITMENT AND SElECTIONleave a job for all sorts of reasons, such as wishingto spend more time with their children or beingfired for misconduct.

Once the initial job analysis has been done, thehuman resources manager will produce a jobadvertisement to get as many suitable people aspossible to apply for the vacant post. There areusually two documents that are produced beforewriting a job advertisement: the job description ancthe person specification. Both these documents areimportant in objectively assessing the suitability e:applicants. They can also be used to gauge traíningneeds and for conducting job appraisals.

(such as the relatively low wages paid to unskilledworkers). The main reasons why people leave theirjobs can be summed up by author M.J. Yatewhoused the acronym CLAMPS as the six acceptablereasons: Challenge, Location, Advancement,Money, Pride (or Prestige) and (Job) Security.

Firms with high staff retention tend to offertraining for both personal and professionaldevelopment. This helps to boost morale as staffsee their employers valuing their contributions anddevelopment. Staff with career development needsare also catered for by being able to attendprofessional training and development courses.

Question 2.1.2

The job analysis will help to create two!m.. ortant documents needed for the recruitmentand selection of staff. These documents, the jobdescription and the person specification, areexplained in the next section.

Sorne organizations will tend to have higher ratesof staff turnover than others. Firms that hire lots ofpart-time temporary staff, such as McDonald's andBurger King, are likely to accept higher rates oflabour turnover, mainly due to the nature of the job

- ':<1 -ons and personal qualities needed- :'::__l\"IT out the job::..::;:~ -ards needed to recruit and retain the post

Trump International Golf LinksWhen American tycoon Donald Trump announced a f1 billion ($1.6 billion) golf development at Balmedie,near Aberdeen, Scotland, the local community were understandably excited about the prospects of the 6,000jobs that would be created. Trump's plans included two championship golf courses, a five-star hotel andhundreds of holiday homes. Trump, who popularised the phrase 'You're fired!' on reality television programmeTheApprentice, said that labour turnover is not a problem at the Trump Organization.a Define the.meaning of 'Iabour turnover: [2 marks]b Explain two reasonswhy a business might need to hire new workers. [4 marks]e Comment on the importance of understanding labour turnover in business organizations. [4marks]

153

[4marks1[6 marks}

él Explain why it is important for a business to produce well-defined job descriptions.b Examine whether the aboye would make an effective job advertisement.

Fonthill Primary School job advertisementFonthill Primary School is seeking to hire an Educational Assistant ($18 per hour) to work for up to 17 hours aweek in the Learning Support Department. The successful candidate will be required to facilitate speciallydesigned educational activities working in collaboration with a classroom teacher and the Head ofDepartment. Applicants should demonstrate patience, initiative and preferably have previous experienceworking with children who present specific learning difficulties. This position involves working specificallywith a single child on a one-to-one basis.Closing date: Frtday, 18May.

Question 2.1.3

A job description is a document that outlinesthe details of a particular joboIt refers specifically towhat the job entails rather than the type of personrequired for the jobo Itwill indude the job title andthe roles, duties and responsibilities of the postholder. Itwill usually provide information aboutthe job in relation to other jobs within theorganization. Good job descriptions also have anelement of flexibility in order to exploit the skills ofworkers; a rigid job description can limit thepotential of workers especially as business esconstantly experience organizational change (seeUnit 1.8). A typical statement in a job descriptionthat allows such flexibility is 'and any otherreasonable job assigned by the employer.

A person specífication is a document thatprofiles the ideal candidate, such as thequalifications, skills, and experiences sought by theemployer. It also lists the personal attributes thatthe successful applicant should possess, such as theability to lead a team and to think critically. For

Box 2.1b Summary of the recruitment process1 Conduct ajob analysis to determine the firm's

need to hire new employees2 Produce ajob description and person specification3 Advertise the vacant post4 Screenapplications and shortlist suitable

candidatesS Interview the shortlisted candidates6 Perform aptitude testing (if applicable)7 Check each shortlisted candidate's references8 Offer the job to the best candidate9 Sign the contract of employment10 Carry out induction of new recruit

sorne jobs, such as fashion models or sportspersonalities, the person specification may evenstate physical attributes of the ideal candidate.

