2.1 Introduction to human resource management
What HR does, what shapes workforce planning, and why people resist change.
Human resource management (HRM) is the strategic approach to managing the people in an organization so that the business has the right number of employees, with the right skills, in the right place, at the right time. People are often a firm's biggest cost and its most important source of competitive advantage.
The role of HRM
- Workforce planning: forecasting how many staff, and which skills, the business will need.
- Recruitment and selection: finding and choosing new employees.
- Training and development: building skills and preparing people for promotion.
- Rewards and motivation: designing pay and non-financial rewards.
- Appraisal: reviewing performance.
- Dismissal and redundancy: handling exits fairly and legally.
- Employee relations: communicating with staff and their representatives.
Factors that influence HR planning
Internal factors
- Business growth or downsizing plans
- New technology changing the skills needed
- Budget available for pay and training
- Staff retirements and resignations
- Changes in organizational structure
External factors
- Demographic change: an ageing population shrinks the labour pool
- Labour mobility: how easily workers move between jobs and places
- Immigration: adds workers and skills
- Flexi-time and remote work expectations
- The gig economy: short term, task based work through apps
- Employment law and minimum wages
- Flexi-time
- Employees choose their start and finish times within limits, often around fixed "core hours".
- Gig economy
- Work is done as short, separate tasks ("gigs") by independent workers, usually through a digital platform, instead of permanent jobs.
- Labour mobility
- Occupational mobility is the ease of changing jobs or skills. Geographical mobility is the ease of moving location for work.
The gig economy gives businesses flexibility and lower fixed costs, because they pay only for work done. The downsides are less loyalty, less control over quality, and ethical concerns about workers' job security and benefits.
Resistance to change
Employees often resist change, even when it benefits the business. Common reasons:
- Fear of the unknown and of job losses
- Self-interest: losing pay, status or a comfortable routine
- Low trust in management
- Poor communication about why the change is happening
- Different views about whether the change is a good idea
Reducing resistance
To reduce resistance to change, HR can:
- Explain the reasons for the change early and honestly
- Involve employees in planning it
- Offer training and support
- Bring it in step by step
- Give incentives or guarantees, for example no compulsory redundancies
Forcing change quickly is sometimes needed in a crisis, but it usually damages trust.
- Listing internal factors such as labour turnover when the question asks about external influences like demographic change or migration.
- Using "redundancy" and "dismissal" interchangeably. Redundancy means the job is no longer needed. Dismissal is about the person (misconduct or poor performance).
Practice questions
New IB style questions every time. You won't get the same one twice until you've done them all at this level.
All companies, people, products, places and figures in these questions are fictional. Any resemblance to real businesses or people is a coincidence and is not intended.