A thousand workers, a thousand plans.

Chinese proverb

--

--------------------.

KEY TOPleS
Supply of human resources and demographic
Domestic and internationallabour

changes

mobility

Workforce planning
Recruitment, appraisal, training and dismissal
Changes in work patterns and practices: homeworking,
portfolio work

teleworking

Higher Level Extension

Employment

rights and legislation

Handy's shamrock organization

Note: Higher Level students will need to be able to analyse reasons for
changes in work patterns and practices and the consequences for employers
and employees. ( IBO,2007)
<!lI> -- ----------------------------

-----------------------.

and

UCTION
. theorists argue that people are a firms most
~-a...t:ableresource. Employing the right people
:'e ps businesses to achieve their aims and
objectives. To do this, a firm needs to use human
se ~ rce planning (or workforce plannng) - the
management process of anticipating an
organization's current and future staffing needs.
Anticipating the human resource needs of a firm
can be carried out by looking at:
Historical data and trends - such as the change
in the size of the workforce over the past few
years or the shift to part -time and flexible
working hours.

the forecasts. This is because businesses are

constantly exposed to the forces of change (see
Unit 1.8), such as an economic recession which
reduces the demand for human resources.
Human resource management (HRM) refers ::
the management function of using and developinr
people within a business to meet the objectives o:
the organization. This entails interrelated roles,
such as:

Labour turnover rates - measures the number

of employees who leave a firm as a percentage of
its workforce, per year. The higher the staff
turnover rate, the more workers a firm will need
to recruit.

Workforce planning (also known as human

resource planning)
The recrutment, selection and induction of
new employees
Training and development of staff
Performance management and performance
appraisals
Promotion and relocation of staff
Reviewing remuneration packages
Disciplinary and grievance procedures
Looking after the welfare of employees.

Demographic changes - government data

regarding changes in the demographics of the
workforce, such as the changes in the number of
female workers in the economy or the number
of graduates, can help managers to forecast
human resource needs.

People are important to an organization as th=

add value to its output. This can be achieved by
increasing productivity (output per worker),
improving quality, coming up with new ideas an providing better customer service to enhance the
overall purchasing experience of customers.

Sales and ncome levels - higher levels of

income and spending in the economy willlead
to more jobs being created.

Technological changes - advances in

technology, such as e-commerce, can bring both
opportunities and threats. There are
opportunities for people to work from home, for
example. However, firms that are capitalintensive might not require as many workers.
Despite attempts to achieve effective workforce
planning, external influences affect the accuracy of

Exam Tip!
The term 'Iabour force' (or 'workforce') ca
mean one of two things, so it is irnportant tc
put 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 the
unemployed). It can also refer to the peop :.=
employed in a particular organization, i.e. _ ::
firm's workforce.

SUPPL y OF HUMAN RESOURCESANO DEMOGRAPHIC CHANGES

-:he pply of human resources in a country is
~=<cted by demographic changes in the workforce.
De ogr ~. is the statistical study of population
e aracteristics, Businesses need to understand
~~e- so that they can respond
a _ro; ~G :-. Demographic changes can be caused
by chaages 3 --:aDOl:S factors:
14c8

The net birth rate is the difference between -number ofbirths and deaths per period of tr;
Countries with a high net birth rate will, in ~=
long term, have a larger supply ofhuman
resources.
The net migration rate measures the dfferez,
between the number of people entering a

UNIT2.1: HUl\".ANRESOURCE
PLA

country (immigrants) and the number of people

leaving a country (emigrants). If the net
migration figure is positive, the supply ofhuman
resources will increase.
The retirement age is the legal age when people
can stop work and claim money from their
pensiono If the retirement age is raised, it will
automatically increase the number of people in
the labour force, Le. those of legal working age.
Many western economies, faced with an
increasing number of elderly people, have
considered increasing the retirement age. For
example, in late 2010, France controversially
raised its retirement age from 60 to 62. In other
countries, sueh as Hong Kong, there is no
statutory retirement age law, which serves to
increase the supply of human resources.
The flexibility of the workforce refers to
businesses or countries with staff who are able to
adapt to change. For example, business es that
employa large proportion of part-time workers,
such as fast -food restaurants and supermarkets,
are able to take advantage of workforce
flexibility as the supply of labour can be quickly
changed according to the needs of the firmo This
is a reason for the growth in the number of
teleworkers (covered later in this Unit).
Women entering or returning to the workforce
will boost the supply of human resources. In
modern societies, there has been an increase in
the number of women taking on part -time jobs.
This gives businesses and staff greater flexibility
in determining working hours.
The mobility of labour is the extent to which
labour can move to different locations (known
as geographical mobility) and their flexibility in
changing to different jobs (known as
occupational mobility). The more mobile that
workers are (both geographically and
occupationally) the higher the supply oflabour
tends to be. Box 2.1a outlines the factor s that
can affect the level oflabour mobility.

Box 2.1 a Labour mobility

Labour can be geographically mobile, especially
within a country, but there are some limitations:
Friends and family ties tend to be the key
constraint for most people's geographical
mobility.
Relocation costs (moving expenses) such as remortgaging property and consideration of
different house prices.
Language and cultural differences tend to limit
international mobility.
Fearof the unknown means that people might
prefer 'home comforts' (familiarity).
The limitations on occupational mobility include:
Occupational mobility tends to be greater with
acquired attributes of a worker (such as
education, qualifications, skilis, experience and
training).
Younger people tend to be more occupationally
mobile since they often change careers. Mature
workers may think they are 'too old' to retrain or
may have more financial commitments so are
lesswilling to take risks by changing careers.
Some workers are immobile because they are
highly-specialised in their area of expertise.
These people find it difficult to seek
ernployrnent opportunities in other industries.
If employers discriminate on the basis of age,
gender, religion or race then this will hinder the
occupational mobility of workers.