Once the job description and personspecification have been finalised, it is time toadvertise the joboThis will usually indudeimportant information such as the hours of work,the rate of pay and fringe benefits (see Unit 2.5). Itis also important to have a contact name andaddress for the business and to set a deadline datefor receiving applications. It is usual to advertise ajob both internally (within the organization) andexternally. A good job advertisement willultimately attract only suitable applicants who havethe potential to work at the firmoTherefore, humanresource managers consider the five TRAPS indesigning effective job advertisements:

• Truthful - The advert should not makeexaggerated or false daims about the job, thepay or the organization. Exaggeration anddishonesty might attract more applicants in theshort term, but is unethical and can create moreproblems for the business in the long termo

• Relevant - Job adverts need to be succinct inorder to attract people's attention and interest.

• Accurate - To minimise the number ofunsuitable applicants for a job, the personspecification and job description must beprecise.

• Positive - This helps to encourage people toapply for a job in the organization.

• Short - Given that advertising space isexpensive, only appropriate and necessaryinformation should go in a job advert.

UNIT 2.1: HUMAN RESOURCE PLA NG

between the interviewer (representing theemployer) and the interviewee (the candidateapplying for a job) to help managers make moreinformed decisions when selecting the bestcandidate for a joboHowever, to get the most out ofthe interview process, all other prerequisites (suchas job analysis) must have been carried outeffectively.

Interviews are important as they provide achance for an employer to meet with the applicantface to face (whether in person or via video­conferencing). The interview will allow theemployer to get a better idea about what theapplicants are like, whether they are suitable for thejob(s) being offered and whether they will fit intothe organization. At the same time, interviewsallow the applicants to obtain more informationabout the job and the business to assess whetherthey would be happy to work at the organization .

Interviews need to be well planned andconducted professionally. For example,interviewers must organize an appropriate venuewhere there will be no disruptions; appropriatequestions need to be prepared to avoid negativediscrimination; the job description and personspecification must be readily available for theinterviewing panel; and the interviewers shouldhave studied the candidate's CV and references inorder to get to know the applicant before theinterview commences. Successful interviews alsorequire managers to have good interview skills.

Interviews can take various forms. A video­conferencing interview uses 1CT technology to saveon the costs of people having to physically meet.Video-conferencing interviews are increasinglybeing used to recruit people from overseas to fillmiddle and senior management posts. Similarly, atelephone interview takes place over the telephone:particularly useful for those involved in telesales.Pace-to-face interviews are usually carried out atthe business, allowing the manager to meet andchat with the applicants. These interviews canrange from having just one interviewer to severalpeople interviewing the candidate at the same time(known as apanel interview). A business might alsuse staged interviews. These are likely to be used forsenior positions where a series of interviews areconducted, each with a different focus .

rocess_- .z z>: -~::.; _- r a ;ob will usually apply for a vacancy

ination of three methods:

_ plication form - a standardised form?r0 uced by the business for selecting

ropriate applicants for a joboThe firm canailor questions to meet its specific needs.Application forms make candidates answer thesame questions in a consistent format, allowingthe employer to compare like-with-like.

• Curriculum vitae - a personal statementoutlining an applicant's education, employmenthistory, skills and professional qualifications.The curriculum vitae (CV), also known as arésumé, allows the employer to see what thecandidate has achieved and to judge whether theexperiences meet the requirements of the jobo

• Covering letter - an introductory letter writtenby the applicant, stating which position is beingapplied for and why the applicant should beconsidered for the joboThe covering letter (orletter of application) allows the HR manager toscan through potential applications, withouthaving to first read all the CVs or applicationforms (many of which will be unsuitable).

Businesses had traditionally mailed applicationforms to prospective applicants. It is more commontoday for candidates to email their CV or to applyusing an online application form, which speeds upthe recruitment process and helps to cut costs(printing and mailing) for the business.

The selection processOnce the completed application forms or CVs havebeen received by the business, the HR managerchecks these to identify suitable candidates for thejob (a process known as shortlisting). Theshortlisting process involves comparing theapplication form and the CV of a candidate againstthe job description and person specification. Thishelps to identify the most suitable applicants toinvite for a job interview. The three main methods

ed to select the best candidate for a job are:interviews, testing and references.

