Approaches to HRM

A2 Business Studies

Aims and Objectives

Aim:• Understand different approaches to HRMObjectives:• Explain the internal and external influences on

HRM objectives• Analyse soft and hard HRM• Evaluate soft and hard HRM

Starter

• Give two HRM objectives a business may wish to achieve.

• Give an example of a business who adopted a cost minimisation objective.

Internal Influences on HRM

In groups brainstorm internal influences on the setting of HRM objectives

Internal Influences

• How might each of the following affect HRM objectives? Use examples to justify your answer:– Corporate objectives– Production strategies– Marketing strategies– Financial strategies

Internal Influences

• Corporate objectives– May include growth/product development but all will require

changes to workforce planning.• Production strategies– E.g. loss of jobs through a change to capital intensive

production• Marketing strategies– A new campaign may impact on training and recruitment

• Financial strategies– E.g. cost minimisation may result in job losses or training cuts

External Influences on HRM

In groups brainstorm external influences on the setting of HRM objectives

External Influences

• Market and Economic changes– Through the course of the business cycle workforce

planning will change, eg. In recession there will be a focus on cost minimisation resulting in redundancies.

– http://www.bbc.co.uk/news/business-17695234

External Influences

• Technological changes– Advances may result in movement towards capital

intensive production, or may improve training.• Skills shortages– There are shortages of some skilled workers, which can

prevent company growth. Firm may have to increase motivations for job – salaries, healthcare.

– http://www.bbc.co.uk/news/business-14146169

External Influences

• Population change– As the UK population rises, there are fewer school

leavers to fill vacancies, and older people are staying in employment longer as they are living longer!

External Influences

• Government and legislation– Changes in EU and national

laws, impact on discrimination, working hours and minimum wage.

Approaches to HRM

Possible to categorise types of HRM into ‘soft’ and

‘hard’ policies.

‘Soft’ HRM

Concerned with how employees are managed. Based on the belief that they

are the most important asset of the business. Concerned with motivation and communication. People are led

rather than managed. They are involved in determining the HRM objectives.

‘Hard’ HRM

Considers employees to be a resource of the organisation to be used as necessary

to achieve the corporate objectives. Control is in the hands of management.

Their role is manage numbers effectively, keeping the workforce closely matched

with requirements in terms of both behaviour and bodies.

‘Soft’ &‘Hard’ HRM Analysis

• Key features sheet.

• Sorting task:• Sort the factors in strengths or

weaknesses of each HRM approach.

‘Soft’ HRM Analysis

Strengths• Rewards motivate

employees to encourage innovation and quality.

• Training and development allow the employee to fulfil their needs which will improve motivation.

• Recruitment costs fall as labour turnover rates and absenteeism falls.

Weaknesses• Trade unions may create

tension between management and employees if employers are seen to be weak.

• It relies on an organisational culture which embraces long-term training and development and acceptance of the need to delegate responsibility.

‘Hard’ HRM Analysis

Strengths• Lower training costs.• Comp.adv can be achieved

through cost minimisation – lean production and wages.

• Reward is linked to pay and so possible to achieve positive relationship between output and pay.

Weaknesses• Can lead to high labour

turnover and absenteeism, which are costs to the business.

• May be difficult to recruit new employees if the firm has a reputation for hiring and firing.

• Limited delegation and empowerment can demotivate employees and reduce quality.

EV: Which approach is better?

It depends on…• The type of business!• The “hard” approach to HR might be expected to result

in a more cost-effective workforce where decision-making is quicker and focused on senior managers.

• However, the danger of taking too “soft” an approach is that when all the employee benefits are added up, the cost of the workforce leaves a business at a competitive disadvantage.

• Often best to have a mix of both!