2. Human resource management

Exam analysis

Most tested topics

2.1 Human resource management (HRM)

Human resource management plans, recruits, develops, rewards and supports people so the organisation has the capability to achieve its objectives.

HR decisions affect cost, productivity, skills, morale and legal risk. HRM is therefore a strategic function, not only an administrative payroll task.

If a firm plans a new digital service, HRM may forecast skills, recruit or train staff and redesign roles before launch.

A “people-first” policy is not automatically effective; its value depends on fit with work, resources and objectives.

Workforce planning forecasts the number and skills of employees needed, audits the current workforce, identifies gaps, chooses actions and reviews results. Demand, technology, expansion, seasonality, labour supply, budgets and employee departures can change the plan; responses include recruitment, training, redeployment, flexible contracts, retention or job redesign.

$\text{Labour turnover (\%)}=\frac{\text{employees leaving during the period}}{\text{average number employed during the period}}\times100$

If 18 employees leave and the average workforce is 90, labour turnover = 18 ÷ 90 × 100 = 20%. Compare the same period and similar roles or divisions before diagnosing the cause.

Pattern	Possible benefit	Possible cost/risk
High turnover	Removes poor fit; brings new ideas/skills; may lower senior wage cost	Recruitment/training cost, lost experience, disruption, weaker quality/service and morale
Low turnover	Retains skills, relationships and culture; lowers replacement cost	Stale ideas, blocked promotion, high senior wages, skill mismatch or retained poor performers

A turnover rate is not a verdict. Interpret who left, why, replacement difficulty, business growth, industry norms and short- versus long-run consequences.

Recruitment attracts a suitable pool; selection chooses against job-related criteria. A defensible pipeline is: identify vacancy → write job description and person specification → choose internal/external channel → advertise → receive applications/CVs or résumés → shortlist → assess → check references → offer and agree an employment contract.

Item	Main purpose
Job description	Duties, responsibilities, reporting, hours/location and role conditions
Person specification	Required or desirable skills, qualifications, experience and attributes
Employment contract	Agreed terms such as job, pay, hours, benefits, notice, duties and rights

Route	Strength	Limitation
Internal	Faster/cheaper; known performance; motivates promotion	Smaller pool; creates another vacancy; fewer new ideas
External advertisement/online	Wide, fast reach and searchable applications	High volume/poor fit; platform and screening cost
Agency	Specialist pool and screening support	Fee and less direct control/knowledge

Method	Evidence supplied	Main caution
Application/CV or résumé	History, qualifications and written claims	Self-reported and inconsistently presented
Structured interview	Comparable responses, communication and motivation	Bias/rehearsal; weak predictor alone
Test/work sample	Knowledge, aptitude, personality or actual task skill	Must be relevant, valid and fair
Assessment centre	Several exercises/observers reveal behaviour and teamwork	Expensive and time-consuming
References	Past role/conduct confirmation	May be brief, selective or restricted

Use more than one relevant source of evidence, apply the same criteria fairly, protect equality and diversity, and weigh quality of hire, speed and cost. A larger applicant pool or a confident interview does not guarantee performance.

Route	Meaning	Choice and basis
Voluntary redundancy	The role is no longer needed and employees are invited to agree to leave, usually with a package	Employee chooses whether to accept; may reduce conflict but the business can lose valued skills
Involuntary redundancy	Employer selects employees because their jobs are no longer required	Employee has no choice; selection criteria and procedure should be objective and lawful
Fair dismissal	Employer terminates an individual for a valid reason such as misconduct or capability, using a fair procedure	Evidence, warnings/hearing where appropriate, consistency and right to respond matter
Unfair dismissal	Termination lacks a valid reason or fair/legal procedure	Can cause claims, compensation, reputation damage and lower morale

Ask first: has the job disappeared, or is the issue the employee's conduct/capability? Automation may make a good worker's role redundant; repeated unsafe conduct after a fair process may justify dismissal. Both choices can affect cost, skills, morale, workload and employer reputation.

Redundancy is not a label for removing an unwanted person. Dismissal is not automatically fair merely because the employer states a reason; the reason and procedure must withstand scrutiny in the relevant legal context.

