Human Resources Management

1 Introduction

In a modern economy most organisational value comes from intangible assets, and the people an organisation employs are among the most valuable — and the most mobile — of those assets. Recruiting, training, appraising, engaging and, occasionally, disciplining employees takes an enormous amount of management time. Get it wrong and your star performers leave for a competitor, taking their knowledge, skills and customer relationships with them.

Individual performance does not improve by accident: it is achieved through structured processes. This chapter covers those processes — training and development; coaching and mentoring; performance appraisal, reporting and review; diversity, equity and inclusion; disciplinary and grievance procedures; health, safety and wellbeing; and the termination of employment. The next chapter deals with the behavioural side of managing performance: target-setting, motivation, reward, and employee empowerment and engagement.

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2 Developing and training

2.1 Training, development and education

Three related terms are worth distinguishing:

2.2 Methods of training

• Formal courses: employees attend classes at their workplace or elsewhere. Courses can be designed around specific training needs or a syllabus, but the knowledge can remain theoretical rather than practical, there is a risk it is never applied back in the job, and courses may run too early or too late to be useful.

• E-learning and computer-based training: training delivered on demand ('just-in-time training'). It is consistent, scalable and self-paced, and employees can take it exactly when the need arises — though it requires self-discipline and offers little human interaction.

• Job shadowing: following an experienced colleague or manager for a period to see how they actually operate.

• Temporary promotion: acting as manager or supervisor for a period develops real skills — though it can be deflating when the acting role ends.

• Coaching and mentoring: developing people through a working relationship rather than a course. These are so important to the syllabus that they get the next section to themselves.

3 Coaching and mentoring

Coaching and mentoring both develop people through a relationship with a more experienced person, but they are not the same thing and the exam expects you to distinguish them.

3.1 Coaching

Coaching is a very practical form of on-the-job development: a skilled, experienced person works closely with the trainee as the trainee carries out real duties — explaining what to do, reviewing what has been done and suggesting better ways of doing it. It is how auditors traditionally learn their craft: the senior in charge tells an assistant to do the bank reconciliation, shows them how, reviews the result and points out what to improve. The training is memorable precisely because it is practical, though it can lack theoretical grounding in why things are done as they are, and because it follows the flow of real work rather than a syllabus the trainee may never cover some aspects of the job.

Two broad approaches to coaching are:

• Directive coaching — the coach instructs, demonstrates and corrects. The coach is the expert transferring skill; useful for technical tasks and for beginners.

• Non-directive coaching — the coach mainly asks questions ('What did you expect to happen? What could you try next?') to help the person analyse their own performance and find their own answers. It builds awareness and personal responsibility, and is the style expected of the modern manager-as-coach.

A widely used structure for a coaching conversation is GROW:

• Goal — what does the person want to achieve?

• Reality — what is actually happening now, and what is the gap?

• Options — what could be done? Generate alternatives before judging them.

• Will (or way forward) — what will the person actually commit to doing, and by when?

3.2 Mentoring

A mentor is a senior or more experienced employee who acts as a trusted adviser and guide. Where coaching focuses on the task, mentoring focuses on the individual: their longer-term development, their career, and how to navigate the organisation. A mentor is like having an official 'friend' in the organisation — someone you can approach confidentially with problems and doubts.

Crucially, a mentor should not be your line manager. However sympathetic your manager is, anything you confess to them — doubts, gaps in knowledge, personal difficulties — could lodge in their mind when promotion or appraisal decisions come round, and that thought stops people being frank. A mentor outside the reporting line can give honest, confidential advice on organising your time, coping with tensions with colleagues, and realistically assessing your own performance, without any of it ending up on your employment record.

Mentoring can be organised in different ways:

• Formal schemes — the organisation matches mentors and mentees and suggests a meeting rhythm (perhaps half an hour a week at first, less as the mentee finds their feet). Cheap to run: no one is specially employed to do it.

• Informal mentoring — relationships that develop naturally; often the most durable.

• Reverse mentoring — a junior employee mentors a senior one, typically on digital tools, social media or the perspectives of a younger, more diverse workforce. A visible signal that learning flows both ways.

