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[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Understanding HR Objectives and
Strategies
Effective human resource management has become more important in recent times.
Here are some reasons why:
 Most businesses now provide services rather than produce goods – people are the
critical resource in the quality and customer service level of any service business
 Competitiveness requires a business to be efficient and productive – this is difficult
unless the workforce is well motivated, has the right skills and is effectively
organised
 The move towards fewer layers of management hierarchy (flatter organisational
structures) has placed greater emphasis on delegation and communication
As a result, if a business is to be successful and achieve its objectives, then it needs to
manage its human resources effectively – ‘human resource management’ (HRM)
HRM - The design, implementation and maintenance of strategies to manage people for
optimum business performance
In other words, HRM is about how people are managed by a business in order to meet
the strategic objectives of the business. The functional objectives set for HRM need to
be consistent with the corporate objectives.
HR Objectives
HR objectives will be determined by an organisation’s overall corporate objectives, but
regardless of these, all organisations are likely to pursue the following:
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Matching workforce skills and the size and location of the workforce to the
requirements of the business. This will ensure that there is sufficient labour in
order to support a business’ needs, and will mean that they do not have the
opportunity cost of over/under producing.
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Minimising labour costs. This will be a HR objective for all businesses in order
to ensure they are operating efficiently, but it will be particularly important for
those businesses suffering from financial problems.
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Making full use of the workforce’s potential. This will ensure that the
productive efficiency of the workforce is maximised, and by improving
motivation, it is likely to lead to greater productivity, reduced labour turnover
and reduced absenteeism.
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Maintaining good employee/employer relations. Without good
employee/employer relations, an organisation is unlikely to achieve maximum
levels of productivity and will not have a committed, satisfied and motivation
workforce.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Internal Influences
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Financial Constraints – these may affect HR objectives relating to the provision of
staff training and development, or the level of pay they can offer employees.
Corporate Culture – the impact of financial constraints may not be seen as sever if
the corporate culture is such that HRM has a high profile in the organisation and
HR are recognised as a valuable asset that needs to be trained and developed.
Organisational Structure – if the organisational structure becomes flatter or if
delayering takes place, this may influence HR objectives in relation to motivation
and communication
Trade Unions – may influence HR objectives concerned with introduction of
change, such as flexible working practices
New Technology – this may influence HR objectives by affecting the type and
amount of labour required, training requirements and worker’s motivation
Overall Performance of the Business – how the business develops or expands may
mean unprofitable areas are closed down or the focus of the business changes
External Influences
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Political Factors – EU legislation on areas such as maximum working time and
other employment rights impacts directly on workforce planning
Economic Factors – economic downturns will place great pressure on HR
departments to reduce staff costs and improve productivity
Social Factors – the growing number of single‐person households is increasing
demand from employees for flexible working options
Technological Factors – the rapid growth of social networking may require changes
to the way the business communicates with employees and customers
Market Changes – a loss of market share to a competitor may require a change in
divisional management or job losses to improve competitiveness
Structure of the Population – factors such as the UK’s ageing population and
future requirement for people to work beyond the traditional retirement age may
influence long term HR objectives
Hard and Soft HR Management
There are a variety of ways to approach the management of HR in a business. The two
broad approaches to HRM are Hard and Soft.
 The hard approach to HR is where employees are seen as assets, similar to
machinery or premises. It might be expected to result in a more cost‐effective
workforce where decision‐making is quicker and focused on senior managers.
However, such an approach pays relatively little attention to the needs of
employees and a business adopting a genuinely hard approach might expect to
suffer from higher absenteeism and staff turnover and less successful recruitment.
