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VCE

2013

Business
Management

UNIT 3 & 4 NOTES


BY JASON

Large Scale Organisations


Organisation: two or more people who work together in a structured way to achieve a specific goal or set of goals.
What do all organisations have in common?
Distinct purpose (objectives that the organisation wishes to accomplish)
2 or more people
Deliberate form of structure formal or informal
Formal: official division of responsibilities, authority, tasks and lines of communication
Informal: what actually happens in an organisation in relation to division of responsibility, tasks, authority, and lines of
communication compared with what is formally stated.
Characteristics of LSOs
Employee Base more than 200 employees
Total Assets - $millions
Total Revenue Substantial gross income or earnings $millions
Profits Substantial gross profits or net profits after tax
Market share Commands large % of the marketplace
Size of operations Usually multiple factories, branches & stores
Number of Locations local, regional, state, national or global
Capital
Multinational Corporation (Transnational): Business has its main office in one country, but operates in other countries as well.
E.g. Amcor, BHPBilliton, Lend Lease, Qantas, National Australia Banks
Joint Venture: setting up a business enterprise by 2 or more organisations to achieve a particular venture.
Organisations change in size by takeover, merger or demerger.
Takeover: Organisation purchases a controlling share in another business.
Merger: 2 or more organisations agree to join together and form 1 united business.
Demerger: company spins off some business it owns to form a separate company
Diversification: entering new markets and/or developing new products. E.g. Wesfarmers <- Coles = Diversification because
finance and banking is added to retail.
Dual Listed Company: 2 companies merge but retain their original stock listing. E.g. BHP + Billiton = Dual Listed Company ->
Benefits
Shareholders entitled to dividend payments (portion of net profit)
Different types of LSOs
Public Sector: part of economy owned by government
Private Sector: part of economy owned by private individuals and companies. Either Private (Pty Ltd) or Public (Ltd)
Public Sector Organisations
Government Business Enterprises (GBE)

government owned and operated


Run profitably
Provide services such as health, education,
roads, law enforcement, justice, museums
and postal service. E.g. Australia Post,
Science works, Vic Roads
Corporatisation
Government sells off a company that they
cant pay for.
Run along the lines of a company
Known as Government Business Enterprises
(GBEs)

Privatisation: Selling public sector (government businesses) to the private sector. E.g. Qantas, Commonwealth Bank, Telstra

Private Sector Organisations


Company (Corporation)
Separate legal entity (incorporated body)
Aim to make profit or increase net (financial) worth
Owned by up to 50 private shareholders or publicly owned by many shareholders
Usually controlled by board of directors
E.g. Wesfarmers, BHPBilliton, Woolworths
Private: propriety Limited (Pty Ltd)
Public: Limited (Ltd) - Allows shares to be traded in the ASX (Australian Securities Exchange)
Orientation or focus
Profit: focus is profit attainment, market share and growth. E.g. ANZ bank
Not for Profit: focus is on providing a specific service to the community.
Government Departments: Organisations owned by the government which provide services to the public. E.g. Australian Tax
Office (ATO), Centrelink
Charities: Provide goods, services or finance to disadvantaged or marginalised groups in society. E.g. World Vision, Red Cross
Foundation: Organisation that exists to further a particular cause and are usually involved in research, education or promotion
of a particular cause. E.g. Heart Foundation
Industry Sectors
Primary: Industries that extract resource from nature. E.g. farming
Secondary: transforms raw materials into finished goods. E.g. manufacturing vehicles
Tertiary: Provides services E.g. Qantas
Quaternary: involved in the provision of information. E.g. newspapers
Quinary: Provision of hospitality and domestic services.
Organisational Objectives
Objectives: targets/outcomes that an organisation aims to achieve.
SMART principle
The objectives being set are specific (S).
The objectives and their outcomes are measurable (M).
The objectives, while difficult, are achievable/attainable (A)
The objectives are understood and accepted by the organisation as relevant (R).
The objectives are time-bound (T).
Hierarchy of Objectives
Mission Statement: Expresses the purpose or reason for existence.
Vision Statement: Outlines the overall business concept
Values Statement: outlines corporate values and cultural priorities. E.g. team work, integrity
Hierarchy of Objectives
1. Mission statement expresses the purpose or reason for an organisations existence
2. Corporate Objectives (Strategic): Deal with the overall requirement to achieve purpose (2 to 5 years).
3. Department Objectives (Tactical): Deal with the achievement of targets within a specific dept. or division (1 to 2 years).
4. Operational Objectives: Short term Daily, weekly, half-yearly, annual e.g., sales manager sets a sales quota for next
month, to sell an increase in 5% of new cars.
5. Individual Objectives: As part of individual employees job requirements (MBO Management by Objectives; relates to
their performance appraisal).
Types of Objectives
Financial: objectives relating to achieving financial performance. E.g. to gain a stated percentage of market share
Service: to provide a stated service either to its clients or to the community. E.g. to meet the needs of our customers
Social: relating to the level of participation in and contribution to community. E.g. to promote equity in the workplace
Environmental: relating to an organisations use of resources and degree of environmental impact. E.g. to reduce waste

Management uses resources to achieve objectives. These resources are:


Human people or employees of the organization. Most important resource.
Material raw material, equipment, buildings and machinery
Financial the capital and ongoing finances required to establish and operate business activity.
Informational vast amount of data, information and intellectual property available
Managers are classified into levels:
Senior: executive managers spend a lot of time planning and setting objectives
Middle: translate objectives into specific projects and monitor the progress of them.
Front line: supervising managers (lowest level). Majority of their time is spent leading and supervising workers who
work on the specific projects.
POLC (roles of management)
Planning: establishing the direction and objectives of the organisation
Organising: Developing a systematic approach to coordinate the human, material, financial and informational resources of the
organisation
Leading: How a manager influences and motivates their subordinates to work towards achieving organisational objectives.)
Controlling: Monitoring and evaluation to ensure objectives are being met
Typical Management Functions
Operations - Creating the organisations final input (product or service)
Finance- planning, maintaining and reporting on the financial aspects of the organisations performance.
Human Resources- managing the overall relationship with employees.
Marketing- developing strategies to create an ongoing relationship with customers.
Research & Development (R&D) - studying and developing new and improved products for the organisation.
Positive Contributions to the economy
LSOs contribute to the Gross Domestic Product (GDP) The total monetary value of all goods and services produced in
Australia in one year.
Economy of scale: a business produces so much of a product that it makes it at a higher quality and lower price.
Employment reduces unemployment rate, employees spend their money on consumer items, helping out other
businesses and thus the economy.
Balance of Payments the record of financial transactions in exports and imports. Export income is where business
export goods to other countries and other countries provide money in return to Australia.
Increased Research & Development (R&D)
Infrastructure Growth: Road, Rail, Air, (Utilities: gas, electricity, water), Communication, Health & Education.
Negative Contributions to the economy
A downturn in the economy would means that LSOs would need to downsize. Because they are large, the negative
impact on the economy is felt harder.
Downsizing: reduction in a companys workforce through elimination of jobs, generally to improve profit
LSOs may decide to move their operations off-shore anyway in order to trim their operations into a lean state. This
reduces domestic production, results in job losses and focuses trading away from Australia.
LSOs also capture a large market share which squeezes out smaller business which are not able to survive heavy
competition. Business failure can result for those non-LSOs.
Stakeholder: Someone who has an interest in the activities of the organisation.
Stakeholder
Shareholders
Directors
Management
Employees
Trade unions
Customers
Suppliers
Creditors/banks
Community
Government
Competitors

Interest and issues


Profitability of business and Receiving dividends
To develop and direct strategy of major business decisions and ensure adherence to corporate governance, social
responsibility, ethical behaviour
To be involved in setting and achieving goals and objectives
Fair wage and salary, opportunity for career advancement, to gain job satisfaction
To negotiate fair wages, working conditions, working hours and to be represented in the workplace
To obtain quality goods and service and to receive high levels of customer service
To ensure business is profitable (so they get paid) and that they are paid promptly
To be paid repayments due on loans and in full.
Benefit from the employment opportunities created by the business, for the business to participate in their
community
Receiving taxation revenue from profitable businesses, providing incentives for business to relocate to benefit a
community
To ensure they gain a competitive edge over the business, to differentiate their product or services from other
competitors.

Business Environments
Internal environment: factors intrinsic to an organisation that can influence change, over which management has control over.
It includes: Owners/shareholders, board of directors & management; employees; organisational structure; corporate culture.
Operating Environment: External factors that directly interact with the business and its operations. It Includes: Customers,
Competitors, Suppliers, Regulatory Bodies, Trade Unions, Lobby / Pressure Groups, Financial Institutions.
Macro Environment: the range of factors that can influence the operation and performance of an organisation, over which it has
no control. It includes Economic, Government/Political, legal, technological, Global, Social and Environmental

Economic the level of impact on a business by economic changes such as a depreciating dollar
Governmental/Political change in government brings about changes in policies. E.g. Liberal government policies
Legal organisations have to comply with laws and regulations in areas such as OH&S, Equal employment opportunity
Technological Businesses have to respond to advantages offered by technological development to stay competitive
Global Global economy means organisations cannot ignore foreign competition
Social increased female work participation, changing dimension of families, ageing workforce
Environmental organisations are under pressure to take care of the environment. E.g. Samsung uses recyclable
packaging for their products

Evaluation of Performance
Efficiency is the way an organisation uses resources to achieve its objectives (doing things right).
Effectiveness is the degree to which an organisation achieves its objectives (doing the right things).
Productivity: A quantitative measure of efficiency. The level of output obtained from a set level of input. E.g. the number of
mobile phones produced per week
Performance Indicators (PIs): a set of measures that helps a company determine if it is reaching its performance and
operational objectives.
All PIs should be comparative and may be compared to:

Changes in PIs over time for example, did the rate or amount increase or decrease over the past year?
Other organisations or benchmarks in the industry sector
Benchmarks: level of quality or achievement used as a standard of comparison for others
Budgets, estimates or targets set by the organisation
Performance Indicators
Number of sales
Percentage of market share: Percentage or share of the market held by an organisation based on sales revenue
Net profit figures
Productivity and rate of productivity growth increased productivity indicates an efficient use of resources
Level of staff turnover number of people leaving the organisation
Level of job satisfaction through staff satisfaction survey
Customer satisfaction levels through customer survey
Number of workplace accidents
Level of waste reducing waste will reduce production costs and may result in fewer non-renewable resources used
Number of customer complaints
Number of faulty products relates to quality control
Staff absenteeism cost to a business in terms of less productivity. High levels may indicate job dissatisfaction
Profit is not the only thing that is important to business. Being socially responsible in the community should cover issues such as
waste management and pollution (Carbon emissions).
Being socially responsible in the workplace should consider issues of staff turnover, absenteeism and workplace accidents.
Incidents relating to these factors can often indicate attitudes of managers or employees. Ethics knowing of whats right and
wrong.
Triple Bottom Line (Analysis): Considers the Social and Environmental impacts and financial performance of an organisation.
(People Planet Profit) PPP

