OxfordAQA A-Level Business: Human resources (9725)

This guide teaches the human resources topic of the OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, which is for International AS exams from May/June 2027 and International A-level exams from May/June 2028. It covers sections 3.2.2.1 to 3.2.2.5, all of which are International AS content, assessed in Unit 2: Managing operations, human resources and finance (a written exam of 1 hour 15 minutes, 60 marks). If you are finishing the older 9625 specification, use your own specification.

Related pages: the course hub, the printable checklist, the revision notes for this topic, the practice questions and the exam preparation page. The marketing guide also uses sales per employee. To find your weak spots first, try the free diagnostics.

What this topic covers

Section	What you must be able to do
3.2.2.1 Human resource objectives	Explain HR objectives and HR planning; evaluate recruitment stages, internal v external recruitment, selection methods, contract types and training
3.2.2.2 Human resource data	Calculate and interpret labour turnover, retention rates, labour productivity, employee costs as a % of turnover, labour costs per unit, sales and profit per employee
3.2.2.3 Organisational design	Analyse span of control, levels of hierarchy, tall v flat, delegation, centralisation, employee representation rates; evaluate restructuring and delayering
3.2.2.4 Motivation	Apply Taylor, Maslow and Herzberg; evaluate financial and non-financial methods and what shapes the choice
3.2.2.5 Employer-employee relations	Evaluate employee involvement, causes and resolution of conflict, technology, ethics and links to other functions

3.2.2.1 Human resource objectives and planning

The specification lists three HR objectives:

• Number and skill level of employees – having enough people with the right skills, in the right place, at the right time.
• Employee engagement – how committed employees are to the business and its goals.
• Employee retention – keeping the employees the business wants.

Human resource planning works out the workforce needed and how to get it through recruitment, training, redeployment (moving staff to other roles), retention and redundancies. Its value: staffing matches the corporate plan, avoiding skill shortages or overstaffing. Its limit: plans rely on sales forecasts, and staff leave unexpectedly.

Recruitment and selection

The recruitment process has three early stages, each with a purpose:

1. Job analysis – study what the role involves. Without it, the advert describes the wrong job.
2. Job description – sets out the tasks, duties and responsibilities of the job.
3. Person specification – sets out the skills, qualifications and qualities the ideal person needs. It is the yardstick for shortlisting.

Internal recruitment is cheaper and quicker, the candidate knows the business, and promotion can motivate; but it brings no new ideas and leaves a vacancy behind. External recruitment widens the pool and brings fresh skills, but costs more, takes longer and is riskier because less is known about the candidate.

Selection method	Advantage	Disadvantage
CV	Cheap; candidate shows what they choose	Hard to compare; may exaggerate
Application form	Same information from everyone	Takes time to design and complete
Interview	Tests communication and fit	Interviewer bias; nervous candidates under-perform
References	Independent view of past behaviour	Referees may be vague or chosen by the candidate
Testing	Measures specific skills objectively	Only tests part of the job
Assessment centre	Several tasks over a day give a rounded view	Expensive; suits senior or graduate roles

Employment contracts. Full-time and permanent contracts build loyalty and skill but raise fixed costs. Part-time contracts cover peaks; temporary contracts suit seasonal work but bring less commitment. Zero-hours contracts give maximum flexibility and no cost when there is no work, but no guaranteed income for staff, which can hurt engagement and retention.

Value of effective recruitment and selection: the right person is productive sooner and stays longer; a poor hire means repeat recruitment costs and lost output.

Training. Induction introduces new staff to the business, its rules and colleagues. On-the-job training happens while working: cheap and relevant, but can pass on bad habits. Off-the-job training happens away from the workplace: wider expertise, but costlier and output is lost meanwhile. Trained staff may be poached.

3.2.2.2 Human resource data

The specification’s Appendix: Formulae and Key data gives these formulas:

Measure	Formula
Labour turnover (%)	number of employees leaving in a year ÷ average number of total employees × 100
Employee retention rate (%)	number of employees at the end of a period ÷ average number of employees at the start of a period × 100
Labour productivity	output in a period ÷ average number of employees during the period
Employee costs as % of turnover	total employee costs ÷ total revenue × 100
Labour costs per unit	total labour costs ÷ units of output produced
Sales per employee	total sales revenue ÷ average number of employees
Profit per employee	total profit ÷ average number of employees

The specification also names the percentage of employees still at the business one year after recruitment: recruits still there after a year ÷ number recruited × 100.

Worked example: Tamarind Lane Ceramics

Tamarind Lane Ceramics had 180 employees at the start of the year and 200 at the end. 38 employees left during the year. Output was 76,000 items, revenue was £9.5m, employee (labour) costs were £2.66m and profit was £1.14m.

Average employees      = (180 + 200) ÷ 2 = 190
Labour turnover        = 38 ÷ 190 × 100 = 20%
Labour productivity    = 76,000 ÷ 190 = 400 items per employee
Employee costs % rev.  = 2.66 ÷ 9.5 × 100 = 28%
Labour cost per unit   = £2,660,000 ÷ 76,000 = £35
Sales per employee     = £9,500,000 ÷ 190 = £50,000
Profit per employee    = £1,140,000 ÷ 190 = £6,000

Of the 180 employees there at the start, 153 were still employed at the end: 153 ÷ 180 × 100 = 85% retained. Of 40 people recruited in the previous year, 30 were still there one year after joining: 30 ÷ 40 × 100 = 75%. Applied to raw headcounts, the appendix formula gives 200 ÷ 180 × 100 = 111%, because new joiners are counted; so check which staff the question wants counted.