Employee morale is the level of satisfaction, enthusiasm, confidence and commitment felt toward work. Welfare protects physical and emotional wellbeing through safe conditions, reasonable support and access to help. Work-life balance is a sustainable allocation of time and energy between work and life outside work.

HRM influences morale and welfare through workload and shifts, pay and fairness, leadership and voice, safety, counselling/support, leave and flexibility. Better fit can reduce stress, absence, errors and labour turnover → preserve skills and service quality → lower replacement cost and strengthen productivity/reputation. Provision costs money and may be difficult in some operating contexts, so diagnose the binding problem.

Concept	Meaning	Possible business impact
Diversity	A mixed workforce whose differences and perspectives are positively valued	Wider labour pool, skills, ideas, customer insight and reputation; may require inclusive culture/training
Equality	Fair opportunity and treatment without unjust discrimination	Motivation, retention, legal-risk control and access to best applicants; change may create short-run cost

Long evening and weekend hours may tire specialist engineers → more mistakes and longer lead times → damaged quality/reputation and higher turnover. Redesigning schedules can help, but staffing cost, customer demand and employee preferences determine feasibility.

A wellness perk does not prove healthy work, diversity does not guarantee inclusion, and equality is not blindly treating unlike needs identically. Judge short- and long-run effects in the business context.

Type	What it is	Strength	Limitation
Induction	Introduction for new employees to people, role, culture, systems, safety and terms	Faster settling, fewer mistakes, confidence and retention	Uses time/cost and may overload new starters
On-the-job	Learning at work while doing/shadowing/coaching/rotating	Relevant, lower direct cost, productive output and colleague knowledge	Trainer quality varies; errors/disruption and inherited bad habits
Off-the-job	Learning away from the normal workplace, e.g. specialist course	Expert input, focus, safe practice and possible qualification/new ideas	Fees, travel/time and lost output; transfer may be weak

Effective training can improve skill, consistency, quality, safety, productivity, customer service, motivation and retention → raise revenue or lower waste, absence, turnover and unit cost. Against this, include fees, trainer time, lost output and the risk that trained staff leave. Evaluate by performance transfer, not course completion.

Development aim	HRM actions	Business effect
Intrapreneurship	Give skills, autonomy, time/resources, cross-functional teams, leadership opportunities and rewards for ideas	More experimentation, process/product innovation and possible competitive advantage; includes project cost/risk
Multi-skilling and flexibility	Cross-train, rotate/enlarge/enrich jobs, map skill gaps and reward new skills	Employees cover tasks/absence/demand changes, improve teamwork and redeployment; may raise workload/pay expectations

Choose the method by learner, task risk, specificity, scale, urgency, cost and need for external expertise. Training improves current capability; development is broader and future-facing, though they can overlap.

Cooperation means management and employees share information, consult, negotiate and work toward compatible goals. Trust and credible voice can improve ideas, safety, quality, productivity, morale and retention while reducing conflict and management time; management gains smoother change and employees gain influence, clarity and fairer treatment. Training, consultation time and compromise can add cost.

A trade union represents members' employment interests. Collective bargaining is negotiation between employer representatives and employee/union representatives over collective terms such as pay, hours, safety, welfare, job security and procedures.

Stakeholder	Possible benefits	Possible costs/risks
Employees	Greater bargaining power, pay/conditions, safety, information, support, job security and decision voice	Membership fees, lost pay during action, conflict or possible victimisation
Employer	One communication/negotiation channel, stable agreements, better coordination, morale and retention	Higher wages/welfare cost, slower decisions, restrictive agreements or industrial action/lost output

Issue → representatives gather member/management evidence → collective negotiation and trade-offs → agreement and implementation, or unresolved dispute/industrial action. For a shift change, consultation and compensation may protect continuity; imposition can trigger resistance, absenteeism, work-to-rule or strike, reducing output and revenue.

Good relations do not mean no disagreement, and unions do not only cause strikes. Judge union density, trust, legal setting, urgency, alternatives, affordability and whether long-run cooperation outweighs short-run concessions or disruption.

2.2 Motivation

Motivation is the willingness to direct effort toward work. It is shaped by intrinsic factors such as achievement and responsibility and extrinsic factors such as pay, recognition and security.