 The soft approach focuses on motivation. It is a long term strategy that looks at the
personal development of all staff. It rewards employee performance and motivates
staff more effectively. However, the danger of taking too “soft” an approach is that
when all the employee benefits are added up, the cost of the workforce leaves a
business at a competitive disadvantage.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Developing and Implementing
Workforce Plans
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Workforce Planning is the method by which a business forecasts how many and
what type of employees it needs now and future, and matches up the right
types of employees to the needs of the business
Workforce Planning is one of the central activities of human resource management and
helps organisations to foresee change, to identify trends and implement human
resource policies.
Stages in Workforce Planning
Workforce planning involves a number of stages to ensure that the right people are in
the right place at the right time in order to meet the organisation’s objectives:
1. Setting Objectives. This involves setting HR objectives based on the corporate
objectives of the organisation and converting these into human resource
requirements.
2. Forecasting Future Labour Demand. This should be done for the short term
(e.g. to cover sick leave or maternity leave), medium term and long term (e.g. to
meet future growth or expansion overseas). Forecasts should constantly be
reviewed and updated. It should give an idea of the size and nature of the
workforce required, as well as where they are needed.
3. Assessing Current Workforce. This involves identifying how many workers there
are, what type (e.g. full/part time, temporary), and their characteristics in
relation to age, length of service, qualifications, staff turnover, promotion
patterns and retirement rates.
4. Identify the Shortfall/Oversupply in the Workforce. The organisation needs to
compare the future demand for skills and staff with the organisations current
workforce, and estimate the changes required in the existing supply of labour,
taking into account potential labour turnover and retirement.
5. Reviewing Internal/External Supply of Labour. This involves estimating the
future state of the market and the availability of staff with the skills and
attributes that the firm needs in the short, medium and long term.
6. Develop Strategies to Fill the Gaps. These will form the basis of workforce
plans, and will outline how the firm will recruit/retrain to fill skill shortages, or
redundancy plans/cut hours to reduce the oversupply of labour.
Workforce Plans are the culmination of the workforce planning process described
above. Appropriate plans should be drawn up for the short, medium and long term.
Plans should include background analysis involved in the various stages of workforce
planning and a detailed plan of action involving recruitment and training, and possibly
redeployment or transfers and redundancies, in order to match the current workforce
with the desired one.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Internal Influences on Workforce Plans
 Corporate objectives – it is vital that workforce planning, which ensures that human
resources are sufficient to facilitate the meeting of overall corporate objectives, is
recognised as part of the strategic planning process.
 Production and marketing objectives – The required production capacity, product
quality and delivery timetables are significant to the business demand for labour.
For example, innovation and technological developments may require employees
with different skills
 Financial position – The workforce plan must take account of the financial budgets
in place and the cash flow forecasting. Staff remuneration is usually a major
operating cost and cash flow
 Strength of the current labour supply – The number, skills and experience of
existing staff clearly influence workforce planning since the process examines
whether the existing supply is sufficient to meet demand
 Existing organisational structure – How production is organised (e.g. cells, teams,
production lines) and management structure (e.g. flat, matrix) all affect existing
internal supply of labour
External Influences on Workforce Plans
 Labour market trends – These will influence the supply of labour from which an
organisation can recruit staff. The migration of workers from other countries, such
as Eastern Europe, may increase the supply of workers who are prepared to work
for lower wages than British workers.