Interviev -s

--cniews are the most common method of.::i."'=:OILAn interview is a two-way dialogue

Box 2.1d Ten common interview questions1 Whydoyouwantthisjob?2 What do you know about this organization?3 What makes you think that you will fit into this

organization?4 What are your key strengths?5 What are your main weaknessesand what have

you done about them?6 Which leader/person do you admire most? Why?7 Describe your key responsibilities in your last joboa Who was the most difficult person you had to

work with and how did you manage this?9 What are your key interests and how might these

help you in this job?10Why did you leave your lastjob?

Box 2.1e Do's and Don'ts for intervieweesDo's• Prepare - research the organization and theindustry; plan on how to get to the venue (ontime!); re-read your CVand letter of application;prepare questions to be asked at the interview.

• Dressappropriately - first impressions count andcan have a lasting impact on the interviewers.

• Practice interview skills - helps candidates toanswer questions more confidently.

Don'ts• Be late - this will give a very bad first impressionand managers don't like waiting!

• Becritical - condemning others (such as previousbossesand colleagues) will not impress theinterviewing panel.

• Falsifyanswers - dishonesty to interviewquestions may eventually surface, withdevastating consequences.

Research has shown that the most effectiveinterviews tend to follow a structured approach,with the same core questions being asked to eachcandidate. These interviews do have sorneflexibility, such as asking further questions basedon what the respondent says in the interview.However, if the same fundamental questions areasked to all candidates, interview bias can bereduced.

To objectively select the best candidate,interviewers often use a predetermined checklist toassess the interviewees by weighing up thestrengths and weaknesses of all candidates in thesame way. Two frequently used models are outlinedin Table 2.1a on page 156. Professor Alee Rodger'sseven-point plan (1952) and [ohn Munro-Fraser'sfive-fold grading system (1971) are still widely usedtoday. Variations of these models are used bybusinesses when preparing a person specification.

The purpose of the interview pro cess is to findand appoint the best candidate for the vacant joboApplicants can improve their chances of success atinterview by reflecting on common sense protocol(see Box 2.1c). Interviews are conducted by askinga series of questions (see Box 2.1d) that link to thejob description and the person specification. Thereare two categories of interview questions:

• Behaviour-based questions are used to assess acandídates behavioural pattern and initiative.Such questions typically start off as "Explain anexample of when you ..:' or "Tell me about ..:'

• Situational-based questions are used to assessan applicant's judgmental ability. The interviewwill start with a hypothetical scenario and askthe interviewee for a response, e.g. "If one ofyour team members was constantly late forwork, what would you do?" The purpose is toevaluate the critical thinking ability of theapplicant in each given scenario. In the aboyeexample, the applicant might consider thereasons why the team member is consistentlylate for work, such as whether there are personalissues at home. Additional information isneeded before an objective judgement can bemade about how to deal with the situation.

and accuracy of their typing. Problem solvin¡and reasoning skills are also often tested.

• Intelligence tests calculate the mental abilitjan applicant, such as their skills of numeracyliteracy and general knowledge.

• Trade tests are used to examine a candidate'sspecific skills. These are useful when standaror skills cannot be judged from an interviewfrom a candidate's application formo Forexample, voice tests are used when recruitintelevision newsreaders and radio presenters.

References

References are written statements about anapplicant from an independent source, such as aprevious employer. Referees, the people who wrireferences, may be asked to confirm the strenand weaknesses of an applicant. They serve as afinal security check to ensure the information givby candidates in their application form, CV andinterview are accurate and truthful. Employersthen determine the suitability of the applicant fothe advertised position.

The contract of employment

Once a suitable candidate has been appointed, funew employee is entitled by law (in most countrito receive either a contract of employment or awritten statement of the terms and conditions oftheir employment (see Box 2.1e).

156

One drawback of all interviews is that they arevery time-consuming, Each interview can last overan hour and sorne jobs may require candidates tohave further interviews with other key personnel.Another limitation is that a persons actual ability isnot tested. Interviews can be unreliable in selectingthe best applicant for a job because candidates canHeor twist the truth. Even if a can didate performswell during an interview, they might lack thedesired qualities or skills needed for the job, whichmay not have been picked up in the interview.Hence, other forms of selection are used, such astesting and references.

'IestingAlthough testing is time consuming, it increasesthe chances ofhiring the best candidate for a joboThis reduces the costs incurred if the wrongapplicant is hired. The four main types of testingused in recruitment are:• Psychometric tests ássess a candidate'spersonality. The tests help to gauge the attitudeof potential recruits and their level ofmotivation. As it is important to recruit peoplewho will fit into the culture of the organization,man)' large companies use psychometric tests,especíally for more senior positions.