Role of Management
Management structure: The ways in which parts of an organisation are formally arranged to link management, employees and
function together to achieve objectives.
E.g., departments in a Myers store, or the downward flow of objectives from the Chief Executive
Hierarchical structure: different levels of management and staff, with higher levels exercising greater authority and control.
Hierarchical structure has three levels of management:
Senior or Executive Management top level and has responsibility for strategic (long term planning)
Middle Managers in charge of a designated department or organisational division. E.g. store manager for Coles. In charge
of tactical planning
Front-line Managers supervisors, team leaders or leading hands responsible for day-to-day operations.
Features of an organisational management structure
Division of labour (who does what)
Division of employees into departments or divisions (segmentation), referred to as horizontal differentiation
Chains of command, control and authority, referred to as vertical differentiation
Patterns of decision making
Hierarchical structures use specialisation, with workers becoming expert in a particular activity
Flatter structures encourage employees to become multi skilled to increase motivation, productivity and flexibility
Chain of command, control and authority
Authority: the power and status to pass commands down an organisation
Span of control: number of people reporting directly to one manager or supervisor
Communication Channels upward (employee to management), downward (management to employee) or lateral (same level)
Hierarchical management (organisational) structure

Employees arranged into layers, or levels with power increasing the further up the hierarchy
Rigid lines of communication, with mostly downward communication
Clearly identifiable organisational positions
Clearly definable span of control exists for each manager
Centralised decision making, with management making decisions and passing on instructions to those below them. This is
referred to as line authority: authority that relates to the main tasks of an organisation
principle of unity of command, where each employee is directly responsible to one manager

Bureaucratic structure

Clear division of labour / large degree of specialisation


Downward communication
Employee performance judged against budget, benchmark & performance
Centralised decision making
Clearly defined hierarchy with each level supervising and exerting control over that below it
Narrow span of control
Clearly defined salaries & benefits at each level
Clearly defined selection and promotion procedures based on merit
Detailed rules and regulations over actions & relationships
Authoritative positions held by managers

Advantages
Quick decision making since less people are involved
Top level managers exercise a great deal of control which is ideal for managers using more autocratic styles
Disadvantages
Discourages creativity and innovation
inflexible and less responsive to change
Front-line employees receive less satisfaction from their jobs, increasing staff turnover rate

Flatter Organisational Structure: organisational structure that has a wide span of control, few management levels and a short chain
of command.
Effects of a flatter structure:
Fewer levels of staff between manager & employees shorter, improved communication paths.
Employees actively involved in decision making improves empowerment and worker motivation.
Uses employee knowledge, skills, experience & potential for innovation.
Greater workplace flexibility and response to change.
Reduction in operating costs due to management downsizing
Fewer status distinctions, such as offices encourages team work to achieve common goals.
Increases training and multiskilling of employees.
Disadvantages
employees lack a specific boss to report to which creates confusion
Forms of Hierarchical organisational structures
Functional
Geographic (Divisional)
based on functions performed,
based on divisions according to
e.g. finance, marketing
location e.g. general manager for
Advantages
Asia
Advantages

High level of
specialisation

employees can work


and train in other

Experts in their
countries
functional area are
very productive

allows wider access to


Disadvantages
markets
Disadvantages

May lead to lack of


flexibility and

different languages can


cooperation
cause barriers in
communication

Narrow departmental
focus

expensive and timeconsuming to travel

Only works if functions


communicate

Product-based (Divisional)
Employees are grouped together
according to the product they
make or sell. E.g. retail store
departments for mens clothing,
womens clothing, electrical
Advantages

employees have
experience in their
department
Disadvantages

lack of central control


over each separate
division

Customer-based (Divisional)
Departments based on types of
customers dealt with by a group
of employees
Advantages

specialists in each area


meaning customers
needs are met by
specialists
Disadvantages

complex structure

difficulties in effective
communication due to
complex structure

Divisional structure: employees are grouped according to product, service, customer or geographic region. It allows for greater
flexibility to adapt to environmental changes and allows for encouragement of the cooperation between departments and
communication between functional areas. There are also specialists in charge of divisions allowing for best practice (a method of
comparing performance of one organisation against the leading firms and taking on board their practices) in these areas. However
there is the possibility of duplication of work and rivalries between divisions. The structure only works if clear communication is
established between divisions.
Consequences of less hierarchical organisational structures
Delayering (reorganisation by removal of layers of management)
Decentralised decision-making: where workers are given responsibility for decision making in their own areas.
Traditional versus Contemporary organisational structure
Elements of structure
Traditional hierarchical structure
Communication
Downward
Communication channels
Slow, unresponsive to change
Decision making
Centralised
Delegation
Downward
Management style
Autocratic
Layers in structure
Multilayered
Span of control
Narrow
Division of labour
Specialisation
Roles and responsibilities
Clear and narrow
Departmentalisation
Well defined
Outsourcing
Limited

Contemporary structure
Multidirectional
Shorter communication paths
Decentralised
Downwards and lateral
Consultative/participative
Fewer layers
Broad
Multi skilled
Greater autonomy
Cross-departmental teams
Non-core functions

Matrix Structure: a structure that places managers and employees into project teams that cut across functional or departmental
lines, and requires them to report to both functional and task management
Advantages are: improved communication channels, reduction in interdepartmental rivalries, and greater level of crosspollination of ideas, with employees exposed to different perspectives of those in other departments
Disadvantages structure is complex so employees may take time getting used to it.
Network Structure: Organisational structure where functions are outsourced to other organisations; the core organisation exerts
control via outsourcing contracts.
Advantages - being flexible and ready to adapt to changes in consumer demand.
Disadvantages heavy dependence on technology and can cause problems in communication if computers crash

Corporate Culture: The shared values and beliefs of an organisation, which can influence the actions and decision making style
of managers and employees.
Corporate Culture is:
A pattern of shared basic assumptions
Developed and shared by the group
Representative of past success
Taught to new employees as the correct way of thinking, feeling and doing
How to recognise corporate culture
Company policies & objectives
Physical environment colour scheme, architecture
Organisational structures and management styles
Organisational processes
Rituals & symbols what is celebrated.
How people address each other
Language
Documentation brochures & logos
Differences in corporate culture
Degree of risk taking and innovation
Attention to detail
People orientation- Wants and needs of employees when making decisions. E.g. work-life balance
Task or process orientation - Is focusing on results or how the results were obtained more important?
Team orientation
Level of Competitiveness
Emphases on ethical and social responsibilities
Diversity among employees skills, ideas, ratio of males to female,
Age of the organisation older organisations may have more traditional practices
How do employees learn organisational culture?

Rituals: these are the things that express and reinforce the key values and expectations of the organisation. It may be
recognition and award ceremonies, or weekly Friday afternoon drinks.
Stories: these may be stories about significant events or people, including things such as the organisations founders
Empowerment: this is transmitted to staff by managers who positively reinforce appropriate behaviour. This may be a
positive comment such as well done or great effort.
Communication formal or informal
Material symbols represent status such as larger offices for senior managers

Pressures to Change Corporate Culture


Corporate culture influences success. A positive culture brings the following benefits:

Increased productivity A committed employee that feels valued may have higher productivity
Greater employee work ethic
Reduced staff absenteeism & turnover
Reduced cost of recruitment and training
Great profitability
Positive public perception loyal staff will provide better customer service

Effect on performance

Often employees work harder to achieve organizational goals if they consider themselves to be part of the corporate
culture.

Different cultures operating in one company can also impact employee performance. For example, if the organization
maintains a reserved talk when necessary culture, employees may work accordingly.

Roles of Management (POLC) and Policy Development

Setting objectives

Analyse the present situation


and future. (SWOT analysis for
strategic planning)

Planning: formalised process to produce a result in the form of integrated systems of


decisions.
Purpose of planning is to give direction of the business, tells individuals what they
should do, improves efficiency and saves time
Strategic Planning: Long term (2-5 years) planning undertaken by senior management to
achieve corporate objectives
Organisations plan on a strategic level to do the following:
Respond to emerging trends, events, challenges and opportunities within a
framework of its vision and mission
Provide direction to the business towards achieving objectives and performance
targets for the organisation
Plan for the future and focus on anticipating the future
- Concentrate on an idea or vision

Develop and Evaluate


alternatives

Implement the plan

Monitoring and reviewing the


results
Steps in Planning (SADIM)

SWOT Analysis
Strength internal characteristic that contributes to the realisation of the
organisations mission. E.g. strong reputation/brand, excellent product/service,
skilled workforce, market share increasing
Weakness internal characteristic that negative influences the functioning of
the organisation. E.g. poor reputation, outdated product/service, toxic culture
Opportunity external fact or development that can contribute to the
realisation of the organisations mission. E.g. changing customer needs,
development of new products/services, new technologies
Threat external fact or development that can have substantial negative effect
on an organisations performance. E.g. competitors, changes in customer
preferences, economic factors, restrictive government policies

Tactical Planning
Formal, medium term (1-2 year) planning undertaken by middle management to implement the organisations strategic
plan.
Responding to changes internally or externally
Allocation of resources in order to achieve the organisations objectives.
Operational Planning
Daily, monthly or up to one year basis by lower-level supervisors and managers.
Detailed level of planning that implements strategies to ultimately achieve specific objectives

Organising: coordination of the various human and physical activities of an organisation


Tasks in organising:
Organising the structure of the organisation
Establishing staff in productive working environments
Evaluating available resources and allocating them appropriately to tasks
Determining what additional resources are needed and how to obtain them
Delegating tasks and responsibilities
Coordination of machinery and physical resources to optimise work
Organising is a multistep process that involves:
1. Determining all the work that must be done to attain organisational objectives
2. Dividing the total workload into activities that can be performed by individuals or by groups (task allocation)
3. Combining tasks in a logical and efficient manner
4. Setting up departments to coordinate the work of organisation members and ensuring that all departments are mindful of
their contribution to organisational success.
5. Monitoring the effectiveness of the organisation and making adjustments to its structure when required.

Leading: influencing others towards the attainment of organisational objectives.