In addition to the aboye, the supply of human

resources to a particular business also depends on:
The internal workforce (employees who
already work for the organization) - If the
internal workforce is highly flexible and can
adapt to change (based on their skills, expertise
and experiences), then it might not be so
necessary to hire workers externally.
The cost ofliving in a particularareaAlthough more people tend to live in cities, the
higher cost of housing and other expenses may
deter others from locating in these areas,
thereby reducing the potential supply of labour .
The cost and availability of transportation Businesses located in are as with good
transportation networks tend to attract a larger
supply of workers. Those living or working in

UNIT2.1: HUMANRESOURCE
PLAN

country (immigrants) and the number of people

leaving a country (emigrants). If the net
migration figure is positive, the supply ofhuman
resources will increase.
The retirement age is the legal age when people
can stop work and claim money from their
pensiono If the retirement age is raised, it will
automatically increase the number of people in
the labour force, i.e. those of legal working age.
Many western economies, faced with an
increasing number of elderly people, have
considered increasing the retirement age. For
example, in late 2010, France controversially
raised its retirement age from 60 to 62. In other
countries, such as Hong Kong, there is no
statutory retirement age law, which serves to
increase the supply of human resources.
The flexibility of the workforce refers to
businesses or countries with staff who are able to
adapt to change. For example, businesses that
employ a large proportion of part -time workers,
such as fast-food restaurants and supermarkets,
are able to take advantage of workforce
flexibility as the supply of labour can be quickly
changed according to the needs of the firmo This
is a reason for the growth in the number of
teleworkers (covered later in this Unit).
Women entering or returning to the workforce
will boost the supply of human resources. In
modern societies, there has been an increase in
the number ofwomen taking on part-time jobs.
This gives business es and staff greater flexibility
in determining working hours.
The mobility oflabour is the extent to which
labour can move to different locations (known
as geographical mobility) and their flexibility in
changing to different jobs (known as
occupational mobility). The more mobile that
workers are (both geographically and
occupationally) the higher the supply oflabour
tends to be. Box 2.1a outlines the factors that
can affect the level of labour mobility.

Box 2.1a labour mobility

Labour can be geographically mobile, especially
within a country, but there are some limitations:
Friends and family ties tend to be the key
constraint for most people's geographical
mobility.
Relocation costs (moving expenses) such as remortgaging property and consideration of
different house prices.
Language and cultural differences tend to limit
international mobility.
Fearof the unknown means that people might
prefer 'home comforts' (familiarity).
The limitations on occupational mobility include:
Occupational mobility tends to be greater with
acquired attributes of a worker (such as
education, qualifications, skills, experience and
training).
Younger people tend to be more occupationally
mobile since they often change careers. Mature
workers may think they are 'too old' to retrain or
may have more financial commitments so are
lesswilling to take risks by changing careers.
Some workers are immobile because they are
highly-specialised in their area of expertise.
These people find it difficult to seek
employment opportunities in other industries.
If employers discriminate on the basis of age,
gender, religion or race then this will hinder the
occupational mobility of workers.

In addition to the aboye, the supply of human

resources to a particular business also depends on:
The internal workforce (employees who
already work for the organization) - If the
internal workforce is highly flexible and can
adapt to change (based on their skills, expertise
and experiences), then it might not be so
necessary to hire workers externally.
The cost of living in a particularareaAlthough more people tend to live in cities, the
higher cost of housing and other expenses may
deter others from locating in these areas,
thereby reducing the potential supply of labour.
The cost and availability of transportation Businesses located in are as with good
transportation networks tend to attract a larger
supply of workers. Those living or working in
149

zez: -; - ea mar need to rely on private

v.hich could be costly. This could
=..:relore reduce the potential supply of human
resources 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 human

resources.
At times, there may be surplus human resources.
For example, during off-peak seasons many
temporary or part-time workers are not required.
Thus, businesses will have two choices: make sorne
workers redundant (their services are no longer
required so their job disappears) or redeploy
(relocate) staff to other departments or parts of the
organization that may be in need of extra staffing.
One distinct demographic change in modern
societies is the increasing longevity of the
population which has led to an ageing population
(when the average age of the population increases).
The effects of this indude:

Increased dependent population. The dependent

population consists of people who are below the
legal working age, those out of work and the
retired population. They are 'supported' by the
working population who are taxpayers. With an
ageing population, fewer people will be working
in proportion to those who have retired, thereby

adding pressure on taxpayers to contribute

towards government expenditure.

Reduced labour mobility. Young people tend to

be more geographically and occupationally
mobile. They have fewer reservations about
moving to different place s and jobs, including
those overseas. They are more likely to switch
between different jobs. Labour immobility
reduces the flexibility and international
competitiveness of a country's workforce.

Changes in consumption patterns. Different age

groups have different spending patterns.
Children, for example, may spend much of their
money (or that oftheir parents!) on toys and
schooling. Retired people are likely to spend a
larger proportion of their money on holidays
and healthcare related products. Hence, an
ageing population can create opportunities for
firms to cater for more mature age groups.

Change in employment patterns. With more

people going to university, the average age of
people entering the workforce has aIso risen .
Coupled with an ageing population, this means
that firms are more likely to retain staffbeyond
their retirement age due to labour supply
shortages. Some firms might even consider
relocating overseas if domestic labour supply is
insufficient or not suitable.

Question
300 million Americans

In october 2006, the population of the USAreached a new

milestone figure of 300 miIlion, making it the third most populated
nation on the qlobe. The last milestoneof 200 million people was
recorded in November 1967.The USAis the only industrialised
country with significant population growth - a net increase of one
person every 11 seconds. However, many people question
America's ability to sustain its population growth, given that it is
the largest consumer of the planet's scarce resourcesi despite its
ageing population. Concerns mount as forecasts show that the
populatlon will hit 400 mili ion by 2050.

Jefine the term 'ageing population'.

