Human Resource Management

1. Labour, Departments & the HR Department

Labour = workforce = manpower of an organization = 2nd factor of production. Some businesses depend totally on labour — a hospital with great equipment but no doctors/surgeons cannot run; a college with great building but no teachers cannot run.

Departmentalisation

Sole trader / small scale: owner X manages A, B, C — no departments needed. When the business grows to hundreds of workers with a variety of skills we must divide them (like a school: separate rooms for physics, chemistry, accounts, business — one hall cannot serve all).

2. What is HRM?

HRM = people management — how employees are dealt with, led and managed (culture, leadership). Labour is a valuable asset (an asset = something you own and paid a cost for). Like a car you bought: you maintain, fuel and repair it. Labour too: you pay hiring cost and training cost, so you look after it.

Financial needs	Social needs
salary, compensation, overtime pay, bonus, commission (financial rewards)	respect, recognition, participation, involvement

Functions of the HR department (= chapters of this unit)

1. Recruitment & selection — process of hiring workers whenever there is a workforce gap
2. Employment contracts — HR signs them with every new hire
3. Staff training & development — enhance skills, fix productivity issues, new skills
4. Employee performance appraisal — monitor/evaluate: right work? targets met?
5. Motivation — keep workers productive so fewer HR issues occur

3. Workforce Planning

Every dept plans (marketing → marketing plan, finance → budget). HR makes a workforce plan. Planning is always the first step — plan first, act later.

Factors (7)

Factor	Why it matters
1 Sales forecasting	predict sales up/down (e.g. masks sell more in dusty winter; food demand in Ramadan) → sales ↑ ⇒ production ↑ ⇒ hire more; sales ↓ ⇒ cut workforce
2 Technological advancement	competitors adopt machinery / automation / AI → need fewer workers (machinery replaces labour)
3 Objectives	expansion ⇒ need more workers (hire); survival ⇒ cut size (fire)
4 Labour market situation	high unemployment ⇒ cheaper to hire (workers accept lower wages); low unemployment, demand > supply ⇒ must pay more
5 Productivity levels	falling productivity ⇒ train / motivate workers, or new skills needed to stay competitive
6 Requirement of skill	rare skills (data analyst, actuary, CA) too expensive to hire ⇒ train existing staff rather than hire
7 LTO – labour turnover	not 100% staff stay each year (resign, relocate) ⇒ plan how many to hire annually

4. Recruitment & Selection

When do we recruit? (situations)

1. Start a business — need chef, waiters, cleaners (land + labour + capital)
2. Expand — more branches ⇒ more workers
3. Resign / retirement — worker leaves or crosses working age (60–65) ⇒ gap
4. When new skills are required — new subject (law) / online store ⇒ web developer, graphic designer, store manager

The process — 11 stages

Stages 1–4: building the criteria (all internal HR work)

• ① Identify vacancy → find the gap in quantity (number of workers) and quality (skills). e.g. 2 accountants → accountancy skills; floor manager → managerial skills. Warning: expansion vacancies = good sign; mass resignation (10–12 at once) = bad sign → find out why (toxic culture? hard management? no growth? rivals offering more?). “If you don’t take care of your employees, your rival will.”
• ② Job analysis → examine/assess the job. HR’s internal working (nothing advertised yet): what makes a suitable candidate (e.g. past holder’s experience, qualification) + nature of the job (duties, responsibilities).
• ③ Job description → describes the nature of the job: main tasks, duties/responsibilities (accountable if not done), working conditions (timings, days, part-time?). Needed so HR knows who is suitable and applicants can decide whether to apply (“math teacher wanted” — O level? full/part-time? everyone applies!).
• ④ Person specification → specifies the ideal person: age, experience, skills, qualification = criteria. Misfits don’t apply; any who do are rejected quickly → R&S easier.

Stages 5–6: advert and applications

• ⑤ Job advertisement → awareness about the vacancy (where/how to apply). Use the right medium/method: newspaper (traditional), social media, recruitment agencies, websites (govt site rozee.pk), campus drives (airline needs pilot → flying schools; fresh graduates → universities like IBA, LUMS — cf. Raju in 3 Idiots).

⑥ Resume (shown 1st)	CV (curriculum vitae)
short, concise, attractive; recruiter has no time for hundreds of CVs. Answers 2 standard questions: (1) Why do you need this job? (be honest — next org will check ex-org, experience/referral letter) (2) Why are you suitable? (strengths that make you stand out)	detailed bio-data, A to Z: qualification, affiliation, past experience, skills, strengths. Read later, only if the resume impressed

Stages 7–11: selection

• ⑦ Shortlisting → reject those not meeting criteria (100 CVs → 50). Selection begins here.