Effective leading requires
Intelligence and knowledge generally of a higher level than that of their followers
Social maturity a tendency towards emotional maturity, together with a broad range of interests.
Orientation towards internal motivation (drive) and achievement.
Self-confidence and good communication working with others and respecting other peoples individuality is recognised.
Communication skills are used to promote a feeling of mutual cooperation and support.
Interpersonal qualities such as visionary skills and the ability to inspire
Ability to take responsibility seriously and have decision making skills
Sources of Leadership: Legitimate power (confirmed by the position in the hierarchy), Expert Power (skills and knowledge used to
influence others), Reward Power (rewarding people in order to gain compliance to a certain way of thinking), Coercive Power
(punishing others when they misbehave), Referent Power (leader is liked and respected and gains power through this)

Controlling: ensures that plans are being implemented appropriately and alerts managers to any deviations from the plan so
corrective action may be instigated. Controlling is directly related to planning
Steps in Controlling
1. Setting a standard target or objective
2. Measuring performance is done through observation, performance indicators
3. Identifying and investigating any deviations
4. Making changes where necessary to ensure that the objectives are being achieved
Types of controls - Financial controls (accounting system to track where money is going), establishing performance standards, Time
controls (ability to produce a certain number of products per day to meet demand), cost controls

Policy: a written statement of the processes, procedures, rules and regulations


Procedures: series of steps that must be followed to implement a policy
Purposes of a policy
Establish a consistent interpretation of the intentions of senior management
Offer guiding principles for actions within the organisation policies allow and restrict actions
Reflect the mission and vision objectives of the organisation
Assist with compliance and acceptance of desired behaviours within the organisation
Effective Policies must be:
Clearly expressed so that everyone can understand them
Cleary communicated so everyone is aware of their existence, and potential and actual changes to them
Policies cover things like bullying, sexual harassment, equal opportunity, privacy, smoking, use of internet and email
Pressures on Policy Development
The environment
Types and source of pressure
Macro
Legislative compliance
Ethics and social responsibility
international e.g. terrorism, global financial crisis
Changes in technology
Operating
Competitiveness
Lobby groups e.g. RACV
Unions E.g. Australian Nursing Federation
Internal
Owner/Shareholders
Management, employees

Policy Development Process


1.
2.

3.
4.
5.
6.
7.

Issue identification This is wrong, we need to fix it!


Research and Analysis What exactly needs to be changed
and what are the possibilities for the exact form of the
change
Stakeholder input What do those affected by a new policy
think?
Policy Development Preparation of a proposed policy
Draft policy is posted This is what is being proposed
Policy approval This is what the policy is going to be.
Evaluation Did the new policy help achieve organisational
objectives

Examples of impacted policies


Equal Opportunity, health and safety
Paid maternity leave, environmental
Corporate relocation and travel; finance lending
Internet use and email
Anticompetitive behaviour, non-collusive bargaining
Road funding; safer roads
Paid maternity leave
Salary; corporate social responsibility
Dress code; workplace flexibility; training and development

Management
Styles
Features

Autocratic

Persuasive

Advantages

Centralised control and


authority
Managers have a desire
to be in control
Great importance on
achieving the task
Policies and procedures
enforced
Centralised decision
making
Little value placed on
employees
contributions
Centralised downward
communication
Quick decision making
made by one person
Decisions made by an
experienced leader
Direct communication
Employees roles and
expectations defined
high regard for
production and
efficiency
suits high-risk or difficult
decisions, e.g. closure of
business

Managers make
decisions then
persuade workers
of the benefits of
those decisions
Same as
autocratic, except
it places some
value on
employees
contributions

Consultative

quick decision
making made by
one person
suits high risk
decisions
employees have a
clear idea about
what they have to
achieve

Takes into account opinions


of team members before
making a decision
Control and authority
centralised but more
employee-based
Task achievement balanced
with people factor
Reasonable level of
employee involvement
Decision making is
centralised but occurs after
consultation with employees
Upward and downward
communication
gains variety of ideas and
suggestions of employees,
leading to a better decision
reasonable level of employee
involvement
Acts to motivate and increase
an employees level of job
satisfaction

Participative

Disadvantages

discourages teamwork
as employees opinions
are not used
does not allow for open
communication
low motivation and job
satisfaction, as workers
are not empowered
too task-focused, with
insufficient regard for
people with needs
creates feeling of unease

no input from
workers into
decision-making
process
opportunities for
employee
initiative
overlooked,
leading to low
levels of
motivation and
job satisfaction

employees may not


understand the complexity of
the problem
time-consuming if many
stakeholders are consulted
Employees may not feel
valued if they have provided
their ideas, but these are
overlooked.

Decentralised
Orientation or focus
toward people.
Belief that motivation of
employees related to an
understanding of how to
satisfy employees broad
range of needs.
Decentralised decision
making, with
management and
employees working
together
Multidirectional
communication
Manager demonstrates
trust and faith in ability of
employees
Increased morale
Employees feel sense of
ownership and
empowerment as they
are now decision makers
Decision making
improved at lower to
middle levels because
employees are involved
in decisions related to
them
Open communication
Empowerment and
coaching encourages
opportunities for
employee development
Conflict between
employees who question
ability of co-workers
Some workers prefer to
have their level of
productivity linked to
money rather than job
satisfaction
Time-consuming to seek
involvement of groups
Conflict may arise when
there are varying
viewpoints

Laissez-faire

Highly decentralised control


Leaves majority of decision-making
and running of business operations to
employees
Employees empowered to determine
their own objectives
E.g. website development company
where designers work independently

High employee control as they can set


their own tasks
Strong motivation, empowerment
and job satisfaction for employees
Good environment for encouraging
creativity and innovation.
Conducive to team work
o Decentralised and flatter
structure encourages good
communication, as ideas are
openly discussed.

Lack of guidance can cause some


employees to lose direction
Some employees may feel unsettled
by freedom of this style
Does not suit employees who are
unskilled or need structure and
routine tasks
Some people get so creative that they
lose track of the project

Management style: manner and approach of providing direction, implementing plans and motivating people.
Contingency management approach: use of range of variables to determine the most appropriate management style required
to attain organisational goals in different types of situations.
Management Skills
A skill is the ability to do something well,
gained through training and experience.
Management styles and skills need to work
together to achieve objectives
Communication
Interpersonal communication sharing
information between 2 people
Organisational communication sharing
information with large numbers of
people
Forms of communication: reading (written data like emails), verbal written (expressing thoughts and ideas through
emails, word documents), verbal oral (talking to people to spread information and gain feedback)
Delegation: passing of authority down the hierarchy to perform tasks or make decisions; responsibility remains with the person
delegating
Formal authority: influence or authority derived from position in the organisation (legitimate power)
Steps in the delegation process
1 Analysis the tasks to be delegated need to be determined
2 Appointment involves nominating the subordinate to whom the task is to be allocated
3 Briefing involves defining the task(s) that are to be delegated
4 Control the progress of the delegated tasks needs to be monitored and encouragement given to those undertaking the task
5 Appraisal the process needs to be reviewed and revised.
Benefits of delegation
Promotes a smooth flow
Saves time by freeing management to be involved in more important tasks
Gives opportunity for training and development
Interrelated skills with delegation: job analysis, establishment of performance standards, setting checkpoints and deadlines,
appropriate recruitment and selection of people, good communication skills, task assessment and feedback
Manager problems with delegation: Insecurity, being shown up by a subordinate, disorganisation, lack of trust/faith in
subordinates, doing the job themselves, desire for power, subordinates lack confidence
Decision-making and problem-solving
Problem Solving: systematic approach to finding and implementing a course of action to correct an unsatisfactory situation.

Negotiation - Process by which one party seeks to obtain something it wants from another party, e.g. employee seeking pay
increase from employer

Core Negotiation Skills: Define objectives, explore the possibilities, prepare well, listen actively and question, prioritise clearly
Steps for successful negotiation
preparation

establish a
positive
working
atmosphere

make the
proposal

responding to
the proposal

establishing
positions

record
information
and confirm
understanding

Team leadership - When a group works together to complete a task; it requires workers to be multi skilled and allows for worker
empowerment
Manager abilities
Coach / mentor function
Encouragement of contributions to achieve objectives
Building cohesion and trust
Facilitating resolution of problems
Managing team dynamics and relationship
Time management
The efficient utilisation of work time, which involves setting and prioritising tasks, allocating time and avoiding timewasting activities.
Systematic approach to Time management
1. List the objectives
2. Rank the objectives
3. List the activities to achieve the objectives
4. Assign activity priority
5. Schedule activities
Stress management: reducing level of stress (physical, mental or emotional strain or tension occurring in response to adverse
influences and capable of affecting physical health)

Factors leading to stress: workload, coping with organisational change, interpersonal conflict, poor management
practices, lack of communication ,bullying
Steps to alleviate work-place stress: provide support, assess workload and clarify work roles, implement change in a
consultative manner, establish training and conflict resolution, promote work life balance, counselling, social
participation (gym, yoga)

Analytical: Ability to analyse or study the nature of a given situation or set of circumstances
Technical: Based on knowledge and proficiency in a specialised field e.g., accounting, legal, marketing, IT
Emotional Intelligence: competencies that allows us to perceive, understand and regulate emotions in ourselves and others
Golemans 7 Elements of EI:
Self-Awareness understanding moods, emotions, personal drivers and how they affect others
Self-regulation think before acting
Motivation passion to work for reasons beyond money or status
Empathy treat people according to their emotional reactions
Social Skills managing relationships and building networks and rapport with others
Intuitiveness able to arrive at clear decisions and drive their implementation
Conscientiousness commitment in pursuing an ethical solution to a difficult issue
Effective management
1. Convey the vision
2. Set the example behaviour that reflects the values and standards you want for the organisation
3. Mentor provide environment where it is safe to learn
4. Promote creativity
5. Be a storyteller talk about peoples strengths
6. Manage by excellence focus on what is being done right, show interest in the work of others
7. Offer feedback
8. Use rewards recognise desired behaviours and make an effort to increase their frequency
9. Create a culture of participation allow participation in decision making
10. Empower staff be concerned with their learning and development

Operations management and Optimising Operations

Inputs

Transformation
process

Outputs

Operations management: management of resources to achieve efficient output of goods or services


Level of planning
Strategic planning undertaken by senior management (2-5
years)

Tactical Planning undertaken by middle management (1-5


years)

Operational planning undertaken by front line management


(daily, weekly or monthly basis)

Description of tasks undertaken

Decisions about what to make (products) or


services to provide

Process and layout

Facilities

Location

Quantity of production

Decisions about material resourcing (inventory


and frequency/amounts of its replenishment)

Supply chain management

Labour resourcing

Layout and process design or reengineering

Sourcing of technology

Decisions about quality management

Decisions about what to process and when


(scheduling)

Decisions about order to be taken to process


requirements (sequencing)

Amount of work to be placed onto resources


(loading)

