Welcome to Managing People: Your Guide to Human Resources!

Hello! We are diving into one of the most vital areas of any business: managing people. If you think about it, no matter how great a product or service is, it's the people—the employees—who deliver it, sell it, and innovate it.

This chapter is crucial because happy, motivated, and well-managed staff lead directly to higher productivity, better customer service, and ultimately, greater profit. Understanding these concepts will not only help you ace the exam but also make you a better manager or employee in the future!

Don't worry if concepts like motivation theories seem abstract at first. We will break them down using simple analogies you see every day. Let's get started!

1. The Foundation: What is Human Resources Management (HRM)?

Definition and Importance

Human Resources Management (HRM) is the strategic approach to managing an organization’s most valuable asset—the people working there—who individually and collectively contribute to the achievement of its objectives.

In simple terms, HRM is everything the business does to ensure it has the right people, in the right place, at the right time, doing the right things.

Key Goal of HRM: To align the workforce's capabilities with the business's goals (e.g., market expansion, increased efficiency, quality improvement).

Quick Review: The Three 'Rs' of HRM

  • Recruiting: Finding the right people.
  • Retaining: Keeping the good people (motivation).
  • Rewarding: Paying and recognizing their efforts.

2. Hard vs. Soft Approaches to People Management

Businesses generally adopt one of two contrasting philosophies when managing their workforce. You need to understand the characteristics and implications of each.

Hard HRM Approach

This approach treats employees primarily as a resource or cost that needs to be controlled and managed efficiently, just like machinery or raw materials.

  • Focus: Efficiency, cost minimisation, and strict control.
  • Staff View: Easily replaceable.
  • Training & Development: Minimal, only if absolutely necessary for the task at hand.
  • Communication: Top-down (managers tell staff what to do).
  • Rewards: Emphasis on financial incentives (e.g., piece-rate pay).

Analogy: Hard HRM is like hiring a taxi driver—you pay them only for the distance they drive, and if they break down, you get a new one immediately.

Soft HRM Approach

This approach treats employees as a valuable asset and a source of competitive advantage. The focus is on development, motivation, and getting the best out of people.

  • Focus: Employee engagement, development, high commitment, and trust.
  • Staff View: Assets that need investment.
  • Training & Development: Extensive investment in skills and future potential.
  • Communication: Two-way, participation in decision-making.
  • Rewards: Mix of financial and non-financial (e.g., job enrichment).

Analogy: Soft HRM is like training an athlete—you invest time, coaching, and resources into them so they perform at their absolute peak over the long term.

Key Takeaway

The approach a business chooses (Hard or Soft) dictates its policies on pay, training, and communication. A modern business often tries to blend the two, but generally leans toward the Soft approach for skilled roles.

3. Motivation in the Workplace

Motivation is the desire or willingness to do something. Highly motivated employees are more productive, have better quality output, and are less likely to leave the company (lower staff turnover).

3.1 F.W. Taylor (Scientific Management)

Taylor believed that workers are motivated purely by money. His approach aimed to find the most efficient way to perform a task.

  • Core Idea: Divide work into simple, repetitive tasks (specialisation).
  • Incentive: Use piece-rate pay (pay per unit produced) to maximise output.
  • Management Style: Autocratic (managers dictate, workers obey).

Did you know? Taylor's ideas were foundational to mass production and the assembly line. While efficient, this approach often leads to boring jobs and doesn't recognise social needs.

3.2 Elton Mayo (Human Relations)

Mayo focused on the importance of social factors and team dynamics. His research (the Hawthorne Studies) showed that feelings and recognition matter more than physical conditions or simple pay.

  • Core Idea: Workers are motivated by social needs, feeling like they belong, and having good relationships with colleagues and managers.
  • Hawthorne Effect: People perform better simply because they are being observed and feel management cares about their well-being.
  • Implication: Teamwork, communication, and managerial attention increase productivity.

3.3 Abraham Maslow (Hierarchy of Needs)

Maslow argued that people have five different levels of needs, arranged in a hierarchy (a pyramid). A lower-level need must be satisfied before the next level can act as a motivator.

The Pyramid (from bottom up):

  1. Physiological Needs: Basic survival (food, water, shelter). Business equivalent: A livable wage, breaks.
  2. Safety Needs: Security and protection (physical and emotional). Business equivalent: Job security, safe working conditions, pension schemes.
  3. Love and Belonging Needs (Social): Friendship, acceptance. Business equivalent: Teamwork, company social events, good communication.
  4. Esteem Needs: Self-respect, recognition, status, achievement. Business equivalent: Job titles, bonuses, public praise, promotion opportunities.
  5. Self-Actualisation Needs: Reaching one’s full potential, fulfilling life goals. Business equivalent: Challenging tasks, creative freedom, maximum autonomy.

Analogy: Think of a video game. You must complete Level 1 (Physiological) to unlock Level 2 (Safety). If you suddenly lose your job (Safety need threatened), your focus immediately drops back down, and higher needs become irrelevant.

3.4 Frederick Herzberg (Two-Factor Theory)

Herzberg split factors affecting job satisfaction into two distinct categories:

  1. Hygiene Factors (Dissatisfiers)

    2. These factors prevent dissatisfaction, but they do not motivate employees to work harder. If these are absent or poor, people become unhappy. If they are good, people are simply 'not dissatisfied'.

