HRM107 report - Grade: 7 PDF

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On-Target Consulting For Matrix Holdings By: Nathanael Homarwidjaja, Sabrina Snyders and Deon Low

Question 1 Nathanael Homarwidjaja

Personal Compacts Human Resource Management (henceforth known as HRM) plays a vital role in an organisation to increase productivity, well-being and satisfaction. At the beginning of employment, there are three distinct overlapping compacts (or contracts), that are not only an expectation from employers and employees, but in the formal sense, is a requirement set by the Australian Government. These are the Formal Contract, the Social Contract and the Psychological Contract.

The Formal Contract The popular employment contract, also known as the formal contract, is the foundation of employment and is defined as, “an agreement between an employer and employee that sets out terms and conditions of employment”. A formal contract should at least cover the terms of; holiday pay and sick pay (if working in full time employment), remuneration – which is the rate of money paid for working, as well as the notice periods for terminating the contract. The contracts could however cover clauses which will protect the business from risk, such as; confidentiality of sensitive business information, ownership of intellectual rights as well as incentives such as bonuses and commission (Mitchell, 2018). As a result, HRM leads the employees through the process of recruitment, employment and expectations of the working environment and as a result are the first representatives of the company that the prospective employees interact with.

The Social Contract HRM is required to be a channel of communication between management and employees. This channel of communication is an example of one of the expectations of an employee, that they will be able to; develop their personal skills and attributes whilst on the job, be able to work in a safe, work-engaged job as well as to have a positive social exchange relationship with management. An aspect of the Social Contract and developmental HRM is fulfilled when the individual’s personal motivations are fulfilled, hence increasing both employee commitment and job satisfaction, such as training in individual skills and abilities and as a result, supporting the developmental needs of the employees (Bal, et al. 2013). This social exchange relationship with the company acting voluntarily in the favour of another individual, the employee results in higher engagement and commitment to the management through the development due to the fulfilment of the employee’s social contract (Bal, et al. 2013). The social contract reduces the significance of the transactional, more formal short term contract for a longer term, organisational based perspective (Bal, et al. 2013). The use of the transactional is effective for short-term focused employees such as contractors, not those looking towards long term goals of the organisation as a whole. As a result, the long term relationship between the employee and managerial sectors of the organisation are both strengthened through the expectation of longterm growth, support and development of the employees (Guest, 2002). This in turn increases the strength of the psychological contract and reduces the staff turnover rate, increases the loyalty and motivation of the employees and as a result increases financial productivity for the

stakeholders and investors as well as assisting in a positive environment and culture within the organisation (Guest, 2002).

The Psychological Contract A higher level of communication and understanding will assist with the underlying expectations of both the organisation as well as the employee. The psychological contract is the “employee’s perceptions about the nature of the relationship with the organisation” (Rousseau, 1995). This includes but is not limited to the levels of employee commitment and participation, job satisfaction and the employer’s responsibility in relation to the quality of working conditions. It revolves around the philosophy that employees will be more satisfied if they have a clearer understanding of the intentions of the organisation and hence utilise HRM as a communication platform with management, resulting in higher employee outcomes – which in turn influences the psychological contract that the employees hold with their employers (Bal, et al. 2013). When working for an organisation an employee seeks further than a simple static, once-afortnight paycheck, employees also have an obligation of a healthy work environment and culture (Guest, 2002). This form of undefined contract however, is not only limited to the employee but also extends to management in a two-way exchange, focusing on agreements and obligations to both the management as well as the employees (Guest, 2002). Some of these obligations is that of a work-life balance, job security, motivation and stress management (Guest, 2002). These disputes are forwarded towards the HRM department, representatives of the organisation who attempt to resolve these issues both for the benefit of the organisation as well as for the wellbeing of the individual (as humans are one of the organisation’s most valuable resources). How HRM deals with each individual complaint or point of potential improvement has a significant impact upon the psychological contract. For example, the way that a workplace dispute is handled has significant implications upon the social as well as psychological contract. A breach of the social contract within the workplace will result in a sense of injustice and as a result will create an environment and culture of reduced communication and as a result reduced productivity, limiting the potential of both the employee and the outcomes for the employer.