Decisions about who does what work and when


(rostering/assignments)

The role of the operations manager


Ensuring the operations systems meet the operational strategy and objectives of the organisation
Strategic decisions relating to planning and designing an operating system, e.g. design and layout of factory or
workplace
Operating the system, which includes establishing plans, processes and methods of production control, making
decisions on day to day management of operations system, e.g. stock levels, work rosters
In particular it relates to:
Inventory management - determining level of stock, customer service requirements, timeliness of deliveries
Manufacturing determining production rate to meet budgets, managing direct labour costs, controlling cost of
wastage, defects, rework
Quality determining required standards, documentation of quality procedures, standards and codes of practice
Maintenance/engineering ensuring equipment is reliable and regularly maintained, controlling maintenance costs,
and keeping up-to-date maintenance records
Operations: series of procedures and processes undertaken in order to create outputs
Outputs: transformed inputs that are returned to the external environment as products or services
Inputs: resources such as raw materials, labour, plant, equipment
Transformation: process involved in converting inputs into outputs
Differences between goods and services
Goods
Tangible
Production and consumption occur separately
Can be stored as inventory
Can be standardised/consistent quality
Minimal customer contact
Produced

Services
Intangible. Quality levels are more difficult to measure
Production and consumption often occurs simultaneously
Difficult to store; however record of service is maintained
Often specifically provided to meet individual requirements
Higher degree of customer contact established
performed

Key elements of an operations system


1. Inputs (ingredients) required to
produce the required goods/services
are gathered
2. Those inputs are put through a series
of procedures in order to transform
them into finished goods/services
(transformation)
3. The final output is generated
Inputs
Raw materials and components e.g.
farm produce, minerals and water
Human Resources labour is human
effort expended in a production process
Technology robotics and e-commerce
Capital, plant and equipment e.g. buildings, machinery, cash
Information and knowledge
Time non-renewable resource that, if wasted, will add to production costs
Transformation process actions performed to transform inputs into finished outputs
Operations process and systems will vary according to the
Type of goods and services being produced
Size of organisation
Numbers, quality and availability of resources
Outputs - Final product, or results of the operations process
Outputs are either goods (tangible) or service (intangible)
In order to maximise competitiveness, the output must be responsive to customer demands
Operations management in relation to business objectives and strategy
Features that can contribute to an organisations operating system in order to enhance its business competitiveness:
Optimal levels of operational efficiency based on reliable supply chain, minimal wastage
High standards of quality
Ethical and socially responsible considerations
Operations system measurable against the level of achievement of objectives and mission
Productivity: a measure of the functioning and efficiency of a production system; the level of output obtained from a set level of
input
-

Productivity can be improved if the amount of input decreases for the same amount of output or if the amount of
output increases for the same amount of input
Productivity can also be improved by communication between employees and managers, automating work processes,
the type of management style and the improvement of facilities.
Organisations that are more productive are able to be more competitive.
Business competitiveness is the ability of an organisation to sell products against other businesses in a given market.
If operations are being managed efficiently,, costs will be minimised and quality will increase
Examples of productivity measures can include: Units of production produced per employee

Factors determining organisational productivity


Technology levels new electronics e.g. robotics, scanning, wireless communication
Research and development
Equipment and facilities quality of equipment and facilities will affect reliability and reduce breakdowns and downtime
(period during which production is not occurring)
Tasks and processes tasks and processes will affect how much is produced and at what cost
Layout of facilities redesigning a workstation, moving equipment can generate efficiency savings
Communication process accurate communication ensures orders are accurate
Workplace safety machinery downtime or accidents affect productivity as the person is away and unable to be productive

Optimising Operations
Facilities design and layout (floor plan)
Factors that influence the location and design decisions can include: product or service, volume of output required, actual
amount of physical space and location, process to be undertaken (closed or virtual) and appropriate type of layout.
Optimising the use of physical space insufficient workspace will result in blockages. A large workspace will hinder productivity
if people have to move long distances.
Optimising use of equipment easily accessible, reliable and operational
Regular maintenance program multiskilling workers to ensure maximum utilisation of equipment. Maintenance will cost time,
labour and parts but will avert downtime
Location of raw materials stocks and finished products must be accessible and time wasted in locating and moving inputs will
reduce productivity
Layout of plant and equipment linking processes and stages of production so that needs are met.

Types of Layout
Fixed position/project layout: product remains in a fixed position with required resources taken to the product. E.g.
Construction Company building a skyscraper
Advantages: greater flexibility, enabling manufacture to exact specifications and High quality built into production process
Disadvantages: expensive as it is time-consuming and needs high labour
Product layout: equipment is used for a single purpose along a production flow line. The product progresses along the line in a
continuous flow.
Advantages: costs are reduced in the long run
Disadvantages: expensive to setup and staff may become bored with repetitive work
Process/functional layout: pieces of equipment with like equipment are grouped together; the product is taken to each piece of
equipment
Lean manufacturing: efficient management of the production process with the aim of achieving minimum use of resources.
Closed factory: production is carried out within the four walls of factory site.
Virtual factory: productive operations are outsourced to other places at a lesser cost.
Methods of Production
Project/Job Process involves the production of one item from start to finish.
Batch Production involves the production of different types of products in batches, where products in each batch go through the
whole production process together.
Continuous production involves automaton where standardized inputs are put through standardized processes in order to
produce the required output in large volumes. Assembly line is used.
Continuous flow production involves a high volume process that runs non-stop, the product goes through the same sequence of
processes continually. Printing press etc.
Mass Customisation: combines the latest technology with multi-skilled employees using a production line to create wide range
of products. Few components are varied to allow for customisation.
Cell production: is a new form of flow production in which workers are divided into teams. It aims to motivate employees
through friendly competition.

Improving operations through technology


Automation: the techniques and equipment used to achieve automatic, as opposed to human, operation or control of a process,
equipment or system.
Computer Aided Manufacturing (CAM) machines fed programmed instructions from a computer.
Computer Aided Design (CAD) computer program that allows creation and modification of product designs. CAD speeds up
the process of product design and increases accuracy. It is Costly to introduce but saves time and money in the long term.
Computer Integrated manufacturing (CIM) is a combination of CAM and CAD; a computer program that controls and directs
production from start to finish. Computers can direct planning cost estimations and inventory planning.
Robotics - Perform manual tasks like assembling circuit boards and free employees from repetitive tasks. Saves cost as they
dont make human errors and dont need breaks or holidays. They also produce products at a consistent speed and quality.
Flexible Manufacturing Systems (FMS) total computer control of operations system using equipment that deliver raw
materials as they are required. Computers can detect machine breakdowns and notify operators.

Problems with technology:

COST- Expensive to buy & needs to be updated very regularly


Training- Employees need to be trained how to use new technology
Repairs- technology can break down easily, making it costly to repair as well as eating up time
Redundancies- Technology can replace workers

Service industries

E-commerce allows business transactions to occur using the internet. E.g. Ebay
Computerisation has reduced operating costs and made significant time economies
Mobile phone internet access on mobile devices improves communication. This offers many potential productivity
gains, greater workplace flexibility and employee work-life balance as employees are no longer tied to a workstation.
Communication via the internet has enabled cost savings as employees can work from home, saving office overheads.

Materials Management: a strategy involved in the planning, organising, leading and controlling of the materials or inputs used
in the operations process which is about transforming inputs to outputs in a manufacturing or service organisation.
Inventory: the holding or storage of raw materials, component parts, work in progress or finished goods

Inventory takes up storage and is a cost. The aim is to ensure that the right quantities of parts/material are available
and that there are sufficient finished products to satisfy demands.

Inventory management necessitates decisions about how much to order (quantities to replenish), timing or ordering (when to
order) and control of the stock security system.
Aspects of inventory management
Reliable inventory system that determines what items to order, in what quantities.
Inventory control that determines how and when to store items and can track movement of raw materials while
protecting against loss due to theft or damage.
Computerised inventory records improve the accuracy of recording and reduce stock damage and loss.
Just in Time (JIT) inventory system that aims to avoid holding any stocks (inputs or finished goods); suppliers arrive just as
needed and finished products are immediately dispatched or sold.
Key Elements of JIT
1. Reduce costs through minimising amounts of inventory that must be held at any one time
2. Small quantities of inputs delivered more frequently to meet immediate requirements
3. Kanban method employed where orders are placed in response to needs further up the line. Inventory only replaced as
it is used.
4. Employees identify wasteful work practices and eliminate these continually
Supply Chain Management the range of suppliers from which an organisation purchases materials and resources

Supplier lead time is important as some suppliers will require prior warning of requirements
Planning in order to know exact amounts of materials required.
Anticipate possibility of future price rises or falls caused by seasonal variations, changes in Australian dollar
System must be established to keep inventory at required levels and avert loss.

Critical:

If materials are not at hand, nothing can be done


If they are of lesser quality, it will lead to bad products
Supply will not be able to reach demand if there is not enough
Efficient system of transporting finished goods to customer must be developed.

Quality Management
Quality: the degree of excellence in a good or service and its ability to satisfy the customer
Quality control: process of checking the quality standards of work done or quality of raw materials or component parts
Quality control stages
1. Establishment of quality benchmarks/standards. Set out attributes that will be checked and standards to be met.
2. Carry out inspections of product performance. Use analaysis and sampling techniques
3. Compare results of inspections with established standards/benchmarks. Reject products that fail to meet standards
4. Correct processes/procedures in order to prevent defects recurring. Reappraisal of performance standards may occur.
Quality assurance: The process through which an organisation achieves a level of quality in the goods and services they
produced that is defined by an independent body. It aims to build quality into work processes, thereby avoiding errors before
they occur. It involves the use of ISO standards and the right to use these provides confidence to stakeholders and has a
competitive advantage in globalised markets over non-certified competitors.

Total Quality Management (TQM)


All members of an organisation aim to participate in ongoing improvement of organisational culture and production processes
Quality circle: workers who discuss quality and production issues; any proposed changes are then put forward to management
Core TQM concepts
Continuous improvement

People required to look at their work as being one step in a continuous process rather than as in isolation to the rest of
the organisation
The way to improve quality is to ascertain who the customer is and what they need and improve the process to meet
this need
You are always looking for a better way of doing things

Customer Focus - Finding out exactly what the user needs and wants, and ensuring the process provides it.
Defect Prevention
TQM tries to prevent defects before they arise rather than relying on inspection to find them after they occur
Universal Responsibility
Quality is everybodys responsibility. Everyone should be concerned with seeking ways to improve the quality of their
own product or service.

