AQA A-Level Business: Human resource management (7132) – Revision Notes

These notes condense section 3.6, Decision making to improve human resource performance, of the AQA A-level Business specification (7132). Full explanations and worked examples are in the study guide. Test yourself with the practice questions. Course hub: AQA A-level Business. Printable list: checklist. Find weak spots with the free diagnostics. Related: managers, leadership and decision making.

Section checklist

Section	You must be able to
3.6.1	Explain the value of HR objectives; list and apply the six named objectives; explain internal and external influences, including soft and hard HRM
3.6.2	Calculate and interpret four HR measures; use HR data in decisions and planning
3.6.3	Apply Hackman and Oldham; explain the five organisational design decisions; judge changes in design; explain the five parts of the HR flow
3.6.4	Explain benefits of motivation; use Taylor, Maslow and Herzberg; judge four financial methods and non-financial methods
3.6.5	Explain influences on involvement; compare trade unions and works councils; improve communication

HR objectives (3.6.1)

• Value: gives direction, allows planning and lets managers judge success.
• Named objectives: employee engagement and involvement; talent development; training; diversity; alignment of values; number, skills and location of employees.
• Internal influences: corporate objectives, finance, culture, leadership style, workforce skills.
• External influences: labour market, competitors, technology, ethics and society.

	Hard HRM	Soft HRM
View of staff	A cost to control	An asset to develop
Typical methods	Flexible contracts, output pay, tight supervision	Training, involvement, communication
Objectives favoured	Numbers, location, cost	Engagement, talent development, values

HR data (3.6.2)

The specification names the measures but not the formulas. These are the standard forms.

Measure	Formula
Labour turnover (%)	leavers / average number employed x 100
Retention rate (%)	staff who stayed all period / staff at start x 100
Labour productivity	output / number of employees
Employee costs as % of turnover	employee costs / turnover x 100
Labour cost per unit	total labour cost / units produced

Method in steps. Write the formula. Substitute with units. Calculate. Interpret: compare with an earlier period or a rival, give one cause, give one decision that follows.

Worked reminder. Rothwick Bakery had 36 staff at the start of the year and 44 at the end, so the average was 40. Six left: 6 / 40 x 100 = 15%.

Second reminder. Rothwick made 84,000 loaves with 28 bakers and paid £210,000 in wages on turnover of £1,400,000. Productivity is 3,000 loaves per baker. Employee costs are 15% of turnover. Labour cost per unit is £2.50. If wages rise 10% and output stays the same, cost per unit rises to £2.75, so the business must raise productivity or price to protect profit.

Data helps decisions on hiring, training, pay, staffing levels and working patterns. It tells you what happened, not why.

Job design: Hackman and Oldham (3.6.3)

Core job characteristic	Leads to psychological state
Skill variety, task identity, task significance	Experienced meaningfulness of the work
Autonomy	Experienced responsibility for outcomes
Feedback	Knowledge of results

Outcomes: higher motivation, quality and satisfaction; lower absence and turnover. To apply it, name the characteristic in the case, say what a redesign would change and say what it would cost.

Organisational design (3.6.3)

Term	Meaning
Authority	The right to make decisions and instruct
Span	People a manager directly supervises
Hierarchy	Levels of authority
Delegation	Passing authority down; accountability stays above
Centralised	Decisions taken at the top
Decentralised	Decisions passed down to branches or teams

Span and layers. Divide the number of staff by the span, round up, repeat until you reach one. For 90 staff and a span of 6: 15 supervisors, 3 managers, 1 director. That is three layers above the staff. A narrower span adds layers.

• Delegation, centralisation and decentralisation depend on trust, skills, risk, size, spread of sites and the need for consistency or local knowledge.
• Changing design: possible gains in speed, cost, motivation and fit with technology; possible costs in disruption, redundancy and resistance.

Human resource flow (3.6.3)

1. Human resource plan: forecast need, compare with supply, plan the gap.
2. Recruitment.
3. Training.
4. Redeployment.
5. Redundancy.

Each helps meet objectives on the number, skills and location of employees. Redeployment and training keep skills; redundancy cuts cost fast but has financial and morale costs.

Motivation (3.6.4)

Theory	Core idea	Implication
Taylor	People work mainly for pay	Simple tasks, training, supervision, output-based pay
Maslow	Five-level hierarchy: physiological, safety, social, esteem, self-actualisation	Satisfy whichever level is still unmet
Herzberg	Hygiene factors prevent dissatisfaction; motivators create satisfaction	Enrich jobs and give recognition

Financial method	How it works	Main risk
Piece rate	Pay per unit	Quality falls
Commission	Percentage of sales	Pressure on customers
Salary	Fixed annual sum	Weak link to effort
Performance-related pay	Reward for targets	Unfair or poorly set targets

Non-financial methods: job enrichment and rotation, empowerment, teamworking, training, recognition, flexible working, career paths.

