AQA AS-Level Business: People management (7137)

This guide is written for the AQA AS Business specification (7137), for first teaching from September 2026, and covers section 3.2.1 People management, which sits in Unit 3.2 (Managing people and operations). Ethics in HR is not covered here. For the course layout see the course structure guide. For stakeholders and objectives see What Is Business?.

Use it with the revision notes and the practice questions. The AQA AS Business hub and the printable checklist show the wider course, and the free diagnostics help you find weak spots.

What 3.2.1 asks you to do

Specification area	You must be able to
HR objectives and planning	Explain HR objectives, what influences them, and the value of HR planning; weigh up employment types and flexible employment
HR data	Explain why businesses measure engagement, representation, diversity and wellbeing; calculate, interpret and analyse productivity, sales per employee, employee turnover and employee costs as a percentage of revenue
Organisational design	Span of control, levels of hierarchy, tall and flat structures, centralisation, decentralisation, restructuring and delayering
Leadership	Autocratic, democratic and transformational styles and their impact
Developing people	Appraisal; acquiring, managing, developing and retaining talent
Teamwork	Value of teams; Hackman’s model of team effectiveness
Motivation	Benefits and challenges; Taylor, Maslow and Herzberg
Rewards	Financial and non-financial methods
Wellbeing	Benefits, challenges and methods
Employer and employee relations	Representation, voice, involvement, poor relations and how to improve them

Throughout, link HR decisions to competitiveness and to other functions, and use the case study data in your answer.

HR objectives and planning

HR objectives are targets for the people side of the business. Typical HR objectives cover the number and skills of employees, turnover and retention, engagement, employee costs, and equality, diversity, inclusion and belonging. They matter because they turn the corporate objective into something managers can measure and act on.

Influences on the objectives a business sets include its corporate objectives, its size and sector, the state of the labour market, and its finances. A business aiming to double sales needs more skilled staff. A business under cost pressure may set an employee cost target instead.

HR planning is working out how many people with which skills the business needs, and how to get them. It covers recruitment, training, retention, redeployment and redundancy. It starts from the current workforce, forecasts future needs, finds gaps in skills or numbers, and checks what the labour market can supply. The value is fewer shortages and less wasted pay, and decisions made early rather than in a panic.

Employment types each have a trade-off:

Type	Advantage	Disadvantage
Full-time	Reliable cover, stronger commitment	Higher fixed pay bill
Part-time	Fits changing demand, widens recruitment	Less cover, more administration
Permanent	Retention, loyalty, training pays back	Redundancy costs if demand falls
Temporary	Quick response to peaks	Less commitment, repeated recruitment
Zero-hours	Hours match demand, low idle cost	Insecure staff, higher turnover, weak loyalty
Freelance	Specialist skills only when needed	Less control, no loyalty to the business

Flexible employment means using a mix of these types and working patterns so the workforce can expand and contract with demand. It supports competitiveness through lower costs in quiet periods, but over-use can damage engagement and service quality.

HR decisions link to other functions. Marketing plans set demand, finance sets the pay budget, and operations sets staffing levels and skills. Good HR decisions improve competitiveness through service quality, productivity and the ability to adapt.

HR data

Businesses measure engagement, representation, diversity and wellbeing (by surveys, records and feedback) because what is measured can be managed. The results show whether HR policies work and warn of problems such as falling morale. Key performance indicators (KPIs) for employees in their roles set a target for each job, such as calls handled or sales made.

You must calculate, interpret and analyse four measures. These are the standard forms.

Measure	Formula
Productivity	output ÷ number of employees
Sales per employee	sales revenue ÷ number of employees
Employee turnover	(number of leavers ÷ average number of employees) × 100
Employee costs as a percentage of revenue	(employee costs ÷ revenue) × 100

Analysis should include percentages, percentage changes and index numbers. Percentage change = (new − old) ÷ old × 100. An index number divides the new value by the base value and multiplies by 100, so the base year is 100.