Ethics and social responsibility


Social responsibility considerations for planning include:

Waste minimisation schemes (recycling)


Reduction of carbon emissions
Provision of safe working environments that respect employee rights
Taking responsibility for the environmental, social and economic impact of the organisations activities

Environmental management system: series of policies and practices that focuses on an organisations approach to
environmental issues.
An EMS will affect:

How well an organisation will meet its ethical obligations in regard to effect on both the natural and social
environments
Efficiency of the operations systems. Environmentally friendly practices and processes usually involve reduction of
waste and cleaner production processes that use fewer inputs

Human resource management and motivation (Chapter 8 and 9)


Human resource management (HRM): management of a wide range of responsibilities relating to the human (employees)
function within a business in order to increase both the employees and organisational efficiency.
The role of a human resource manager
able to translate business strategy into action
develop and implement HR strategies consistent with corporate strategies
long-term planning of decisions relating to employees
management of employment cycle
innovative strategies such as group-based performance appraisal and skill development
strategies to increase employee motivation, job satisfaction and productivity
achieving improved customer service through recruitment, selection
Able to act as a change agent: individual leading the change
Staff managers (HR manager): a manager who provides specialist advice or assistance to functional managers
Functional manager: manager responsible for just one organisational activity. E.g. finance
Line management: management responsible for having direct authority over subordinates within the area of authority.
External Environment
Political
Legal
Environment
Technology
Demographic
Social/Cultural
Competition
Economic
Industrial relations/employee relations
Internal environment
Corporate culture
Organisational structure

Employees

Influence on Human resource management


Impacts relationships established by employers with unions
Impacts on laws and regulations e.g. work hours, equal employment,
workers compensation, health and safety
Creates new employment areas, such as environmental pollution, energy
conservation
Rate of change impacts job design, recruitment, selection, and training.
More flexibility in work environment
Changes in demographic distribution, ethnic origin
Changing values and attitudes have led to changes in job titles, language,
way of life (more open and relaxed)
Reduction/increase in industry size, takeovers and mergers, customers and
suppliers.
Downturn in economic activity, level of investment and change from public
to private ownership
Level of union membership, employee attitudes, quality of work life
Influence of Human Resource Management
Importance of values, beliefs, assumptions and symbols
Impacts employees productivity and behaviour. A hierarchical tends to be
authoritarian, rigid and formal. A flatter structure tends to be more
flexible, adaptable, informal and more entrepreneurial.
Greater demand for work-life balance. Impacts on need for workplace
flexibility, family-friendly work practices

Measuring HRM effectiveness

Commitment did the HRM policies enhance employee identification with and their attachment to their job and
organisation? High level of commitment results in greater loyalty, increased team work
Competence did the HRM policies attract, retain, motivate and develop employees with abilities, skills and knowledge
to achieve objectives?
Cost effectiveness how have personnel related costs been reduced? Eliminating all unnecessary work, reducing
compensation and benefit costs, reducing staff turnover and absenteeism.
Congruence agreement between management and employees, different employee groups
Adaptability - is the organisation ready for change?
Performance - has HRM contributed to employees increased performance and productivity?
Job satisfaction do employees now have more positive attitudes and feelings? Job satisfiers may be pay, promotion
opportunities, fringe benefits
Employee motivation are employees motivated to achieve goals?

Employee Expectations
Employees expectations
To be paid a fair wage
Finish work on time
To gain satisfaction from the work they do
To receive positive feedback
To be given assistance when necessary
To have time off (e.g. maternity, illness)
To work within a professional and respectful environment
Working in a Safe and healthy work environment
Negotiating flexible working arrangements
Opportunity for promotion

Employers expectations
To achieve organisational objectives
To have employees complete their work
That the employee has some job satisfaction
That employees act in a professional and loyal manner
That customers are given good customer service
Employees arrive and leave on time
That employees do not deliberately sabotage the business
That employees comply with health and safety policies and
procedures
To have work completed on time
That employees are courteous and respectful

Conditions of employment: what an employer has agreed to give an employee in return for their work.
General Expectations
-

Different generations have different work expectations. E.g. Gen Y tend to be more demanding for career
advancement, pay rises and time off but they are tech savvy and have a lot of enthusiasm.
Conditions of employment and the work-life balance
-

Organisations that are working towards creating work-life balance will provide family and parental leave (paid or
unpaid), Child care, flexible work hours, part time work or job share
Flexible work practices: work practices that allow employees to balance work and family responsibilities
Advantages: Reduced recruitment costs as staff turnover will reduce, retaining valued employees who would otherwise
leave and higher staff morale and increased productivity for employees as they are more focused.
Occupational health and safety
Employers must maintain a safe workplace such as fire exits not blocked.
Adequate facilities such as clean toilets, drinking water and hygienic eating areas
Job security
Many organisations have had more contractors/casual staff or have reduced permanent full time employment to parttime.
Huge impact on motivation of employees as well as their feelings of loyalty and commitment

Motivation: the desire or drive to work well; process of ensuring that there is continuing commitment to a common set of
goals or a single goal
Abraham Maslow (Hierarchy of needs)

Within all individual exists a hierarchy of five needs,


which can be arranged based on the importance of the
needs
Maslow suggested that needs are deficiencies that need
to be satisfied and if they are satisfied they are no longer
effective at motivating & employees seek to satisfy needs
higher in the hierarchy
HR managers can use Maslow's theory when trying to
motivate workers by being aware that employees will be
at different stages
Conflict: No research that proves this theory & people
can have more than one need at a time
Five levels separated into
1. Lower order needs likely to be satisfied externally
(physiological and safety)
2. Higher order needs likely to be satisfied internally (social, self-esteem and self-actualisation)

Level in hierarchy
1. Physiological needs

What it means
Basic needs like food, water, air, shelter

2.

Safety needs

Security and protection from physical and


emotional harm

3.

Social needs

4.

Esteem needs

Affection, affiliation, acceptance and friendship


in peer groups
External needs of status, regonition and attention

5.

Self actualisation
needs

Internal needs of self respect, autonomy and


achievement
Ultimate need
Personal growth, achieveing own potential, selffufilment and using own creative talent

Relevance to HRM

A job

Rumeneration (pay)

Job security

Benefits

Safe and healthy work conditions

Superannuation and insurance

Friendly work associates

Supportive management, empowerment

Job title and task responsibilities

Promotion, recognition

Pay linked to status of position

Prestigious workplace facilities

Challenging work alloiwng for creativity

Particpative decision making

Growth and development

Setting and achieveing goals (LOCKE)

Fredrick Herzberg
Herzbergs two-factor theory of motivation: hygiene theory; two significant and different classes of factors. The lower level
needs are hygiene factors and the higher level needs are motivators.

Hygiene
Environment in which you work physical conditions, pay, status. These will provide general
satisfaction or prevent dissatisfaction but no motivation

Motivation
Sense of recognition, achievement, challenge. These will provide high motivation, satisfaction
and strong commitment

Hygiene factors are easily satisfied and adding more of these will not motivate an employee long term
The factors that lead to positive job attitudes do so because they satisfy the individual's needs for self -actualisation in
his work (LIKE TO MASLOW)
Managers can apply Herzbergs theory
1. Hygiene factors that act to dissatisfy an employee must be eliminated
2. You need to help them find satisfaction e.g. removal of poor company policies, meaningful work
3. Create satisfaction by introducing motivating factors associated with the work; e.g. creating work that is rewarding
and matches the skills and abilities of the employee

Comparison of Maslow and Herzberg


Similarities
Both believe that recognition and promotion will motivate a worker
Lower levels only satisfy employees short-term, while higher levels intend to establish long-term motivation.
Differences
Maslow believes that the lower levels of his hierarchy provided motivation. Herzberg believed they only prevented
dissatisfaction.
Maslow believes that a person moves from one level to another. Herzberg believes there is only two sets of factors.
Edwin Locke
Goal setting theory: process theory of motivation that focuses on the process of setting and attaining goals.
-

Locke said that motivation comes from having clear goals & good feedback
Goals need to be SMART (Specific, Measurable, Achievable, Relevant, Time Bound)
Application of the goal-setting theory approach involves participation between managers and subordinates at every
level.
Management by Objectives (MBO) where each persons major areas of responsibility are defined in terms of
measurable expected results. MBO focuses the efforts of all members to achieving personal and organisational goals.

Comparison between Maslow and Locke


Similarities
Both aim to motivate
Both encourage recognition and feedback (Locke's is with
reviewing of the goals and making amendments and with Maslow
its in the self-esteem stage where employees are recognised, e.g.
merit & performance review
Differences
Hierarchical structure vs. goal setting theory
Locke's is more dependent on the employee actually achieving the
goal whereas Maslow's is highly dependent on the manager, as
they are the ones supplying the needs.
Motivational theories for job satisfaction and performance
Reward and Recognition system
Recognition (financial or non-financial) for a job well done or to act
as a motivator to perform a job.
The design of a job
Job enlargement: making a job bigger or more challenging by combining various operations at a similar level
(horizontal)
Job enrichment: making a job more challenging so workers are using their full capabilities and gain personal growth.
Job rotation: workers are moved between different jobs to increase variety of work and to create a flexible workforce.
Degree of flexibility built into work practices
Taking into account the impact of family responsibilities on employees will lead to a more loyal and committed
employee.
Organisational environment and corporate culture
Toxic work cultures identified by low levels of mutual respect, lots of negative feedback and high punitive cultures
have been found to kill motivation.

