Unit 3.2: Managing People and Operations | A-Level Business Studies
Ensuring the business has the right number of employees with the appropriate skills mix to meet current and future demands.
Amazon regularly adjusts its workforce numbers based on demand. During peak periods (Black Friday, Christmas), Amazon hires over 100,000 temporary workers in the UK alone. The company also invests heavily in upskilling programmes like "Career Choice" which pre-pays 95% of tuition for courses in high-demand fields, regardless of whether skills are relevant to Amazon careers.
Managing the rate at which employees leave the business (turnover) and implementing strategies to keep valuable staff (retention).
John Lewis has historically maintained low turnover rates through its employee ownership model. All permanent staff are "Partners" who own shares in the business and receive annual bonuses based on profits. This creates strong retention, with many employees staying for decades. The retail industry average turnover is around 60%, whilst John Lewis typically maintains rates below 15%.
The level of commitment, passion, and involvement employees have with their work and the organisation.
Google consistently ranks highly for employee engagement through initiatives like "20% time" (allowing employees to spend 20% of their time on passion projects), extensive perks (free meals, on-site facilities), and flat organisational structures. Gmail and Google News were both developed during 20% time. Their Googlegeist survey measures engagement across all offices globally, with results directly influencing policy changes.
Managing the total expenditure on workforce, including wages, benefits, training, and associated overheads.
Ryanair maintains one of the lowest cost bases in the airline industry partly through tight control of employee costs. Cabin crew are often employed on temporary contracts with productivity-based pay. This keeps employee costs as a percentage of revenue significantly lower than competitors like British Airways, though it has led to industrial relations challenges and strikes affecting operations.
Creating a workplace where all employees feel valued, respected, and have equal opportunities regardless of background or characteristics.
HSBC has set specific EDIB objectives including achieving 50% female representation in senior leadership by 2030 and increasing ethnic minority representation in senior roles to 22%. They publish annual diversity reports showing progress. The bank has employee resource groups for various communities and conducts pay gap analyses to ensure equality. HSBC links executive bonuses to achieving diversity targets.
| Influence | Description | Example |
|---|---|---|
| Corporate Objectives | HR objectives must support overall business strategy | If Tesco aims to expand internationally, HR must plan for multilingual staff recruitment |
| Market Conditions | Economic climate affects recruitment and wage demands | During recession, businesses may set objectives to reduce headcount; in growth periods, aggressive recruitment targets |
| Technological Change | Automation and digitisation change skill requirements | High street banks closing branches set objectives to retrain staff for digital customer service roles |
| Legislation | Legal requirements shape HR priorities | National Living Wage increases force retailers to set objectives around productivity per employee |
| Competitor Actions | Need to match or exceed rival offerings | When Aldi increased starting wages to £12/hour, other supermarkets adjusted their wage objectives |
| Organisational Culture | Company values influence HR priorities | Patagonia's environmental values lead to extensive sustainability training objectives for all staff |
Planning ensures the business attracts and selects the right talent at the right time.
Identifying future skills needs and developing programmes to equip staff appropriately.
Planning strategies to keep valuable employees and reduce turnover costs.
Moving employees to different roles or locations within the organisation.
Planning for ethical and legal workforce reduction when roles are no longer required.
Uses full-time permanent "Partners" to maintain high service standards.
60% of UK workforce is part-time, enabling flexible coverage.
Hires thousands of temporary workers for Christmas period.
Faced criticism for 90%+ zero-hours contracts usage.
HR decisions directly impact cost structures and pricing ability.
Primark maintains cost leadership partly through lean staffing and lower wage costs, enabling rock-bottom prices. M&S invests more in staff numbers and training. Primark's HR model supports its competitive strategy of price leadership.
Well-trained, motivated staff deliver superior products and services.
Can charge £500+ per night partly because of exceptional service from highly trained, well-paid, long-serving staff. HR investment in recruitment, training, and retention enables quality differentiation that justifies premium pricing.
The right talent and culture drive innovation and adaptability.
Dyson's competitiveness depends on continuous innovation. Their HR strategy focuses on recruiting top engineering graduates, investing in 3,500+ UK-based engineers, and creating a culture that encourages experimentation. This HR approach maintains their competitive advantage through constant product innovation.
Purpose: Measures extent to which employees are committed, motivated, and willing to go the extra mile.
Value: Engaged employees are 21% more productive. Predicts future turnover problems before they occur.
Quarterly surveys measure engagement. When contact centre engagement dropped from 78% to 71%, they identified software frustrations, responded with training, and recovered to 76%, preventing 50+ departures.
Purpose: Measures workforce composition across protected characteristics and representation at all levels.
Value: Diverse teams make better decisions (McKinsey: 36% higher profitability). Legal requirement for 250+ employees.
Data showed 49% female overall but only 35% in senior roles. This revealed a "leaky pipeline" problem. HR introduced sponsorship programmes, increasing senior female representation to 38%.
Purpose: Measures physical, mental, and emotional health of employees.
Value: Reduces absence costs (UK average: £658 per employee/year). Wellbeing interventions show 12% productivity gains.
When "energy scores" dropped 15% in marketing, HR found excessive overtime. Implemented "meeting-free Fridays". Within 3 months, energy recovered, absence dropped 20%, productivity increased despite fewer hours.
£10.4bn revenue ÷ 65,000 employees = £160,000 per employee
Compare to Sports Direct (~£130k per employee) to assess relative efficiency.
Started with 5,000, ended with 5,200, 650 left during year.
Average employees = (5,000 + 5,200) / 2 = 5,100
Turnover = (650 / 5,100) × 100 = 12.7%
At £30k replacement cost per nurse, 650 leavers = £20m in costs.
£1.8bn revenue, £540m employment costs.
(£540m / £1.8bn) × 100 = 30%
For every £1 of sales, 30p goes to employee costs. Typical for food retail (25-35%).
2020: £150k per employee (base) = index 100
2023: £172.5k per employee = (£172.5k / £150k) × 100 = index 115
Productivity increased 15% since 2020.
2022 turnover: 150%, 2024 turnover: 105%
((105 - 150) / 150) × 100 = -30%
Turnover decreased by 30%. With 50,000 warehouse staff at £5k replacement cost, this 30% reduction saved approximately £112m annually.