3.3 The leader as coach

Modern performance management expects managers to coach continually — observing, giving feedback and asking non-directive questions throughout the year — rather than saving judgement for an annual interview. Coaching in this sense is not a training method so much as a management style, and it links directly to employee engagement (covered with motivation in Chapter 4) and to the continuous approach to performance review described next.

4 Performance appraisal

4.1 The purpose of appraisal

The purpose of performance appraisal is twofold: first, to improve organisational performance; second, to develop individuals. Done well it is win-win. Organisations perform through their people, so unless people are told how they are getting on — where they have done well and where they need to improve — organisational performance is unlikely to improve. At the same time, being recognised, seeing your skills grow and doing more meaningful work is motivating in itself.

4.2 The three elements of an appraisal

It is often said that an appraisal covers three elements:

• Reward — what will this person be paid next year, and what bonus have they earned?

• Performance — looking back over the previous period: were targets hit and objectives met?

• Potential — looking forward: objectives for the next period, the employee's preferences, promotion prospects and training needs.

Many HR professionals argue that the reward element should be kept separate from the other two — perhaps six months out of phase. There is more to pay than performance: the organisation can only pay what it can afford, salaries should not drift far above the market rate for the work, and in larger organisations pay is constrained by grade bands however good the individual is. It also looks unconvincing to praise someone to the skies and then announce, in the same meeting, that there is only an inflation-level pay rise this year.

4.3 The appraisal process

A well-run appraisal follows four stages:

1. Prepare. The manager gathers evidence about the employee's actual performance — including views of colleagues and clients — and re-reads the previous appraisal record to see what was agreed and whether promised improvements happened.

2. Interview. Good two-way communication, not a manager monologue. Employees may have legitimate explanations for apparent under-performance, and their preferences matter for development and progression.

3. Agree and record. Manager and employee agree what the employee will do next and commit to it. A written report is produced, typically in two parts: a copy for the employee recording the agreed conclusions and objectives, and a copy for the personnel file.

4. Follow up. If training was promised, make sure it happens; if a secondment was arranged, make sure it takes place; if performance was weak, monitor progress continually rather than waiting a whole year for the next interview.

Most appraisal processes use a form listing the important aspects of performance — technical ability, punctuality, ability to get on with customers and so on — with scores allocated to each (for example −5 to +5). 360-degree appraisal is increasingly common: the employee is appraised not only by their manager but also by peers, subordinates and sometimes customers. It gives a fuller, fairer picture and dilutes the biases of any single rater.

4.4 Appraisal interview styles

The classic interview approaches, in rising order of employee involvement, are:

• Tell — the manager announces the assessment; no real discussion.

• Tell and sell — the manager announces the assessment and tries to persuade the employee it is correct. Communication is still one-way.

• Tell and listen — the manager states their view but invites a response. Better — though a manager who has already made up their mind rarely changes the assessment, since doing so feels like admitting error.

• Problem-solving — the most effective approach. The form starts blank and manager and employee work through it together: 'What do you think your technical ability is — plus three? I was thinking plus one — talk me through it.' Because nothing is written down in advance, both sides genuinely discuss the evidence before settling on a score, and then jointly plan how to improve it.

Some writers dislike the very term 'performance appraisal' because of its judgemental, critical overtones, preferring 'performance management' — putting the emphasis on improving performance, which benefits employer and employee alike.

4.5 Lockett: six barriers to effective appraisal

Lockett suggested six ways the appraisal process goes wrong:

• Confrontation — angry disagreement; once emotions rise no useful communication happens and the employee leaves feeling persecuted rather than developed.

• Judgement — one-sided, subjective criticism from the manager with no employee input and little supporting evidence.

• Chat — the opposite failure: a friendly conversation in which the manager avoids passing any judgement, so nothing useful emerges.

• Bureaucracy — the appraisal exists to get the forms filled in and signed off; no other purpose.

• Event — the annual ceremony, carried out every March because it always is, with little planning and little thought about what should come out of it.

• Unfinished business — no follow-up: the promised course or secondment never happens, which makes employees deeply cynical about the whole process.