Conclusion Humans are one of the most important resources to an organisation, and by default, Human Resource Management has an increasingly important role in developing and fulfilling the employee’s obligations, both through the formal legal means as well as through the construction of a social culture as well as building reputability, trust and rapport with the implementation of a positive psychological contract. HRM not only allows for dialogue between management and the employees but also focuses on the unifying culture of the workplace and as a result assists with the overall productivity of the organisation. The end result is that the individual employees improve in their personal skills and attributes due to their time spent in the organisation and the management benefits from low staff turnover rates creating a more positive, healthy working environment.

Question 2 Sabrina Snyders

Introduction: The reason why Mr Anderson may believe that Human Resource Management (HRM) is nothing more than a management system to enhance control over workers is because he might have only witnessed businesses using a hard HRM approach, where control over workers is the main focus. However, a lot of businesses also follow a soft HRM approach, which isn’t so much control over the workers but instead also making sure the needs of workers are met (tutor2u, n/a). This would lead me to disagree with his view.

Hard HRM approach: It is understandable how Mr Anderson can think that HRM’s focus is to control workers if we look at the hard HRM approach. This approach treats employees merely as a resource of a business, same as a building or machinery (tutor2u, n/a). Hard HRM focuses on the goals and objectives of the business and makes sure that the employees they recruit meet those requirements (Nanakervis, Baird, Coffey and Shields, 2017). This approach also involves giving employees very little empowerment or delegation and can also sometimes only pay their employees minimum wages to save costs (tutor2u, n/a). The business manages their employees in a similar way to raw materials and equipment (Price, n/a), and so don’t give their employees any power, but rather manage them to help reach their business objectives. So, in this case Mr Anderson would be correct as HRM is trying to enhance control over workers to further benefit the company.

Soft HRM approach: However, this is just one approach, and if Mr Anderson were to look deeper into HRM’s purpose, he would discover that the department has a few more responsibilities than just to control workers. For example, if we were to look at the soft HRM approach we would see that it involves less control over workers but rather trying to benefit both the business and employees. Obviously HRM’s main goal to reach business objectives, however in the soft approach they believe that this is done by rather empowering employees instead of controlling them. This is done by having two-way communications, where employees can voice their grievances (tutor2u, n/a), also rewarding employees if they reach their goals which helps motivate them. If employees are content and feel satisfied in their job it will lead them to be more efficient and productive, which will hopefully result in the company reaching their objectives. Whereas unhappy employees can lead to high employee turnover, which is undesirable for a business. Job retention is important as it can be costly for a business to hire staff and then train them only to have them leave quickly and, the investment made into that employee would be wasted (Nanakervis, Baird, Coffey and Shields, 2017). So, although there is a possibility that Mr Anderson could see this as a way to control workers, if you look at the bigger picture it’s less about controlling workers and more about treating workers as individuals who can be used to help a company gain a competitive advantage (Nanakervis, Baird, Coffey and Shields, 2017).

Other responsibilities: Looking into other HRM responsibilities there are outcomes that can help disprove Mr Anderson's original statement. For instance, HRM plays a big part in making sure that the company is in compliance with labour laws (Mayhew, 2018). Such as The Fair Work Act 2009 which is the standards and regulation for employment that companies need to follow, such as ensuring minimum wage (Employsure, 2017). It is important that companies are in compliance with laws otherwise it can result in dissatisfaction with working conditions that could negativity affect productivity. Another responsibility of HRM is to ensure job safety under the Health and Safety Act 2011, which states employers should provide a safe working environment for employees (Mayhew, 2018). HRM has to do safety training and log down any injuries and offer compensation when necessary (Mayhew, 2018). Both of these responsibilities show that HRM does more than just control workers, as it is up to them to make sure a company will provide a safe and fair working environment to employees as if they don’t it is possible a company could be dealt with lawsuits from employees. A negative outlook on the company could be brought on by this, leading to decreased sales and lower profitability. So, it is HRM’s responsibility to make sure this does not happen.