• Aptitude tests examine the ability and skills ofpotential employees, For example, applicants fora secretarial job might be tested on the speed

I AleeRodger's seven-point plan Munro-Fraser 's flve-fold grading system

Physical make-up, e.g. appearance, speech Impact on others, e.g. mannerism and physicaland mannerism make-up

Attainments, e.g. education, qualifications, Qualifications, e.g. acquired knowledge,experience and training experience and training

General intelligence, e.g. reasoning, accuracy Innate (natural) abilities, e.g. special aptitudes andand problem-solving ability to comprehend

Specialised aptitudes, i.e. speciality skills or Motivation, e.g. determination and successratecompetencies relevant to the job

Interests, e.g. team sports and intellectual Emotional adjustment, e.g. ability to handle stresshobbies / difficult situations and to get on with people

Disposition, e.g. outlook, friendliness,temperament and reliability

Circumstances, e.g. family commitments andthe ability to work unsocial hours

Table 2.1a Mode/sof interview se/ectioncriterio

been truly tested in the recruitment process. Bycontrast, management will be familiar with thestrengths and weaknessesof their staff, sorecruiting internally might ensure that thevacancy is filledwith a highly suitable candidate.

• Motivational - Internal recruitment, especiallyfor promotional posts, can act as a form ofmotivation. Providing internal people withopportunities for promotion suggeststhatmanagement value their employees.Hence,internal promotion can create employee loyaltyand commitment to the firmo

Disadvantages of internal recruitment• Fewer applicants - Internal adverts limit thenumber of potential applicants for a joboExternal candidates could be ofbetter qualitybut they have been overlooked.

• Time consuming - Redeploying, relocating orpromoting an internal candidate will usuallylead to another unfilled vacancy in theorganization. Therefore the process couldpotentially be more time consuming than ífexternal recruitment had been used from theoutset.

Internal recruitmentInternal recruítment involveshiring people whoalreadywork for the firm to fill a vacant position.This often happens when a business restructures itsorganization ofhuman resources (seeUnit 2.2) orwhen internal candidates apply for a promotionalpost within the firmoInternal posts are usuallyadvertised on staff notice boards, in newsletters orvia staff emails.Advantages of ínternal recruitment• Cost effective - It is usually cheaper and quickerto recruit from within an organization. Suitablecandidates may also be readily available.

• Less down-time - Internal people are alreadyfamiliar with the culture of the business andhow it operates. They are therefore usuallymoreable to adapt and settle into the new positionthan those who are new to the organization.Hence, the internal recruit can take up their newrole with minimal down-time (time used to getfamiliarwith the operations of a business ratherthan time actually spent on getting work done).

• Less risk - Employing a newworker fromoutside the organization could be risky in thattheir actual abilitiesand skillsmay not have

INfERNAL ANO EXTERNAL RECRUITMENT

Note: Note: HL candidates must be able toexamine how recruitment enables a firm toachieve workforce planning targets. © IBO,2007.

lnductlon

For most newly appointed staff it is common toreceive induction training to help them settle intotheir new role.This can also applyto staffwho havebeen internally recruited, perhaps due to apromotion or due to restructuring within theorganization. Although the internally appointedperson may still need sorne induction for their newpost, the duration and breadth of the training willbe less since they are already familiar with thepolicies, practices and culture of the business.

UNIT2.1: Hu

Box 2.1 e Contents of an employment contract

1 Job title2 Job role and job specification3 Date the job starts (and ends, if the agreement is

a finite contract)4 Hours and days of work5 Rate(s)and method of pay6 Holiday and sick pay entitlements7 Pension scheme arrangements8 Outline of disciplinary procedures9 Period of notice that must be given when

employment is terminated (by either party)10 Namesand signatures of both parties (employee

and employer)

centres tend to be used for advertising re ~low-paid jobs so this method might not besuitable for sorne businesses.

• Headhunting - the poaching of a personhis or her current employer. The person issought for their experience and expertise. -=~entice them to leave their current job, the l:__:­company will try to offer a contract, inclu • - =pay deal, that is simply too good to resist.

• University visits - business es going to speci ~:universities to advertise their jobs. These jc::tend to be for junior managerial posts. Vl5i:~=universities means that there is a large poo, ;:potentially suitable and talented people tochoose from.

