Apply Business Theory Essay Sample

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From my investigation into the functions of the personnel department as the personnel manager, I have found out that there is a high staff turnover. A high staff turnover can be a problem for businesses. High staff turnover means that staff are constantly being employed, but after a limited amount of time, they leave. This is a problem because it would affect the way in which businesses carry out their business activity. Managers would not be able to develop a good relationship with the workers, and be able to identify their strengths and weaknesses, and the productivity rate would decrease.

In Hamptons this may be a problem, as good instructors, which the customers are familiar with, might leave. When a new instructor is employed, it would take longer for customers to get to know the new instructor. There are many factors that affect staff turnover, and which are investigated by the manager of the personnel department. The following theories suggest the reason why workers work, how they can work to high standards, and how they work and what they want.

Needs of individuals and why they work

People work because they need to attain certain things that are required to live. These are things like food and shelter. People achieve this by working and earning money, which is in the form of wages and pay. This can be used to buy the things they need. Needs for workers in a business can be split up into physiological needs (needs to survive), security needs (to ensure the welfare of workers), social needs (the need to make friends and be accepted), ego/esteem needs (needs for luxuries or for benefits), and self-actualisation needs (needs to achieve). Hamptons can satisfy some of these needs for workers, such as wages and pay. Others, especially low hierarchy workers, might not be satisfied with their wages, and this might be the reason behind Hamptons’ high staff turnover.

Payment Systems

There are several methods of payment. Payment systems are the methods of organising the payment of workers. The different ways of paying workers are:

* Time-based systems: These are payments for manual workers. Manual workers are workers who do physical or practical worker, like a manufacturing worker. In Hamptons, this mainly applies to lower hierarchy employees, like the gym instructors and the cleaners. They are paid wages, which is based on the number of hours they work per week, and extra if they decide to work overtime.

* Salaries: Salaries are paid to non-manual workers. These workers are workers that do office work, and in Hamptons they are the managing director, and may well be the managers. Salaries are usually shown as a yearly figure, but they are paid monthly. Overtime pay is usually not applicable, as the pay in the worker’s salaries covers the time it would take to complete their work. Worker’s pay is a major factor in reducing staff turnover, and Hamptons may have to carry out profit satisfice (paying workers enough so that they are happy), especially with the lower hierarchy employees, who may become complaisant.

* Results-based Systems: There are three types of ways in which workers are paid with this method: piece rates, commission and bonus. Piece rates are paid according to the level of production. For example, if a gym instructor teaches 5 people, then his pay would be relative to the number of people he has taught.

The downside of this idea is that if nothing is produced, then there is no pay for the worker. Although it is likely that Hamptons does not operate in this way, this may be a reason why staff may leave in other businesses. Commission is when staff get paid for the amount of products or services they sell. This usually applies to sales staff, and if they sell nothing, they get paid nothing. This is another unlikely method for Hamptons. Bonus is when staff get paid for doing extra activities or for rewards such as good work. It is very likely that Hamptons deploys this method.

* Senior employee payment: In many companies, the more senior employees usually get paid a higher salary or wage than junior employees. They may also have more benefits. These are fringe benefits; when a payment in the form of a product or service is given in addition to wages. A prime example is when directors or managers get a company car. In Hamptons, the managers may get offered a car or a pension scheme. The reward is higher when the employee is higher in the hierarchy. This could make lower hierarchy workers envious, as they might want to receive the same benefits, and therefore may look for alternative jobs.

* Gross pay and net pay: When workers get paid, some of their earnings may have to go towards tax or bills. The sum left is called the ‘take home pay’. This is the amount of money left to spend. Gross pay is the overall amount of money paid before any deductions take place. Net pay is the amount of money left after deductions. This can be a suitable way to determine correctly how much money a worker should be paid. If the worker has very little money left to spend, it could be an indication that they are not satisfied with their pay.

Industrial Relations

Industrial relations is the term given that covers every aspect of relationships between businesses and their employees. It is important to maintain good relationships between workers and managers in Hamptons. The services provided by the business would be most effective as a result, and employees could be alerted to changes and managerial decisions within the business, consequently motivating employees. Sometimes the employees can be greatly affected by their employer’s managerial decisions, and this could lead to arguments and disputes. The employee could be at a disadvantage here. It would be a good idea to join a trade union at this stage. Trade unions represent the interests of workers, and are formed in companies to protect the workers’ interests.

