What you need to know

Human resource management (HRM) is the management of the people in a business so that it can achieve its goals. Its strategic role is to align the skills, numbers and motivation of staff with the long-term plan of the business; in service businesses especially, staff are the main source of competitive advantage. HR is interdependent with the other functions: operations needs trained production staff, marketing needs capable sales people and finance sets the wages budget. Some businesses outsource HR tasks such as payroll or recruitment to specialists, domestically or overseas, to cut costs or gain expertise.

• Stakeholders: employers, employees, employer associations, unions, government organisations (such as the Fair Work Commission and the Fair Work Ombudsman) and society.
• Legal influences: the employment contract (common law rights and obligations, statutes); minimum employment standards and minimum wage rates; awards and enterprise agreements; work health and safety (WHS) and workers compensation laws; anti-discrimination and equal employment opportunity laws.
• Economic influences: the business cycle affects hiring and job security; globalisation widens the labour market.
• Technological influences: automation, remote work and HR software change the skills needed and how work is organised.
• Social influences: changing attitudes to work-life balance, flexible hours, diversity and ageing of the workforce.
• Ethics and corporate social responsibility: treating staff fairly beyond the legal minimum builds reputation and retention.

HR strategies are the tools managers use within these processes. Leadership style (autocratic, participative, laissez-faire) shapes culture. Job design can involve general (multi-skilled, varied) or specific (narrow, specialised) tasks, and job rotation, enlargement and enrichment are used to lift motivation. Recruitment may be internal (cheaper, motivating, known candidates) or external (new ideas, wider pool), and may target general or specific skills, domestically or globally. Training and development can be on-the-job or off-the-job. Performance management has a developmental purpose (helping staff improve) and an administrative purpose (informing decisions on pay and promotion). Rewards can be monetary or non-monetary, individual or group, and may include performance-based pay.

Workplace disputes arise over pay, conditions, job security, management policy and WHS. They may be resolved informally through negotiation between the parties, through internal grievance procedures, with the help of a neutral third party in mediation, or through conciliation and arbitration by a tribunal such as the Fair Work Commission; courts become involved where the law is breached. Industrial action such as strikes, work bans and lockouts is the costly last resort. Global HR adds decisions about costs, skills and supply of labour in different countries, cultural differences and the use of expatriate versus local staff.

Corporate culture is the shared values and behaviours in a business, and it is both a result of and an influence on HR effectiveness. A positive culture lowers turnover and disputes, and lifts productivity; a poor culture shows up in high absenteeism, accidents and complaints. Changing culture takes time and consistent leadership, which is why HR strategy must be planned for the long term.

Check yourself

1. Which HR process includes recruitment and selection?
2. Give one example of voluntary separation and one of involuntary separation.
3. What is the difference between on-the-job and off-the-job training?
4. A business with an average of 120 staff had 18 resignations in a year. Calculate the staff turnover rate.
5. Name two methods of resolving a workplace dispute without going to court.
6. Why might a business choose internal recruitment over external recruitment?

Answers: 1. Acquisition. 2. Voluntary: resignation or retirement; involuntary: retrenchment (redundancy) or dismissal. 3. On-the-job training happens in the workplace while doing the job (for example coaching by a supervisor); off-the-job training happens away from the normal work setting (for example a TAFE course or external workshop). 4. 18 ÷ 120 × 100 = 15%. 5. Negotiation, grievance procedures, mediation, conciliation (any two). 6. It is cheaper and faster, the candidate's performance is already known, and it motivates existing staff by offering promotion.