A reward changes behaviour only if employees value it, believe performance can earn it and see the process as fair. Different people respond to different combinations.

A sales bonus may increase effort when targets are controllable, but can damage teamwork if staff compete for an unfairly allocated reward.

Motivation is not identical to satisfaction or productivity; an enthusiastic worker may still lack training or resources.

A human need is a basic requirement or valued psychological state an individual seeks to satisfy. At work, needs can involve income and physical conditions, safety/security, belonging, esteem/recognition and growth, challenge or fulfilment.

Need	How work may satisfy it	Why it may remain unsatisfied
Physical/material	Sufficient pay, breaks, canteen/toilets and comfortable conditions	Low pay, excessive hours or poor facilities
Safety/security	Contract, stable job, clear authority and safe systems	Zero/short hours, unsafe work, recession or weak protection
Belonging	Teams, communication and inclusion	Isolation, exclusion, conflict or discriminatory culture
Esteem/status	Recognition, responsibility, promotion and fair treatment	No acknowledgement, unfairness or blocked progression
Growth/fulfilment	Challenge, creativity, development and autonomy	Repetitive work, strict control or no learning opportunity

The same practice can matter differently by experience, role, life stage and ambition. A carer may value flexible hours; a developer may value challenge; a low-paid worker may prioritise reliable income. Business finance, job design, leadership and objectives limit what can be offered.

Needs models identify possibilities, not a rigid universal sequence. Ask which need is salient, what workplace evidence shows, and whether the proposed action genuinely addresses the barrier.

Theory	Core idea	Management implication and caution
Taylor	Economic reward and scientific task design can raise output; workers are treated mainly as rational economic people	Standardise work and link pay to output, e.g. piece rate; may ignore social/intrinsic needs and encourage quantity over quality
Mayo	Social relations, attention, communication and group belonging affect motivation	Use teams, consultation and supportive supervision; group norms can also restrict output
Maslow	Physiological, safety, social, esteem and self-actualisation needs may become salient	Diagnose the unmet need and match pay/security/team/recognition/challenge; order and responses are not universal
Herzberg	Hygiene factors prevent dissatisfaction; motivators create satisfaction	Fix pay, policy, conditions and security, then enrich jobs with achievement, recognition, responsibility and growth; categories can overlap
McClelland	People differ in learned needs for achievement, power and affiliation	Give realistic challenge/feedback, influence/leadership or teamwork; needs mix varies and can be difficult to measure
Vroom	Motivation depends on expectancy (effort→performance), instrumentality (performance→reward) and valence (reward value)	Make targets achievable, links credible and rewards valued/fair; if any link is near zero, incentive effect collapses

Diagnose evidence before choosing a lens: repetitive isolated work may suggest Herzberg/Mayo; unreachable targets or broken promises suggest Vroom; a creative software employee may need McClelland achievement or Maslow self-actualisation. Then propose an action, trace its effect and test cost, fairness, task and employee differences.

Content theories ask what needs or factors motivate; Vroom is a process theory explaining how expectations produce effort. Naming a theorist is not analysis, and no theory is best for every worker.

Payment method	Basis	Main incentive and risk
Time based	Amount per hour	Income tracks hours; may not reward output
Salary	Fixed annual amount, usually monthly	Security/status; weak direct output link
Piece rate	Amount per item produced	Raises quantity; quality/safety/teamwork may suffer
Commission	Amount or percentage of sales	Raises selling effort; aggressive selling, volatility and revenue-not-profit focus
Bonus	Extra payment for a target/event	Focuses effort; target gaming or unfairness
Profit sharing	Employees receive a share of business profit	Aligns with total success; individual effort link may feel weak and profit varies
Performance-related pay	Pay linked to assessed agreed criteria	Rewards contribution; measurement, bias, stress and administration issues
Fringe benefits	Non-cash financial-value perks, e.g. insurance/car/discount	Retention/status; cost and unequal value to employees

Commission example: weekly salary $250 for four weeks =$ 1,000; direct sales $10,500 at 5% =$ 525; total February payment = $1,525. Always identify whether commission is additional to basic pay and whether it is based on sales value, volume or another measure.