4.6 Performance reporting and review

The appraisal interview is one event in a continuous performance management cycle: objectives are set (Chapter 4 covers target-setting and SMART objectives), performance is reviewed and discussed regularly through the period, a formal appraisal consolidates the picture, development actions follow, and the cycle restarts with revised objectives.

The clear trend is away from the appraisal as a once-a-year event and towards continuous performance management: frequent one-to-one check-ins, real-time feedback given close to the work it concerns, and ongoing review of progress against agreed measures. Regular review catches problems early, keeps objectives aligned as circumstances change, and is far less stressful for everyone than an annual verdict.

Whatever the rhythm, outcomes must be reported and recorded: agreed conclusions, objectives and development commitments are documented and feed into pay, promotion and training decisions. Consistent, evidence-based records also protect fairness — they are the foundation for defensible reward decisions and, where necessary, for the disciplinary processes later in this chapter.

Closely related to reporting and review is employee engagement – the emotional commitment to the organisation and its goals that shows up as discretionary effort. Everything in this chapter helps to build it: development and coaching, fair and honest appraisal, being listened to, and recognition. Engagement itself – its drivers and how it is measured – is covered with motivation in Chapter 4, and empowerment, one of its strongest drivers, in Chapter 2.

5 Diversity, equity and inclusion

The syllabus asks for diversity and equity practices, and the modern framing of this whole area is diversity, equity and inclusion (DEI). The treatment here is deliberately generic: employment law differs between countries, but the concepts — and the business case — are global.

5.1 Non-discrimination: the foundation

Most jurisdictions protect people from less favourable treatment at work — in recruitment, promotion, pay and access to opportunities such as training — because of characteristics such as sex, race, religion or belief, sexual orientation, age, or disability. For disability, employers are typically required to make reasonable adjustments (or accommodations): what is 'reasonable' scales with the employer — a four-person firm would not be expected to install a lift for a wheelchair user, but a 200-person firm might well be.

Three concepts recur wherever discrimination is regulated:

• Direct discrimination — treating someone less favourably because of a characteristic. A job advert saying 'Salesman required' directly discriminates by sex; it should say 'sales representative'.

• Indirect discrimination — a requirement that looks neutral but in practice disadvantages one group. 'Sales representative required: must be over 2m tall and have a large black beard' never mentions sex, but the requirements are much easier for male candidates to meet. Indirect discrimination is where most real-world discrimination hides, and it can be subtle: one company offered a fast-track course to staff who were 'managers and under 30' — much harder criteria to meet together for people who had taken career breaks to raise children.

• Victimisation — treating someone badly because they asserted their rights, for example after they brought (and perhaps won) a discrimination claim.

5.2 Diversity

Diversity means the composition of the workforce broadly reflecting the population and talent pool it draws from — across visible characteristics (sex, race, age, disability) and invisible ones (background, education, cognitive style, working patterns). The business case is solid:

• A wider talent pool. Every unnecessary restriction shrinks the field of candidates. Flexible and part-time working, home working and job shares bring in excellent people — the skilled tax manager returning from parental leave who cannot do nine-to-five, five days a week, but would happily work three days from home — who would otherwise be lost entirely.

• A variety of skills and perspectives. Recruit people just like yourself and you get your own skills and outlooks duplicated. Difference adds capability — and useful challenge to your ideas, which protects against groupthink and improves decisions and innovation.

• Reflecting customers and clients. Customers deal more comfortably, and business flows more easily, with organisations that look and think like the markets they serve.

• Reputation. Being visibly fair and open attracts candidates, customers and partners.

5.3 Equity versus equality

These two words are not interchangeable, and the syllabus deliberately says equity:

Reasonable adjustments for disability are the clearest example of equity in action: treating a wheelchair user 'equally' by giving them the same staircase as everyone else is precisely the failure equity corrects.

5.4 Inclusion and belonging

Diversity is the mix; inclusion is making the mix work. An organisation can hire a diverse workforce and still waste it if meetings are dominated by the same voices, informal networks decide who advances, and people feel they must hide parts of themselves to fit in. Inclusion means everyone can contribute fully and safely; belonging is the felt result — people are valued for who they are, not despite it. Diversity without inclusion produces a revolving door: the people recruited to add difference leave, because the organisation never let the difference count.