Recruitment/Job retention: A very important job of HRM is recruiting new employees, which can be a rather difficult process. It includes job analysis which consists of determining the responsibilities of different employee positions (inc, 2017). This can comprise what skills experience someone would need to be able to fill a certain position. Hiring the right employees can be crucial to a business, so it’s important that HRM can work with management to find the right people to fill the job. HRM does this by advertising jobs, conducting preliminary interviews and help make the final selection of candidates, helping save time for management (Mayhew, 2018). Again, this can help demonstrate how HRM is more than just a management system for control over employees, they play an essential part shaping up the business.

Conclusion: While Mr Anderson does state a valid point about how HRM is a management system to enhance control over workers, I would disagree with the fact that he says it’s nothing more than that. As we have seen throughout this report so far, HRM has many responsibilities in helping a business maintaining an efficient workforce, by not only having control over employees but also making sure the correct people are hired and trained properly, employees are protected in the workforce and the company’s objectives are met through strategic employee planning. All these different responsibilities are what makes up the core role of HRM and it’s vital that they are acknowledge by Mr Anderson if he wants to run a successful business.

Question 3 Deon Low

Introduction and Contextual Outline Collective bargaining denotes the negotiation of improved working conditions and pay between an employer and an organized body of employees. Rudd’s labour government introduced the Fair Work Act in 2009 in order to rectify the grievances of the immensely unpopular Work act 2005 under Howard’s liberal leadership. The unfair leverage held by employers due to the removal of safety net rights and unfair dismissal laws under The Work Act 2005 was relinquished (Colvin, 2014). With the Fair Work Act 2009, a distinct pluralist approach was adopted, underpinned by ‘10 NES and ‘principles of good faith’ .Good Faith bargaining came in as the crux of the new approach of collective bargaining on the enterprise level , whereby both representatives are required to partake in collaborative bargaining and give genuine consideration to the proposals made by each party, and attend/ participate in meetings at due time (Forsyth, 2010). Since the inception of the Fair Work Act 2009, The effectiveness of the regulatory framework remains dubious in some respects. This section of the report will attempt to outline the limitations and restrictions of the Fair Work Act 2009 regulatory architecture in ensuring improved working conditions, particularly in regards to the fallacies of good faith bargaining, the non-compliance of stipulated legislation by employer, and a lack of education which restricts certain segments of the Australian workforce from utilising the FWA 2009 to its fullest.

Problems with good faith bargaining Under Subdivision A, Bargaining orders (228), the fair work act 2009 stipulates that both participating parties bargaining do not have to reach a conclusive agreement. This presents the implicit problem of elongated bargaining sessions where a concise, mutually-agreed upon decision cannot be made. This notion is highlighted through the highly publicised 2011 Qantas industrial relations dispute. Qantas CEO ‘Alan Joyce’ instigated a grounding of the entire fleet and lockout of staff in response to the increasing industrial pressures (ABC News.2018). Prior to the grounding, Qantas had been engaged lengthy Industrial disputes pertaining to the employment conditions and pay of staff. Conversely, Qantas argued that this industrial action harmed its functioning as a business, by disrupting work efficiency and revenue. The protracted Industrial disputes ultimately culminated with the grounding of the fleet, when the three involved unions had a common bargaining agenda at hand which involved curbing the offshoring of Qantas's employment. The dispute highlighted an inherent weakness within the approach to collective bargaining under the Fair Work Act 2009, in which ‘good faith bargaining’ could not be codified clearly. The validity of both parties demands were rational, with Improved working conditions argued for by unions, and disruption costs of up to $70 million argued by Qantas (Cooper, 2011). Thus, it is is illustrated that ‘good faith bargaining’ under the FWA 2009 does not ensure that both respective parties will always be able to come to an agreement .