[2 marks]
O line two constraints and two opportunities, from a business perspective, provided by the
de ographic changes in the USA.
[4 marks]

150

UNIT 2.1:

HUMAN RESOURCE PlAHNI G

WORKFORCE PLANNING
Workforce
(or human resource
planning) is the process of anticipating the current
and future demand for workers in an organization.
It can be short term or long term:
Short -term workforce planning deals with the
existing and upcoming demands of an
organization, such as employing workers to
cover for staff who are about to resign, retire or
go on maternity leave.
Long-term workforce planning looks at the
human resource needs of the business in the
foreseeable future. For example, Disney
recruited and trained employees up to two years
before the Hong Kong Disneyland and Shanghai
Disneyland theme parks were opened.
Planning the human resource needs of an
organization requires consideration of the demand
for labour, which depends on several factors:
Historical data of changes in staffing allows a
business to identify trends. For example, labour
turnover rates will inform a business of the
number of people that leave the firm each year
(expressed as a proportion of the workforce).
Hence, a business can plan its recruitment needs
better if employment patterns can be identified.
However, past data is not always indicative of
what will happen in the future.
The flexibility and workload of staffhelps
businesses to determine the demand for labour.
For example, a highly flexible workforce may be
able to cope if there is a sudden shortage of staff.
In a firm where people are over-specialised and
where workload is soaring, it might be necessary
to employ more staff. The skills and expertise of
existing workers may mean that they can be
reassigned to different jobs, as and when
necessary, thereby reducing the need to recruit
new staff. A restructuring of human resources,
such as smaller hierarchical structures (see
Unit 2.2), will also affect the demand for labour.
Capital intensity measures the amount of
capital usage in comparison to other factors of
production. An automated business, such as
computer manufacturing, might be able to raise
productivity without the need to hire more
workers. A change to automation will result in a

business requiring less labour. By contrast, low

capital intensity (or high labour intensity)
requires more workers to raise output. For
example, if the waiting list for a national health
service is to be reduced, hospitals will need to
recruit more doctors and nurses.
Work study is a scientific management tool
devised by F.W Taylor aimed at measuring the
best way to complete certain processes. Work
study (or time and motion study) looks at the
best number of people needed to complete a task
efficiently rather than inaccurately estimating
the number of workers.
Derived demand means that the demand for
labour, like all other resources, depends on the
demand for the product that labour is used to
help produce. For example, there is no need for a
school to hire German language teachers if
students do not opt for this subject. Likewise, as
the demand for personal computers and
smartphones increases, the demand for people
who manufacture these products also increases.
Natural wastage occurs when a person leaves a
job (rather than being dismissed) but the
position is not filled, Le. the job is not replaced.
This often happens when firms undergo
restructuring. It can also happen when people
resign from their jobs (perhaps to raise young
children or simply due to better opportunities
elsewhere) 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 Post
revealed that poor recruitment practices in Hong
Kong cost business es HK$39 billion (US$5bn) per
year. The same report showed that managers in
Hong Kong spent a ffth of their time c6rrecting the
mistakes made by their staff.
Before a business recruits new workers,
managers usually carry out a job analysis, This
involves scrutinising the different components of a
job, such as the routine tasks and responsibilities of
the post holder, to determine what the job entails.
Managers might also want to verify:
the skills and training required to do the job

- ':<1 - ons

and personal qualities needed

:'::__l\"IT out the job

::..::;:~ -ards needed to recruit and retain the post

The job analysis will help to create two
!m.. ortant documents needed for the recruitment
and selection of staff. These documents, the job
description and the person specification, are
explained in the next section.
Sorne organizations will tend to have higher rates
of staff turnover than others. Firms that hire lots of
part-time temporary staff, such as McDonald's and
Burger King, are likely to accept higher rates of
labour turnover, mainly due to the nature of the job
Question

(such as the relatively low wages paid to unskilled

workers). The main reasons why people leave their
jobs can be summed up by author M.J. Yate who
used the acronym CLAMPS as the six acceptable
reasons: Challenge, Location, Advancement,
Money, Pride (or Prestige) and (Job) Security.
Firms with high staff retention tend to offer
training for both personal and professional
development. This helps to boost morale as staff
see their employers valuing their contributions and
development. Staff with career development needs
are also catered for by being able to attend
professional training and development courses.

2.1.2

Trump International

Golf Links

When 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 6,000
jobs that would be created. Trump's plans included two championship golf courses, a five-star hotel and
hundreds of holiday homes. Trump, who popularised the phrase 'You're fired!' on reality television programme
The Apprentice, said that labour turnover is not a problem at the Trump Organization.
a Define the.meaning of 'Iabour turnover:

[2 marks]

b Explain two reasons why a business might need to hire new workers.

[4 marks]

e Comment on the importance of understanding labour turnover in business organizations.

[4 marks]

RECRUITMENT AND SElECTION

The recruitment and selection of employees is vital
to the running of a business. Labour is one of the
four factors of production (see Unit 1.1) needed for
the provision of any good or service. Hiring the
right people helps to ensure that businesses can
function effectively. Since the recruitment and
selection process is likely to be quite time
consuming and rather expensive, managers must
ensure the procedures are effective.
The recruitment and selection process (see
Box 2.1b) starts when a vacancy becomes available
) .ithin the organization, perhaps due to expansion
of the business or simply to replace staff who have
de . ed to leave the organization. People might

152

leave a job for all sorts of reasons, such as wishing

to spend more time with their children or being
fired for misconduct.
Once the initial job analysis has been done, the
human resources manager will produce a job
advertisement to get as many suitable people as
possible to apply for the vacant post. There are
usually two documents that are produced before
writing a job advertisement: the job description anc
the person specification. Both these documents are
important in objectively assessing the suitability
applicants. They can also be used to gauge traning
needs and for conducting job appraisals.

e:

UNIT 2.1:

Box 2.1 b Summary of the recruitment

process

1 Conduct ajob analysis to determine the firm's

need to hire new employees
2 Produce ajob description and person specification
3 Advertise the vacant post
4

Screen applications and shortlist suitable

candidates
S Interview the shortlisted candidates

Perform aptitude testing (if applicable)