 Legislation – Workforce plans may also be affected by changes in the law: for
example, by legislation requiring an organisation to ensure it meets stringent equal
opportunities and health and safety requirements
 Economic conditions – Closely linked to market demand. A weak economy may
lower wage rages and make it easier to recruit (and vice versa). But poor economic
growth is likely to result in lower market demand too
 Local factors – Local labour market may be affected by specific factors such as
changes in transport links, quality of local schools, major changes in substantial local
business employers
 Market demand – Demand for the firm’s products determines production output
which in turn sets out the requirement for labour. If there is an increase in
competition, there is likely to be less output required, leaving the company
overstaffed. Also, a unusually large order may come in which leaves them with a
sudden shortage of staff
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Benefits of Effective Workforce Planning
Performed effectively, the following are commonly seen as benefits of workforce
planning:
o An effective workforce plan helps a business achieve its corporate objectives by
ensuring the business has a workforce of the right size, with the right skills, in the
right place. Seen like that, you can argue that good workforce planning is a source of
competitive advantage
o Workforce planning encourages managers to prepare and plan for changes rather
than simply react to them – it places the HRM managers at the heart of strategic
decision making
o Businesses going through periods of significant change (e.g. technological change in
the industry, environmental change) are better able to handle the workforce
implications
o Improved communication is a common benefit – staff feel that they are closer to the
decision‐making process, are working for a business that takes HRM seriously etc
Issues with Workforce Planning
The main issues that need to be addressed in order for workforce planning to be
effective can be summarised as follows:
o Cost- This is perhaps the most important issue. A workforce plan needs to be
supported by sufficient financial resources for it to be effective. However, the HRM
department can’t be given a blank cheque. Every decision made as a result of the
plan has a cost implication (e.g. new training, extra recruitment, redundancies). The
cost needs to be justified and should be consistent with the corporate objectives.
o Employer / employee relations - Businesses perform best when there are strong
working relationships between employers, employees and the business owners (e.g.
shareholders). Effective workforce planning involves communication and
consultation. This will mean that the final pan is accepted throughout a business and
can be implemented successfully.
o Training - Ensuring the successful implementation of a workforce plan usually
requires extensive training and development activities, including the induction and
training of new staff and the retraining or updating of current staff. This is
expensive.
o Corporate Image - A business that has an effective workforce plan that has the
support of employees is likely to enjoy a better brand or corporate image than one
which is perceived to be poorly managed and uncaring towards its employees.
Customers recognise businesses that place HRM as a strategic priority - they see it in
the higher quality of customer service and quality that they experience at each
interaction with the business. A plan imposed without consent of employees will
give the company a bad corporate image.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Competitive Organisational
Structures
The way in which a business is organised has a direct effect on its competitiveness. For
a business to be able to achieve its aims and objectives, it needs to organise its people
in a suitable way – that is known as the “organisational structure”.
Factors Determining Organisational Structure
Size of the business – Small businesses will tend to have informal or flat hierarchical
structures. Larger and more complex businesses will develop more complicated and
detailed structures involving more layers of hierarchy, departments and functions
Type of business – Does the business operate from just one or several locations? Is the
business in the service or manufacturing sector? Does it have overseas operations or
outsource any significant business activities? Is the workforce mainly unskilled,
semi‐skilled, highly skilled?
Management and leadership style – Often over‐looked, but very important. An
autocratic leadership style will often result in a very different structure compared with
one designed by a leader who prefers to delegate responsibility
The competitive environment – Organisation structures are often influenced and
changed by developments in the market – for example changes in the use of
distribution channels, suppliers, competitor actions
Accountability and Responsibility
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The extent to which a named individual is held responsible for the success or
failure of a particular policy, project or piece of work.
Whatever organisational structure is chosen, it is essential that accountability and
responsibility is clear.
When a company’s management structure is clear, as shown by an organisational
chart, staff should know what authority has been given to them and by whom.
According to Herzberg, achievement and recognition of that achievement will produce
motivation. Recognition of achievement is more likely when the lines of accountability
are clear.
In some instances, clear lines of accountability can be seen as a threat that deters
managers from taking decisions in case they turn out badly. This in turn makes them
overcautious, to the detriment of the business.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Centralisation vs. Decentralisation
One of the organisational issues that a business needs to address is where
decision‐making power resides in the structure. A key question is whether authority
should rest with senior management at the centre of a business (centralised), or
whether it should be delegated further down the hierarchy, away from the centre
(decentralised).
