Approaches to Staffing (Edexcel A-Level Business): Revision Notes
Approaches to staffing
Introduction to staffing approaches
As businesses grow, they need to employ people to share the workload. In the UK, businesses can be classified by the number of employees they have. Small businesses employ between 1 and 49 people, medium-sized businesses employ between 50 and 249 people, and large businesses employ 250 or more employees.
Different businesses take contrasting approaches to how they view and manage their staff. Some businesses see employees as valuable assets that contribute to success, while others view them primarily as costs that need to be minimised. These different approaches have significant implications for how businesses operate and how productive their workforce becomes.
Staff as an asset
When employers view staff as assets, they place high value on their employees and show genuine concern for their welfare. This approach recognises that employee efforts directly contribute to business performance and effectiveness. Employers adopting this perspective understand that supporting and developing their workforce leads to better overall results.
Businesses treating staff as assets typically provide several key benefits:
- Acceptable pay levels that reflect employee contributions
- Reasonable provision for holidays, sick leave, maternity and paternity leave, and pension arrangements
- Safe and comfortable working environment
- Training programmes to develop skills and ensure competent, safe task completion
- Job security and regular opportunities to interact with colleagues
- Recognition and professional relationships throughout the organisation
- Clear and effective leadership
- Promotion opportunities for career progression
- Chances to solve problems, work collaboratively in teams, and express creativity
When employers adopt the staff-as-asset approach, they actively work to retain their employees. They understand that employees seek challenge, acknowledgment and reward in their roles. While recognising that money may not motivate everyone equally, these employers often provide above-average wages as part of a comprehensive reward package.
This approach helps businesses recruit high-quality staff, keep them for longer periods, and maintain strong motivation levels throughout the workforce.
Real-World Example: Investors in People (IIP)
The UK government established Investors in People (IIP) in 1991 to help employers maximise employee potential. This organisation encourages businesses to improve how they manage and develop their people.
Assessment Process:
- Uses ten performance indicators including empowerment, continuous improvement and leadership
- Businesses must meet 39 specific requirements to gain the IIP award
- Provides external validation of commitment to treating staff as assets
- Demonstrates very high standards in people management and development
Staff as a cost
When employers view staff primarily as costs, their focus shifts towards minimisation rather than development. Like any business expense, they attempt to reduce staffing costs wherever possible. This approach creates a very different working environment and employment relationship.
Businesses adopting this cost-focused approach typically demonstrate several characteristics:
- Pay only the legal national minimum wage rather than competitive rates
- Common use of zero-hours contracts, where workers are employed only when needed and often at short notice
- Neglected or minimal investment in training
- Financial incentives as the primary tool to raise productivity
- Only the minimum legal employee rights regarding sick leave, holiday pay and working conditions
- Penalties imposed on employees who arrive late, break rules or create costs
- Cheap recruitment methods of inferior quality
The False Economy of Cost-Minimisation
While this approach can lower immediate employment costs, it often proves to be a false economy:
- Productivity frequently suffers because of poor motivation among the workforce
- Staff turnover rates tend to be higher as employees leave for better opportunities
- Absenteeism increases as workers feel less committed to the business
- Conflict between staff and management becomes more common
- Workers may feel exploited, neglected, stressed and unhappy in their roles, creating a negative cycle that damages business performance
Flexible workforce
Most businesses prefer to employ a flexible workforce that helps them adapt to change more easily. For example, when output needs increasing quickly, a business with flexible staffing arrangements can bring in temporary workers rather than committing to permanent employees. Businesses can create workforce flexibility through several different methods.
Multi-skilling
Multi-skilling describes the process of enhancing employee skills so they can handle a wider variety of tasks and responsibilities. This approach allows businesses to respond more quickly and effectively to problems as they arise.
Practical Application: Multi-skilled Receptionist
A receptionist who previously only transferred calls to other departments might be trained to handle straightforward enquiries directly.
Benefits:
- Creates faster customer service
- Frees up other employees to focus on more complex activities
- Increases overall operational efficiency
Certain motivation theories suggest that giving individuals more skills and responsibilities can improve their work performance by making jobs more interesting and challenging.
Criticisms of Multi-skilling
Critics argue that individuals are simply given additional skills so employers can expect more work without extra pay. Problems can also arise when workers receive inadequate training for their expanded roles, leading to mistakes and reduced quality.