7 Check each shortlisted candidate's references

8 Offer the job to the best candidate
9 Sign the contract of employment
10 Carry out induction of new recruit

A job description is a document that outlines

the details of a particular joboIt refers specifically to
what the job entails rather than the type of person
required for the jobo It will indude the job title and
the roles, duties and responsibilities of the post
holder. It will usually provide information about
the job in relation to other jobs within the
organization. Good job descriptions also have an
element of flexibility in order to exploit the skills of
workers; a rigid job description can limit the
potential of workers especially as business es
constantly experience organizational change (see
Unit 1.8). A typical statement in a job description
that allows such flexibility is 'and any other
reasonable job assigned by the employer.
A person specfication is a document that
profiles the ideal can didate, such as the
qualifications, skills, and experiences sought by the
employer. It also lists the personal attributes that
the successful applicant should possess, such as the
ability to lead a team and to think critically. For

HUMAN RESOURCE PLA

NG

sorne jobs, such as fashion models or sports

personalities, the person specification may even
state physical attributes of the ideal candidate.
Once the job description and person
specification have been finalised, it is time to
advertise the jobo This will usually indude
important information such as the hours of work,
the rate of pay and fringe benefits (see Unit 2.5). It
is also important to have a contact name and
address for the business and to set a deadline date
for receiving applications. It is usual to advertise a
job both internally (within the organization) and
externally. A good job advertisement will
ultimately attract only suitable applicants who have
the potential to work at the firmo Therefore, human
resource managers consider the five TRAPS in
designing effective job advertisements:
Truthful - The advert should not make
exaggerated or false daims about the job, the
pay or the organization. Exaggeration and
dishonesty might attract more applicants in the
short term, but is unethical and can create more
problems for the business in the long termo
Relevant - Job adverts need to be succinct in
order to attract people's attention and interest.
Accurate - To minimise the number of
unsuitable applicants for a job, the person
specification and job description must be
precise.
Positive - This helps to encourage people to
apply for a job in the organization.
Short - Given that advertising space is
expensive, only appropriate and necessary
information should go in a job advert.

Question 2.1.3
Fonthill Primary School job advertisement
Fonthill Primary School is seeking to hire an Educational Assistant ($18 per hour) to work for up to 17 hours a
week in the Learning Support Department. The successful candidate will be required to facilitate specially
designed educational activities working in collaboration with a classroom teacher and the Head of
Department. Applicants should demonstrate patience, initiative and preferably have previous experience
working with children who present specific learning difficulties. This position involves working specifically
with a single child on a one-to-one basis.Closing date: Frtday, 18 May.
l

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.

[4marks1
[6 marks}

153

rocess
_- .z z>: -~::.;

a ;ob will usually apply for a vacancy

ination of three methods:

_- r

_ plication form - a standardised form

?r0 uced by the business for selecting
ropriate applicants for a jobo The firm can
ailor questions to meet its specific needs.
Application forms make candidates answer the
same questions in a consistent format, allowing
the employer to compare like-with-like.
Curriculum vitae - a personal statement
outlining an applicant's education, employment
history, skills and professional qualifications.
The curriculum vitae (CV), also known as a
rsum, allows the employer to see what the
candidate has achieved and to judge whether the
experiences meet the requirements of the jobo
Covering letter - an introductory letter written
by the applicant, stating which position is being
applied for and why the applicant should be
considered for the jobo The covering letter (or
letter of application) allows the HR manager to
scan through potential applications, without
having to first read all the CVs or application
forms (many of which will be unsuitable).
Businesses had traditionally mailed application
forms to prospective applicants. It is more common
today for candidates to email their CV or to apply
using an online application form, which speeds up
the recruitment process and helps to cut costs
(printing and mailing) for the business.
The selection process
Once the completed application forms or CVs have
been received by the business, the HR manager
checks these to identify suitable candidates for the
job (a process known as shortlisting). The
shortlisting process involves comparing the
application form and the CV of a candidate against
the job description and person specification. This
helps to identify the most suitable applicants to
invite 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."'=:OIL An interview is a two-way dialogue

between the interviewer (representing the

employer) and the interviewee (the candidate
applying for a job) to help managers make more
informed decisions when selecting the best
candidate for a jobo However, to get the most out of
the interview process, all other prerequisites (such
as job analysis) must have been carried out
effectively.
Interviews are important as they provide a
chance for an employer to meet with the applicant
face to face (whether in person or via videoconferencing). The interview will allow the
employer to get a better idea about what the
applicants are like, whether they are suitable for the
job(s) being offered and whether they will fit into
the organization. At the same time, interviews
allow the applicants to obtain more information
about the job and the business to assess whether
they would be happy to work at the organization .
Interviews need to be well planned and
conducted professionally. For example,
interviewers must organize an appropriate venue
where there will be no disruptions; appropriate
questions need to be prepared to avoid negative
discrimination; the job description and person
specification must be readily available for the
interviewing panel; and the interviewers should
have studied the candidate's CV and references in
order to get to know the applicant before the
interview commences. Successful interviews also
require managers to have good interview skills.
Interviews can take various forms. A videoconferencing interview uses 1CT technology to save
on the costs of people having to physically meet.
Video-conferencing interviews are increasingly
being used to recruit people from overseas to fill
middle and senior management posts. Similarly, a
telephone interview takes place over the telephone:
particularly useful for those involved in telesales.
Pace-to-face interviews are usually carried out at
the business, allowing the manager to meet and
chat with the applicants. These interviews can
range from having just one interviewer to several
people interviewing the candidate at the same time
(known as a panel interview). A business might als
use staged interviews. These are likely to be used for
senior positions where a series of interviews are
conducted, each with a different focus .

