Understand flexibility in organisations

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Human Resource Management
Session 8
LO2: Key elements of HRM
Session Objectives
By the End of the Session you will be able to :
Understand flexibility in organisations
Design methods of workplace flexibility
Understand performance management
Determine the methods of payment and rewards
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The flexible organizations
Flexibility is about an employee and an employer making changes to
when, where and how a person will work to better meet individual and
business needs. Flexibility enables both individual and business needs to
be met through making changes to the time (when), location (where) and
manner (how) in which an employee works. Flexibility should be mutually
beneficial to both the employer and employee and result in superior
Formal flexibility policies are “officially approved human resources
policies, as well as any official policies that give supervisors discretion to
provide flexibility.“
Informal flexibility refers to “policies that are not official and not written
down but are still available to some employees, even on a discretionary

Numerical Flexibility
This refers to a firm’s ability to adjust the level of
labour inputs to meet fluctuations in outputs. There is
increased use of part-timers, temporary, short-term
contract staff, job sharers and agency workers.
There is a contrast between ‘core’ permanent
workforce and ‘peripheral’ non-permanent. The general
idea is that an increasing mixture of non-standard
employment forms will be more efficient and cheaper.

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Functional Flexibility
This refers to a firm’s ability to adjust and deploy the
skills of its employees to match the tasks required by its
changing workload, production methods. This is done by
multi-skilling / dual skilling / dismantling of traditional
rigidities between occupational groups (horizontal and
vertical flexibility). This is designed to improve
efficiency and reduce costs.
This is a core area of traditional conflict within the
division of labour between distinct skilled groups and
between the skilled and the non-skilled
Financial flexibility
Financial flexibility involves a company’s ability to
adjust employment costs in response to supply and
demand in the external labour market. The objectives
of functional and numerical flexibility are made easier
thanks to financial flexibility. Also, it involves a move
away from standardised pay structures. It is directed
towards more individualised systems dependent upon

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Model of Flexible
The concept of a “flexible firm” (as proposed by John
Atkinson, 1985) recognizes that organizations will
requires enhanced flexibility to meet ever evolving
market and competitive pressures.
The “flexible firm” model suggests that we can design
our workforces to proactively meet our business needs
through flexible staffing arrangements.
Flexibility is a calculated risk utilized by organizations
to survive and gain strategic competitive advantage.
Atkinson’s Model for Labour
Atkinson’s model for labour flexibility included “core”
workers and “peripheral” (secondary) workers.
Numerical flexibility, the expansion and contraction of
labour to address market fluctuations, would primarily
impact “peripheral” groups:
part-time, temporary, or
contractual workforces.
“Core” groups of full-time
would provide their organizations with
functional flexibility: an employee pool of skills that
could be moved about in reaction to emerging
technological, market or product changes.

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Model of Handy’s Flexible
Charles Handy’s Shamrock model advises a business to
have three types of workers:

1. Core workers: full time, permanent staff, may be
managers/professionals, central production staff
2. Peripheral workers: temporary, flexible, part-time
3. Contract workers: employed for a specific task,
often for a certain time period (outsourcing)

With only core workers present, there would be no
flexibility of time or expertise. Including peripheral
workers in the workforce allows for the time aspect of
flexibility to be ensured, while including contract
workers allows for the expertise aspect to be achieved.
Model of Handy’s Flexible

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Benefits of Workplace
Flexibility- Employees
An improvement in productivity: Working in a flexible
environment helps the majority of employers as well as
employees to work smarter and increase their work
practices to be more effective and productive.
– An improvement in work-life balance: In today’s large
companies, many employees are striving to meet both
work and personal commitments. Workplace flexibility
somehow improves quality and effectiveness both in
their work and personal lives.
Benefits of Workplace
Flexibility- Employees
– Increases employee job satisfaction: Employees
become more confident and motivated to perform in
their highest capacity, as they are more flexible to meet
their duties and are driven to work harder and more
– A flexible workplace environment shows that the
needs of the workers are taken into consideration, and
this in turn increases their loyalty, trust and respect
towards their employers

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Benefits of Workplace
Flexibility- Employer
Having a flexible workplace increases the retention of
the permanent employees; organisations get to retain
experienced and valuable employees..
– Minimizes absence and turnover: A flexible workplace
decreases the stress level of employees, stress that is
often caused by trying to meet their job and family
commitments at the same time. Flexibility enables
them to develop a greater sense of well-being, and look
forward to going to work each day.
– With workplace flexibility, organisational resources are
matched more closely with customer/product demand.
Benefits of Workplace
Flexibility- Employer
– A flexible workplace attracts highly qualified expertise
that become keen to share their experience and
knowledge in the company.
– A flexible workplace results to greater profits and a
higher market share, due to the hard work and
dedication of its employees.
– Employers get to save in recruitment costs, and
minimize the fixed labour costs, such as office space,
fuel, etc.