Choose and judge a reward system by the type of work, budget, rivals’ pay, culture and staff preferences, then by turnover, absence, productivity, unit cost and surveys, set against cost.

Employer-employee relations (3.6.5)

• Extent and method of involvement depend on leadership style, workforce size, skills and expectations, and speed of decision.
• Trade union: independent body representing members; bargains on pay and conditions.
• Works council: employee and management representatives who share information and consult inside the business.
• Better communication: two-way channels, early and honest information, consultation before decisions.
• Value: fewer disputes, less absence, easier change.

Answering extended questions

1. Define or apply the key term in one sentence tied to the case.
2. Give a developed point: cause, effect on the business, link to an objective.
3. Give a counter-point: a cost, risk or limit in this context.
4. Weigh them using the case facts: size, labour market, finances, urgency, culture.
5. Reach a judgement that answers the question set, and say what it depends on.

For “evaluate” and “justify”, the judgement matters as much as the analysis. Mention a factor such as time scale (short-run savings against long-run loyalty) or the strength of competitors’ offers.

Themes to weave in

Technology and ways of working such as tele-working; ethics and environment; labour market and competition; competitiveness; links to finance, operations and marketing.

Must-know distinctions

• Delegation (passing a task) versus decentralisation (a structure where decisions sit lower down).
• Retention rate versus labour turnover: one counts staying, the other counts leaving, and they use different bases.
• Productivity (output per employee) versus labour cost per unit (money per item).
• Hygiene factors versus motivators.
• Job rotation (moving between tasks) versus job enrichment (more responsibility in one job).

Quick self-test

1. A business had an average of 50 staff and 8 leavers. Calculate labour turnover.
2. 50 staff were employed at the start of the year and 44 of them stayed throughout. Calculate the retention rate.
3. Output is 12,600 units from 28 employees. Calculate labour productivity.
4. Employee costs are £210,000 and turnover is £1,400,000. Calculate employee costs as a percentage of turnover.
5. Labour costs of £210,000 produce 84,000 units. Calculate labour cost per unit.
6. A worker is paid £1.25 per unit and makes 360 units. State the pay.
7. Name the three critical psychological states in Hackman and Oldham’s model.
8. 90 staff, span of 6: how many layers of management sit above the staff?
9. State one difference between a trade union and a works council.
10. Is pay a hygiene factor or a motivator in Herzberg’s theory?

Answers

1. 8 / 50 x 100 = 16%.
2. 44 / 50 x 100 = 88%.
3. 12,600 / 28 = 450 units per employee.
4. 210,000 / 1,400,000 x 100 = 15%.
5. 210,000 / 84,000 = £2.50.
6. 1.25 x 360 = £450.
7. Experienced meaningfulness, experienced responsibility and knowledge of results.
8. Three (15 supervisors, 3 managers, 1 director).
9. A union is independent of the employer and bargains for members; a works council sits inside the business and mainly consults and shares information.
10. A hygiene factor.

Where marks are usually lost

• Using the closing headcount rather than the average in labour turnover.
• Giving a figure without interpreting it or comparing it.
• Listing Maslow’s levels without linking them to the case.
• Saying a method is good without a context-based reason or a drawback.
• Confusing delegation with decentralisation.
• Treating redundancy as only a cost saving, with no mention of morale, payments or lost skills.
• Ignoring the labour market or competition when judging a pay scheme.
• Giving a long conclusion that repeats the points without a judgement.

Frequently asked questions

What is the difference between labour turnover and retention rate? Labour turnover counts staff leaving as a percentage of the average number employed, while retention rate counts the staff who stayed as a percentage of those employed at the start. They measure opposite things and use different bases.

How do you work out the number of management layers from a span of control? Divide the number of staff by the span, round up, and repeat until you reach one. For 90 staff and a span of 6, that gives 15 supervisors, 3 managers and 1 director: three layers.

What is the difference between a trade union and a works council? A trade union is independent of the employer and bargains for its members on pay and conditions. A works council sits inside the business, with employee and management representatives who share information and consult.

What is the difference between delegation and decentralisation? Delegation is passing a task or decision to someone lower down, while decentralisation is a structure in which decisions are taken lower down the organisation. Confusing the two is a common error.

Official syllabus

AQA, AS and A-level Business (7131 and 7132) specification, section 3.6 Decision making to improve human resource performance, for first teaching from September 2023. The formulas are standard forms, since the specification gives none.