5.5 Unconscious bias

Unconscious (cognitive) bias is the mental shortcutting that produces biased judgements without any conscious intent to discriminate. Common forms in people decisions:

• Affinity bias — favouring people like ourselves; recruiting 'in your own image'.

• Halo (and horns) effect — one strong positive (or negative) trait colours the whole assessment.

• Confirmation bias — seeking evidence that supports the view we formed in the first two minutes.

• Recency bias — an appraisal dominated by the last month rather than the whole year.

Awareness training alone changes little; what works is de-biasing the processes:

• Structured interviews — every candidate asked the same questions, scored against the same criteria.

• Anonymised screening — removing names, ages and photographs from CVs before shortlisting.

• Diverse panels — more than one perspective on selection and promotion decisions.

• Evidence-based appraisal — scores tied to documented results and behaviours, not impressions (another argument for the records kept in the performance-review cycle above).

• Calibration reviews — comparing ratings across managers to catch systematically harsh or generous raters.

5.6 Inclusive leadership

Inclusive leaders make DEI operational: they commit visibly, stay curious about difference, actively draw quieter voices into discussions, allocate stretching work fairly rather than to favourites, challenge non-inclusive behaviour when they see it, and role-model the standard. Chapter 2's material on leadership styles and ethics is directly relevant here.

6 Rewards and sanctions: disciplinary and grievance procedures

Managing performance needs consequences in both directions. Rewards — pay, bonuses, recognition — are covered with motivation in Chapter 4. This section deals with sanctions: what happens when conduct or performance falls short. Two principles run through everything that follows: procedures must be fair and consistent, and they must be documented.

6.1 Disciplinary procedures

Disciplinary procedures address both misconduct (poor time-keeping, breaches of safety rules) and poor performance. Their purpose is to correct behaviour, not merely to punish — and a properly followed procedure is also the employer's protection if a dismissal is later challenged as unfair.

Discipline should be progressive — escalating through stages, with time to improve between them:

1. An informal talk — often enough by itself.

2. A verbal warning — which may be informal (not recorded) or formal (entered on the employee's record).

3. A first written warning.

4. A final written warning.

5. Sanction — suspension, demotion or dismissal.

Some acts — gross misconduct, such as violence, theft or deliberately endangering colleagues — are serious enough to justify dismissal without prior warnings. Even then a fair process must be followed before dismissing.

Whatever the local legal detail, a fair disciplinary process follows the same universal principles:

• Establish the facts — investigate promptly, gather evidence, and where needed hold an investigatory meeting before any disciplinary hearing.

• Inform the employee in writing — with enough detail about the alleged misconduct or poor performance for them to prepare a response, plus the time and place of the hearing.

• Hold a fair hearing — without unreasonable delay but allowing reasonable preparation time. The employer explains the problem and the evidence; the employee answers the allegations, asks questions, presents evidence and calls relevant witnesses. Good practice — and in many jurisdictions a legal right — is that the employee may be accompanied by a colleague or union representative.

• Decide and communicate — decide what action (if any) is warranted, keep sanctions proportionate and consistent with how similar cases were treated, and confirm the outcome in writing.

• Allow an appeal — heard without unreasonable delay, impartially, and wherever possible by a manager not previously involved in the case.

6.2 Grievance procedures

A grievance procedure is the route by which employees raise complaints — about their treatment, workload, working conditions, or discrimination — and have them resolved. The procedure should be written down and communicated to all employees, and it should:

• Identify who to contact — including an alternative if the normal contact person is themselves involved in the grievance.

• Try informal resolution first, with a formal grievance hearing if that fails.

• Set time limits for each stage.

• Provide an appeal, dealt with impartially and wherever possible by a manager not previously involved.

• Allow the employee to be accompanied at meetings by a colleague or union representative.

Grievances handled badly (or ignored) corrode engagement and drive turnover — and grievance themes are useful early-warning data about managers, workloads and inclusion problems.

7 Health, safety and wellbeing

Employers owe their people a duty of care. The case for taking it seriously is moral first, but also financial and legal: in many countries an employee injured at work can recover very substantial damages, and accidents cost reputation, morale and lost time. A workplace configured for safety and wellbeing is also simply one where people perform better.