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Problems of Workplace
Often, there is a need of a specialized management
team for the flexible workforce in organisations.
– Training costs often increase when implementing
workplace flexibility.
-There is an increase in complexity in administration.
– Communication also gets affected; it tends to become
difficult because of the segmentation of the workforce.
– Workplace flexibility often creates tension amongst
the diverse categories of workers due to uneven
treatment in terms of pay.
– Workplace flexibility increases job insecurity,
especially for the part-time workers.
Flexible Working options
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s of a
t System
HRM Components
Performance Appraisal and Feedback
Provides managers with the information they need to make good human
resources decisions about how to train, motivate, and reward
organizational members
Feedback from performance appraisal serves a developmental purpose for
members of an organization
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HRM Components
Pay and Benefits
Rewarding high performing organizational members with raises, bonuses and
Increased pay provides additional incentive.
Benefits, such as health insurance, reward membership in firm.
Performance Appraisal and
Performance Appraisal
The evaluation of employees’ job performance and contributions to their
Performance Feedback
The process through which managers share performance appraisal
information, give subordinates an opportunity to reflect on their own
performance, and develop with subordinates, plans for the future.
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Types of Performance
Trait Appraisals
Assessing subordinates on personal characteristics that are relevant to job
Disadvantages of trait appraisals
Employees with a particular trait may choose not to use that particular trait on the
Traits and performance are not always obviously linked
It is difficult to give feedback on traits.
Performance Appraisal and
Behaviour Appraisals
Assesses how workers perform their jobs—the actual actions and behaviours
that exhibit on the job.
Focuses on what a worker does right and wrong and provides good feedback
for employees to change their behaviors.
Results appraisals
Managers appraise performance by the results or the actual outcomes of
work behaviours
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Performance Appraisal and
Objective appraisals
Assesses performance based on facts (e.g., sales figures).
Subjective appraisals
Assessments based on a manager’s perceptions of traits, behaviour, or
Graphic rating scales
Behaviorally anchored rating scales (BARS)
Behaviour observation scales (BOS)
Forced ranking systems
Subject Measures of Performance:
Graphic Rating Scale
Figure 12.5
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Subject Measures of Performance:
Behaviorally Anchored Rating Scale
Figure 12.5
Subject Measures of Performance:
Behavioural Observation Scale
Figure 12.5
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Employee Reward Management
Organisations today need to attract, motivate and retain
talent at a time when salary increases are not always a
viable option.
Employee Reward Management is a key part of employee
engagement and should feature in any organisation’s talent
management strategy.
Businesses with successful employee reward management
plans are often highlighted as employers of choice and
realise competitive advantage through their people.
Total Reward, or ‘Flexible Benefits’ packages in particular
offer a creative, personalised, cost-effective way in which
to attract, motivate and retain employees, without huge
increases in the wage bill.
Methods to Monitor
Employees Performance
Self Evaluation
Self appraisals can supplement manager view.
Peer appraisal
Coworkers provide appraisal; common in team settings.
360 Degree
A performance appraisal by peers, subordinates, superiors, and clients who
are in a position to evaluate a manager’s performance
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Methods to Monitor
Employees Performance
Graphic Scales: Discussed above
Checklists: A checklist evaluation method is simplistic
but effective. It consists of a series of performance
questions that are traditionally given the option of yes
or no.
Critical Incident: A proactive manager keeps an ongoing
log throughout the year of an employee’s performance,
and then uses that information to fuel discussion during
the employee performance review. This method of
keeping a list of good and bad incidents of employee
performance is known as critical incident evaluation.
Pay/Reward Strategies
“Reward strategy “theory”
Implicit in the notion of reward strategy is that of over-arching
All the parts of a reward strategy that is :
the underpinning reward philosophy,
the pay structure,

its market positioning and
its progression rules

All join together in a mutually supportive way.
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Pay and Benefits
Includes employees’ base salaries, pay raises, and bonuses
Determined by characteristics of the organization and the
job and levels of performance
Benefits are based on membership in an organization
Pay and Benefits
Pay level
The relative position of an organization’s incentives in comparison with
those of other firms in the same industry employing similar kinds of workers
Managers can decide to offer low, average or high relative wages.
High wages attract and retain high performers but raise costs; low wages can
cause turnover and lack of motivation but provide lower costs.
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Pay and Benefits
Pay Structure
The arrangement of
jobs into categories
based on their
relative importance
to the organization
and its goals, level of
skills, and other
Director Director
Dept Manager
Pay and Benefits
Legally required: social security, workers’ compensation
Voluntary: health insurance, retirement, day care
Cafeteria-style benefits plans allow employees to choose the best mix of
benefits for them; can be hard to manage.
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Pay System
Employees concerned with purchasing power, fairness
& recognition of efforts & skills
Employers concerned with recruitment, retention,
motivation & minimising wage budget
Employers restricted by law & product markets re pay
4 main alternative methods re setting base pay rates:
1. External labour market comparisons
2. Internal labour market mechanisms
3. Job evaluation
4. Collective bargaining
Equity in procedures essential to successful pay system
Performance Related Pay
Success Criteria:
Understand target & standards required to reach
Reward clearly & closely linked to effort / attainment
Need to ID what will get if achieve targets / standards &
can track performance against them.
Fair & consistent method for measuring performance.
Ability to influence performance by changing
Rewards should be meaningful.
Rewards should closely follow the achievement that
generated it.

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Performance Related Pay
Management must ensure that:
The purpose & processes clearly communicated to staff
SMART objectives clearly defined &agreed
Performance measured & consistently by line managers
Line managers fairly differentiate between good & poor
Staff believe pay decisions are fair & unprejudiced
Limited performance pay budgets distributed fairly.
Small sums distributed appropriately to avoid demotivating staff
Do not prejudice effectiveness of developmental
aspects of performance management where review
meetings focus on ratings & their pay implications.
Preferably should be separated.
The Equal Pay Act 1970
“Illegal to pay different rates to men & women who do
different jobs, but whose hobs have been rated the
same under a job evaluation scheme”.
The Equal Pay Amendment (Regulations) 1983
Added category of “Equal Value”
The Employment Rights Act 1996
Consolidates previous legislation re employment rights.
The National Minimum Wage Act 1998
Established an national minimum wage rate. Differences
based on age. Provides protection for lowest paid
groups of workers