Research has shown that the most effective

interviews tend to follow a structured approach,
with the same core questions being asked to each
candidate. These interviews do have sorne
flexibility, such as asking further questions based
on what the respondent says in the interview.
However, if the same fundamental questions are
asked to all candidates, interview bias can be
reduced.
To objectively select the best candidate,
interviewers often use a predetermined checklist to
assess the interviewees by weighing up the
strengths and weaknesses of all candidates in the
same way. Two frequently used models are outlined
in Table 2.1a on page 156. Professor Alee Rodger's
seven-point plan (1952) and [ohn Munro-Fraser's
five-fold grading system (1971) are still widely used
today. Variations of these models are used by
businesses when preparing a person specification.
The purpose of the interview pro cess is to find
and appoint the best candidate for the vacant jobo
Applicants can improve their chances of success at
interview by reflecting on common sense protocol
(see Box 2.1c). Interviews are conducted by asking
a series of questions (see Box 2.1d) that link to the
job description and the person specification. There
are two categories of interview questions:
Behaviour-based questions are used to assess a
canddates behavioural pattern and initiative.
Such questions typically start off as "Explain an
example of when you ..:' or "Tell me about ..:'
Situational-based questions are used to assess
an applicant's judgmental ability. The interview
will start with a hypothetical scenario and ask
the interviewee for a response, e.g. "If one of
your team members was constantly late for
work, what would you do?" The purpose is to
evaluate the critical thinking ability of the
applicant in each given scenario. In the aboye
example, the applicant might consider the
reasons why the team member is consistently
late for work, such as whether there are personal
issues at home. Additional information is
needed before an objective judgement can be
made about how to de al with the situation.

Box 2.1e Do's and Don'ts for interviewees

Do's
Prepare - research the organization and the
industry; plan on how to get to the venue (on
time!); re-read your CVand letter of application;
prepare questions to be asked at the interview.
Dressappropriately - first impressions count and
can have a lasting impact on the interviewers.
Practice interview skills - helps candidates to
answer questions more confidently.
Don'ts
Be late - this will give a very bad first impression
and managers don't like waiting!
Becritical - condemning others (such as previous
bossesand colleagues) will not impress the
interviewing panel.
Falsify answers - dishonesty to interview
questions may eventually surface, with
devastating consequences.

Box 2.1d Ten common interview questions

1 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 weaknesses and what have
you done about them?
6 Which leader/person do you admire most? Why?
7

Describe your key responsibilities in your last jobo

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?
10 Why did you leave your lastjob?

Table 2.1 a Mode/s of interview se/ection criterio

Alee Rodger's seven-point plan

Munro-Fraser 's flve-fold grading system

Physical make-up, e.g. appearance, speech

and mannerism

Impact on others, e.g. mannerism and physical

make-up

Attainments, e.g. education, qualifications,

experience and training

Qualifications, e.g. acquired knowledge,

experience and training

General intelligence, e.g. reasoning, accuracy

and problem-solving

Innate (natural) abilities, e.g. special aptitudes and

ability to comprehend

Specialised aptitudes, i.e. speciality skills or

competencies relevant to the job

Motivation, e.g. determination and success rate

Interests, e.g. team sports and intellectual

hobbies

Emotional adjustment, e.g. ability to handle stress

/ difficult situations and to get on with people

Disposition, e.g. outlook, friendliness,

temperament and reliability
Circumstances, e.g. family commitments and
the ability to work unsocial hours

One drawback of all interviews is that they are

very time-consuming, Each interview can last over
an hour and sorne jobs may require candidates to
have further interviews with other key personnel.
Another limitation is that a persons actual ability is
not tested. Interviews can be unreliable in selecting
the best applicant for a job because candidates can
He or twist the truth. Even if a can didate performs
well during an interview, they might lack the
desired qualities or skills needed for the job, which
may not have been picked up in the interview.
Hence, other forms of selection are used, such as
testing and references.

'Iesting
Although testing is time consuming, it increases
the chances ofhiring the best candidate for a jobo
This reduces the costs incurred if the wrong
applicant is hired. The four main types of testing
used in recruitment are:
Psychometric tests ssess a candidate's
personality. The tests help to gauge the attitude
of potential recruits and their level of
motivation. As it is important to recruit people
who will fit into the culture of the organization,
man)' large companies use psychometric tests,
especally for more senior positions.
Aptitude tests examine the ability and skills of
potential employees, For example, applicants for
a secretarial job might be tested on the speed
156

and accuracy of their typing. Problem solv

and reasoning skills are also often tested.

Intelligence tests calculate the mental abili

an applicant, such as their skills of numerac
literacy and general knowledge.

Trade tests are used to examine a candidate

specific skills. These are useful when standa
or skills cannot be judged from an interview
from a candidate's application formo For
example, voice tests are used when recruitin
television newsreaders and radio presenters
References

References are written statements about an

applicant from an independent source, such a
previous employer. Referees, the people who w
references, may be asked to confirm the stren
and weaknesses of an applicant. They serve as
final security check to ensure the information
by candidates in their application form, CV an
interview are accurate and truthful. Employers
then determine the suitability of the applicant
the advertised position.
The contract of employment

Once a suitable candidate has been appointed,

new employee is entitled by law (in most coun
to receive either a contract of employment o
written statement of the terms and conditions
their employment (see Box 2.1e).

UNIT2.1: Hu

Box 2.1 e Contents

of an employment

contract

1 Job title
2 Job role and job specification
3 Date the job starts (and ends, if the agreement is
a finite contract)
4 Hours and days of work
5 Rate(s)and method of pay
6

Holiday and sick pay entitlements

7 Pension scheme arrangements

8 Outline of disciplinary procedures
9 Period of notice that must be given when
employment is terminated (by either party)
10 Names and signatures of both parties (employee
and employer)

lnductlon

For most newly appointed staff it is common to

receive induction training to help them settle into
their new role. This can also applyto staffwho have
been internally recruited, perhaps due to a
promotion or due to restructuring within the
organization. Although the internally appointed
person may still need sorne induction for their new
post, the duration and breadth of the training will
be less since they are already familiar with the
policies, practices and culture of the business.
Note: Note: HL candidates must be able to
examine how recruitment enables a firm to
achieve workforce planning targets. IBO,2007.