• Employee referrals - personal recommenda:made by a current employee who knows pe ~with the necessary skills and qualities to fi.r :vacancy. As is so often the case in the businesworld, sometimes it really is who you knov -rather than what you know that matters.

Advantages of external recruitment

• New blood - People hired from outside theorganization can bring in new ideas. They c -contribute to the sharing of good practise an .:give the business sorne insight to how a rivalfirm might have done things.

• Wider range of experiences - Similarly, externa,recruits might be more qualified or suitable . -any of the internal candidates, perhaps becausethey have gained the experiences and skillsrequired by the business.

• Larger pool of applicants - Businesses will have :wider range and larger number of peopleapplying for the joboThis increases their chanceof finding the ideal candidate for the jobo

Disadvantages of external recruitment

• Time consuming - External recruitment tends +~

take longer than internal recruitment. Externa:advertising, screening of the applications,shortlisting suitable candidates, interviewingand checking references all take up valuablemanagement time. Employers might also beobliged by law to consider anti-discriminationlaws when advertising jobs and interviewingapplicants. This further lengthens the process.

158

~- - . o - "' lthout external recruitment, it- -:-~ be difficult to get new ideas introduced totae organization. Businesses do not benefit fromharing stale and outdated working practisesLillownas dead wood) because staffhave beenthere for too long. Quite often, managementdiscover that their staff lack the necessary skillsto take up an internal position, so they useexternal recruitment.

• Internal politics - There could be resentmentand conflict amongst fellow workers who wereunsuccessful for the internal position. This cancreate an uncomfortable working environmentfor the people involved. Also, íf no internalcandidates are suitable then the business willstill have to use external recruitment.

External recruitmentExternal recruitment is the process of hiringemployees from outside the business. The variousmethods inelude:

• Newspaper advertising - a common method as ithas a wide audience. However, targeting theright people can be difficult and the advertisingcosts are high.

• Specialist trade publications - used to bettertarget the right audience, e.g. management jobsin the supermarket industry are advertised inThe Grocer and teaching jobs are published inthe Times Educational Supplement.

• Internet advertising - growing in popularity asmore business es use websites to advertise theirjobs. They may use specialist recruitmentwebsites (such as www.stepstone.com) or theirown corporate website to advertise vacancies.Internet advertising can have a global reach yetonly incurs relatively low costs.

• Commercial employment agencies - advertiseand interview suitable applicants for a job andmake recommendations for selection to thehiring firmoUsing agencies costs money (as theycharge afee for their services) but saves a hugeamount of time for the employer who mightprefer to rely on the recruitment expertise of theemployment agency.

• Job centres - non-profit organizations funded bythe government to help people findemployment Businesses can advertise theirposts at job centres free of charge. However, job

159

Advantages of appraisals• They are used to set targets to make changes thatshould lead to progress.

• They allow managers to objectively praise staffon their strengths and their contributions.

• Managers can use appraisals to provideconstructive criticism to employees, therebyallowing staff to focus on improving particularareas of weakness.

• Appraisals are a useful method of gettingfeedback from staff.

Figure 2.1 a Performancemanagement meetings help toformulate goals for employees

Box 2.1f Typical questions asked in appraisalmeetings• What hasgone well for you this year?What hasnot gone so well for you?

• What are your key strengths and weaknesses?• What can be done to help improve your overallperformance?

• Where do you seeyourself in five years' time?• What ideas do you have to help you improve ordevelop asa team member?

)

An appraisal is the formal assessment of anemployee's performance in fulfilling his or her jobbased on the tasks and responsibilities set out intheir job description. It is common for appraisals tobe conducted on an annual basis by a more seniormember of staff.

The main reasons for appraisals are to:

• assess and record an employee's performance inline with their job description and targets

• assist staff in reflecting on their performance atwork

• provide an opportunity to praise staff on theirgood performance

• identify any barriers hindering the performanceof an employee

• identify appropriate training and developmentneeds of the appraisee

• set new targets and goals• aid professional development, helpingemployees to plan their careers

• aid management in assessing the suitability ofindividuals for a pay rise or promotion.

Appraisals are part of performancemanagernent - the continuous process involvingthe planning, reviewing and mentoring ofemployees in order to enhance their performanceat work. Managers will use a range of data,information and interviews to assess eachemployee. Typical questions in an appraisalmeeting indude those in Box 2.1f.