Establishment phase
Human resource planning: planning for future needs, taking into account both internal activities and factors in the external
environment.
Factors or trends affecting HRM
Structural changes in the labour market
Work patterns are changing
Length of working life is changing
Change in skills and education expectations
HRM must plan to assist the organisation to:

Labour shortage due to ageing population


Increasing demand for work-life balance
Generational change
Change in strategic direction of organisations

Meet current employment requirements


Cater for future needs by determining how many employees will be required and their skills
Ensure the required human resources are available
Assist the organisation to respond to external forces such as the state of economy
Job analysis and job design

Job analysis: gathering information relating to a job being performed


Job description: written description of a jobs title, duties and responsibilities; including its location on the
organisational chart.
Job specification: detailed listing of the personal skills and characteristics required to perform a particular job.
Job design: grouping together of tasks for a particular job which should incorporate variety and challenge for the job
holder.
Methods used to conduct job analysis
1. Interviewing the present job holder
2. Questionnaires
3. Observation
4. Supervisory reports
5. Log books and daily work diaries
Recruitment: The process of finding the best qualified pool of applicants
Internal Recruitment - Positions offered internally first which allows for career advancement through promotion
External recruitment: Position filled by someone from outside the organisation
Advantages of Internal Recruitment
Quicker adjustment to the position; no induction needed
Incentive for employees to gain career progression
Act as a motivator and morale booster
Organisation knows the applicant, applicant knows the organisation
Advantages of External Recruitment
Larger pool of applicants
New insights, skills and abilities
Costs can be lower, as do not have to fill 2 positions
New approach to work, issues and problems

Disadvantages of Internal recruitment


Employees may be promoted beyond competency level
No new ideas introduced, could stifle creativity and innovation
Infighting and negative impact on morale for unsuccessful
applicants
Any poor work habits will remain and bureaucracy encouraged
Disadvantages of External Recruitment
Attracting/selection of new employee is time-consuming and more
difficult
Induction takes longer
Limits career advancement of existing employees
Greater risk, as new employee is an unknown person
Costly form of recruitment

Recruitment Methods
Internal notice boards, memos, intranet, newsletter, recommendations
External advertising (newspapers), electronic recruiting (seek.com.au), government employment agencies, outplacement firms

Selection
Selection: process undertaken to decide whether to make a job offer to a candidate
Receipt of application polite to acknowledge any application
Initial Screening eliminates applicants who do not possess the skills required for the position. A
Short list of potential applicants to interview is created.
Interviews common selection technique where questions are asked based on the job
description and specification

Testing
Psychometric testing provides a scientific component to recruitment. Can include aptitude test
(IQ based), personality and motivation questionnaires
Competency testing undertaken by using business games such as role play or simulation
exercises to judge how the applicant will handle various work situations
Physical Examination to find out whether the applicant is physically capable to perform the job
Background investigation reference checking
HRM can conduct checks by contacting former supervisors, colleagues or using social
media such as Facebook
Advising applicants of outcome position officially offered to successful applicant and
unsuccessful applicants advised of their non-success
Employment contract: formal written agreement between employer and employee, setting out
the legal obligations of each party; an informal or oral agreement may also be entered into
Types of employment
Permanent full-time basis continuing contract of employment where employee will receive salary or wages, leave
entitlements and superannuation
Permanent part-time basis continuing contract but fewer hours than full-time basis
Casual basis short term work and paid on a daily or hourly basis. Dont receive benefits such as sick leave
Fixed term basis for project work or to replace employees absent on long-service leave
Arrangements relating to pay and working conditions
Award: agreement that sets out minimum terms and conditions of employment relating to an industry
Employee collective agreement agreement between an employer and employees, setting out terms and conditions of
employment
Union collective agreement: agreement between employer(s) and a Union(s) that sets out terms and conditions of
employment; an agreement may cover businesses run by more than one employer
Remuneration: The amount a person is compensated (paid) for performing work tasks (job)
Types of remuneration
Wages
Salary annual figure payed on a monthly or fortnightly basis.
Salary packages used for senior positions which includes pay and fringe benefits (bonus pay, company car)
Benefits paid maternity leave, alternative work arrangements, life insurance, extra superannuation

Maintenance phase

Role is to ensure the organisation retains productive employees who are loyal and committed to the organisation
Performance appraisal: determining how well employees have performed their jobs, providing feedback and establishing
plans to improve performance. Usually involved with existing employees

Induction: process of introducing new workers to their place of work, their job role, their colleagues, supervisors, management and
corporate culture.

Purpose is to create a sense of belonging (socialisation process), communicate organisational values and beliefs, provide
information about job tasks and to create a favourable impression about the organisation (public relations)

Training and development


Training: providing an employee with the knowledge of specific skills needed to do a job
Development: process designed to develop skills for future activities and responsibilities
Training needs analysis: diagnoses current problems and future challenges that need to be overcome using training
Organisational analysis entire business is analysed to determine where training should be concentrated.
Task analysis individual jobs to be performed and analysed to determine any skill deficiencies.
Person analysis each employee is assessed to determine what kind of training is required.
Performance appraisal of an existing employee may mean that an individual needs training in any of the following areas:
Basic skills (grammar, maths), technical and job-specific skills (computer software), interpersonal skills (communication
leadership) and conceptual skills (planning, decision making skills)
Competency-based training: training that focuses on the ability to perform specific tasks to a predetermined standard. Training
methods include: coaching, apprenticeship, presentations, job rotation
Financial rewards
Wages: based on level of productivity/hourly rate
Salary
Commission: a proportion of sales gained
Flexible salary packaging: a monetary component together with fringe
benefits customised to meet needs of employee (e.g. car, health
insurance)
Superannuation (higher employer contribution)
Performance related pay: where bonus for exceeding targets (sales)
or output (production) is paid
Allowances for travel, accommodation and clothing

Non-financial rewards
Promotion, opportunities to work on special projects
Career development, study leave, extra paid leave
Staff recognition awards, praise for job well done
Expense accounts (not included in salary)

Travel, entertainment vouchers


Fringe benefits: laptop, smartphone
Office (larger and better outfitted)

Performance management: system used to improve organisational, functional and individual performance through linking
objectives of each; it assesses all phases of the employment cycle
Used to report on past performance of both the organisation and the individual employee, in that it:

Tells an organisation whether its selection devices have been effective


Gauges whether current training and development and motivational programs are required
Shows were training, development and motivational programs are required
Provides the basis for decisions relating to remuneration and reward, promotion and dismissal.

Steps in appraisal process


1. identify and establish performance appraisal
objectives

2. evaluate or appraise the employee's


performance through observation and
analysis

3. review performance and provide


feedback to employee. Strengths must
be recgonised and rewarded,
weaknesses overcome with assistance

Four common appraisal methods


1.
2.
3.
4.
-

Management by Objectives
setting specific, measurable objectives with an employee then reviewing their performance
Advantage of both manager and employee being aware of expected objectives and standards
Comparative standards
Employees performance is compared to or ranked against another employee
Relies on global judgement of the employees performance and does not highlight any specific strengths or weaknesses
Absolute standards
Independent evaluation of an employees performance by their manager
Manager required to make honest and informed statements about the employees performance
Causes problems as there is no control over areas chosen for appraisal and is time-consuming and difficult to compare
employees.
Critical Incidents
Appraiser/manager recording observations or events of good or poor employee performance.

Performance appraisal outcomes

Remuneration and rewards


Training and development
Counselling
Job promotion
Job rotation/transfer
Termination

Termination Phase
Voluntary termination methods
Resignation: voluntary termination that occurs when an employee leaves the workplace, usually to go to another job.
Retirement: voluntary termination when an employee decides to leave the paid workforce.
Impacts of voluntary termination

Loss of talent
Cost of replacement
Decline in morale
Breakdown of effective teams
Productivity increase or decrease (depending on effectiveness of departing employee)

Involuntary termination methods


Retrenchment: termination of employment by an employer because it does not need a particular job done by anyone or needs
fewer people. Redundancy arises when:

An employer is closing the business


Internal organisational restructure occurs
New technology is introduced
Business relocation
Duties of a position are reallocated to other employees
The business merges or is acquired by another business
Employees receive a period of notice and severance pay which will increase according to the employees length of service.

Dismissal: termination of employment usually due to poor work performance or illegal behaviour
Employer required to provide employee with a notice of termination and a reason for termination
Period of notice is based on the number of years of continuous employment
Positive and negative effects on an organisation from involuntary termination
Positive cutting of non-productive employees, reduction in costs, change in organisations structure
Negative loss of talent, decline in morale, breakdown of effective teams, increased pressure on performance of remaining staff
Termination management
Outplacement services
-

Services provided to assist employees who have been retrenched to gain new work and cope with retrenchment
Providing this service sends a message to remaining staff that the organisation cares about its employees

Transition Services - Provided to employees who are retiring and need assistance to organise their finance (superannuation,
pension), lifestyle planning and volunteering activities

Exit interviews can be used to gain feedback from employees as they are likely to be open about their problems. Managers
should take this feedback and use it to resolve problems and reduce staff turnover.

Chapter 11 Employee relations


Employee relations: relationship between employees and employers encompassing all aspects of their working lives, including
wages and conditions of employment based on optimum working relationships
Industrial relations: resolution of conflict between the employee and employer, but employee relations incorporate all the issues in
employer-employee relationships in the workplace.
Participants in Australian Employee relations
Trade union: an organisation formed to represent and protect the rights of workers in a particular industry
Employer associations: groups that provide advice to employers and represent their interests on employee relations issues. Types
of employer association:
Government laws that affect employer-employee relationship in areas such as taxation, OH&S, EEO
Fair work Australia power to vary awards, determine unfair dismissal claims to assist in resolving disputes

Centralised approach to employee relations (pre-1991)

conflict resolution using negotiation to fix problems after they had occurred
centralised system: where awards (pay and working conditions) were determined by a central body (AIRC) relating to an
industry
AIRC (Australian Industrial Relations Commissions) established industrial awards which set out minimum conditions of
employment for employees doing a particular job
Industrial rewards had blanket coverage across all Australian workplaces of the type specified. This caused inflexibility, as
the needs of particular workplaces and employees could not be met.
Awards covered areas such as: pay rates, working conditions, meal breaks, holidays and leave

Advantages of centralised employee relations


certainty of pay and working conditions for employees
working in the same industry
Government has tighter control over wages through a
centralised body
Greater opportunities for taking industrial action. Potential for
more control for trade unions.
Employers can refer to a government-determined document
to find out pay and working conditions, so saving time and
effort.

Disadvantages of centralised employee relations


Reduces potential for employers and employees to create
flexibility relating to both pay and working conditions
Does not recognise an individual organisations circumstances,
as the wage outcomes are imposed with no trade-off for
increased productivity.
Opportunity for unions to mount harmful industrial
campaigns.
As the pay and working conditions are not negotiated at the
workplace, it lessens the importance of the participative
management approach.

Decentralised Approach to employee relations (post-1991)


Decentralised system: where employers and employees at each workplace determine their pay and working conditions and work
through their differences without outside interference
Federal Industrial relations reform act 1993 workplace flexibility increased through expansion of enterprise bargaining. Enterprise
bargaining: Direct negotiation of working conditions and remuneration, which takes place between an employer and its employees
(or representative) at a particular workplace
Enterprise bargaining agreement: The formal agreement that results from the enterprise bargaining process
Workplace relations Act 1996
Emphasis on enterprise agreements instead of awards to negotiation between employers and employees
Collective/certified agreements: enterprise bargaining agreements that result from negotiations between an employer and
union. That process is known as collective bargaining: process by which wages, hours, rules and working conditions are
negotiated and agreed upon by a union with an employer for all the employees collectively whom it represents.
Australian workplace Agreement (AWA): agreement made directly between an employer and employee covering working
conditions and remuneration
Employees right to strike was restricted
Workplace relations amendment (WorkChoices) 2005
Exempting business with less than 100 employees from unfair dismissal claims
Permitting LSOs to dismiss workers for operational reasons of an economic, technological or structural nature
Restrictions on trade unions
Effect was that in acting to further decentralise the employee relations environment it reduced employees protection
while promoting individual contracts. It also reduced power of unions and was considered unfair.