Part-time and temporary staff
Part-time workers are defined as people who normally work no more than around 30 hours per week. Some people actively prefer part-time work because it suits their lifestyle circumstances. Many students, for example, take part-time jobs to support themselves financially while studying.
In 2014, over one million UK part-time employees would have preferred full-time employment but could not find it, raising concerns about involuntary part-time work.
Part-time staff provide significant flexibility for businesses. They can be scheduled during peak trading periods, such as weekend shifts in restaurants or busy evening periods in gyms. This allows businesses to match staffing levels more closely to customer demand patterns.
Temporary workers are employed for limited periods only. Their employment is tied to specific projects, seasons or short-term increases in demand.
Examples of Temporary Employment:
- 2012 London Olympics: Over 100,000 temporary jobs created to handle the additional workload
- Agriculture: Farmers regularly employ temporary workers during busy harvest periods
- Royal Mail: Takes on extra staff each Christmas to cope with increased postal volumes
The use of part-time and temporary workers has grown significantly. Of the UK's working population of over 30 million people, nearly half do not work full-time. This broader group includes approximately:
- 4.1 million self-employed people
- 1.6 million temporary workers
- 6.7 million part-time workers
- 1 million unpaid people on apprenticeships or work schemes
- 1.5 million unpaid carers
- 1.1 million workers with second jobs
Flexible hours and home working
Workforce flexibility increases when staff work flexible hours, though this can be arranged in different ways. Some employees must work a set number of hours within a particular period (such as one week) but choose when to work those hours. Others might work a reduced number of days but with longer hours each day. Shift work represents another form of flexibility, with factories operating 24 hours typically running three eight-hour shifts.
The main business advantage of flexible hours is the ability to remain open for longer periods.
Case Study: BMW's Flexible Working Arrangements
BMW offers full-time employees several sophisticated options:
- Workers can take days off using a flexitime system
- Sabbaticals of between one and six months are available
- Full-time employees can take up to 20 extra days of unpaid holiday each year, subject to conditions
- Part-time workers receive support with childcare planning through specific schemes
Zero-hours contracts have become increasingly common in the UK. Under these arrangements, workers are employed only when businesses need them, often at very short notice. This provides businesses with extreme flexibility but proves unpopular with many employees because of insufficient financial security.
Office for National Statistics surveys found 700,000 people on zero-hours contracts, representing about 2.3 per cent of the UK workforce. Companies like Sports Direct and JD Wetherspoon employ high proportions of their workforce on these terms.
Home workers include a diverse range of people such as farmers, shop owners, writers, musicians, telesales staff, hotel owners and software designers. They may work full-time or part-time and may be self-employed.
Advantages of home working:
- Suits lifestyle preferences
- Eliminates commuting time and costs
- Reduced costs for office space, equipment, heating and lighting
- Decreased problems with absenteeism
- Diminished disruption from bad weather or transport delays
Disadvantages of home working:
- Communication difficulties when staff cannot be contacted easily
- Monitoring the quality and quantity of home-based work becomes more challenging
In 2014, 4.2 million of the UK's 30.2 million workers were classified as home workers.
Outsourcing
Outsourcing involves getting other people or businesses to carry out tasks that were originally performed by the business's own employees. This allows businesses to focus on their core capabilities while specialists handle peripheral activities.
Outsourcing in Practice:
An aircraft component manufacturer might outsource:
- Payroll administration
- Marketing
- IT support to external providers
This allows the manufacturer to focus on its core competency of producing aircraft components while specialists handle support functions.
Key advantages of outsourcing:
- Lower costs and increased capacity
- More effective work completion, especially when specialists are employed
Major drawbacks:
- Loss of control and increased reliance on suppliers
- When suppliers fail to deliver on time, entire production processes can be disrupted
- Employees often resent outsourcing because their jobs may be threatened
Both large and small businesses increasingly use outsourcing. In 2014, companies were growing their use of offshore services in developing countries. Computer programming, other IT services and marketing were popular targets for outsourcing work, with this trend expected to continue expanding.
Advantages and disadvantages of a flexible workforce
Advantages
A flexible workforce allows businesses to expand and contract quickly in response to changes in product demand. In contrast, a workforce of permanent staff is difficult to reduce quickly because of redundancy costs and legal requirements. Businesses may also hesitate to recruit new permanent staff if they fear demand might fall again, leaving them overstaffed.