Non-financial method	Mechanism	Caution
Training/development/promotion/status	Skill, growth, recognition and career path	Cost; opportunity may be limited or staff may leave
Job rotation/enlargement/redesign	Variety or wider tasks	Wider is not necessarily deeper; training/disruption
Job enrichment	More challenge, complexity, responsibility and achievement	Stress or errors without capability/resources
Team working	Belonging, support and shared problem-solving	Conflict, free-riding or restrictive norms
Empowerment	More authority/control over work	Poor decisions, stress or loss of management control
Participation	Voice and influence over decisions	Slower decisions and managers may ignore input

Participation can use meetings/consultation, quality circles, works councils, worker directors, autonomous work groups, democratic leadership or employee share ownership. The degree of influence differs: giving information is weaker than voting, board representation or control over task decisions.

Apply theory and context: worker needs, measurability, fairness, skill, trust, cost, job role, business objective and short-/long-run side effects. Financial methods are not universally motivating; non-financial methods are not automatically free or effective.

2.3 Management

Traditional function	Management work
Planning	Set objectives, forecast and choose actions/resources/timing
Organising	Arrange tasks, people, authority and other resources
Directing	Lead, communicate and motivate action toward objectives
Controlling	Set standards, measure actual performance, compare and correct

Lens	Main roles	What it adds
Fayol	Planning, organising, commanding/directing, coordinating and controlling	A functional cycle for turning objectives into organised action and correction
Mintzberg interpersonal	Figurehead, leader, liaison	Relationships, representation and motivation
Mintzberg informational	Monitor, disseminator, spokesperson	Gather, share and communicate information
Mintzberg decisional	Entrepreneur, disturbance handler, resource allocator, negotiator	Change, crisis response, priorities and bargaining

Style	Decision/authority pattern	Likely strength	Likely limitation / suitable condition
Autocratic	Manager decides and closely directs	Fast, clear, useful in crisis/inexperience/high risk	Low voice/trust, stress, weak creativity and morale
Democratic	Employees contribute before decisions	Better information, ownership, motivation and retention	Slower; conflict or diluted accountability; useful with experienced staff
Laissez-faire	Skilled employees receive wide autonomy	Creativity, speed near expertise and ownership	Drift, inconsistent standards or poor coordination without capable teams
Paternalistic	Manager decides while seeking employees' welfare, like a parent	Security, loyalty and coordinated direction	Dependency, limited genuine voice and manager may misjudge needs

Assumption	Manager response	Conditional consequence
Theory X: employees may dislike work, avoid responsibility and need external control/reward	Close supervision, clear rules/targets and often autocratic direction	Clarity can help new/inexperienced staff or crises and reduce decision stress; can create mistrust, low creativity and dependence
Theory Y: employees can find work natural, self-direct, seek responsibility and be creative when committed	Participation, delegation, empowerment and development	Can unlock ideas and intrinsic motivation; fails if capability, information, desire or controls are insufficient

Managers contribute by setting direction, designing structures/processes, allocating scarce resources, recruiting/developing people, creating culture, coordinating specialists, controlling finance/quality and communicating with stakeholders. These can improve productivity, service, customer/patient satisfaction, cost control, innovation and sustainability—or damage them when decisions are bureaucratic, uninformed or incompetent.

No style or assumption is universally best. Judge urgency, risk, workforce skill/experience, task complexity, information location, organisational culture and need for consistency or creativity. In a hospital, managers and medical specialists are interdependent: resources and systems enable clinical expertise, while management without professional evidence can obstruct care.

2. Human resource management

Exam analysis

Most tested topics

2.1 Human resource management (HRM)

HRM aligns people, capability and organisational goals

Workforce planning closes capability gaps; turnover is a signal

Recruitment attracts candidates; selection tests job fit

Redundancy removes a role; dismissal ends an individual's employment

Morale and welfare connect fairness, wellbeing and performance

Training closes current gaps; development builds future flexibility and innovation

Cooperation and collective bargaining reshape workplace outcomes

2.2 Motivation

Motivation links effort to needs, rewards and work design

Work can satisfy or frustrate different human needs

Six motivation theories diagnose different causes of effort

Motivation methods must fit the measure, work and employee

2.3 Management

Managers combine functions, roles, styles and assumptions to deliver performance