Fair work Act 2009


Strengthening safety net of minimum wages and conditions
Abolishing AWAs and restoring collective bargaining
Restoring to all employees protection against unfair dismissal if they have worked for that employer for more than 6
months.
Advantages of decentralised employee relations

Disadvantages of decentralised employee relations

Allows organisations and employees to negotiate pay and


working conditions
Opportunity for employers to negotiate for productivity gains
while meeting needs of employees for increased flexibility in
their working arrangements
Creates a more inclusive working environment where both
parties are working together to achieve agreement

Reduces the level of control of the government in wage


determination
More time-consuming for employers to undertake
negotiations. May feel that some of the employees demands
are unrealistic
Reduces the influence of unions as representatives of the
workers. May make some workers feel more vulnerable

Characteristics
Orientation
Who makes them?

Modern Award (FWA)


Centralised
Fair Work Australia

How do they arise?

Submissions to FWA by employer,


unions

Collective agreement (FWA)


Decentralised
Employer/employees (collective group)
or employer/trade union/employees
Negotiated after good faith bargaining at
the workplace between employee
representatives and the employer

Individual contract
Decentralised
Employer and individual
employee
Negotiated between parties

Pay and working conditions for


individual employee
Period determined through
negotiation
As negotiated between parties

Content

FWA determined
Pay and working conditions

Pay and working conditions

Duration

Ongoing, revised every 4 years

Up to 4 years

Annual rate

4 weeks paid leave for each year of


service
Australian workers in an industry or
occupation
Allowable only during period or after
authorisation from FWA

4 weeks paid leave for each year of


service
Australian workers at
workplace/enterprise
Allowable only during period or after
authorisation from FWA

Unprotected action results in


deduction of pay
Must apply for entry permit to
workplace
NES act as minimum legal
employment standards

Unprotected action results in deduction


of pay
Must apply for entry permit to
workplace
NES and national minimum wage and
modern awards act as minimum legal
employment standards

Applies to
Industrial action and
dispute resolution

Role of union
Protection provided
toe employees

Unfair dismissal protection


Unfair dismissal protection

Individual employee
Both parties would have terms in
contract relating to dispute
resolution and contract
cancellation
None
Clauses written into individual
contract
Contracts enforceable through
courts

Grievance procedure: formal, systematic process that permits employees to complain about matters that affect them and their
work
Form of Industrial action
Passive resistance
Work to rule
Boycott
Stop-work meeting
Picket line
Strike
lockout

Explanation
Lack of cooperation to complete tasks, absenteeism
Workers refuse to do anything more than the bare minimum required
Employees refuse to do something to deal specifically with someone
Employees hold meeting during working hours to discuss an issue. Productivity ceases
Employees physically demonstrate outside the premises of their employer.
Employees withdraw their labour and production ceases. E.g. teachers strike
Employer/management not allowing workers to enter a plant or building to work

Initiated by
Employees
Employees
Employees
Employees
Employees
Employees
Employer

Employee relations and HRM under a decentralised approach


Employees are encouraged to think of themselves as part of a team working with management in order to advance the
organisation as a competitive player in globalised markets
Role of HRM is to:
Negotiate with employees on employment relations issues
Act as an intermediary between employees/unions and senior management

What does good employee relations require of management?

Commitment to the achievement of organisational objectives creates sense of common purpose and teamwork
Allowing employees to feel their contribution is valued. A participative management style facilitates this.
Treating employees and their complaints seriously
Promotion of the concept that change is essential will assist in creating a more flexible mindset towards reform.
Effective communication skills and methods help avert industrial dispute. Management taking time to explain reasoning
behind decisions gives employee an opportunity to see things from the point of view of management.
fair pay and working conditions and recognition of employee achievement creates positive workplace atmosphere
Maintenance of good working relationships between management and union officials.
fair and accessible grievance procedures will decrease chance of dispute
participative and open management styles will always improve relationships within a workplace

Assessment of workplace relations


Levels of employee participation in decision making. Workers empowerment enables employees to feel a sense of control
Degree of consultation in a workplace demonstrates worker empowerment levels
Quality of communication channels within a workplace. Industrial disputes can be averted using open communication
Values indicate the attitude of employers and employees towards each other
Productivity levels demonstrate employee motivation and satisfaction. Increased productivity positively impacts
profitability
Staff morale levels indicate employee commitment and teamwork. These can be measured through levels of employee
satisfaction, staff turnover and work satisfaction
Incidences of strikes and other industrial action. Rate of union membership indicate general employee feelings
The ideal workplace relations manager would therefore possess excellent:
Communication and listening skills
Negotiation skills
People skills
Team building
Planning and leadership skills (relates to POLC)
Understanding and knowledge of workplace relations laws and how they apply
Problem solving skills
Decision-making skills
A participative style of management is most effective in the modern workplace as this allows for employee input, ownership of
decisions and easier negotiations. Flexibility in management styles is an asset; for example, the autocratic style may need to be
adopted when difficult/speedy decisions such as retrenchments, need to be made.
Relationship to business objectives and business strategies
Profit - Most enterprise agreements contain productivity trade-offs for increased wages. This leads to a more competitive position
from which more profit can be gained.
Employee satisfaction - If workers are happy with their agreements, it is likely to be reflected in increased morale and lower staff
turnover rates. Flexible work arrangements should result in lower levels of staff absenteeism.
The role of the HRM in employee relations
HRM are involved as employer representatives in negotiating new agreements. This can involve discussions with workers and/or
their unions. As they are representing the organisation, leading is important and control is also necessary in negotiations.
HRMS are responsible for making sure that the agreements are implemented correctly. Roles of planning and organising are most
important here, as new levels of wages may need to be organised and the details of new arrangements to be introduced.
Timing of implementation will have to be planned so that workers receive all their entitlements on the correct dates.
Control is essential as the correct amounts of money must be paid, and the workers must abide by all conditions of work.
HRMs may be required to negotiate in ties of industrial unrest and disputes
If previous negotiations regarding enterprise agreements may have failed and industrial action has resulted, then HRM may need to
plan a new strategy, or organise and implement some control measures so that no harm is done to the business.

Change Management
Change: any alteration to an organisation and/or its work environment.
This occurs because of pressures placed on the organisation to make adjustments to its structures, activities, policies,
behaviours, processes and culture.
Internal environment: activities, functions and pressures that occur within an organisation over which it has control.
External environment (operating and macro): all elements outside an organisation that will act as pressures or forces on its
operation
Internal pressures as a source of change
Corporate culture changing negative culture by training of employees, changing methods for promotion
Policies new laws may require a policy to be changed. E.g. changes to OH&S laws require new policies
Management can influence the direction and progress of an organisation through management skills/style
Employees can exert pressure for changes to areas such as training, performance appraisal and policies
Operating environment pressures as a source of change
Customers organisation must keep up with changing customer preferences
Suppliers problems with a supplier will not allow organisations to produce its products as inputs are not available
Competitors changes may be required if competitors change their business practices, to maintain competitiveness
Creditors development of secure lines of credit enables efficient operation
Unions exert pressures for change in collective agreements which affects wages and working conditions
Macro environment pressures as a source of change
Economic business activity (more people employed means more demand for products as people have more income),
inflation interest rates, unemployment, value of Australian dollar
Political changes to laws, change in government brings about changes in laws (E.g. 2013 Federal election)
Social and demographic changes in attitudes, values and lifestyles. Demographics (E.g. women with children In workforce
creates need for increased childcare facilities, flexible work hours)
Technological increased use of computers and internet, growth of e-commerce will require an organisation to change
International pressures global economy affects organisations. E.g. Global financial crisis
Geographic Silicon Valley puts pressures on government as they may demand taxation breaks as they control most of the
supply of microchips. Puts pressure on other manufacturers of computer hardware

Environmental pressures increasing awareness of effects of economic activity on environment. Organisations have to
become more environmental responsible using waste management practices, reduction of carbon emissions
Force field analysis (Kurt Lewin): looks at forces that are
either driving movement towards a goal or change (Driving
forces) or blocking movement towards a goal or change
(Restraining forces)
Driving forces: forces affecting a situation that are pushing in a
particular direction and are supporting the goal or proposed
change
Restraining forces: forces acting to restrain or decrease the
driving forces for change; these may include apathy, hostility,
and poor maintenance of equipment
Lewins model steps
1. Define the target of change
2. Identify which are driving forces and which are
restraining forces
3. Analyse the forces that can be changed
4. Develop an action plan on what can be changed

Harnessing the forces for change


1.
2.
3.

Driving forces Dominant = change is likely to be successful


Driving and restraining forces similar level = change not successful
Restraining forces Dominant = Change not successful
Organisation is like an iceberg
above the water part represents the more tangible aspects of the organisation
below the water aspects are more difficult to manage and change

Pressure or
force for
change
Management
and
management
styles
Employees

Time

Competitors

Organisational
inertia
Legislation

The pressure as a driving force

The pressure as a restraining force

A positive relationship between employees and


management, is more likely to allow change to be discussed
and implemented. A consultative/participative style is best.

Lack of consultation and negative relationship may mean


change is not implemented. An autocratic/persuasive style
leads to poor communication

Employees in an organisation with positive corporate


culture are more likely to be involved in change, and
resistance is less likely
Organisations that plan ahead to deal with change are more
likely to have time to better manage the change process

Employees who do not feel part of the organisation will make


change difficult to introduce as they are resistant to change.

Competition between companies means that an


organisation is always aware of what its competitors are
doing and able to respond to changes quickly
An existing organisation that is quick to take on new
challenges is likely to change with few problems.
New laws can act as a driving force if a new initiative is
introduced and organisations need to change in response

Cost

Ability to minimise costs will allow an organisation to bring


in change in an efficient and cost-effective way

Productivity

High productivity indicates that organisation is able to


easily change its operations system with few issues and in
an efficient manner

Organisations that dont plan or have not foreseen change in


their industry, find they are unable to respond quickly to
change
If an organisation is behind its competitors in responding
after change has occurred, then changes in that organisation
will be difficult
Organisations that are stable with little change over time are
less likely to respond to changes quickly or in a positive way.
If an organisation finds that it has to manage and adjust to a
change in the law thaw that is unexpected or difficult to
implement, it will be harder to respond positively
If costs involved in the change are high, it may mean that the
change is postponed or not implemented as well as it should
be.
Low productivity indicates that changes in an organisation are
expensive and impact the operations system.

Organisational inertia: lack of ability of an organisation to react to internal and external pressures for change

Kotter theory of change management


1.
2.
3.
4.
5.
6.
7.

