The Personnel Function In Business

Daniel Sparkes 10L 07/05/07

The Personnel or Human Resources Department of a company deals with all the issues that relate to the people that work in that company.

In many ways people are the most important factor in production, business is all about people, it uses human skills and talents to produce an increasing number of goods and services. Nowadays machines are gradually taking over some of the jobs that used to be done by people but people are still important.

Motivations for Work

Why do people work? People work for all sorts of different reasons but the main ones are:

Money – working enables us to buy what we consider to be essential goods and services as well as many luxuries.

Progress – people gain a sense of achievement as they make progress at work, promotion or the hope of it makes people work harder.

Status -many people gain pleasure from their status that their job gives them; they strive to get a better position at work as the higher their status the more outward signs there are of their importance.

Togetherness – some people like to work as they become part of a team and people need to feel they belong.

Job satisfaction – most people want a job that gives them pleasure and also seems worth doing. Some people work for less money because they feel their job is worthwhile and rewarding.

The Personnel Department

Although not all firms have a personnel department they do all have someone who is responsible for managing the people who work there. Generally it is not cost effective to have a personnel department in companies with fewer than 100 employees.

The functions of the personnel department

One of the main tasks of the personnel department is managing pay and fringe benefits. It also has the task of trying to motivate its employees for the benefit of the business. In addition it has to make sure that the many laws relating to employees are obeyed. It is in charge of the recruitment, selection and training of employees; with industrial relations and it is also concerned with the dismissal of employees.

Payment Systems

There are great differences in the rate of pay in this country. At the bottom ...

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The functions of the personnel department

Payment Systems

There are great differences in the rate of pay in this country. At the bottom of the scale nearly 5% of all full-time employees earn less than £130 a week (£6,760) while at the top a few earn a million a year.

Rates of pay are generally decided by the forces of supply and demand – if a job can be done by almost anyone then it is poorly paid whereas if the job can only be done by a few then it will be highly paid. Other factors that influence rates of pay include:

Length of time you have trained
What qualifications you have gained
What risks your job involves
How good a deal your union is able to negotiate for you
What fringe benefits are attached to the job

Payment is done by means of either a wage or a salary. Wages are paid on a weekly basis and are usually paid to manual workers. There are a number of different methods of calculating wages that are used in this country. The most common of which are as follows:

Time rates- a rate is agreed through union collective bargaining and this sets an hourly rate of pay, which will then be paid to the worker at the end of the week. Britain has just agreed to implement of minimum wage policy so that no worker should fall below £3.60 an hour.

In addition to the hourly rate of pay some workers are able to work overtime for additional pay. This has to be agreed between both sides before the work is carried out and is usually paid at a higher hourly rate than the normal pay.

Some workers are also entitled to earn a shift premium payment where they are rewarded with extra pay for working unsociable hours such as the night shift.

Payment by results- (PBR) these are incentive schemes that attempt to make people work harder by linking their pay to their performance. One common PBR system is called piecework where workers are paid for each item they produce, this is quite successful in encouraging work as the worker tries to make as many items as possible in the time allowed.

Bonuses are another system of PBR where workers are paid a bonus at set times of the year based on the total output of the company, while bonuses are welcomed by the employees they rarely see the link between them and productivity so they do not tend to encourage hard work.

Profit sharing schemes on the other hand provide a stronger incentive since the higher the firms’ profits the higher will be the workers share of those profits.

Salaries are based on an annual rate of pay divided into 12 equal parts and paid monthly on a set day off each month. Salary workers have a contract that states their hours of work and overtime is rarely paid even though many work far longer than their contracted hours.

Many salary systems operate an incremental pay scale with regular annual increases but the problem with this is the employers have to pay the increase even if they think the employee does not deserve it. In addition employees get no further increases in pay after they have had all of their increments so they have less incentive to work hard.

For this reason many employers now use schemes that relate pay to the work done. One such scheme is known as Performance Related Pay whereby increases in pay are only given for increased performance levels, there are no automatic pay rises.

One of the oldest forms of Performance Related Pay is commission where staff receives a basic salary plus a percentage commission on everything they sell. Always avoid a job that pays you only commission and no basic salary.

A better form of incentive pay is called Profit Related Pay where firms are allowed to pay up to one fifth of their employees pay a year tax free as long as this is in some way related to the profit of the company.

Fringe Benefits

A great number of employees receive a number of fringe benefits, which are goods and services provided by the employer in addition to wages or salaries. Employees gain because these are usually tax-free and employers gain because they can choose the benefits that they consider will motivate their employees.

Examples of fringe benefits are contributions to a pensions scheme, free travel to work, subsidised canteen meals, free uniform, discounts on purchases of the firms goods and services, company and private health insurance.

Working Hours

The days when everyone had a nine till five job are rapidly disappearing and more and more companies allow employees some flexibility in there hours of work.

Some companies operate an annual hours system where they employ people to work a set number of hours to work so that the company is busy the employees working hours a week but might have other times of the year hardly work at all.

Flexitime is another system of variable hours where workers agree to work a core time but make the rest of their hours up to suit them so they might work from early one day but start later the next.

Job Sharing is a system whereby two people share the same job and one does the job in the morning and the other in the afternoon or they work alternate days or weeks.

Maternity leave and career breaks are two other ways in which working has become more flexible.

Paid holidays from work are becoming longer with many firms now giving 4 or 5 weeks paid holiday in addition to the eight bank holidays.