⑧ Assessment centre → a structured process of tests, activities and role plays to assess potential and behaviour before a hiring (or promotion) decision — because a CV is only claims on paper (e.g. teacher gives a demo lesson; accountant treats adjustments; manager does a leadership role-play).

Test	What it checks
IQ	intelligence / intellectual level — field tests (job skills), not Facebook quiz games
EQ	emotional intelligence: attitude (inbuilt, doesn’t change) + behaviour (how you react). Triggering questions / situations. Need a balanced person (high IQ but violent = unsuitable; calm but zero skills = unsuitable). Vital for managers under pressure.
Psychometric	personality test — 42+ traits (not just introvert/extrovert); does personality align with the job? (data-entry: shy is fine; manager: extrovert)
Medical	health status — compulsory for sports/army; some corporates check too (e.g. COVID reports for teachers)

After tests: 50 → 10 left.

• ⑨ Interview → face-to-face between interviewer (employer) and interviewee (candidate). EQ is often tested here with triggering questions. Interviewer may ask even personal questions to test EQ; candidate can only ask job/organization questions at the end.
• ⑩ Probation period → up to 6 months (3, 4 or 6), temporary contract; salary & terms apply but job insecure. HR evaluates performance: regularity, punctuality, behaviour, targets, standards. Why after so many tests? Halo effect — candidate may have faked a good image; probation minimises risk.
• ⑪ Hiring → if up to standard, signed on a permanent contract.

Types of recruitment

	Internal	External
Meaning	vacancy filled within the org — promotion (e.g. Asst Manager → Manager; O-level teacher → A-level)	from outside — a new employee via advert + full process
Suitable when	(1) org has a potential candidate available (2) vacancy is short-term / temporary (manager away 1 month; substitute teacher)	(1) long-term / permanent vacancy & no potential candidate inside (2) new skills required (new subject; online store)
Advantages	cheaper, faster; growth culture → motivation; known ability (no fear of unknown); no induction needed	new skills & new ideas (opposite of internal’s disadvantages)
Disadvantages	same skills/ideas; jealousy of those not promoted; disturbance — chain of vacancies, ex-colleague becomes your boss (respect, informal culture)	time-consuming, expensive (whole process), unknown potential, needs induction

5. Employment Contracts

Gives job security and works as proof you are part of the org (like car documents with your name prove you own the car, not just drive it).

Elements (7)

1. Name of employee — proof contract is his; contracts and pay scales differ person to person
2. Job designation / entitlement — position in structure (HR manager, coordinator…) → sense of recognition & pride
3. Holiday entitlement — public holidays for all; full-timers get more (casual, sick, maternity/paternity); extra leave ⇒ salary deduction
4. Nature of contract — permanent / temporary / part-time / full-time
5. Payment method & mode — method = basis (fixed salary, hourly wage, sales + commission); mode = medium (cheque, bank transfer, cash)
6. Duties & responsibilities — if not performed, employee is accountable
7. Terms & conditions — regularity, punctuality, dress code, zero-tolerance policy, code of conduct → then sign

Part-time vs full-time

	Part-time	Full-time
Hours	35–40 hrs / month	35–40 hrs / week (9–5 = 8 hrs × 5 days = 40)
Nature	flexible → busy hours / need / situation (cinema evenings, gym trainers at peak time, elective-subject teachers)	core workers doing core activity (chef in a restaurant; English & Maths teachers); usually permanent
Why hire	cheaper — no paying for idle hours; hours can be raised/cut with demand; avoids understaffing at peak	org needs them for more working hours; permanent = security & consistent quality (changing chefs ⇒ taste varies ⇒ unhappy customers)

6. Employee Welfare, Morale & Work–Life Balance

Welfare ↑ ⇒ well-being ↑;  morale ↑ ⇒ satisfaction ↑. Relationship is positive: more welfare ⇒ higher morale ⇒ workers stay, productive ⇒ HR issues ↓ (low labour turnover).

Methods of welfare	Meaning & examples
Statutory	need / legal — employer legally bound: contract, limit on working hours, canteen area, restroom
Voluntary	owner’s will — good sign of an employer: free meals, transport / pick & drop, free education, medical allowance, holiday encashment (unused leave paid in cash)

Work–life balance

Work = job / business hours. Life = family, friends, hobbies, leisure. Prioritise as the situation changes: exams / peak season (Ramadan — clothing outlets open ~18 hrs) ⇒ more work; off-season ⇒ more life.