Centralised Structures:
Businesses that have a centralised structure keep decision‐making firmly at the top of
the hierarchy (amongst the most senior management). The need to ensure consistency
of customer experience and quality at every location, together with a desire to exploit
economies of scale, are the main reasons for this type of organisational structure. The
main advantages and disadvantages of this approach can be summarised as follows:
 Easier to implement common policies
and practices for the business as a
whole
 Prevents other parts of the business
from becoming too independent
 Easier to co‐ordinate and control from
the centre – e.g. with budgets
 Economies of scale and overhead
savings easier to achieve
 Greater use of specialisation
 Quicker decision‐making (usually) –
easier to show strong leadership
 More bureaucratic – often extra
layers in the hierarchy
 Local or junior managers are likely to
much closer to customer needs
 Lack of authority down the hierarchy
may reduce manager motivation
 Customer service does not benefit
from flexibility and speed in local
decision‐making
Decentralised Structures:
In a decentralised structure, decision‐making is spread out to include more junior
managers in the hierarchy, as well as individual business units or trading locations.
Hotel chains are particularly keen on using decentralised structures so that local hotel
managers are empowered to make on‐the-spot decisions to handle customer problems
or complaints. The main advantages and disadvantages of this approach can be
summarised as follows:
 Decisions are made closer to the
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customer
Better able to respond to local
circumstances
Improved level of customer service
Consistent with aiming for a flatter
hierarchy
Good way of training and
developing junior management
Should improve staff motivation
 Decision‐making is not necessarily
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“strategic”
More difficult to ensure consistent
practices and policies
May be some diseconomies of
scale – e.g. duplication of roles
Who provides strong leadership
when needed (e.g. in a crisis)?
Harder to achieve tight financial
control – risk of cost overruns
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Functional vs. Matrix Organisational Structures
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Functional Structures
The traditional organisation structure of a business has focused on the functions,
departments and main activities of a business. This structure could be adapted and
used for businesses that organise themselves according to geographical location or
product brands. A functional organisation is based on a hierarchy in which each
department operates separately under the leadership of those above it.
 Simple to understand
 Control is from the top down – gives
 Decision‐making can soon become
business a strong sense of direction
 Clear lines of communication and
command
 Allows specialists to manage in their
relevant functional areas
 Encourages employees to seek
promotion
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bureaucratic and too slow
Structure is prone to inter‐departmental
conflicts
Not always easy to get co‐ordinated
action across departments or functions
Employees not encouraged to develop
an overview of the whole business
Little reward for functions working
together
Matrix Structures
This type of structure combines the traditional departments seen in functional
structures with project teams. In a matrix structure, individuals work across teams
and projects as well as within their own department or function. For example, a
project or task team established to develop a new product might include engineers
and design specialists as well as those with marketing, financial, personnel and
production skills.
These teams can be temporary or permanent depending on the tasks they are
asked to complete. Each team member can find himself/herself with two managers
‐ their normal functional manager as well as the team leader of the project.
 Can help to break down traditional
department barriers, improving
communication across the entire
organisation
 Avoid the need for several
departments to meet regularly, so
reducing costs and improving
coordination
 Likely to result in greater
motivation amongst the team
members
 A good way of sharing resources
across departments – which can
make a project more cost‐effective
 Members of project teams may
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have divided loyalties as they
report to two line managers.
Equally, this scenario can put
project team members under a
heavy pressure of work.
There may not be a clear line of
accountability for project teams
given the complex nature of matrix
structures.
Difficult to co‐ordinate
It takes time for matrix team
members to get used to working in
this kind of structure
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Delayering
The traditional way to achieve a flatter organisational structure is through delayering.
Delayering involves removing one or more levels of hierarchy from the organisational
structure. Frequently, the layers removed are those containing middle managers.
Delayering does not necessarily involve cutting jobs and overheads. But it does usually
mean increasing the average span of control of senior managers within the business.
