Human Resource Management Strategy (A Level 9609, Topic 7.4)
Hello future Business leaders! Welcome to one of the most strategic chapters in Human Resources Management (HRM).
This topic is where we move beyond the day-to-day HR tasks (like recruitment and training, which you learned in AS Level) and look at the long-term strategies that link a business’s workforce directly to its overall goals.
Think of it this way: HR strategy ensures that the right people, with the right skills, are working in the right environment, always moving the company forward. Mastering this topic is crucial for the A Level essays and case studies!
7.4.1 Approaches to Human Resource Management (HRM)
Businesses can adopt fundamentally different philosophies about how they treat their staff. These approaches are often described as 'Hard' or 'Soft' HRM.
The Difference Between 'Hard' and 'Soft' HRM
Imagine you run a factory. Do you see your workers as expendable tools, or as valuable assets to be nurtured?
Hard HRM: The Resource Approach
This approach views employees simply as a resource—a cost to be minimized, just like machinery or raw materials. The focus is on efficiency, control, and getting maximum output.
Key Features of Hard HRM:
• Emphasis on short-term changes in workforce size (e.g., hiring and firing quickly based on demand).
• Minimal communication or consultation with staff; decisions are top-down.
• Focus on quantitative measures like labour turnover and absenteeism rates.
• Pay structure is often performance-related or piece-rate, aiming to drive productivity.
• Training is task-specific and minimal (just enough to do the job).
Did you know? Hard HRM is often found in industries with high competition and low-skill jobs, such as fast-food restaurants or large manufacturing plants, where cost control is paramount.
Soft HRM: The Asset Approach
This approach views employees as the business's most valuable asset and a source of competitive advantage. The focus is on developing, motivating, and retaining staff for long-term success.
Key Features of Soft HRM:
• Emphasis on long-term planning and job security.
• Extensive communication and consultation (e.g., team meetings, suggestion boxes, empowerment).
• Focus on development, job enrichment, and career progression.
• Pay is often salary-based with good fringe benefits to encourage loyalty.
• High levels of trust and delegation.
Quick Review: Hard vs. Soft
| Feature | Hard HRM | Soft HRM |
|----------------|--------------|-------------|
| View of Staff | Cost/Expendable Resource | Valuable Asset/Investment |
| Decision Making| Autocratic (Management control) | Democratic (Participation and Trust) |
| Goal Focus | Cost minimisation, efficiency | Motivation, retention, quality |
Key Takeaway: Hard HRM is often reactive and cost-focused, treating people as a means to an end. Soft HRM is proactive and long-term focused, treating people as partners in success.
Flexible Working Contracts and the Gig Economy
A key part of modern HRM strategy is adapting the employment contract to meet the needs of both the business and the workforce.
Types of Flexible Contracts and Working Arrangements
Flexible contracts move away from the traditional 9-to-5, 5-day work week.
• Part-time and Full-time Contracts: The standard definitions, though part-time allows the employee to work fewer hours than a full-time employee.
• Temporary Contracts: Employment for a fixed period (e.g., six months for a specific project).
• Zero Hours Contracts: The business is not obliged to offer the employee any minimum hours, and the employee is not obliged to accept the work offered. (Highly flexible for the business, often criticised for insecurity for the employee.)
• Annualised Hours: Total number of hours worked over a year is fixed, but the scheduling varies, usually to match seasonal or peak demand (e.g., working longer hours in summer and shorter in winter).
• Flexi-time: Employees must work a core set of hours (e.g., 10 am - 3 pm), but the start and end times are flexible (e.g., starting at 7 am and finishing at 4 pm, or starting at 10 am and finishing at 7 pm).
• Home Working (Telecommuting): Working from home, often facilitated by IT and communication technology.
• Shift Working: Employees work in rotation (e.g., 6 am-2 pm, 2 pm-10 pm) to ensure 24/7 or extended operational coverage.
• Job Sharing: One full-time job is split between two (or more) individuals.
• Compressed Working Hours: Working the standard weekly hours (e.g., 40 hours) in fewer days (e.g., four 10-hour days).
The Gig Economy
This describes a labour market characterized by the prevalence of short-term contracts or freelance work, rather than permanent jobs. Workers (often called freelancers or independent contractors) are paid for specific ‘gigs’ or tasks (e.g., Uber drivers, freelance writers, web developers).
Advantages and Disadvantages of Flexible Contracts
Flexible contracts must be evaluated from the perspective of both the employer and the employee.
Advantages (to Business):
• Better Matching Capacity: The business can match staff numbers directly to fluctuations in demand (especially useful with zero-hours or annualised hours).
• Reduced Overheads: Less office space needed due to home working.
• Wider Talent Pool: Attracts people who cannot commit to full-time, rigid hours (e.g., students, parents, carers).
• Higher Retention: Employees value work-life balance (related to Soft HRM).
Disadvantages (to Business):
• Communication Issues: Difficult to ensure smooth communication and team cohesion when staff work varied hours or remotely.
• Training Costs: High labour turnover in temporary/zero-hours roles leads to constant induction training.
• Lack of Commitment: Flexible staff, especially temporary or gig workers, may show less loyalty or commitment to the business.
• Difficult Management: Harder to monitor performance and ensure quality control across varied shifts and locations.
Key Takeaway: Flexible contracts offer strategic responsiveness to demand but require excellent communication systems to avoid fragmentation of the workforce.
Managing Poor Employee Performance
Poor performance can severely damage a business's productivity, quality, and reputation. A strategic HRM approach requires a structured process to address this.
Measurement of Poor Employee Performance
Performance must be measured objectively before it can be managed.