Interpreting. 20% turnover means one in five staff left: higher recruitment and training costs and lost experience, though some turnover brings new ideas. The specification stresses that measures such as labour productivity vary in different contexts: a hand-finishing workshop makes fewer items per employee than an automated line. Compare like with like and look at trends.

3.2.2.3 Organisational design

• Span of control – the number of people a manager directly supervises.
• Levels of hierarchy – the number of layers of management between the top and the bottom.
• Tall structures (many levels, narrow spans) give close supervision and promotion steps, but slow communication and high management costs. Flat structures (few levels, wide spans) give faster communication and more responsibility, but managers can be overstretched.
• Delegation – passing authority down the hierarchy. It develops staff and frees managers, but the manager stays accountable.
• Centralisation keeps decisions at the top (consistency, tight cost control); decentralisation pushes them to branches or lower levels (faster local responses, more motivated managers, but less consistency).
• Employee representation rate – the proportion of the workforce represented by a trade union or other employee body. A high rate gives employees a stronger collective voice and can make consultation easier to organise.

Influences include the size of the business, staff skills, the nature of the work, culture and the cost of managers.

Worked example: delayering at Pelican Freight

Pelican Freight has a chief executive, 3 regional directors, 15 depot managers (5 per region) and 180 drivers (12 per depot manager): 199 staff on 4 levels. Removing the regional directors (each paid £90,000) saves 3 × £90,000 = £270,000 a year, but the chief executive’s span rises from 3 to 15.

Restructuring and delayering cut costs, speed up decisions and can empower staff. Drawbacks: fewer promotion opportunities, heavier workloads for remaining managers, lost experience and fear among those left.

3.2.2.4 Motivation

Benefits of motivated employees: higher productivity, better quality and service, lower labour turnover and absence.

Theories.

• Taylor’s scientific management: workers are motivated by money. Break jobs into simple tasks, find the most efficient method, pay by output and supervise closely. It suits repetitive work but ignores social needs.
• Maslow’s hierarchy of needs: basic (physiological), safety, social, esteem and self-actualisation. A need motivates until it is met; then the next level matters. Pay meets basic needs, secure contracts safety, teams social needs, recognition esteem, and challenging work self-actualisation.
• Herzberg’s two-factor theory: hygiene factors (pay, working conditions, supervision, company policy) cause dissatisfaction if poor but do not motivate when improved. Motivators (achievement, recognition, responsibility, the work itself, advancement) give lasting motivation.

Financial methods.

Method	Advantage	Disadvantage
Wages (hourly)	Easy to adjust hours	No reward for effort
Piece rate	Links pay to output	Quality may fall; income unpredictable
Commission	Rewards sales effort	Pressure selling; unstable pay
Salaries	Security; simple to run	No direct link to effort
Performance-related pay	Rewards targets met	Appraisal can feel unfair
Fringe benefits	Help retention	Cost; may not be valued by all

For example, a worker paid £0.80 per item who makes 550 items in a week earns 550 × £0.80 = £440. A sales assistant on a £300 basic plus 4% commission who sells £12,500 earns £300 + £500 = £800.

Non-financial methods of motivation and engagement. Job enlargement adds more tasks at the same level (more variety, but can feel like more work for the same pay). Job enrichment adds responsibility and more challenging tasks (meets Herzberg’s motivators, but needs training). Job rotation moves staff between tasks (variety and cover, but little extra challenge). Empowerment gives staff authority to make decisions (faster, more committed staff, but risk of mistakes). Teamwork meets social needs and shares ideas, but conflict and free riders are possible.

Influences on choice and assessing effectiveness: the nature of the work (output easy to measure suits piece rate), cost and cash available, management style, employee skills and expectations, and culture. Judge effectiveness with HR data: has turnover fallen or productivity risen?

3.2.2.5 Employer-employee relations

Employee involvement draws on staff knowledge, improves commitment and eases change. Consultation (asking views before deciding) is cheap, but staff feel ignored if nothing changes. Trade unions negotiate collectively, giving one clear channel, but can resist change. Employee forums (staff representatives meeting managers) give direct input but may lack power. Involvement depends on management style, business size, urgency, legislation and staff skills.

Good relations mean lower turnover and fewer disputes. Conflict arises over pay, conditions, job losses, changed working practices and poor communication.

Actions employees might take: withdraw cooperation, work to rule (follow every rule exactly so work slows), leave, strike, or impose an overtime ban.

Resolving conflict: participation (involve staff in finding solutions), bargaining (negotiation between managers and employee representatives) and arbitration (an independent third party hears both sides and recommends or decides a settlement). Relations improve through regular communication, fair pay, consultation before change and clear grievance procedures.

Managing human resources. Technology changes recruitment (online adverts, video interviews), the nature of work, the skills needed and ways of working such as remote working, which cuts office costs but makes supervision harder. Managing people well raises competitiveness. HR decisions link to other functions: recruitment depends on the finance budget and training affects operations quality. Ethical issues include unsafe working conditions and practices and low pay; acting ethically costs money now but protects reputation and retention.

Common errors

• Using the end-of-year headcount instead of the average number of employees in labour turnover or productivity.
• Confusing job description (the job) with person specification (the person).
• Saying Herzberg treats pay as a motivator: it is a hygiene factor.
• Mixing up job enlargement (more tasks, same level) and job enrichment (more responsibility).

Next: the revision notes, then the practice set.

Official syllabus

OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, for International AS exams May/June 2027 onwards and International A-level exams May/June 2028 onwards, published by OxfordAQA. Section 3.2.2 Human resources.