Worked example: Dunmore Fold Bakery.

	Year 1	Year 2
Average employees	40	44
Output (boxes)	320,000	374,000
Revenue	£2,400,000	£2,860,000
Employee costs	£720,000	£858,000
Leavers	6	8

• Productivity: 320,000 ÷ 40 = 8,000 boxes in Year 1; 374,000 ÷ 44 = 8,500 in Year 2.
• Productivity index (Year 1 = 100): 8,500 ÷ 8,000 × 100 = 106.25, so productivity rose by 6.25%.
• Sales per employee: £60,000 in Year 1 and £65,000 in Year 2, an index of 108.3.
• Employee turnover: 6 ÷ 40 × 100 = 15% in Year 1; 8 ÷ 44 × 100 = 18.2% in Year 2.
• Employee costs as a percentage of revenue: 720,000 ÷ 2,400,000 = 30%; 858,000 ÷ 2,860,000 = 30%.

Interpretation. Revenue rose by 19.2% while staff numbers rose by 10%, so each employee is producing more. Costs stayed at 30% of revenue, so the pay bill is not squeezing profit. The weak point is turnover, which rose from 15% to 18.2%. Higher turnover means more recruitment and training spending and lost experience, and it may be the price of pushing productivity up. A good answer ends with a judgement: the bakery is more efficient, but it should investigate why people are leaving before the gain is lost.

Organisational design

Span of control is the number of subordinates reporting directly to a manager. Levels of hierarchy are the layers of authority from top to bottom. For a fixed workforce, a wider span means fewer levels. If 44 staff are supervised by 4 managers, each span is 11; with a span of 4 the same staff need 11 supervisors, so more managers and usually more levels are needed.

Structure	Advantages	Disadvantages
Tall (many levels, narrow spans)	Close supervision, clear promotion path, easy to support staff	Slow communication, higher management cost, distance from top to bottom
Flat (few levels, wide spans)	Faster communication, lower management cost, more delegation	Heavy workload for managers, less supervision, fewer promotion steps

Centralisation keeps decisions at the top. It gives consistency and tight control but can be slow and demotivating. Decentralisation passes decisions down. It uses local knowledge, speeds responses and develops staff, but risks inconsistent decisions and weaker control.

Restructuring changes the organisation, for example by delayering (removing levels) or by centralising decisions. Delayering cuts costs and speeds communication, but it can mean redundancies, bigger workloads for those who remain, and falling morale.

Leadership

Autocratic: the leader decides and tells. Decisions are quick and suit a crisis or inexperienced staff, but it can demotivate skilled workers and raise turnover. Democratic: the leader consults and often follows the group view. Decisions are better informed and staff feel valued, but they take longer. Transformational: the leader sets an inspiring vision and encourages people to go beyond their own interests. It suits change and can raise engagement, but it depends on one person’s energy.

Influences on style include the leader’s personality, staff skills and experience, the urgency of the task and the culture. The impact on individuals shows in motivation and stress, on teams in cooperation and conflict, and on the business in performance and retention. No style is always best, so judge fit to the situation.

Developing people

Appraisal is a regular review of an employee’s performance against agreed targets. Its purpose is to give feedback, find training needs and link to pay or promotion. Its value is clearer goals and better development; the risk is that it feels like criticism if handled badly.

Talent management means acquiring, managing, developing and retaining people with high-value skills. It adds to competitiveness because skilled people are hard to copy. The challenges are cost, competition from rivals, the risk that trained staff leave, and tension if others feel overlooked.

Teamwork

Teams combine skills, spread workload, generate ideas and give support, so the whole can outperform individuals. In the standard summary of Hackman’s model of team effectiveness, a team is more likely to succeed when it has:

• a real team: clear membership and members who depend on each other
• a compelling direction: a clear, challenging purpose
• an enabling structure: well-designed tasks, sensible team size and agreed rules
• a supportive context: rewards, information and resources
• expert coaching: help from leaders when needed.