Methods (board):

• Job sharing — one full-time job done by two part-timers (one morning, one evening; swap when needed) → flexibility for family.
• Work from home (teleworking) — not possible for e.g. a factory production-line worker.
• Part-time jobs — only some hours, time left for family/life.
• Sabbatical period — up to 6 months off (2, 3 or 6), job kept for rejoining. Employee-initiated (trauma: death of close one, divorce) → may be paid or unpaid; employer-initiated (training/delegation abroad) → usually paid.

7. Redundancy, Dismissal & Unfair Dismissal

All three: same impact (worker leaves → workforce downsized) but different causes — like two people breaking a bone on the stairs, one pushed, one slipped.

① Redundancy

Not the employee’s fault (e.g. O-level Statistics teachers lost jobs when subject demand fell). Labour is the easiest target when cutting costs — before selling assets/machines.

Factor	Explanation
1 Economic downturn	recession ⇒ income ↓ ⇒ spending ↓ ⇒ demand ↓ ⇒ production ↓ ⇒ fewer workers
2 Structural change	technology / automation — drones replace helicopter camera operators; AI hits content writers; business becomes capital-intensive
3 Closure of division / range of products	e.g. Nike stops loss-making accessories ⇒ some staff moved, rest laid off
4 Closure of dept → outsourcing	another firm does the function for you (restaurants outsource delivery to foodpanda; marketing to an agency) ⇒ own riders / marketers redundant

Voluntary redundancy	Involuntary redundancy
Employee’s choice — skilled person with value; org offers “accept lower pay and stay, or take redundancy pay and go”	Employer’s choice — compulsory; selected, no option; take redundancy pay and leave

② Dismissal

Complete mistake of the employee (he signed the contract = agreed to code of conduct).

• Misconduct (breaking code of conduct): 1 regularity issue (too many offs), 2 punctuality issue (reporting 9:00, arrives 9:30–9:45), 3 dress code (e.g. tie compulsory at a bank)
• Unsatisfactory performance — after assessment centre he should perform; a good employer finds the reason, gives counselling/training; fires only if no improvement.

Both are fair dismissal — employee’s mistake despite warnings, or serious offence we cannot tolerate.

③ Unfair dismissal

Reasons: 1 colour, 2 caste, 3 community, 4 religion, 5 gender, and personal grudges / grievances. We hire on skills, qualification, experience — not these.

How to stop it: trade union (covered later) and an equality & diversity policy.

Diversity = respect differences (background, colour, religion, ethnicity) → mixed workforce. Equality = fair treatment; growth & promotion on performance — no favouritism or nepotism.

Benefit	Why
1 Motivation ↑	assured promotion depends on performance
2 Competitive working environment	everyone competes for fair growth
3 Inflow of ideas	mixed backgrounds → new ideas, different markets, different problem solving
4 Legally compliant	often part of employment law (≈ 90% UK firms adopt)
5 Employer branding	seen as a good employer, word-of-mouth publicity

8. Staff Training & Development

HR dept is responsible for the quality of workers (→ training); quantity comes from recruitment. Training is needed for new skills or low productivity.

Training	Development
enhance skills of someone who already has skills (batsman, teacher)	build skills from scratch
one specific area (manager’s communication, board work)	multiple areas (board work, communication, class control, syllabus)
short term	long term

“Educational” because learning of new skills/techniques is involved. (Exam asks only this definition, not the difference.)

Methods of training (situational — one method does not fit all)

① Induction training = introductory training for a new employee / external recruit — needed even from the same industry, since cultures differ. Familiarise with:

• culture / terms & conditions (policies, regularity, punctuality)
• premises (offices, canteen, production unit)
• relationships (team, whom to report to, department)

⇒ chances of errors ↓ (otherwise a violation is management’s mistake); motivation ↑ — feels welcoming, sense of belonging.

② On-the-job training — trainer (has skills) + trainee (needs skills), at the workplace, both employees of the org. Senior ↔ junior = work shadowing (junior teacher sits in senior’s class; medical students with surgeons; junior stylist with senior stylist).

③ Off-the-job training — employees sent outside the workplace to a specialist trainer (training/educational centre, software house, masters abroad). Suitable when skills not available / new skills needed (e.g. software update). Most expensive: fees + loss of working hours (e.g. teachers at a workshop).

Impact of training

Positive	Explanation
1 Motivation ↑	growth / promotion chances, better jobs; sense of achievement (McClelland’s need for achievement — mastering a weak cricket shot)
2 Efficiency & productivity ↑	more value, lower cost, more output
3 Quality ↑	better customer service (communication, guidance)
4 Errors ↓	skilled workers make fewer mistakes
5 New skills & techniques	org value and competitiveness ↑
6 Multi-skilling	one teacher teaches two subjects
7 Intrapreneurship	trained employees more responsible, innovative inside the business

9. 5-Marker Practice

10. Quick Recap — Full Cheat-Sheet