They also inform workers and provide services for them They constitute of workers who have come together for a common interest. Since Hamptons doesn’t have trade unions, the workers would have nothing to turn to, and no one to support them. Their interests would not be protected, and this could lead to them feeling insecure. Because of this, they might leave the company, and this could be one of the factors that lead to high staff turnover. There are several types of trade unions. Unskilled workers belong to General Workers Union. This type of union covers a wide range of employee jobs, ranging from unskilled to semi-skilled workers. In Hamptons, most of the low hierarchy, manual, blue-collared workers (workers that do physical work) would belong to this type of trade union. The cleaners and the kitchen staff would belong to this trade union if there were one in Hamptons.

Another type of trade union is the craft union. This is a trade union where skilled workers belong. Skilled manual workers work in this union, such as builders. An example of this type of trade union would be the Electrical, Electronic, Telecommunications and Plumbing Union (EETPU). The closest example of workers that would be associated with a craft union in Hamptons would be the gym instructors and the beauty therapist.

The third type of trade union is the white collar union. This type of trade union applies to skilled, non-manual, white-collar workers (workers that do non-physical work). Most workers that are white-collared workers are office workers. Therefore, this type of trade union would consist of workers like teachers, or accountants, for example. An example of this trade union is the National and Local Government Officers Association (NALGO). In Hamptons, not many workers do much office work, as it is a leisure centre, although some of the higher hierarchy workers such as the managers do.

The last type of trade union is an industrial union. An industrial union is a trade union formed by workers for a specific type of industry. The trade union would relate to the industry it is associated with. An example of this type of trade union is the National Union of Mineworkers (NUM). This trade union is associated with the mining industry. Another trade union could be the National Union of Steelworkers (NUS). This type of trade union would be totally irrelevant to Hamptons, as Hamptons is not a business that specialises in the industry economy.

Many trade unions in the UK are influenced by the Trade Union Congress (TUC). The TUC provides coordination and organisation for the union movement. It is headed by the general council, which makes decisions and management. Each year, unions hold annual conferences. Representatives of trade unions go to this conference to discuss and establish policies. Issues that may be discussed are:

* Pay – whether workers are satisfied with their pay, and the forms in which they can alter their pay.

* Working conditions – the duration of time in which they have to work

* Welfare of workers – whether workers are safe at work.

* Redundancies – the manner in which workers are made redundant.

* Equal opportunities and rights – no discrimination against workers in the business.

Employers may also have an established association of employers that share similar mutual interests. These associations may help employers in national negotiations with trade unions. They may introduce pay schemes for workers. Many of these associations belong to the Confederation of British Industry (CBI). This is more or less the equivalent of the TUC. If Hamptons had similar associations, the employers could strengthen their relationship with their employees, and be able to discover the needs of each other. This could promote a more lively and welcome atmosphere, and staff turnover could reduce. On the other hand, trade unions could take up valuable time, and sometimes may even lead to bigger disputes between employers and employees, especially when they take industrial action.

Industrial action is when workers oppose the views and negotiations of employers. Trade Unions take action on the behalf of their terms to try and put pressure on the business to accept their terms. This could be in the form of strikes, boycotts, and reducing work output to affect the business. Employers can respond by locking workers out of their premises, making them redundant or reducing their wages. These disputes can be resolved by ACAS (Advisory, Conciliation and Arbitration Service). The ACAS is a government association that attempts to resolve disputes between workers and employees by giving advice and suggestions.

The concept of trade unions may have a profound effect on the organisation and running of Hamptons. It is a fairly small leisure centre, with a flat structure, so trade unions may cause too much inconvenience for the company. At the same time, it could help workers to get just what they need and stay motivated. This would consequently be able to reduce staff turnover.

Motivation Theories

In business terminology, motivation is defined as the level of enthusiasm and effort a worker puts in to the completion of a task. Motivating workers is a key and vital role of managers. A happy worker would be expected to work much faster and to a higher standard. As workers provide the labour for businesses, it is essential that they work as efficiently as possible. In Hamptons, motivated workers would tend to be happy with staying at the company, and this would be essential in reducing staff turnover.

It would also help in the process of carrying out the business activity. This would help Hamptons keep costs low, and help it to maximise its profit. There are many principles on how workers are motivated and the factors that are involved. One of the most evident features is the accomplishment of workers achieving their basic needs. These are mostly the things that are needed to live and stay secure, like food and shelter. However, after a time, workers may feel they need more than just their basic needs. They may need luxuries and higher distinctions. These needs can be classified into a variety of categories, according to their importance to the worker. They can be put into a pyramid conveying a workers hierarchy of needs.

