Produce an Analytic Report on How a Large Business Manages Human Resources

Have a little read: ... Produce an Analytic Report on How a Large Business Manages Human Resource Terms of Reference This report has been produced as evidence for Unit 4 - 'Human Resources' - as part of a Vocational A'level in Business Studies. Introduction This report has been written in order to show how successfully the company - 'Boots' is in running its human resources department in order to meet its business objectives. The report has been divided into four parts to ensure a comprehensive coverage of Boots has been researched and also to give the report a main structure of the human resources departments. Part 2 will be discussed in depth. Part 1 = Planning Part 2 = Recruitment & Selection Part 3 = Training & Development Part 4 = Performance Management This unit provides an insight into how businesses recruit and manage their human resources. It shows that if businesses are to achieve their objectives, they must plan their human resource function so that they have the right number of employees with the appropriate qualifications and training to meet the needs of the business. Successful human resource management requires that a business takes account of changes in the labour market and employment legislation to keep its employees motivated, to monitor their performance and to help them continuously develop through additional training. Findings - Part 1 What is Human Resource Management? Human resource management includes a variety of activities. There are many key factors for any large organisation to focus on such as the following: * What staffing needs to have and whether to use independent contractors or hire employees to fill these needs * Recruiting and training the best employees, ensuring they are high performers * Dealing with performance issues and ensuring its personnel and management practices conform to various regulations. For the organisation activities also include managing its approach to employee benefits and compensation, employee records and personnel policies. Usually new business owners have to carry out these activities themselves because they can't yet afford part or full-time help. However, they should always ensure that employees have and are aware of personnel policies, which conform to current regulations. These policies are often in the form employee manuals, which all employees have. Staff are a major resource in any business. This is particularly true in a business like Boots, which has a very large amount of employees and which provides a range of services to its customers. Managing human resources effectively is vital to Boots for several reasons: * The business needs to employ the right number of staff. If it has too many employees it is not cost effective and if it has too few then it will not be able to carry out all of its work * The business needs to have a stable workforce. It is costly and inefficient if there is a high labour turnover of staff * The business needs to recruit the most appropriate staff for vacancies * The business must make sure its staff are properly trained in order to carry out their work in the most effective way * The business has to abide by laws and regulations concerning its staff or it could face prosecution or difficulties later * Motivated staff work better than demotivated staff * Pay levels should be appropriate. Paying too much is costly, but paying below the minimum wage is demotivating. Who is responsible for Human Resource Management? In Boots each manager takes it upon themselves to contribute to the overall responsibility of the way the Human Resources is managed. In many ways it is upto a department that is known as the personnel, which ensures the employees of Boots are well trained and motivated enough to carry out each task as efficiently as possible. There are a number of problems Boots may face when planning how to use its personnel: * Problems with predicting the behaviour of people. Boots may have filled a position, but after being appointed the individual may decide he/she does not want the job. This could mean another costly and time-consuming series of interviews for the company. * Problems with predicting external events. Sometimes it is difficult to predict exactly how many employees are required. For example, the opening up of the former communist countries to trade from the West in the early 1990s would have meant changing plans for businesses aiming to break into these markets. It is likely that employees with knowledge of the business and language of these countries would have been in demand. * Planning has to be constantly monitored. It is unwise for Boots to plan its human resource needs and not alter them in the light of changing events. Planning has to be checked, revised and updated as other factors change. * Human resource planning must be well thought out or it is likely to lead to industrial relations problems. Cuts in the workforce or wage reductions that are not negotiated could, as mentioned earlier, affect employees' motivation and could lead to industrial action. Human Resource Planning Boots have to plan carefully to ensure they have the right number of suitable employees for their needs. To do this they need a good understanding of the labour market in the areas where the company's branches operate. Boots consider the effects of the following labour market factors for their human resources planning: * Local employment trends * Local skills shortages * Competition for employees * Availability of labour. Human resources planning also involves looking at how labour is organised within Boots. Boots take account of a range of factors when making decisions about their internal staffing. The factors include: * Labour turnover (stability index wastage rate) * Sickness and accident rates * Age, skills and training * Succession. On the next page shows a diagram that indicates the various stages in the Human Resource Planning process. The top-left side of the diagram is concerned with an analysis of the likely future supply of the right sorts of people, while the top right-hand side looks at the expected future demand for the right sorts of people. The human resources plan is concerned with ways of matching up these two sides. Firstly