Appraisals can also be used as part of jobevaluation to work out levels of payoThis can bedone by looking at the different tasks, skills,responsibility, qualifications and effort that a jobentails. The appraisal process can then allow abusiness to objectively reward more demandingjobs at higher rates of payo

in recruitment, selection, induction andtraining.

• Greater degree of uncertainty - When hiringexternal recruits, managers take a risk in thatthey do not really know the candidates or theirability to do the job effectively.

UNIT 2.1: HUMANREso CEP

• Expensive - External recruitment can beextremely expensive, such as the cost of jobadverts in newspapers. Businesses might alsoneed to reimburse shortlisted candidates fortheir travel expenses. There is also theopportunity cost of management time involved

administer. Appraisers need to be appropriatelytrained and have excellent writtencommunications skills. Since the method isopen -ended, it lacks sufficient structure to allo­managers to compare appraisals of differentindividual employees.

• 360 degree appraisal involves collectingevidence about the appraisee's job performancefrom peers, subordinates, Iine managers or otherparties (such as suppliers or customers) whohave direct contact with the appraisee. Opinionsand comments are usually obtained by the use ofquestionnaires. The questions are mainlyfocused on the core competencies of theappraisee. A 360 degree appraisal is a popularmethod of appraising managers, with the aim ofproviding useful and practical feedback toimprove managerial effectiveness. However,such appraisals rely heavily on opinions ratherthan factual evidence. Hence this is not suitablefor all business es and it is important formanagers to consider group norms andcorporate culture before embarking with 360degree appraisals.

• Rating system is a highly structured appraisalmethod that examines the different componentsof a job and then rates each specific part of thejob on a scale, such as from 'poor performance'to 'outstanding performance'. Almost any aspectof an ernployee's job performance can be scaled,including traits such as communication skills,punctuality, competence, technical knowledgeand initiative. Rating systems get around theproblems of more flexible appraisal methodssuch as essay appraisals. They are carried out ina structured and standardised manner, therebymaking it easier to conduct appraisals and tocompare results with those of other workers.The method also allows for the equal treatmentof employees in the appraisal process. Adrawback of rating systems is that sorne traitschosen for assessment may not be directly or asrelevant to the jobs of all employees. The use ofinitiative, for example, would be more relevantto the appraisal of managers than the appraisalof machine operators. The latter are likely toscore low on their use of initiative, but notnecessarily because they lack initiative butbecause their jobs do not give as many

160

Disadvantages of appraisals• Appraisals are a time consuming and costlyexercise.

• Formal appraisals tend to take place annually, soregular monitoring of targets can be difficult.

• It can be a daunting experience for both theemployee and the appraiser, especially withupwards appraisals (where a worker appraiseshis or her line manager).

• By their very nature, appraisals can be rathersubjective as personal feelings and relationshipsat work can interfere with the process.

• Staff may get offended by comments from theappraiser, especially about areas of weakness.

• Many appraisers lack the experience andconfidence to carry out appraisals. Thisdiminishes the credibility of the process andresults.

• The employee can experience unnecessaryanxiety and stress if appraisals are linked to payo

• There must be confidential feedback (whichlengthens the exercise) and follow-up actionwhich requires funding and monitoring;otherwise the process will be pointless.

Managers often aggregate the findings ofappraisal meetings to identify common strengthsand weaknesses. This can help them to identifyareas in need of improvement and the training anddevelopment needs of the workforce.

Methods of appralsal• Essay appraisal involves the appraiser preparinga written statement about the appraisee,describing specific strengths and weaknesses interms of job performance. It is cornmon for theappraiser to suggest strategies for dealing withany shortcomings. The appraisee wilI usually getto review the statement and any necessaryamendments are made before a final copy of thetatement is produced; a copy of which is keptbv the employer and another copy given to theemployee, The key advantage of the essayap raísal is that it is very flexible as it allows theappraiser to inspect any relevant issue regardingjOD performance. Other methods that compareWOL-ertraits to predetermined scales or criteriaare more rízid, Ho- -eyer, essay methods can beYery time-cons . g to conduct and

SECTION 2: HUMAN ReSOURCES

16_

results on the opinions of an appraiser. MBOmethods also provide clarity about what is to beassessed to both appraiser and appraisee.However, appraisers must be careful whensetting objectives since unrealistic targets mightsimply be too difficult to achieve. This wouldlead to the conclusion that the employee isincompetent or sub standard even if in realitythis is not the case, but because the originalobjectives were unrealistic and unachievable.

