2 Human resource management

Human resource management (HRM) studies how organisations plan, organise, lead, motivate and communicate with the people who work for them, and how they manage change and conflict at work. Every organisation depends on its employees, and for most businesses labour is one of the largest costs, so the way people are managed affects productivity, quality, customer service and profit.

Questions that frame the unit

The unit returns again and again to a few practical questions about people at work.

• Why does a business that pays well still lose its best employees to competitors?

• Should decisions be taken by a few senior managers or pushed down to the people closest to customers?

• What makes a good leader in a crisis, and is it the same as in a period of steady growth?

• Why do employees resist changes that managers believe will benefit everyone?

• Why do some mergers fail even when the numbers suggest they should succeed?

What the unit covers

The unit has seven subtopics. Five are studied at SL and HL; two are HL only.

How the subtopics connect

The unit starts with workforce planning: forecasting how many employees a business needs, with which skills, when and where. The plan follows from the business’s objectives and growth strategy, and it is shaped by internal factors such as finance and technology and by external factors such as demographic change, labour mobility and the gig economy. Introduction to HRM also explains resistance to change, a theme that runs through every later subtopic.

The concept map shows three subtopics that follow directly from workforce planning. Organisational structure sets out how jobs are grouped and who reports to whom. Its span of control and levels of hierarchy affect which leadership style is practical: a manager with thirty direct reports cannot supervise each one closely. Leadership in turn affects motivation, because a style that gives employees a say in decisions meets different needs from one that relies on instructions and close control.

Structure and communication are closely linked. A long chain of command means messages pass through many people, so they are slower and more likely to be distorted, while a flat structure makes horizontal communication easier. At HL, organisational culture adds the shared values and habits that shape how people communicate and how leaders behave, and it explains why a change of leader or a merger can unsettle an organisation.

Motivation links to industrial relations, studied at HL. When pay, job security or working conditions fall short of what employees expect, conflict follows, and it may take the form of collective bargaining or a strike. Disputes affect costs and output, so the unit connects directly to finance and to operations. Among the toolkit tools, a STEEPLE analysis organises the external factors that shape HR planning, and descriptive statistics summarise HR data such as absence rates and survey results.

Change, creativity, ethics and sustainability in the unit

The key concepts take a particular form in the unit, because each one depends on the behaviour of people.

How SL and HL differ

HL students study everything SL students study, plus two HL-only subtopics and HL-only parts of three SL subtopics. The HL-only subtopics are:

• 2.5 Organisational (corporate) culture: the meaning of culture, Handy’s four types (power, role, task and person cultures), and the culture clashes that follow mergers, growth or a change of leader.

• 2.7 Industrial/employee relations: the sources of conflict at work, the approaches employees and employers take, and methods of resolving disputes such as conciliation and arbitration.

The SL subtopics with HL-only parts are:

Two HL toolkit tools are used often with the unit. Force field analysis weighs the forces driving and resisting a change, and Hofstede’s cultural dimensions compare national cultures, which helps explain differences in leadership, communication and motivation between countries.

Assessment

Unit 2 is examined in Paper 1 and Paper 2. Its SL content can appear in either paper at both levels; the HL-only content (culture, industrial relations and the HL parts of structure, leadership and motivation) appears only in Paper 2 at HL and in Paper 3, never in Paper 1. Most questions are qualitative and set in the case: explaining why employees resist a change, analysing the effect of delayering, or evaluating a leadership style or a set of rewards for a named group of workers.

Constructing an organisation chart from a description is a common short question, and so is identifying the span of control or chain of command on one. At HL, calculating labour turnover and commenting on the result is the unit’s main calculation. In 10-mark answers, the motivation theories and leadership styles are used as tools to support a judgment, for example on whether a business should introduce performance-related pay.

Studying the unit