INfERNAL ANO EXTERNAL RECRUITMENT

Internal recruitment

Internal recrutment involveshiring people who

already work for the firm to fill a vacant position.
This often happens when a business restructures its
organization ofhuman resources (see Unit 2.2) or
when internal candidates apply for a promotional
post within the firmoInternal posts are usually
advertised on staff notice boards, in newsletters or
via staff emails.
Advantages of nternal recruitment
Cost effective - It is usually cheaper and quicker
to recruit from within an organization. Suitable
candidates may also be readily available.
Less down-time - Internal people are already
familiar with the culture of the business and
how it operates. They are therefore usually more
able to adapt and settle into the new position
than those who are new to the organization.
Hence, the internal recruit can take up their new
role with minimal down-time (time used to get
familiar with the operations of a business rather
than time actually spent on getting work done).
Less risk - Employing a new worker from
outside the organization could be risky in that
their actual abilities and skills may not have

been truly tested in the recruitment process. By

contrast, management will be familiar with the
strengths and weaknesses of their staff, so
recruiting internally might ensure that the
vacancy is filled with a highly suitable candidate.
Motivational - Internal recruitment, especially
for promotional posts, can act as a form of
motivation. Providing internal people with
opportunities for promotion suggeststhat
management value their employees.Hence,
internal promotion can create employee loyalty
and commitment to the firmo
Disadvantages of internal recruitment
Fewer applicants - Internal adverts limit the
number of potential applicants for a jobo
External candidates could be ofbetter quality
but they have been overlooked.
Time consuming - Redeploying, relocating or
promoting an internal candidate will usually
lead to another unfilled vacancy in the
organization. Therefore the process could
potentially be more time consuming than f
external recruitment had been used from the
outset.

~- - . o
- "' lthout external recruitment, it
- -:-~ be difficult to get new ideas introduced to
tae organization. Businesses do not benefit from
haring stale and outdated working practises
Lillown as dead wood) because staffhave been
there for too long. Quite often, management
discover that their staff lack the necessary skills
to take up an internal position, so they use
external recruitment.
Internal politics - There could be resentment
and conflict amongst fellow workers who were
unsuccessful for the internal position. This can
create an uncomfortable working environment
for the people involved. Also, f no internal
candidates are suitable then the business will
still have to use external recruitment.
External recruitment
External recruitment is the process of hiring
employees from outside the business. The various
methods inelude:
Newspaper advertising - a common method as it
has a wide audience. However, targeting the
right people can be difficult and the advertising
costs are high.
Specialist trade publications - used to better
target the right audience, e.g. management jobs
in the supermarket industry are advertised in
The Grocer and teaching jobs are published in
the Times Educational Supplement.
Internet advertising - growing in popularity as
more business es use websites to advertise their
jobs. They may use specialist recruitment
websites (such as www.stepstone.com) or their
own corporate website to advertise vacancies.
Internet advertising can have a global reach yet
only incurs relatively low costs.
Commercial employment agencies - advertise
and interview suitable applicants for a job and
make recommendations for selection to the
hiring firmo Using agencies costs money (as they
charge afee for their services) but saves a huge
amount of time for the employer who might
prefer to rely on the recruitment expertise of the
employment agency.
Job centres - non-profit organizations funded by
the government to help people find
employment Businesses can advertise their
posts at job centres free of charge. However, job
158

centres tend to be used for advertising re ~

low-paid jobs so this method might not be
suitable for sorne businesses.
Headhunting - the poaching of a person
his or her current employer. The person is
sought 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 to
choose 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 busines
world, sometimes it really is who you knov rather than what you know that matters.
Advantages of external recruitment
New blood - People hired from outside the
organization can bring in new ideas. They c contribute to the sharing of good practise an .:
give the business sorne insight to how a rival
firm might have done things.
Wider range of experiences - Similarly, externa,
recruits might be more qualified or suitable . any of the internal candidates, perhaps because
they have gained the experiences and skills
required by the business.
Larger pool of applicants - Businesses will have :
wider range and larger number of people
applying for the jobo This increases their chance
of 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, interviewing
and checking references all take up valuable
management time. Employers might also be
obliged by law to consider anti-discrimination
laws when advertising jobs and interviewing
applicants. This further lengthens the process.

UNIT 2.1:

Expensive - External recruitment can be

extremely expensive, such as the cost of job

adverts in newspapers. Businesses might also
need to reimburse shortlisted can didates for
their travel expenses. There is also the
opportunity cost of management time involved

An appraisal is the formal assessment of an

employee's performance in fulfilling his or her job
based on the tasks and responsibilities set out in
their job description. It is common for appraisals to
be conducted on an annual basis by a more senior
member of staff.
The main reasons for appraisals are to:
assess and record an employee's performance in
line with their job description and targets
assist staff in reflecting on their performance at
work

HUMANREso

CEP

in recruitment, selection, induction and

training.
Greater degree of uncertainty - When hiring
external recruits, managers take a risk in that
they do not really know the candidates or their
ability to do the job effectively.

Box 2.1 f Typical questions asked in appraisal

meetings
What has gone well for you this year? What has
not gone so well for you?
What are your key strengths and weaknesses?
What can be done to help improve your overall
performance?
Where do you see yourself in five years' time?
What ideas do you have to help you improve or
develop as a team member?

provide an opportunity to praise staff on their

good performance
identify any barriers hindering the performance
of an employee
identify appropriate training and development
needs of the appraisee
set new targets and goals
aid professional development, helping
employees to plan their careers
aid management in assessing the suitability of
individuals for a pay rise or promotion.
Appraisals are part of performance
managernent - the continuous process involving
the planning, reviewing and mentoring of
employees in order to enhance their performance
at work. Managers will use a range of data,
information and interviews to assess each
employee. Typical questions in an appraisal
meeting indude those in Box 2.1f.
Appraisals can also be used as part of job
evaluation to work out levels of payoThis can be
done by looking at the different tasks, skills,
responsibility, qualifications and effort that a job
entails. The appraisal process can then allow a
business to objectively reward more demanding
jobs at higher rates of payo
)

Figure 2.1 a Performance management meetings help to

formulate goals for employees

Advantages of appraisals
They are used to set targets to make changes that
should lead to progress.
They allow managers to objectively praise staff
on their strengths and their contributions.
Managers can use appraisals to provide
constructive criticism to employees, thereby
allowing staff to focus on improving particular
areas of weakness.
Appraisals are a useful method of getting
feedback from staff.
159