Non-compliance with legislation The 10 National employment standards is a pillar of the Fair Work Act 2009, which consists of 10 minimum standards of employment within Australia. Circumvention of compliance with regulatory framework is a significant issue which prevents effective negotiation and improvement of work conditions (Forsyth, 2010). The enactment of the Fair Work Act does not

necessarily ensure that employees will is always access to fair and equitable working conditions.The high-profile case of 7-eleven exemplifies this notion. The issue stemmed from years of non-compliance with the FWO from 7-eleven in regards to extensive history of underpayments and falsification of employment records, dating back to as early as 2008 (Commonwealth,2016). It was discovered through independent audits and inspections that employees of 7-eleven branches were paid substantially lower than their entitled base rate, and that when employees attempted to exert their rights under the FWA 2009 to collective bargaining and the 10 NES, their opinions were subverted by managerial staff (Commonwealth,2016). This lengthy incident highlighted a considerable flaw within the legislation of the FWA, particularly a lack of regulatory enforcement, due to prerequisite formalities having to be met first in order to conduct a thorough investigation. Arguably, this incident illustrated the regulatory faults of the Fair work Act 2009 and its failure in ensuring equitable working conditions. .

Uneducated segments It can be argued that employee leverage under the Fair work Act 2009 is its most effective, if users are educated and are able to coherently understand legislation. A segment of the Australian workforce which has not extensively reaped the benefits of the Fair work act 2009 are migrant women workers. Migrant women are not able to negotiate working conditions effectively due to a lack of proficiency in english and understanding of regulatory laws (Zhang,2010). In some instances migrant women are forced to work multiple menial jobs outside their field of expertise in appalling conditions. Additionally there is a sense of fear which is commonly associated with union membership amongst migrant workers. This fear is derived from women fearing losing employment due to managerial bullying for joining a union, as (Zhang, 2010) recollects a women disclosing her fear “If those English speakers are treated that way, what will the boss do to us?”. This lack of education regarding the Fair Work Act 2009, and unwillingness to seek union help due to fear of unemployment perpetuates migrant worker exploitation. Thus, The Fair Work Act 2009 has not been able to consistently ensure fair working conditions amongst migrant women due to a lack of outreach and educational information.

Conclusion In summation, whilst the Fair work Act 2009 represents a progressive change from the work act 2005, whereby employee leverage has been increased, it does not mean that its regulatory structure is perfect. As discussed above, there are multiple instances in which The Fair work Act 2009 has been unable to procure improved working conditions between employee and employer due to faults in good faith bargaining, non-compliance in regulations and a lack of legislative understanding.

Reference list: -

Guest, D, 2002, Communicating the psychological contract: an employer perspective. Human Resource Management Journal, last viewed [6 May 2018] [online] 12(2), pp.2238. Available at:

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Irwin Mitchell, 2018, Formal Contracts Of Employment | Legal Advice For SMEs, last viewed [5 May 2018] [Online] Available at:

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Rousseau, D. M, 1995, Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Thousand Oaks, CA: Sage Publications.

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Bal, P., Kooij, D. and De Jong, S, 2013, How Do Developmental and Accommodative HRM Enhance Employee Engagement and Commitment?, The Role of Psychological Contract and SOC Strategies, Journal of Management Studies, last viewed [6 May 2018] [online] 50(4), pp.545-572. Available at:

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Tutor2u, n/a, Soft and Hard HRM, tutor2u, last viewed [28 April, 2018], [Online] avaliable at:

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Nankervis, A, Baird, M, Coffey, J, Shields, J, 2017, Human resource management: strategy and practice, 9th Asia-Pacific edition, Ceng...