• Self-appraisal involves employees appraisingthemselves based on predetermined criteria.Appraisees are expected to be honest about theirstrengths and weaknesses. They also need to setrealistic targets for improvement.

Whichever method of appraisal is used, aperformance appraisal usually includes thefollowing steps:

• Staff records and reports are used to assess theperformance of an employee over the past year.

• A formal and structured appraisal meeting isconducted to allow the appraisee to reflect ontheir performance. Feedback is important andan action plan might be formulated by bothparties.

• Appraiser completes a written report of theappraisal. There is usually a rating system usedto judge the performance of the appraisee, from'outstanding' to 'unsatisfactory'

• Both appraiser and appraisee sign the finalwritten reporto

• At times, there might also be a countersignaturefrom a more senior manager, such as thesupervisor of the appraiser to ensure that theappraiser has carried out the assessment in anhonest and objective way.

If an appraisee has an overall rating that is below'modérate, then the following actions can be taken:

• lssue an advisory letter to the employee (similarto issuing a warning letter).

• Counselling the appraisee and giving advice oftheir shortcomings (in their job performance),i.e. discussion of strategies for improvement.

• Dialogue concerning the consequences if thereis no improvement in job performance.

opportunities for them to display this trait.Another problem is that the perceived meaningof the scales can vary from one appraiser toanother. What one person interprets as 'aboyeaverage performance' might not be perceived inthe same way by another persono With an oddnumber scale system (3, 5 or 7 options), it iscommon for appraisers to 'play safe' by optingfor the middle of the scale (placing someone'below average' may spark conflict and requirefurther justification). This act in itself issubjective so the results become less valido

• Peer appraisal involves using employees on thesame level in the organization's hierarchy as theappraiser and the appraisee. For example, themarketing manager of a firm might be used toappraise the finance manager. Peer appraisal isoften used by retail business es with differentoutlets, such as branch managers assessing otherbranch managers. An advantage of this is thatboth the assessor and appraisee are familiar withthe requirements of the joboJob performanceshould therefore be relatively easy to assess. Adisadvantage is that appraisers are often tooreluctant to criticise (identify weaknesses of)their peers or team members. This then defeatsthe purpose of carrying out an appraisal.

• Upwards appraisal involves an employeeappraising someone more senior in theorganization, i.e. appraisals carried out by asubordinate. Although growing in popularity,this is not a common appraisal method due to itssubjective nature especially as the exercise canbe somewhat intimidating for both parties. Theappraisee might also lack the experience toconduct an appraisal. Furthermore, manysubordinates are often unwilling to criticise theirline managers for fear ofbeing reprimanded at alater date.

• Management by Objectives (MBO) involvesassessing the extent to which an employee hasmet his or her objectives, as set and agreed bythe employee and the appraiser. If the objectivesare met, then this indicates satisfactory jobperformance. Exceeding the objectives might beseen as good or excellent job performance. TheMBO method therefore assesses peopleaccording to actual outcomes rather than basing

The general benefits of training anddevelopment include:

• A better skilled and more flexible workforceleads to (higher) targets being met. Quality isalso likely to increase.

• Improved competence leads to less wastage andreworking (having to do things again due toerrors the first time round). Hence, greaterefficiency and better productivity help to reducecosts.

• Higher morale as workers progress within theorganization. This may help to reduceabsenteeism and to reduce staff turnover, as stafffeel valued by employers who have invested inthem. Workers also have improved chances ofpromotion as they become more skilled.

• By having a good reputation for training anddeveloping staff, business es might find it easierto attract good quality workers.

• Better levels of customer service as staffbecomemore confident and competent in their roles .

• T&D can also help employees to adjust better tochange. By updating their skills and being multi­skilled, workers are better able to cope withorganizational change.

T&D programmes are a key strategy in helpingorganizations to achieve a flexible workforce.Workforce flexibility refers to the ability ofworkers to multi -task (carry out a range of differenttasks or jobs simultaneously) and to adapt tochanges in the business. For example, manybusinesses have benefited enormously from hiringpart -time workers as it means they can open forlonger periods. Flexibility allows a business to bemore efficient and can help to cut costs (part-timeworkers, for instance, cost less to hire).