8.

Establish a sense of urgency. Inspire people to move, make objectives real and relevant. A SWOT analysis can be used to
identify possible opportunities and threats that could arise from implementing change.
Assemble a group of people who will lead the organisation through the changes. It is important that the organisation gets
the right people with the right emotional commitment, mix of skills and levels
Create a vision for the organisation necessary to establish a simple vision and strategy to focus on emotional and creative
aspects necessary to drive service and efficiency.
Communicate the vision to all within the organisation. It is critical that as many people as possible understand and accept
the vision and strategy.
Empower others to act on the vision and remove any obstacles that may undermine the change process. Important to
create a situation that allows constructive feedback and support from leaders.
Plan to achieve short-term gains and wins rather than aim for large instant changes. It is also important to finish current
stages and celebrate this before moving on.
Consolidate all of the changes and develop employees who can help the change. As small goals are achieved, others need
to be set and strived for so that the change process becomes continuous and the momentum remains. Each success
provides an opportunity to build on what went right and identify what can be improved. Dont give up and press harder
after first success.
Institutionalise new approaches and create a new culture. Reinforce connections between the new behaviour and changes
and organisational success. It is important to reinforce the value of successful change via recruitment, promotion and
appointment of new change leaders. By weaving change into corporate culture, it is likely that the new change will become
a way of life for the organisation.

Strategies for effective change management


Low-risk strategies: participative approach to implementing change

Two-way communication between management and employees


Empowerment of employees to make decisions
Establishment of work teams to implement changes
Support for those going through the change such as counselling

High risk practices: autocratic approach to implementing change

Coercion and threats to employees who do not agree with the change
Manipulation of the situation e.g. details left out
Autocratic management style where employees are told what to do and there is little or no opportunity for discussion

Low-risk practices are more likely to be successful in the long-term and allow for all stakeholders within the organisation to feel
valued as their ideas and feelings are heard.

Practices to successful implement change


1. Educate leaders to ensure they understand what the change is
2. Use a systems approach to ensure that all aspects of the organisation are considered when planning and implementing change.
3. Use a team approach and involve stakeholders in the change process.
4. Empower managers and employees to make decisions and implement changes.
5. Develop plans, but also allow for flexibility so that they can be changed if required.
6. Acknowledge that there is tension between establishing readiness for change and the need to get people implementing new
approaches quickly.
7. Provide training and staff development for those involved.
8. Choose innovative practices that are research based and supported by data.
9. Change can only happen through people. Understanding emotional effects and reasons for resistance is vital.
10. Be prepared for an implementation dip things often get worse before improvement appears.
11. Help employees understand the new practices.
12. Seek out paradigm shifters and those who are interested in making substantial changes.
13. Take a long-term view change takes time.

The role of leadership in change management


Skills necessary for effective leadership:
Diagnosing being able to understand the situation as it is now and knowing what could be expected in the future
Adapting being able to adapt behaviour and other resources to help close any performance gaps
Communicating even if a leader knows what needs to be done, it is important to communicate this to others
If leaders do not have the right skills, then the introduction of change can lead to a situation where employees become
cynical and begin to resist the change.
Leaders need to focus on building relationships with employees and external stakeholders. By cultivating teamwork,
coaching, encouraging diversity, developing talent within the organisation and having open communication, change is more
likely to be successful
Impact of change on the internal environment
Structure
Business may expand through joint ventures, mergers, takeovers and acquisition
Unprofitable parts of the business may be sold off
Flatter organisational structures with fewer levels of management are more likely
Outsourcing of non-core business activities
Diversification of business operations
Corporate Culture
Changes to the size of the workforce may mean existing employees re negative about the future
Changes in tasks and jobs may impact on culture
Policy
New methods and structure may mean that the organisation develops policies and procedures in areas such as recruitment
and selection ,training, codes and contracts with suppliers
Management Styles, skills and roles
Effective change may mean the use of consultative and participative styles
Need for skills such as interpersonal/communication skills, decision making, delegation and vision
Focus on roles of planning and leading through the change process
Need for controlling and organising - ensure that the change process has been implemented and evaluated
Operations management
Emphasis on work groups of teams
New plant and equipment
Introduction of programs such as Total Quality Management (TQM)
Introduction of new value-added programs
Pressure on organisations to use green technology to lessen the impact on the environment
New technology training and equipment
Human Resource Management
Downsizing may lead to a reduction in the number of staff
Decentralisation of power, decision making and accountability with more emphasis on employees
Changing jobs and tasks
Employees may become multi skilled
HR managers will need to recruit staff with the right skill set, and manage ways to provide career paths and retain talented
and skilled employees
New ways of performing tasks and training programs may be introduced
Legislative changes such as OH&S, Equal employment opportunity (EEO)

Technological development Change Issue

As the use of technology increases, organisations and employees need to change the way they work

Can be managed by:


Restructuring the networks, with allowing employees to telecommute
If employees are working independently , new methods of social contact will need to ensure the employees do
not become isolated
Automation of work processes make employees redundant

Advantages
Saves time and money as information can be collected quickly

Frees up time for employees and managers


Allows organisations to become more efficient and effective in their
operations
Led to the development of different jobs and skills for employees in
areas such as software development
Internet has allowed organisations to move into markets across the
world. Allows businesses to market and sell products in the global
market.

Disadvantages
Technology can be seen as a substitute for labour. Many jobs,
particularly in clothing manufacturing have disappeared as these
tasks can now be done by automated technology
Can lead to de-skilling of employees and some employees on
production lines may find the work unskilled.
Use of technology can have high costs. The purchasing, developing,
training required and continued IT support can be expensive.

Technological development as a pressure for change on organisations


Corporate culture
Cultural shifts may occur when applicants are recruited for their technological skills. The new employees and their
perspectives may mean that their new ideas and attitudes influence culture.
Changes due to technology may mean employees and managers become stressed and resist change if they are unclear
about the purpose or implications of the change.
Employees
Employees use computers, internet and mobile for daily work life and need to develop their skills in these areas and
adapt as technology continually changes.
Customers
Customers now expect organisations to have up-to-date technology as part of their normal business functions
Trade Unions
New technologies may mean that some of the workforce is no longer required and employees may lose their jobs.
Trade unions will oppose job losses or campaign so that losses are minimised .
Impact of technology on organisations
Impact
Human resources

Operations management
Organisation in general

Benefit or cost

Recruitment may be done using ICT, e.g. mobile phone interviews

Increased and continual training for employees

Need for multi skilled employees

Development of new policies, e.g. acceptable use of email/internet policy

Need for It support staff

Waste minimisation new technology allows this

Changes in operations management, e.g. use of robotics, CAD

Changes in structure or organisation, e.g. outsourcing of IT support

Some jobs and departments are no longer required; others are new

Technology and its impact on ethics and social responsibility


Code of conduct for internet and email use
Policies and procedures in place to deal with cyber-bullying and inappropriate use of the internet and email
Privacy policies and practices to ensure that information and data is not given out
Practices in place to ensure that viruses are stopped and data protected
Practices in place to try and ensure that technology is used to reduce pollution and emissions in the manufacturing and
processing industries
Recycling of old hardware so that it does not end up in landfill
Use of green technology to contribute in a positive manner to the environment

Chapter 12 Ethics and Social Responsibility


Ethics: a set of moral principles that an organisation needs to establish and follow
Social responsibility: Accountability of a business towards its stakeholders; the idea that businesses should contribute to the
welfare of their communities
An organisation that is demonstrates ethical and socially responsible behaviour will receive a better public image leading to
increased sales revenue, profit and business competitiveness.
Ethically and socially responsible management of the internal environment
Mission, vision and values statements should reflect social responsibility and ethical values
Objectives focus should not be just on profit and performance
Organisational structure and social responsibility organisation may find it needs to change its structure to focus on ethics.
Corporate culture embraces and develops high levels of ethical behaviour and a socially responsible workforce.
Policies may need to be introduced to incorporate a more ethical approach.
Management styles and skills organisations wanting to be socially responsible and ethical are more likely to use the participative
management style as it reflects a positive culture and values employees.
Ethically and socially responsible management of Operations
operations management
strategy
Waste minimisation
Recycling components
Inventory management
systems
Quality control/quality
assurance
Technology (robotics, CAD)
Facilities layout and design
Supply chain and material
management
Environmental management
system
Ergonomics

Influence of ethics and social responsibility on the operating system


Reduces operating costs, while minimising impact of waste on the environment
Cuts costs and means less waste is left to be disposed of.
Allows planning of stock levels and ensures there is no wasted stock
Quality focus will mean a better quality product will leave the organisation. It also means consumers are
protected from faulty products
More efficient and means that dangerous tasks are not completed by employees
Ensures the production processes operates smoothly and reduces resources like water
Monitoring suppliers and ensuring that ethical practices are observed can assist the workforce of
another country. Controls over suppliers may mean that resources are used in a socially responsible
manner
Focuses on all areas of the organisation and its practices and ensures these are socially responsible
Providing environmentally friendly and ergonomically correct equipment.

Ethical and socially responsible management of HRM


HRM strategy
Recruitment methods
Selection and interviews
Induction
Policies
Motivation
Employment arrangements and
flexible employment conditions
Training and development
Performance management and
appraisals and career
development
Exit strategies and management
of retrenchment and
redundancies

Influence of ethics and social responsibility on HRM


Targeting a particular group in terms of gender, ethnicity or disability to be given employment
Assumptions should not be made and all applicants treated equally
To ensure that new employees act in an ethical manner, policies/culture should be explained
Clearly defined and established policies in place so that everyone is clear about what the expectations
and codes of behaviour are.
Employees should be motivated in terms of positive reinforcement, recognition of performance and
opportunities to develop. This will ensure a positive corporate culture.

Providing flexibility in areas such as working hours

Conditions and pay negotiated fairly without pressure on employees

Providing time off to work in a community or charity program


Access to training programs should be based on equal opportunity.
Positive and constructive feedback establishes a culture where employees and managers are valued
and judged on their work performance. This can reduce harassment/bullying as employees and
managers are given feedback and training when required

Clear exit strategies and retrenchment procedures is ethical

Outplacement services and support to assist employees in finding another job

Support for retiring employees to allow a smooth transition into retirement

Ethically and socially responsible management in times of change

Open and honest communication


No Hidden agenda All reasons of change explained and not manipulated
Change achievable, realistic, measureable
People must be able to cope keep them motivated
Managers- encourage and settle people
Management style shared decision making planning and implementation
Face to face communication sensitive to employees who are going through times of change
Understand businesss corporate culture - the manager needs to be able to understand how to explain why change is good
to motivate employees

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