7.1 The employer's duties

• Safe work practices and a safe, healthy environment — not too hot, cold, dusty, noisy or polluted; safe systems for genuinely risky work such as working at height.

• Properly maintained plant and equipment — inspected regularly so that nothing has silently become dangerous.

• Information, instruction, training and supervision — so people know how to operate machinery and what safe working looks like.

• A known safety policy — everyone should know the policy exists and what it requires of them.

• Risk assessments — thinking ahead systematically: identify what could go wrong in each task, judge how serious it is, and put training, guidance and protection in place as necessary. Even 'no significant risk' should be a recorded conclusion, not an assumption.

• Sharing hazard information — a hazard found in one department or site should be communicated to others running similar processes.

• Identifying employees particularly at risk and introducing controls to reduce risk (no trailing cables, wet-floor signs, fire drills).

• Competent safety and health advisers — employed where the work demands specialist knowledge, for example the emergency treatment for exposure to a dangerous chemical.

There will usually also be a safety representative from the employees' side and a safety committee, where representatives and management meet regularly to review incidents and improve safe working.

7.2 Employees' duties

• Take reasonable care of themselves and others — practical jokes around machinery can be a disciplinary offence, and endangering colleagues may be gross misconduct.

• Allow the employer to carry out safety duties — for example, stopping work on a machine so it can be made safe.

• Not interfere intentionally or recklessly with machinery — such as removing guards to work faster.

• Report dangers — an employee who notices that a machine has deteriorated has a duty to tell the employer.

• Use equipment properly, engaging all its safety features.

7.3 Health and safety policy

Many organisations publish a health and safety policy, typically containing: a statement of principles; specific procedures (for example fire safety); the importance of complying with applicable law; detailed operating instructions for machinery; and the training and qualifications required to implement the policy properly.

7.4 Beyond physical safety: wellbeing

The modern view of 'managing the workplace environment' extends past physical hazards to wellbeing: workload and stress, mental health, ergonomics (including home workstations), and the always-on culture that digital communication makes possible. These affect performance and engagement just as surely as machinery guards affect safety, and employers increasingly monitor them — through the engagement and pulse surveys described in Chapter 4 — and act on what they find.

8 Termination of employment

Employment ends in one of three ways: retirement, resignation or dismissal.

There are three forms of dismissal:

• Termination by the employer — the ordinary case.

• Non-renewal of a fixed-term contract when it expires.

• Constructive dismissal — the employer's behaviour is so bad (for example, unilaterally cutting pay or duties) that the employee is entitled to treat themselves as dismissed, even though they resigned.

Two different questions can make a dismissal unlawful, and they are worth keeping apart:

• Wrongful dismissal asks: was the contract honoured? Dismissing without the agreed notice period is the classic example — a breach of contract.

• Unfair dismissal asks: was the dismissal fair. Where unfair-dismissal protection applies, the law commonly examines both the reason for dismissal and whether a fair process was followed; the precise rights, qualifying conditions and remedies depend on the jurisdiction.

Reasons generally accepted as fair grounds for dismissal:

• Redundancy — the role genuinely disappears, and selection for redundancy is itself fair.

• Incapability — the employee cannot do the job despite training and support.

• Legal restriction — for example, a driver who loses their driving licence.

• Misconduct — provided suitable warnings were given through a fair disciplinary process; gross misconduct (hitting a customer!) can justify immediate dismissal.

• Some other substantial reason — for example, an irresolvable conflict of interest such as being married to a direct competitor's sales director.

Dismissals for certain reasons are treated as automatically unfair in most systems that regulate dismissal — for example dismissal because of pregnancy or family leave, trade union membership, raising genuine health-and-safety concerns, or asserting basic employment rights such as insisting on a contract and payslips.

Dismissal disputes are heard by employment tribunals or courts, which can typically order reinstatement (the original job back), re-engagement (a similar job) or compensation. In practice compensation is the usual remedy — after litigation, neither party normally wants to work with the other again.

9 Test your knowledge

Two quick checks before you move on: run the flashcards to fix this chapter’s definitions and frameworks in mind, then attempt the ten objective questions to see whether you can apply them.