Boots will examine the demand side before going onto look at the supply conditions. The stages in the Human Resources Planning process Demand side Boots' demand for labour will depend on the plans the company has for the future, in particular the big plans, what many businesses refer to as 'strategic plans'. For example, a company may decide to increase its market share quickly and to do this it must review its competition. It may find that to be as good if not better than its competitors it could open a great deal more branches around the UK. This expansion would be the company's strategic plan. In order to support this expansion the company would need to recruit many more employees. Forecasting the demand for human resources Boots's demand for human resources must be estimated by analysing its future plans and by estimating the levels of activity within the business. There are two main ways of forecasting demand: * Management estimates * Work study techniques Management estimates Managers of any business may be asked to forecast their staff requirements. They will do this on the basis of past, present and likely future requirements. Work-study techniques Over the years much work has gone into work-study. Work-study specialists work out how long various jobs take using available machinery and equipment. Provided they know what output/sales are likely to be, they can calculate the numbers of employees required and the hours they will need to work. Supply side If Boots is to work out the supply of labour available the company must examine the numbers of people available to work, how long they can work for, their ability to do the required jobs, their productivity (output per head) and other factors. The supply of labour is made up of two sources: internal and external. See below: Internal Supply Before Boots decide to recruit any employees externally it needs to consider whether it has the suitable candidates internally who could do the job efficiently. By doing this Boots are saving money and recruiting internally takes less time than recruiting externally. However, if the job on offer is highly specialised then it is unlikely that there are any suitable candidates that match the criteria. The personnel can do this by sifting through employees' documentation that may contain past experience, skills gained before joining the company and appraisal reports. Boots is one of many companies that ask employees to complete a 'skills questionnaire' to see whether they possess the required skills to take up a vacant job. A skills questionnaire may also be of help to the Human Resource Department to identify possible mentors and to plan training events if skills shortages are identified. This information is of use to the Human Resource Department when deciding whether to advertise internally. (Unfortunately it was not possible to gain a skills questionnaire from Boots). Statistics and information would be collected on employees already within Boots, which would cover the following areas: * The number of employees in particular job categories * The skills available * Skills analysis * Performance results * Promotion potential * Age distribution and length of service * Staff turnover The number of employees in particular job categories This figure will give a broad overview of the numbers in Boots who already possess certain broad category skills - e.g. in a Premier division football team this could be the number of strikers, midfielders, defenders goalkeepers etc. Or it could identify those who already have Premier division experience and those who are novices at that level. The skills available It may be helpful to identify the current skills held by the labour force and see how many of these are transferable (a skill used in one particular job may be transferable to another job). Skills analysis Boots needs to be sure it has the right number of people available at the right time but also with the right skills. The company, therefore, needs to assess its present supply of skills across the company's workforces and to identify the sorts of skills it will require in the future. A skills inventory of current employees will indicate those who have received recent training and those who will require training. It may be possible to meet the human resource requirements of the organisation by training and developing current staff rather than recruiting externally. (This is often a cheaper option and also helps to motivate people who are already working for the company). Performance results Boots will want to gather information about the level of performance of various categories of current employees. This sort of information may be collected in a quantitative form (e.g. numbers of items produced of acceptable quality, number of rejected items because of poor quality etc). In addition information may be collected that is of qualitative nature (e.g. information from appraisal interviews). Promotion potential Internal promotions will change the availability of existing resources. It is useful to know how many employees have the skills and aptitude for promotion to more demanding roles. In addition, it is useful to know how many employees have the potential, with suitable training, for promotion. Age distribution and length of service This is a very important factor to any large or medium sized business because it is possible to have too many experienced workers and too many inexperienced workers within an organisation. If Boots has too many experienced workers there is a danger that they will retire at similar times leaving the organisation in a mess to sort out by recruiting more staff with no experience. It is therefore important for Boots to have a workforce of mixed ages so that the danger of experienced workers retiring at the same time is avoided. If the organisation has too many inexperienced workers it may show a slow progress of advancement in the business objectives which may influence employees to quit their job and look somewhere else offering them more job satisfaction. Staff turnover. Staff turnover should be analysed in order to identify the reasons people leave Boots and to help it forecast future losses. A degree of staff turnover may be beneficial to the organsation, as fresh staff can be recruited, promotion channels