Effectiveness of HR Management

• There are a range of indicators to reflect on the effectiveness of human resource functions

• Can be compared to best practice businesses or internal divisions to determine strengths and weaknesses as well as create basis for improvement- benchmarking

• Indicators are collated in human resource audits- diagnostic tools used to evaluate HR polices and practices in order to identify problems and develop solutions

• Most common KPIs (key performance indicators) are
      - output per employee, absenteeism, accidents, level of disputation, worker satisfaction

• Results must be communicated and acted upon by improvement plans

• Successful businesses maintain balance between concern for success and regard for employees

• Better work and employment relationships begin with an understanding of how to develop a positive corporate culture- values ideas, expectations and beliefs

• Indicators of poor corporate culture are high staff turnover, poor customer service, absenteeism, accidents

• Built on quality of business’s communications systems and participation of  employees in decisions making

• Common features are pay ($$) more than basic rates, fun atmosphere, collaboration

• Compare business performance in specific areas against other similar businesses

• Informal benchmarking- networking through informal discussions with colleagues in other businesses, visits or research best practice

• Performance- comparing performance levels with other business

• Best practice- comparing performance levels with those of another best practice business

• Balanced scorecard- measuring whether activities of business are meeting its objectives established in strategic plan

Audits

• Used to analyse and evaluate HR activities and effectiveness

• Benchmarking against industry best practice, outside consultant conducts research to analyse problem and suggest solutions

Qualitative evaluation

• Detailed feedback and research on key issues, which allows judgements to be made about changes in behaviour or quality of service provided

• Major sources of information include feedback from middle management and surveys

• Benchmarking major variables like absenteeism and industrial disputes essential in planning for continuous improvement

• Consider domestic and international trends in management practices when planning strategies for improving effectiveness

Definition - Refers to separation of employees from an employer both voluntary and involuntary

• Often shown as percentage of total staff numbers e.g. 25% staff turnover

• Important to benchmark turnover against those of other businesses in same industry to determine type of staff leaving and reasons

• Staff may leave to seek new opportunities, promotion, whilst others may leave due to toxic workplace

• High turnover is expensive($) as there are costs involved with payout for entitlements, hiring,inducting and training new staff

• Productivity and service quality lost but little turnover is OK as it means new ideas brought in

• New workers at Apple are expected to give at least six years of service but the average tenure is usually only 2 and a half years

• There are very high dissatisfaction levels amongst technicians or “Geniuses”

• Measured as the average rate of employee absenteeism on an average day, without sick leave or leave approved in advance

• High levels indicate workers are dissatisfied or conflict within the workplace

• Revenue lost as work is disrupted and business needs to have higher staffing levels to cope

• 5.3% of Australian workers experience work related injury or illness each year and young males in physical work are most likely

• $60 billion cost per year in direct and indirect costs

•  Direct- medical bills, compensation, insurance

•  Indirect- wages and time lost, production delays

• Systematic, legally compliant approach to managing WHS necessary

• WHS indicators are benchmarked by:

• • Lost Time Injury Frequency Rates (number of lost time injuries x 1000000/total hour worked in accounting period)

  • Best practice businesses have regular safety audits, comprehensive safety programs, build culture of safety and provide careful induction and ongoing training

Case Study

 Some of Apple’s outsourcing partners have been criticised for the unsafe working conditions and the high rate of accidents occurring in their factories

• Employees work excessive overtime and live in crowded dorms

• They stand so long that their legs swell until they can hardly walk

• Various overt and covert manifestations of disputes that employers need to monitor and evaluate

Overt (seen by mgmt):

• Pickets

• Strikes

• Lockouts

• Dismissals

Covert:

• Absenteeism

• Labour turnover rates

• Sabotage

• Discrimination

Indicators of industrial disputation

• Work bans- ban or boycott, refusal to work overtime, handle a product, piece of equipment

• Work-to-rule- refuse to perform any additional duties

• Go slow- work slower rate than normal

• Sabotage- vandalism, cyber attacks, theft

• Grievance reports indicators of poor quality relationships in workplace

Additional information

• Determine whether issues relate to policies and processes operating within the business or to specific individuals who require further training

• Making of awards and agreements and managerial policy are main causes of disputes

• Most common in large businesses where relationships and communication is more impersonal

• For Apple In 2013, a dispute erupted between assembly line workers and quality control managers as a result of new iPhone 5 aluminium casing being starched in the production process. Workers disputed the lack of training and abuse by managers

• It is a key factor in employee commitment, job performance and staff turnover

• Surveys useful in helping employers measure and understand how staff feel about work, management and culture of organisation

• Used to improve management style and processes, benefits and reward systems

• Feedback confidential and analysed by professionals qualified to interpret such feedback

• Satisfaction mainly comes from good relationships with coworkers and enjoying work activities, receiving relevant training

• Effective leadership necessary

• Family-friendly culture, adequate breaks, rewards for effort

• Holistic approach to employees which values and cares for them - this is most effective in building commitment, satisfaction and retaining effective employees

2012

2015

Question 25 (10  marks)

The table contains data about a business in 2014 and 2015. Use the information in the table to answer parts (a)−(b).

(a) To what extent is human resources management effective in this business? Support your answer with examples from the data. 4 marks

(b) Using the data, analyse the interdependence between human resources management and profitability management in this business.  6 marks