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Teaching guide: Decision making to improve human resource performance (podcast)

These podcast teaching guides cover topics from our AS and A-level Business specifications. You can download them below.

Podcast 6: Decision making to improve human resource performance

This podcast covers the specification's sixth subject area, ‘Decision making to improve human resource performance’. It includes: Setting human resource objectives; Analysing human resource performance; Improving organisational design and managing the human resource flow; and Improving motivation and engagement.


Hello and welcome to the AQA AS and A-level Business podcast, supporting your teaching of our new specifications, available for first teaching from September 2015.

We believe that our holistic approach to the study of business equips students with the academic as well as the practical skills they need to succeed – and helps the students of today develop the fundamental skills needed by the business leaders of tomorrow.

This podcast is the final in a series of six, and covers the sixth subject area of the new specifications, ‘Decision making to improve human resource performance’ in which we cover the following topics:

* Setting human resource objectives.

* Analysing human resource performance.

* Improving organisational design and managing the human resource flow.

* Improving motivation and engagement.

Topic one: Setting human resource objectives

People are an important resource of a business and managers need to think how to manage them. This topic focuses on managing human resources to improve business performance.

Throughout the study of decision making to improve human resource performance, students should think about the influences on these decisions including factors such as ethics, the nature and state of the labour markets and the link between human resource decisions and other functions.

HR decisions cannot be taken in isolation without thinking what the business as a whole is trying to achieve. An interesting area for discussion is the motivation behind paying a low wage: is paying relatively low wages because of high levels of unemployment a good business decision, or does it go against the values of the business?

HR decisions must also be analysed in terms of what is happening in terms of finance, marketing and operations. More training may need finance, entering new markets may require a new organisational structure, and a change in the operational approach may require more delegation.

Students should also consider how technology can affect Human Resources: for example, it may enable more people to work from home, may affect communications throughout the organisation and change the skills required.

The decision making cycle is a useful framework for studying human resources. The starting point is to identify the human resource objectives. These might include employing the right number of employees, ensuring the business has the right skills in the right parts of the business, achieving appropriate levels of employee engagement and ensuring there is an appropriate level of diversity.

Students need to think about the factors that might influence these objectives:

* if the business is growing this may affect the number of staff required

* if it is changing what product it offers this may require different skills

* if it is operating in many markets internationally then global diversity may be very important.

As ever students need to appreciate the range of approaches and think what might work best in a given situation. Managers do not necessarily want to train all their employees to the highest level possible, they do not necessarily want to pay the highest financial rewards of any business in the industry, they do not necessarily worry too much if labour turnover is higher than rivals. In some situations a relatively low skilled workforce may meet the business needs, low pay may still attract enough applicants to do the job and the staff leaving may be relatively easy to replace.

One influence on the human resource objectives of the business will be the managers’ overall approach to managing people: if they adopt a softer or more democratic approach this may mean they are more willing to invest in training. They may view employee engagement as a greater priority and believe it is important that employees’ values are well aligned with those of the business. Some organisations operate effectively with a high turnover of staff and little investment in training; others do well with high levels of investment in training and a high retention of staff. The “right” approach depends on the context.

Students should consider the value of setting human resource objectives in terms of planning and reviewing decisions and coordinating the many different activities within the business.

Topic two: Analysing human resource performance

Having considered the types of human resources objectives that might be set, we now want to analyse the data to understand the existing position of the business and to decide what needs to be done.

Students need to be able to calculate measures of employee performance such as labour turnover, retention rates, labour productivity and labour cost per unit. Students need to understand the significance of this data and how they can act on it: for example, the possible issues that occur with a low level of labour productivity and how this might affect the decisions made in this area.

Managing people also involves managing the jobs that people do and the overall organisational design. Students need to consider how a job is designed. The Hackman and Oldham model provides a good structure for this. The model sets out 5 dimensions of a job which influence how motivating it is likely to be. These five dimensions are:

* Task identity.

* Task significance.

* Task variety.

* Autonomy.

* Feedback.

You can find out more about the Hackman and Oldham model in our teaching topics resource: just visit aqa.org.uk/teachingtopics

Topic three: Improving organisational design and managing the human resource flow

Students should also consider how jobs fit together: for example, how many people report to a manager? How many levels of hierarchy are there? To what extent are employees allowed to make decisions without asking permission from their manager?

As ever there are no right answers to these questions: it depends on the situation. The design will vary between organisations and even between departments within organisations.

A creative organisation wanting to share ideas may avoid too many levels of hierarchy, whereas an organisation wanting to control employees closely may have a small span and high levels of hierarchy.

A business wanting subordinates to make their own decisions and respond to market conditions may encourage decentralisation whereas a business in which senior managers want to maintain a uniform approach throughout the business would be more centralised.

Students should consider why the organisational design may need to change over time: pressure on costs may lead to stripping out layers of management, whilst better training of employees may enable more delegation.

Topic four: Improving motivation and engagement

Over time managers will also have to manage the flow of people through the organisation. Students need to understand what is meant by a workforce plan and what influences it. When planning ahead managers will consider the implication in terms of decisions such as recruitment, training, redeployment and redundancy.

One aspect of managing people is to consider what might motivate or engage them. Students need to understand the benefits of motivating employees and how this might be achieved using the work of Taylor, Maslow and Herzberg. Our teaching topics resource offers some really interesting frameworks you can use to explore this topic: just visit aqa.org.uk/teachingtopics.

Students should understand these theories and be able to apply them to different situations. They should be able to analyse different ways of motivating employees including the likely effectiveness of financial methods such as piece rate, commission, salary schemes and performance related pay. Students also need to consider what determines how different approaches to motivation will affect employees. Will more pay actually motivate employees? What is the effect of providing secure full time employment? Is more feedback likely to be effective? When considering how to motivate employees, students must consider a range of factors such as the needs of employees and what the business can actually offer.

Topic five: Improving employer-employee relations

Managing people also involves decisions about the extent to which managers want to involve employees in decision making and how they want to achieve this. Students should appreciate the factors that might affect how much managers want employee input.

Factors to explore include:

* the nature of the decision being made: is it straightforward or particularly complex?

* the skills and abilities of employees of employees: would they add to the quality of the decision?

* the wider management approach to employees: is it soft or hard?

The extent to which employees are involved could be linked to the Tannenbaum Schmidt continuum, previously discussed in Podcast two. Students should not assume more involvement is right: it may take time, it may not lead to useful debate and it may not even be necessary.

If employees are to be involved, how is this best done? It might be worth discussing here what trade unions and work councils offer in terms of communication and employer-employee relations. Students need to consider the importance of employer employee relations, as well as what factors might affect how high on the agenda of senior managers this is.

Thank you for listening to this AQA business podcast. You can find information on the specifications and the resources available to support your teaching of them on the AQA website: just visit aqa.org.uk/business

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