SECTION 2: HUMAN ReSOURCES

Disadvantages of appraisals
Appraisals are a time consuming and costly
exercise.
Formal appraisals tend to take place annually, so
regular monitoring of targets can be difficult.
It can be a daunting experience for both the
employee and the appraiser, especially with
upwards appraisals (where a worker appraises
his or her line manager).
By their very nature, appraisals can be rather
subjective as personal feelings and relationships
at work can interfere with the process.
Staff may get offended by comments from the
appraiser, especially about are as of weakness.
Many appraisers lack the experience and
confidence to carry out appraisals. This
diminishes the credibility of the process and
results.
The employee can experience unnecessary
anxiety and stress if appraisals are linked to payo
There must be confidential feedback (which
lengthens the exercise) and follow-up action
which requires funding and monitoring;
otherwise the process will be pointless.
Managers often aggregate the findings of
appraisal meetings to identify common strengths
and weaknesses. This can help them to identify
areas in need of improvement and the training and
development needs of the workforce.
Methods of appralsal
Essay appraisal involves the appraiser preparing
a written statement about the appraisee,
describing specific strengths and weaknesses in
terms of job performance. It is cornmon for the
appraiser to suggest strategies for dealing with
any shortcomings. The appraisee wilI usually get
to review the statement and any necessary
amendments are made before a final copy of the
tatement is produced; a copy of which is kept
bv the employer and another copy given to the
employee, The key advantage of the essay
ap rasal is that it is very flexible as it allows the
appraiser to inspect any relevant issue regarding
jOD performance. Other methods that compare
WOL-ertraits to predetermined scales or criteria
are more rzid, Ho- -eyer, essay methods can be
Yery time-cons
. g to conduct and
160

administer. Appraisers need to be appropriately

trained and have excellent written
communications skills. Since the method is
open -ended, it lacks sufficient structure to allomanagers to compare appraisals of different

individual employees.
360 degree appraisal involves collecting
evidence about the appraisee's job performance
from peers, subordinates, Iine managers or other
parties (such as suppliers or customers) who
have direct contact with the appraisee. Opinions
and comments are usually obtained by the use of
questionnaires. The questions are mainly
focused on the core competencies of the
appraisee. A 360 degree appraisal is a popular
method of appraising managers, with the aim of
providing useful and practical feedback to
improve managerial effectiveness. However,
such appraisals rely heavily on opinions rather
than factual evidence. Hence this is not suitable
for all business es and it is important for
managers to consider group norms and
corporate culture before embarking with 360
degree appraisals.
Rating system is a highly structured appraisal
method that examines the different components
of a job and then rates each specific part of the
job on a scale, such as from 'poor performance'
to 'outstanding performance'. Almost any aspect
of an ernployee's job performance can be scaled,
including traits such as communication skills,
punctuality, competence, technical knowledge
and initiative. Rating systems get around the
problems of more flexible appraisal methods
such as essay appraisals. They are carried out in
a structured and standardised manner, thereby
making it easier to conduct appraisals and to
compare results with those of other workers.
The method also allows for the equal treatment
of employees in the appraisal process. A
drawback of rating systems is that sorne traits
chosen for assessment may not be directly or as
relevant to the jobs of all employees. The use of
initiative, for example, would be more relevant
to the appraisal of managers than the appraisal
of machine operators. The latter are likely to
score low on their use of initiative, but not
necessarily because they lack initiative but
because their jobs do not give as many

opportunities for them to display this trait.

Another problem is that the perceived meaning
of the scales can vary from one appraiser to
another. What one person interprets as 'aboye
average performance' might not be perceived in
the same way by another persono With an odd
number scale system (3, 5 or 7 options), it is
common for appraisers to 'play safe' by opting
for the middle of the scale (placing someone
'below average' may spark conflict and require
further justification). This act in itself is
subjective so the results become less valido
Peer appraisal involves using employees on the
same level in the organization's hierarchy as the
appraiser and the appraisee. For example, the
marketing manager of a firm might be used to
appraise the finance manager. Peer appraisal is
often used by retail business es with different
outlets, such as branch managers assessing other
branch managers. An advantage of this is that
both the assessor and appraisee are familiar with
the requirements of the jobo Job performance
should therefore be relatively easy to assess. A
disadvantage is that appraisers are often too
reluctant to criticise (identify weaknesses of)
their peers or team members. This then defeats
the purpose of carrying out an appraisal.
Upwards appraisal involves an employee
appraising someone more senior in the
organization, i.e. appraisals carried out by a
subordinate. Although growing in popularity,
this is not a common appraisal method due to its
subjective nature especially as the exercise can
be somewhat intimidating for both parties. The
appraisee might also lack the experience to
conduct an appraisal. Furthermore, many
subordinates are often unwilling to criticise their
line managers for fear ofbeing reprimanded at a
later date.
Management by Objectives (MBO) involves
assessing the extent to which an employee has
met his or her objectives, as set and agreed by
the employee and the appraiser. If the objectives
are met, then this indicates satisfactory job
performance. Exceeding the objectives might be
seen as good or excellent job performance. The
MBO method therefore assesses people
according to actual outcomes rather than basing

results on the opinions of an appraiser. MBO

methods also provide clarity about what is to be
assessed to both appraiser and appraisee.
However, appraisers must be careful when
setting objectives since unrealistic targets might
simply be too difficult to achieve. This would
lead to the conclusion that the employee is
incompetent or sub standard even if in reality
this is not the case, but because the original
objectives were unrealistic and unachievable.
Self-appraisal involves employees appraising
themselves based on predetermined criteria.
Appraisees are expected to be honest about their
strengths and weaknesses. They also need to set
realistic targets for improvement.
Whichever method of appraisal is used, a
performance appraisal usually includes the
following steps:
Staff records and reports are used to assess the
performance of an employee over the past year.
A formal and structured appraisal meeting is
conducted to allow the appraisee to reflect on
their performance. Feedback is important and
an action plan might be formulated by both
parties.
Appraiser completes a written report of the
appraisal. There is usually a rating system used
to judge the performance of the appraisee, from
'outstanding' to 'unsatisfactory'
Both appraiser and appraisee sign the final
written reporto
At times, there might also be a countersignature
from a more senior manager, such as the
supervisor of the appraiser to ensure that the
appraiser has carried out the assessment in an
honest and objective way.
If an appraisee has an overall rating that is below
'modrate, then the following actions can be taken:
lssue an advisory letter to the employee (similar
to issuing a warning letter).
Counselling the appraisee and giving advice of
their shortcomings (in their job performance),
i.e. discussion of strategies for improvement.
Dialogue concerning the consequences if there
is no improvement in job performance.