Workers hierarchy of needs (Maslow’s theory)

Physiological needs: These are the basic needs of individuals in order to survive. Hamptons offers this through paying workers wages. These needs are the most important needs of workers.

Security needs: Security needs are essential to workers so that they can feel safe and not be worried. They want to be in a safe environment, so that they can do their jobs effectively. Hamptons offers security to workers by providing a personnel department that would take the thoughts and say of workers into consideration, and by making workers work around the company’s premises.

Social needs: Workers may lack motivation if they are in a business environment where they are isolated and not accepted. Hamptons overcomes this problem by providing good communication links between workers, and the chance to socialise with customers if they are gym instructors. Also, there are quite a few workers that share the same type of job, so they are not left out. The free membership they might have and access to equipment means workers might decide to meet and do sport and fitness activities together, making friends in the process.

Self-esteem needs: Workers may want to be different to others, so that they can be diverse. They may want to be acknowledged and respected by people for having something or doing something. Hamptons provides this through the personnel department and its training procedures. Training allows workers to develop skills, and they would be more effective in carrying out their jobs, and may become multi-skilled. Hamptons has tried to maintain that the self-esteem for each worker is equal.

Self-actualisation needs: This is the highest order need for workers, and it is the ability to have confidence, and be able to express themselves. Workers can be motivated this way by receiving rewards. Hamptons could have provided more fringe benefits for workers, so that they stay motivated, or they could offer a reward for the best worker of the week, etc. By providing this need for a worker, they could stay motivated. The reward could be anything from a money bonus to an object, such as free equipment. Hamptons could also offer more chances of promotion.

Once a need is satisfied, in theory it would no longer motivate a worker, and the next level of need would be wanted. It may also be irrelevant if a lower order need is not satisfied, but a higher order need is satisfied. Also, money isn’t the only thing that would motivate employees. Motivation is based around the fulfilment of workers’ needs and rewards.

Another theory for worker motivation is the ‘two factor theory’. This theory is based on the higher needs of workers being the factors that motivate, and the lower needs being factors that do not motivate, or demotivate. The demotivation factors are known as hygiene factors. They are factors that do not motivate workers, but without them they could demotivate workers. For example, a hygiene factor could be pay, and if the worker is paid well, then according to this theory, they would not be motivated, but not demotivated either. On the other hand, if inadequate pay was offered, then the workers could be demotivated. Concluding from this, if hygiene factors are not met by a business, then they could lead to demotivation.

If a business achieves all this, then workers may get job satisfaction, which is the enjoyment, luxury and pleasure workers get from their job. At Hamptons, efforts are made to ensure that hygiene factors do not prevent workers from being motivated, and that they are met. This is why the personnel manager is employed. Hygiene factors could be working conditions, for example, and it is the duty of the personnel manager to provide appropriate working conditions. By doing this, Hamptons may be able to at least prevent workers from being demotivated, although the high staff turnover contradicts this.

There are various methods of motivation in businesses. These include:

* Job enlargement: This would see workers taking on a wider variety of roles, so that they are not faced with the same boring task every day. This method would be difficult to apply to Hamptons, as most of the jobs in Hamptons require special skills or training. For example, a gym instructor cannot carry out many tasks, as he would be limited to the confines of the skills he possesses. He would not be able to change his routine of teaching sport and fitness related activities, because the business needs to provide these services in order to become successful. What he can be given to do, however, could be tasks like maintenance of equipment. Sometimes job enlargement could lead to demotivation, as workers would just be given more tasks to complete.

* Job rotation: Job rotation is when workers rotate and swap their jobs on a regular basis to provide variety. They could be organised into small groups and then given jobs to carry out in the group. In Hamptons, this could be difficult, as there are not many workers in the business due to the flat structure. Also, the jobs carried out by some of the workers are specialised to their skills, e.g. a gym instructor cannot take the role of a cook.

* Job enrichment: This method is to provide more opportunities and challenges for workers. A greater variety of tasks, more freedom and choice for their decisions and more responsibility may increase the level of motivation workers have.

* Teamworking: Teamworking is when workers are put into groups to take on tasks. It gives them responsibility, and allows workers to socialise, motivating them more. Hamptons offers this method, especially for gym instructors, who may decide to work together, and the cooks and kitchen staff. Teamworking allows a greater range of skills and experience, and it may help workers by giving them ‘indirect training’. The downside of teamworking is that decision-making could be long, and some members may not agree with others,.

Motivation could be the ultimate solution for Hamptons to reduce its staff turnover. A happy worker whose needs and desires are being fulfilled, but at the same time being offered rewards and opportunities, would be unlikely to leave a business. Hamptons may need to offer more career opportunities, such as promotion, and rewards for workers.