Effectiveness is judged by the quality of the output, the team’s ability to keep working together, and the growth and satisfaction of its members. To use it, find which condition is missing in the case.

Motivation

Motivated employees work harder, stay longer and serve customers better. Benefits include productivity and lower turnover; challenges include cost, differing needs and effects that fade.

Taylor (scientific management) assumed pay is the main motivator. Work is broken into simple tasks, timed, and paid by output, such as piece rate. It can raise output but ignores other needs and can make work monotonous.

Maslow proposed a hierarchy of needs: physiological, safety, social, esteem, self-actualisation. A lower need must be broadly met before the next motivates. Pay meets lower needs; teamwork and recognition meet higher ones. Limits: people differ, and needs do not always follow a fixed order.

Herzberg split factors into hygiene factors (pay, conditions, job security, supervision), which prevent dissatisfaction but do not motivate, and motivators (achievement, recognition, responsibility, the work itself), which increase motivation. This points to job enrichment and delegation rather than pay alone.

Methods of rewarding people

Financial	Advantage	Disadvantage
Wages and salaries	Predictable for both sides	Weak link to effort
Piece rate	Rewards output directly	Quality may fall; unsuitable where output is hard to count
Commission	Drives sales	Pressure, unstable income, mis-selling risk
Performance-related pay	Links pay to targets	Hard to measure fairly; rivalry
Shares	Aligns staff with owners’ goals	Value can fall; limited effect on daily effort
Fringe benefits	Attract and retain	Costly; may not motivate

Non-financial methods are delegation, empowerment, job enrichment, training and development, and remote, hybrid and flexible working. They cost less in cash and meet higher needs, but they need trust and good management, and they cannot replace fair pay.

Employee wellbeing

Wellbeing methods include physical and mental health support, an inclusive work environment, employee voice and flexible working. Benefits are lower absence, better retention, stronger engagement and a better reputation. Challenges are the cost, the difficulty of measuring a return and the risk that token gestures damage trust.

Employer and employee relations

Employee voice and involvement means staff have a say in decisions. It improves ideas and commitment but slows decisions. Individual representation (an employee speaks for themselves) is flexible and personal, but a single employee has little bargaining power. Collective representation (trade unions, employee forums) gives a strong voice and protects staff, but it may create conflict and slow change. A trade union is an independent organisation of employees; an employee forum is a body inside the business where staff representatives meet managers.

Poor relations are caused by pay disputes, poor communication, unfair treatment and sudden change. Consequences include strikes, absence, high turnover, falling productivity and a damaged reputation. They are improved by honest communication, consultation before changes, fair pay and prompt resolution of grievances.

Common errors

• Writing “turnover” for revenue. In HR, turnover means staff leaving.
• Dividing leavers by starting staff when the question gives an average.
• Calling Herzberg’s pay a motivator.
• Describing Hackman’s conditions without applying them to the case.
• Stating a style or structure is good without judging its fit.

Frequently asked questions

What HR data do you need to calculate for AQA AS Business (7137)? Four measures: productivity, sales per employee, employee turnover, and employee costs as a percentage of revenue. You also need to analyse them with percentages, percentage changes and index numbers.

What are the five conditions in Hackman’s model of team effectiveness? A real team, a compelling direction, an enabling structure, a supportive context and expert coaching.

What is the difference between centralisation and decentralisation? Centralisation keeps decisions at the top, giving consistency and tight control but slower decisions. Decentralisation passes decisions lower down, giving speed and local knowledge but less consistency and control.

What are the advantages and disadvantages of zero-hours contracts for a business? Hours can match demand, so there is little paid idle time. The drawbacks are insecure staff, higher turnover and weak loyalty.

Which leadership styles are in AQA AS Business section 3.2.1? Autocratic, democratic and transformational. A good answer judges which style fits the staff and situation in the case rather than calling one style best.

Official syllabus

AQA AS and A-level Business specification (7137, 7138), for first teaching from September 2026, section 3.2.1 People management.