• Quantitative Measures:
• Productivity Rates: Output per worker compared to targets.
• Absenteeism and Punctuality: Days missed or late arrivals.
• Waste/Defect Rates: Especially relevant in production roles.
• Sales Figures: For commercial roles.
• Qualitative Measures:
• Performance Appraisals: Feedback from supervisors.
• Customer Reviews/Complaints: Direct feedback on service quality.
• Team Feedback: Input on teamwork and reliability.
Causes and Consequences
Common Causes of Poor Performance:
1. Skill/Training Deficit: The worker doesn't know *how* to do the job (poor selection, or inadequate training).
2. Motivation Issues: The worker *can* do the job, but chooses not to (lack of job satisfaction, poor rewards, or poor management).
3. External Factors: Personal issues, health problems, or poor work-life balance.
4. Resource Deficit: The business fails to provide the necessary tools, equipment, or adequate supervision.
Consequences for the Business:
• Reduced profitability and productivity.
• Increased waste and lower quality standards.
• Negative impact on team morale (high performers resent carrying the load of low performers).
• Increased management time spent on disciplinary issues.
Strategies for Improving Employee Performance
The appropriate strategy depends heavily on the cause. Always aim for improvement before resorting to dismissal.
1. Identify and Communicate: Use appraisals to formally identify the shortfall and communicate clear performance targets (linking to MBO, below).
2. Training and Development: If the cause is a skills gap, provide remedial on-the-job or off-the-job training.
3. Motivational Strategies: If the cause is motivation, use non-financial motivators (job enrichment, empowerment, team working) or financial incentives (performance-related pay).
4. Mentoring and Coaching: Pair the underperforming employee with a high performer for continuous guidance.
5. Disciplinary Procedure: If performance doesn't improve despite support, formal disciplinary action (warnings) may be necessary, eventually leading to dismissal if required.
Common Mistake to Avoid: Don't confuse 'dismissal' (firing due to misconduct or inability) with 'redundancy' (losing a job because the job role no longer exists).
Key Takeaway: Strategic performance management is cyclical: Measure, Diagnose Cause, Apply Targeted Strategy (Train or Motivate), and Review.
Management by Objectives (MBO)
Management by Objectives (MBO) is a strategic management technique where managers and employees agree upon specific, measurable goals (objectives) that align with the company's overall strategy.
Implementation of MBO
MBO is typically a four-stage process:
1. Define Corporate Goals: Senior management sets broad, long-term organizational goals.
2. Set Departmental/Individual Objectives: Managers work with employees to translate the corporate goals into specific, SMART objectives for each department and individual. (Example: Corporate goal is 'Increase market share by 10%.' Individual objective might be 'Increase sales calls by 5 per week.')
3. Monitoring Performance: Regular meetings and performance appraisals are held to check progress and provide feedback and support.
4. Evaluate and Reward: At the end of the period, performance is reviewed against the agreed-upon objectives. Success can be linked to rewards (like bonuses or promotion).
Usefulness of MBO
MBO is highly useful in strategic HRM because it integrates individual work with business goals.
• Improved Motivation: Employees are involved in setting their own goals (participation and empowerment), increasing commitment.
• Clarity of Roles: Everyone knows exactly what is expected of them, reducing conflicts.
• Better Communication: Requires continuous dialogue between managers and subordinates.
• Facilitates Performance Review: Provides clear, measurable benchmarks (the objectives) against which performance can be judged.
However, MBO can be time-consuming, and if the objectives are set poorly (too ambitious or too easily achievable), it can lead to frustration or manipulation by staff.
Key Takeaway: MBO ensures alignment; everyone rowing the boat is aiming for the same strategic destination.
The Changing Role of Information Technology (IT) and Artificial Intelligence (AI) in HRM
Technology is transforming how HRM functions, making processes faster, more data-driven, and often more strategic.
Information Technology (IT) in HRM
IT covers systems like databases, networks, and specialized software.
• Data Management: IT systems (like Enterprise Resource Planning - ERP) automate routine tasks such as payroll, holiday requests, and recording training history.
• Efficiency: Reduces administrative burden on HR staff, allowing them to focus on strategic tasks (e.g., succession planning, employee development).
• Workforce Planning: Allows instantaneous analysis of labour turnover, skills gaps, and recruitment needs.
• Communication: E-learning platforms facilitate consistent training delivery, and internal networks improve communication, especially for remote workers.
Artificial Intelligence (AI) in HRM
AI uses complex algorithms to mimic human intelligence, dramatically changing strategic HRM processes.
• Recruitment and Selection: AI scans thousands of CVs (résumés) in seconds, matching candidate skills and profiles to job requirements, speeding up the initial screening process.
• Performance Prediction: AI can analyze historical employee data (attendance, project success, appraisal ratings) to predict who is likely to leave (flight risk) or underperform, allowing HR to intervene proactively.
• Personalised Training: AI identifies individual learning gaps and recommends highly specific training modules, making development more effective.
Caution: While powerful, AI in recruitment must be carefully monitored to ensure algorithms do not introduce or reinforce unintentional bias based on age, gender, or background.
Key Takeaway: IT handles the administration (speed and storage); AI handles the strategy (prediction and analysis), fundamentally shifting HR from an administrative function to a strategic decision-making partner.
You’ve made it through the core elements of HRM strategy! Remember, the people dimension is often the trickiest part of business because humans are unpredictable. By implementing careful strategies like Hard/Soft HRM choices, appropriate flexibility, performance management, and using MBO, a business can maximise its chances of meeting its overall strategic goals. Keep practising your application and evaluation skills!