16_

-~

;:fiQll'\m fue pertmmance

oi fue

:.;'?r see, perhaps by calling for quarterly

reports or updates.

Note: Note: HL candidates must be able to

examine how appraisal enables a firm to achieve
workforce planning targets. IBO,2007.

~ o im~rovements are made within an agreed

eme penod, action is taken to dismiss the
employee.

TRAINING
Training is the process of providing opportunities
for workers to acquire employment-related skills
and knowledge. The amount and nature of training
and development (T&D) required for a job will
vary from one job to another. Sorne jobs require
constant training or updating of skills and
qualifications (such as those in the IeT or medical
professions). Other jobs will only require basic
training to be carried out (such as unskilled
machine operators in a factory).
Whilst training tends to be specfc to the tasks
and responsibilities of a certain job, development
focuses on enhancing the personal skills of a
persono Developing these personal skills helps the
employee to be more effective and flexible in their
jobs. Examples of personal skills development

include: assertiveness, counselling, time

management, stress management, first -aid and
foreign language courses. Employees wishing to
attend sueh courses must be able to justify how
their personal development helps to improve the
performance of a business.
The general objectives of training and
development include:
To enhance the efficiency and effectiveness of
staff
To improve the quality of work (including
customer service) by the employees
To facilitate career and personal development of
each staff member
To develop a multi-skilled and productive
workforce
To help staff adapt to change (technological,
organizational, social and legal changes).

The general benefits of training and

development include:
A better skilled and more flexible workforce
leads to (higher) targets being met. Quality is
also likely to increase.
Improved competence leads to less wastage and
reworking (having to do things again due to
errors the first time round). Hence, greater
efficiency and better productivity help to reduce
costs.
Higher morale as workers progress within the
organization. This may help to reduce
absenteeism and to reduce staff turnover, as staff
feel valued by employers who have invested in
them. Workers also have improved chances of
promotion as they become more skilled.
By having a good reputation for training and
developing staff, business es might find it easier
to attract good quality workers.
Better levels of customer service as staffbecome
more confident and competent in their roles .
T&D can also help employees to adjust better to
change. By updating their skills and being multiskilled, workers are better able to cope with
organizational change.
T&D programmes are a key strategy in helping
organizations to achieve a flexible workforce.
Workforce flexibility refers to the ability of
workers to multi -task (carry out a range of different
tasks or jobs simultaneously) and to adapt to
changes in the business. For example, many
businesses have benefited enormously from hiring
part -time workers as it means they can open for
longer periods. Flexibility allows a business to be
more efficient and can help to cut costs (part-time
workers, for instance, cost less to hire).
The largest drawback of providing T&D
opportunities is the financial cost: training course

162

UNIT2.1:

fees and loss of output whilst workers are being

trained. Another limitation is that effective T&D
takes time to plan and this often consumes a large
amount of a managers valuable time. Furthermore,
there is no guarantee that T&D will help to solve
business problems.

HUMAN

REso

Ultimately, the benefits of T&D mean that the

workforce becomes more flexible and productive. If
the benefits of T&D are greater than the costs, then
the training can be judged to be financially
justified.

Question 2.1.4
Northern Ireland's hotel industry
In a recent report on the recruitment situation in Northern Ireland's hotel industry, it was found that workers
suffered from low wages (earning little much more than the.national minimum wage), very limited career and
promotion prospects and a lack of training and professional development. ProfessorTom Baum and Frances
Devine's report also showed that most hoteliers felt that staff training and development was a burden rather
than a benefit, and so should be kept at a minimum.
a Explain why lowwages and few opportunities for promotion may create problems for
hoteliers.

[4marks]

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

There are three broad types of training:

induction, on-the-job and off-the-job.

By settling in quicker, new recruits can

contribute to the organization more promptly.

lnductlon training

Morale is boosted as new staff feel welcome and

more confident in what they do.

Induction training is training aimed at

introducing new employees to the organization.
Such a training programme might require a new
recruit to:
Meet key personnel, such as the ernployee's line
manager and departmental team members.
Tour the premises including the recruit's main
work space or area.
Learn about the new job role and other relevant
duties and procedures.
Look at company policies and practices, such as
the health and safety policy and fire evacuation
procedure.
The purpose of induction is to help new recruits
to settle in quicker. It can also help to avoid costly
mistakes being made by new employees who are
not aware of the procedures or code of behaviour
required to carry out their duties.
Advantages of successful induction training
Establishes expectations and good working
habits from the start.

Disadvantages of nduction training

Planning and preparing an induction
programme can be time consuming.
Key personnel need to be 'freed' from their
other duties because they are involved in the
induction programme.
'Information overload' can be counterproductive as the new staff have to absorb so
much fresh information.

On-the-job training
On-the-job training refers to training carried out
whilst at the workplace. For example, the training
can be delivered by a head of department or other
specialists. The trainees learn from the skilled
colleague delivering the training at the place of
work. As part of their on-the-job training, junior
managers might shadow (observe and learn from)
more senior managers. Essentially, this type of
training involves 'learning by dong' As Confucius
said, "1hear and 1forget. 1see and 1remember. 1 do
and 1 understand,"

Helps new recruits to understand the corporate

culture of the organization.
163