may be opened up and it may allow for natural wastage when Boots is trying to reduce its workforce. Too high a level of staff turnover will mean that there will be high additional costs of staff replacement and recruitment, additional training costs and disruption to the quality of service or to production. If Boots found that there was nobody suitable for the job of an Office supervisor within the organisation then it would need to consider the possibility of finding one within its locality. In this case because the report is on Boots of Carlisle the HRD would study local labour market information of Cumbria. Techniques for forecasting internal employee supply: labour turnover There are two simple methods of measuring the rate at which employees leave or stay with an organisation, which are: * Employee wastage rate * Labour stability rate Employee wastage rate - Below shows a simple diagram indicating how it is possible to calculate the number of staff leaving a business as a percentage of those who could have left: Number of staff leaving in time period Wastage rate = X 100 Average number of staff employed in time period Unfortunately, information was unable to be found for a realistic wastage rate in Boots so an example is shown below: If Boots were to employ a photo-developing workforce of 400 in the North of England but found that 100 of them left during the year, the wastage rate would be: 100 X 100 = 25% 400 Such information is used to predict likely turnover in the future, to see if there is a need to examine in detail the reasons for the high turnover and to find out if there is need to recruit new staff to replace those leaving. Even though the labour turnover index is very useful to the organisation it also (as with most statistics) needs to be considered alongside other factors such as whether employees are leaving one particular department of the organisation. Labour stability rate - Some organisations make good use of the labour stability index as well as the wastage rate. This indicates to the organisation the tendency for employees with long service to stay with the company therefore linking the leaving rate with the length of service. Number of staff leaving with more than 1 year's service Stability index = x 100 Number employed 1 year ago The advantage of knowing about the current labour force of an organisation enables it to make the most of the skill and potential present within. But on the other hand, the availability of those from the local and national labour market statistics also has to be taken into consideration. The effectiveness of employee organisation The effectiveness with which Boots or any other organisation runs its human resource policies can be measured by the level of employee satisfaction, and this is where stability indexes and, again, wastage rates are so important. If employees of Boots are content with their work, they are most likely to turn up for work. Levels of stress and stress related absenteeism increase when there is poor human relations atmosphere. Sickness and accident rates It is most likely that Boots keep a record of the following: * Notified absences. When employers are going to be absent from work (e.g. to attend a funeral, a hospital appointment, a wedding etc). * Absences due to sickness. Employees will need to produce a doctor's note so that they are entitled to sickness benefits, etc. * Unauthorised absences. When employees simply do not turn up for work, without telling anyone. As a result of these records, Boots can record absences as a percentage of the hours/days etc, that could possibly have been worked. Absence records can be kept for individual employees, groups of employees and the workforce as a whole at Boots. Such detailed statistical analysis enables Boots to keep an eye on where problems lie - with an individual, with a particular section of workers or with Boots as a whole. Comparisons can then be made with other workers and past records (for the individual employee), with other teams/sections (for teams/sections) in the workplace and with comparable organisations. Breaking down the statistics further highlights whether the problem lies with sickness or with unauthorised absence. And by keeping these records for a number of years, it is possible to establish trends. Absences should be measured as a percentage of total time. For example, if an employee from Boots is due to work for 40 hours in the week, but turns up for work for 32 hours only, then his/her absence level is: 8 x 100 = 20% 40 If the total hours people in Boots work in a week is 10, 000 but they work only 9, 500 of these then the absence rate is: 500 x 100 = 2.5% 10, 000 Accident rates are calculated by recording the number of accidents at work. Boots should have a health and safety committee with the responsibility to: * Investigate and report on accidents or incidents. * Examine national health and safety reports and statistics * Review health and safety audit reports * Draw up works rules and instructions * Oversee health and safety training * Promote and advise on relevant publicity campaigns * Recommend updates to Boots' safety policy * Consider and advise on impending legislation. Part of the health and safety committee's responsibilities will be to ensure accurate records are kept of accidents at work. The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1985 (RIDDOR) set out that injuries resulting from accidents at work where an employee is incapacitated for three or more days must be reported to the authorities within seven days. Injuries involving fatalities must be notified immediately by the most practical means (e.g. by phone). Listed diseases must also be notified. Boots, therefore, will keep statistics on both minor accidents at work (i.e. ones however minor that involve some form of first aid) and accidents that have to be reported to the authorities under RIDDOR. Accident statistics relating to particular industries and organisations can then be collected nationally. In addition, Boots and other organisations will want to keep internal statistics to make sure that undesirable trends do not occur. In the course of time Boots will want to see accident rates falling. Accident rates can be calculated simply as a number of accidents per year within a chosen