Delayering can offer a number of advantages to business:
 It offers opportunities for better delegation, empowerment and motivation as the
number of managers is reduced and more authority passed down the hierarchy
 It can improve communication within the business as messages have to pass
through fewer levels of hierarchy
 It can reduce costs as fewer (expensive) managers are required
 It brings managers into closer contact with the business’ customers – which should
(in theory) result in better customer service
But disadvantages exist too, making a decision to delayer less clear cut:
 Delayering can have a negative impact on motivation due to job losses
 A period of disruption may occur as people take on new responsibilities
 Those managers remaining will have a wider span of control which, if it is too wide,
can damage communication within the business. There is also a danger of
increasing the workload of the remaining managers too much
 Delayering may create skills shortages within the business – a danger is that
delayering means that the business loses managers and staff with valuable
experience
Flexible Workforces
In a dynamic business environment, organisations need to have structures that can
respond quickly to changes taking place in the external environment. One approach is
to introduce more flexible workforce structures that allow organisations to
expand/reduce capacity quickly:
Core vs. Peripheral Workers:
An example of a flexible workforce approach is to employ a core of permanent, fulltime, salaried workers supported by other peripheral, temporary or part-time workers.
The activities and responsibilities of core workers are central to the organisation and
such workers are likely to be fully committed to the aims and objectives of the
organisation. Peripheral workers are likely to be engaged in activities that are
additional to the main purpose of the organisation. Their jobs are less secure and they
are less likely to be committed to the organisations aims and objectives.
Outsourcing
The most usual method of achieving a flexible workforce structure is by sub-contracting
work to other firms. Outsourcing gives a firm the opportunity to use expertise not
otherwise available in the organisation to offload low-level administrative work, to free
employees to undertake more interesting work and to reduce costs.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Homeworking
Advances in technology and the growing availability of broadband mean that many
people can work very effectively from home. There are now increasing opportunities to
use audio and video conferencing for meetings and seminars, which all combine to
make flexible working increasingly attractive to employers and employees. By working
from home, employees remove the need to travel, saving time, making them more
productive, less stressed and happier, especially is the have family commitments. This
can motivate staff by giving them more independence and responsibility and, at the
same time, reducing the impact of Herzberg’s hygiene factors. They are more likely to
be committed to the firm and unlikely to take time off work due to sickness or stress.
However, some find it difficult to separate work from leisure ad miss the social aspects
of working alongside colleagues.
There are good business reasons why businesses are increasingly likely to offer
employees one or more flexible working options. For example:
 Savings on costs. A business can make substantial savings on overheads if it does
not have to provide office and other accommodation for so many employees or if
staff can work from home rather than commute into work every day
 Helping with recruitment and staff retention. There is lots of evidence that
flexible working result in better job satisfaction and higher staff morale
 To reflect the changing profile of the UK workforce. There are more women in the
labour market and an ageing population – as a result, it is increasingly common for
staff to have caring responsibilities outside work
 To take advantage of developments in technology. It is now simple and
cost‐effective for employees to be able to access their employers online and other
networked systems, and to communicate digitally with colleagues
 Legislation. Increasingly the law allows certain groups of employees the legal right
to request flexible working
Whilst there any many advantages to flexible working, it is not always simple or
appropriate to introduce it.
Amongst the concerns that employers often raise about flexible working are:
 Additional administrative work and “red‐tape” involved in setting up and running
flexible working
 The potential loss of customers if key employees reduce their working hours
 Lower employee productivity
 Inability to substitute for certain skills if certain employees are absent (a common
concern of smaller businesses)
 Organisations will be dependent upon other organisations and agencies outside
their direct control
 Managers finding it difficult to manage or administer the flexibility
 By downsizing and focusing on core activities, there may be less opportunity for
future expansion as worker’s skills and experience will be lost.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Effective Employee/Employer
Relations
The successful modern business recognises the need for positive, constructive
relationships between employers and employees. The business world is competitive
enough without a firm having to grapple with internal disputes – even if they are
somewhat inevitable given human nature.