The largest drawback of providing T&Dopportunities is the financial cost: training course

162

Training is the process of providing opportunitiesfor workers to acquire employment-related skillsand knowledge. The amount and nature of trainingand development (T&D) required for a job willvary from one job to another. Sorne jobs requireconstant training or updating of skills andqualifications (such as those in the IeT or medicalprofessions). Other jobs will only require basictraining to be carried out (such as unskilledmachine operators in a factory).

Whilst training tends to be specífíc to the tasksand responsibilities of a certain job, developmentfocuses on enhancing the personal skills of apersono Developing these personal skills helps theemployee to be more effective and flexible in theirjobs. Examples of personal skills developmentinclude: assertiveness, counselling, timemanagement, stress management, first -aid andforeign language courses. Employees wishing toattend sueh courses must be able to justify howtheir personal development helps to improve theperformance of a business.

The general objectives of training anddevelopment include:

• To enhance the efficiency and effectiveness ofstaff

• To improve the quality of work (includingcustomer service) by the employees

• To facilitate career and personal development ofeach staff member

• To develop a multi-skilled and productiveworkforce

• To help staff adapt to change (technological,organizational, social and legal changes).

TRAINING

Note: Note: HL candidates must be able toexamine how appraisal enables a firm to achieveworkforce planning targets. © IBO,2007.

- ~ ;¡:fiQll'\m fue pertmmance oi fue:.;'?r ísee, perhaps by calling for quarterlyreports or updates.

• ~ o im~rovements are made within an agreedeme penod, action is taken to dismiss theemployee.

163

On-the-job trainingOn-the-job training refers to training carried outwhilst at the workplace. For example, the trainingcan be delivered by a head of department or otherspecialists. The trainees learn from the skilledcolleague delivering the training at the place ofwork. As part of their on-the-job training, juniormanagers might shadow (observe and learn from)more senior managers. Essentially, this type oftraining involves 'learning by doíng' As Confuciussaid, "1hear and 1forget. 1see and 1remember. 1doand 1understand,"

There are three broad types of training:induction, on-the-job and off-the-job.

lnductlon trainingInduction training is training aimed atintroducing new employees to the organization.Such a training programme might require a newrecruit to:

• Meet key personnel, such as the ernployee's linemanager and departmental team members.

• Tour the premises including the recruit's mainwork space or area.

• Learn about the new job role and other relevantduties and procedures.

• Look at company policies and practices, such asthe health and safety policy and fire evacuationprocedure.

The purpose of induction is to help new recruitsto settle in quicker. It can also help to avoid costlymistakes being made by new employees who arenot aware of the procedures or code of behaviourrequired to carry out their duties.

Advantages of successful induction training

• Establishes expectations and good workinghabits from the start.

• Helps new recruits to understand the corporateculture of the organization.

b Towhat extent do you agree with the commonly heId view of Northern Ireland's hotel businesses thattraining and development is a burden and so should be minimised? ,[8 marks]

• By settling in quicker, new recruits cancontribute to the organization more promptly.

• Morale is boosted as new staff feel welcome andmore confident in what they do.

Disadvantages of índuction training• Planning and preparing an inductionprogramme can be time consuming.

• Key personnel need to be 'freed' from theirother duties because they are involved in theinduction programme.

• 'Information overload' can be counter­productive as the new staff have to absorb somuch fresh information.

[4marks]

Northern Ireland's hotel industryIn a recent report on the recruitment situation in Northern Ireland's hotel industry, it was found that workerssuffered from low wages (earning little much more than the.national minimum wage), very limited career andpromotion prospects and a lack of training and professional development. ProfessorTom Baum and FrancesDevine's report also showed that most hoteliers felt that staff training and development was a burden ratherthan a benefit, and so should be kept at a minimum.a Explain why lowwages and few opportunities for promotion may create problems for

hoteliers.

Ultimately, the benefits of T&Dmean that theworkforce becomes more flexible and productive. Ifthe benefits of T&D are greater than the costs, thenthe training can be judged to be financiallyjustified.

UNIT2.1: HUMAN REso

Question 2.1.4

fees and loss of output whilst workers are beingtrained. Another limitation is that effective T&Dtakes time to plan and this often consumes a largeamount of a managers valuable time. Furthermore,there is no guarantee that T&Dwill help to solvebusiness problems.