    • Examples: Pay/Salary, Working Conditions, Company Policy, Job Security, Relationships with supervisors.
  2. Motivators (Satisfiers)

    3. These factors actively create satisfaction and encourage employees to work harder and achieve more. These are linked to the job content itself.

    • Examples: Achievement, Recognition, Responsibility, Promotion, The Work itself.

A Simple Example: Giving an employee a higher salary (Hygiene Factor) stops them complaining about low pay, but giving them responsibility for a major project (Motivator) is what makes them passionate and productive.

Key Takeaway (Motivation)

Taylor focused on money (External reward); Mayo, Maslow, and Herzberg highlighted intrinsic (internal) motivation derived from job satisfaction, recognition, and self-development.

4. Job Design and Reward Systems

To improve motivation, managers must design jobs effectively and use appropriate reward systems.

4.1 Improving Job Design

  • Job Enrichment: Giving employees greater responsibility and control over their work (vertical loading). This is a strong Motivator according to Herzberg.
    Example: A factory worker is now responsible for scheduling maintenance, not just operating the machine.
  • Job Enlargement: Giving employees a wider variety of tasks at the same level of responsibility (horizontal loading). This reduces boredom but may not significantly increase motivation.
    Example: A cleaner is now responsible for two floors instead of one, doing the same basic tasks.
  • Job Rotation: Moving workers periodically between different tasks or departments to increase flexibility and reduce monotony.
    Example: An employee spends three months in marketing, then three months in sales.

4.2 Financial Reward Systems

These are methods of payment designed to attract and retain staff, and encourage productivity:

  • Wages: Paid hourly or weekly, often used for manual labour.
  • Salary: Fixed annual sum, paid monthly, often for professional staff.
  • Piece-rate: Paid per unit produced (often used in Hard HRM).
  • Commission: Payment based on sales achieved (common for sales staff).
  • Performance-Related Pay (PRP): A bonus given if specific targets are met (e.g., meeting a KPI).
  • Profit Sharing: Employees receive a percentage of the company’s annual profits.

4.3 Non-Financial Rewards

These factors help satisfy Maslow's higher needs and Herzberg's motivators:

  • Praise and Recognition: Simple verbal acknowledgement or employee-of-the-month schemes.
  • Job Enrichment (discussed above).
  • Teamwork: Satisfies social needs (Maslow/Mayo).
  • Fringe Benefits: Non-cash rewards (e.g., company car, subsidised gym membership, flexible working hours).
Common Mistake Alert!

Students often confuse Job Enrichment (giving more responsibility) with Job Enlargement (giving more tasks). Enrichment makes the job more satisfying; Enlargement just makes it busier.

5. Staffing the Organisation: Recruitment, Selection, and Training

To succeed, a business must find, select, and develop the right talent.

5.1 Recruitment

Recruitment is the process of finding and attracting suitable candidates for job vacancies.

Internal Recruitment

Filling the vacancy with someone already working within the business (e.g., promotion).

  • Advantage: Cheaper, faster, candidate’s abilities are known, and it motivates existing staff (clear career path).
  • Disadvantage: Leaves a vacancy elsewhere, limits new ideas/perspectives, smaller pool of candidates.
External Recruitment

Filling the vacancy with someone from outside the business (e.g., job centres, online platforms, recruitment agencies).

  • Advantage: Brings in new skills and fresh ideas, larger pool of candidates.
  • Disadvantage: More expensive (advertising costs), takes longer, and the chosen candidate is unknown and requires induction.

5.2 Selection

Selection is the process of choosing the best candidate from those who applied.

Common selection methods include: reviewing CVs/application forms, interviews (structure vs. unstructured), testing (aptitude, psychometric, or skill tests), and checking references.

5.3 Training

Training increases productivity, flexibility, and quality, while reducing waste and accidents.

On-the-Job Training

Training takes place while the employee is working, often led by a senior colleague or manager.

  • Advantage: Relevant to the specific job, productive work is still being done, cost-effective.
  • Disadvantage: Trainer may lack teaching skills, mistakes can be made on live projects, can disrupt the workflow.
Off-the-Job Training

Training takes place away from the immediate work environment (e.g., courses, lectures, specialized external colleges).

  • Advantage: Higher quality training by specialists, no distractions, formal qualifications can be earned.
  • Disadvantage: Expensive (fees and travel), lost working time, skills learned may not be perfectly relevant to the specific workplace.

6. Ending Employment

Eventually, the relationship between employer and employee comes to an end, either voluntarily (resignation/retirement) or involuntarily (dismissal/redundancy).

6.1 Dismissal

Dismissal is when an employee is asked to leave because they have breached their contract or failed to perform their job to the required standard.

  • Reason: Employee conduct (e.g., persistent lateness, theft, poor performance).
  • Requirement: Dismissals must be fair and follow legal procedures (e.g., warnings must be issued first, unless gross misconduct occurs).

6.2 Redundancy

Redundancy occurs when an employee loses their job because the job itself is no longer needed by the business.

  • Reason: Business needs (e.g., automation means a specific role is obsolete, falling demand means fewer staff are required, or the business is closing a division).
  • Key Point: Redundancy is not the employee’s fault. Affected staff are usually entitled to severance pay (redundancy pay).
Key Distinction Recap

Dismissal = You lose the worker because of something the worker did wrong.
Redundancy = You lose the worker because the business no longer needs the job.

Congratulations! You have covered the key elements of managing the 'people' aspect of business. Remember, success is all about aligning the right people with the right strategies!