Methods of communication

Communication is essential in businesses. It is therefore vital that the ways in which Hamptons communicates with its staff are effective. By maintaining good communication links, information received can be accurate, efficient and effective. It is important for Hamptons to be able to communicate effectively with its staff, so that problem issues can be identified, such as staff turnover. It can also keep staff informed, so that they do not lose motivation. The three main categories of communication are:

* Verbal communication: This is communication from talking and speaking. This type of communication tends to be informal and, as Hamptons has a flat structure, the communication in the company may be informal too. Verbal communication involves telephone communication and meetings. It also involves interviews when people are applying for a job. Verbal communication is fast, and it is interactive – the receiver can receive additional information from the sender by asking a question. They can also give instant feedback. Verbal communication cannot get recorded, and sometimes the receiver may not listen to it.

* Written communication: Written communication tends to be more formal compared to verbal communication. It can be stored, but can also be inaccurate sometimes. It may take long to send and receive feedback, and the message can sometimes be distorted. Examples of written communication include letters, memos, notices, reports and minutes. Written communication can be very detailed, but also ignored, such as notices. Written communication can cover a wide range of concepts. In Hamptons, there may be less written communication between staff, as the company is flat structured. Most written communication is likely to be in the form of formal messages.

* Electronic communication: This type of communication involves the use of technological equipment. Examples are modem, facsimile, transmission, confravision and e-mail. These types of communication can be formal or informal, but more likely to be formal. The ways that information is sent this way could be more convenient for staff, as it could take up less of their time, and the messages would arrive fairly quickly. Sometimes, technology cannot be reliable, such as computers not sending e-mails to the right recipient. Hamptons may not use this type of communication as widely as the previous two.

There are two main types of communication: internal and external. Internal communication is communication inside the business, like a gym instructor communicating with another gym instructor. External communication is when there is communication between two parties outside the business, like a gym instructor communicating with a customer. In businesses, there is the threat of barriers to communication. This occurs when the information sent out is misinterpreted, distorted, or not comprehensible. If the message is passed through many stages, then it is possible that the initial information could have had one of these factors affecting it. Hamptons does not have many levels of hierarchy, so the information will probably be reliable.

Channels of communication can also affect businesses. Channel of communication is the path taken by a message. If it takes a long path, it may be distorted. Distorted messages could lead to workers losing motivation, as they would not be aware of what is happening in the business. There are two main types of formal communication. These are vertical communication and horizontal communication. Vertical communication is communication up and down the hierarchy, e.g. between a gym instructor and a duty manager. It tends to be between a worker and their line manager. It is important to maintain good vertical communication, as this would keep workers and managers informed.

If a worker were not being ignored by their manager, then they would be motivated. However, if a manager was ignoring a worker, then they would lose motivation. Horizontal communication is when employees at the same hierarchy level communicate with each other, e.g. duty manager to duty manager. It is quite common for there to be informal communication in channels like this, so businesses should be cautious that the information is not misinterpreted. In Hamptons, there would tend to be quite a lot of communication like this, because of the high number of workers at the same hierarchy level.


Hamptons recruits its workers locally. Recruitment is when employees are given jobs in a business. The personnel department carries out the function of recruiting. There are two main types of recruitment – internal and external. Internal recruiting is when an employee inside a business applies for a different job in the same business that is vacant. This is only applicable as long as the candidate for the post has the right skills. Promotion could be an example of internal recruitment, and in Hamptons, there are not many opportunities for this type of recruitment. This is because not many employees are directly in line for a specific job.

For instance, a gym instructor cannot take the job of the duty manager when it becomes vacant, because although the duty manager is the gym instructor’s line manager, he would not have the appropriate skills that are required for the job. The only example in Hamptons that may be available for internal recruitment could be the administrator applying for the sales manager’s job when it becomes vacant. Because of this lack of internal recruitment policy, Hamptons does not offer its staff many promotions, and they may not be able to develop the career they were hoping for. This could lead to high staff turnover.

The method of external recruitment is when applicants for a vacant job position are recruited from outside the business. This would involve the applicants applying for the vacant post, and then a selection procedure to go underway in order to obtain the best possible employee for that position. The law states that people who apply for a job should not be turned down because of discrimination against them. Because Hamptons recruits its workers locally, they do not have the same level of range and choice of workers in contrast to if they were recruiting openly.

It seems that the reason why there is a high turnover of staff could be present in these theories.

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