Specialist Jobs and Cost Efficiency
Some specialist jobs need completing but do not justify employing permanent workers. Most small businesses, for example, employ external accountants to manage their accounts. This proves far cheaper than employing an in-house accountant because the work volume is relatively small.
Temporary staff or subcontractors can sometimes be cheaper to employ than permanent staff. Businesses may not offer certain benefits to temporary employees, though they must comply with employment legislation. When temporary staff are treated as self-employed or subcontractors, businesses may save on National Insurance contributions.
However, temporary staff are not always cheaper and sometimes command higher pay through agencies. The key advantage is that temporary staff can be released almost immediately when not needed, with little cost, unlike permanent employees.
Additional advantages:
- Training costs may be transferred to subcontractors or whoever trained the temporary worker, representing a significant saving over time
- More efficient business operations through job sharing or flexible hours—businesses can employ different workers for daytime and evening periods to respond to client needs
- Better matching of staffing to demand—restaurants can ask staff to work longer hours during busy periods and fewer hours during quieter times
Disadvantages
Peripheral workers may demonstrate less loyalty to businesses where they work temporarily. Their motivation may centre primarily on financial gain rather than commitment to business success.
Quality and Reputation Risks
Some businesses have experienced poor quality outsourced work that damaged their reputation with customers. Peripheral workers move on without taking responsibility for substandard work, but the business suffers lasting damage through lost customers.
Additional disadvantages:
- Communication can be problematic with peripheral workers who are not necessarily available when businesses need to communicate with them, though modern technology and mobile phones have partially solved this problem
- Employing peripheral workers can involve costly processes—for example, putting work out to tender to find subcontractors might secure the lowest price, but the tender process itself can be expensive
- Temporary staff vary greatly in quality—some are excellent, well-qualified and highly motivated, while others have struggled to hold down permanent positions
- Too many peripheral workers can demotivate the permanent workforce—core workers may want stable team membership to form relationships and fulfil higher order needs. Constant turnover can leave core workers feeling disorientated and unsettled
Distinction between dismissal and redundancy
Most people leave employment voluntarily, moving to other jobs or retiring. However, some workers are forced out of employment through dismissal or redundancy. Understanding the distinction between these two concepts is important.
Dismissal
Dismissal occurs when employees are forced to leave their employment. This can happen for various reasons, some of which may be unfair. Dismissing someone for joining a trade union, for example, would be considered unfair. Employment tribunals have the power to reinstate employees who have been dismissed unfairly.
Lawful Reasons for Dismissal
However, lawful reasons for dismissal do exist:
- Misconduct—such as theft, violence or serious breach of company rules
- Incapability—where an employee cannot perform their job duties adequately
When dismissing an employee, businesses must provide a period of notice. The notice length varies depending on how long the employee has worked for the business, with longer service typically requiring longer notice periods.
Redundancy
Redundancy represents another lawful method of ending employment. It applies specifically when there is no work or insufficient work for the employee to do. Redundancy situations typically arise during recessions or when businesses face challenging external conditions.
Legal Entitlements for Redundancy
Employees are entitled to redundancy or severance payments by law, but must meet certain criteria:
Must have:
- A contract of employment (rather than being self-employed)
Not covered by redundancy legislation:
- Members of the armed forces, The House of Commons, and The House of Lords
- People retiring over age 60 or 65
- Those reaching the end of fixed-term contracts or apprenticeships
The legal entitlement to redundancy pay reflects recognition that job loss through no fault of the employee creates significant financial hardship. Redundancy payments help support workers while they search for new employment opportunities.
Key Points to Remember:
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Staff as assets vs costs: Viewing staff as assets leads to better welfare provision, training and motivation, while viewing them as costs focuses on minimisation but may reduce productivity and increase turnover
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Flexible workforce methods: Multi-skilling, part-time and temporary staff, flexible hours, home working, and outsourcing all increase business adaptability but each has specific advantages and disadvantages
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Zero-hours contracts: Provide maximum flexibility for employers but offer minimal security for workers, representing an extreme form of flexible employment
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Outsourcing trade-offs: Reduces costs and allows focus on core activities but creates dependency on external suppliers and risks loss of quality control
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Dismissal vs redundancy: Dismissal relates to employee conduct or capability; redundancy occurs when insufficient work exists—both have different legal requirements and protections