Importance of Communication
 Implementing Change. It makes it easier to implement change because employees
and other stakeholders understand and recognise the need for it. Taking into
account the opinions of employees is likely to encourage greater commitment to
the change process.
 Motivation. Effective communications encourages a more motivated workforce
and develops commitment to the business from employees at all levels of the
organisation.
 Achieving Objectives. Good communication helps to ensure that the business is
well coordinated and that all employees pursue the same corporate objectives. It is
important that employees understand how their own job contributes to meeting
objectives and how well they are performing their jobs and hence contributing to
the success of the business.
 Improving Competitiveness. It allows an organisation to be more competitive by
improving efficiency and identifying opportunities.
Barriers to Effective Communication
 Language – The communication message might not use vocabulary that is
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understood by the receiver – e.g. too much use of technical or financial jargon
Noise – Various things stop a message from getting through or being heard – e.g.
poor connection, background noise, distractions, too many people speaking
Overload – Too much information can cause problems e.g. slow down decision
making
Emotion – The relationship between the sender and receiver of communication
might adversely affect the message – which could be ignored or misinterpreted
Gaps – Too many intermediaries (e.g. too many layers in hierarchy through which
message has to be passed) might prevent or distort the message
Inconsistency – If people receive conflicting or inconsistent messages, then they
may ignore or block them
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Employee Representation
Employee representation or participating arises when employees are part of a formal
structure for involving them in the decision‐making process of an organisation. Of
course all businesses communicate with their employees in some way every day.
However, there are some situations when the law requires this communication to take
place. The law requires a business to consult with employees on things such as:
 Redundancy programmes
 When employees are transferred from one employer to another (e.g. the sale of
the business)
 On changes to pension arrangements
 Proposed changes to working time arrangements
In additional to the mandatory requirements for employee representation, there are
several strong reasons why a business should have a formal system of employee
representation. For example, to:
 Make employees' views known to management
 Help strengthen both management's and employees' understanding of
workplace issues and other matters affecting the business
 Help create an atmosphere of mutual trust between employees and
management and therefore improve workplace relations
 Increased empowerment and
 Time‐consuming – potentially
motivation of the workforce
 Employees become more
committed to the objectives and
strategy of the business
 Lower risk of industrial disputes
slows decision making
 Conflicts between employer and
employee interests may be a block
to essential change
 Managers may feel their authority
is being undermined
Types of Employee Representation
Work Councils
Work councils are committees of management and workforce representatives that
meet to discuss company-wide issues such as training, investment and working
practices. Excluded from the agenda is bargaining over issues such as wages, terms of
employment and productivity levels, which is generally left to trade unions.
The role of the work council is to essentially look at the company’s plans and provide
an opportunity to meet and gain ideas or improvements from the shop floor.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Trade Unions
Trade unions are organisations of workers that seek through collective bargaining with
employers to:
 Protect and improve the real incomes of their members
 Provide or improve job security
 Protect workers against unfair dismissal and other issues relating to
employment legislation
 Lobby for better working conditions
 Offer a range of other work‐related services including support for people
claiming compensation for injuries sustained in a job
The two main functions of a trade union are to represent their members and to
negotiate with employers. The basic concept behind a trade union is that of increased
bargaining and negotiation power which comes from acting together.
The traditional view of the employer/trade union relationship has been one of
confrontation. However, in most cases employers and union representatives have a
constructive relationship. Indeed, it is possible to identify several advantages of
unionisation from the employers’ point of view:
 Negotiating with trade unions (ideally a single union) saves time and cost rather
than dealing with all employees individually
 Unions are part of the communication process between the business and
employees
 Employee morale and motivation may be improved if they know that their
interests are being protected by a union
 The trade union can be a supportive partner in helping a business undergo
significant change
Partly as a result of their declining membership, unions now have significantly less
power and influence to determine pay and conditions than twenty years ago although
in some industries (including postal workers, railway worker, fire fighters and prison
officers) unions are still prepared to exert their “industrial muscle”.
Under UK law employers must recognise a trade union in pay and employment
discussions when a majority of the workforce want to be represented and has voted for
it. But there is little evidence that union members secure any significant wage
“mark‐up” or greater job protection than people in non‐union jobs.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Industrial Disputes
Back in the 1970’s and 1980’s the news was often dominated by industrial disputes and
action taken by trade unions. However, in the last two decades the incidence of
industrial disputes has reduced dramatically. This can largely be attributed to more
effective methods of avoiding and resolving industrial disputes. However, industrial
disputes and action do arise. The main forms of industrial action are:
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Work‐to‐rule. Employees follow the strict conditions of their employment contract - no
voluntary overtime, no participation in supporting activities. Staff still get their basic
pay.
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Overtime ban. Employees refuse to work overtime. Can have a significant effect on
production capacity during period of peak demand, but ineffective as a bargaining tool
during quieter periods.
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Go‐slow. Employees work at the slowest or least‐productive pace that is allowable
under their employment contracts.
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Strike. The action of last‐resort; fraught with danger for both employer and employee
and strictly policed by legislation on industrial action.
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Damage for the Business
Lost sales and profits from the lost
output
Damage to customer satisfaction
An internal distraction for management
and the business (worse if competitors
are not affected)
Damaged relationship with staff may
adversely affect motivation, productivity
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Damage for the Employee
Lost pay
Potential loss of jobs if the action results
in action to cut costs
Possible loss of customer and public
support (depending on the reasons for
the action)
Risk that illegal action will result in legal
proceedings
Given the costs involved, what can a business do to prevent industrial action in the first
place?
The priority for management should be to encourage a workplace culture that prevents
conflicts from arising. This involves informing and consulting workers and their
representatives on employment matters and business developments more widely
Depending on the size of the business, management could set up:
 Regular consultations with a recognised trade union ‐ an effective working
relationship with union officials can pick up problems before they escalate
 A staff forum or joint working group to pass on information and collect ideas
from workers and consult with workers
 An employee consultative body to discuss major issues as they arise
 Team and group meetings and feedback sessions
Many employers, especially those which recognise trade unions, have written
procedures in place to discuss with representatives collective grievances or other
significant issues affecting all or part of the workforce. Those procedures are important
and can be used to address emerging problems at an early stage.
[HUMAN RESOURCE STRATEGIES] BUSS3 - AQA
Settling Employee and Industrial Disputes
Most employee and industrial disputes are settled without resorting to industrial
action. Where the employer and employee cannot resolve the issue between
themselves, it often helps to take the dispute to an independent advisory service. In
the UK, the main such organisation is ACAS – the Advisory, Conciliation and
Arbitration Service. As suggested by its name, ACAS offers three main services:
(1) Conciliation. Conciliation is used when an employee is making, or could make, a
specific complaint against their employer to an employment tribunal. Conciliator
has no authority to seek evidence or call witnesses, or make decisions or awards.
Conciliator discusses the issues with both parties in order to help them reach a
better understanding of each other's position. The conciliator encourages the
parties in dispute to come to an agreement between themselves, and so avoid the
stress and expense of contesting the issue at an Employment Tribunal
(2) Mediation. Involves an independent, impartial person helping two or more
individuals or groups reach a solution that's acceptable to everyone. Aim is to
restore and maintain the employment relationship wherever possible – not
apportion blame. Best used early on in a dispute. Agreements are not legally
binding, but usually carried out
(3) Arbitration. An alternative to a court of law. Held in private rather than in public
(court case). Arbitration involves an impartial outsider being asked to make a
decision on a dispute. The arbitrator makes a firm decision on a case based on the
evidence presented by the parties. Arbitration is voluntary, so both sides must
agree to go to arbitration; they should also agree in advance that they will abide by
the arbitrator's decision. Often used in disputes between employers and trade
unions over collective bargaining issues (e.g. pay awards)