Human resource management
Domain 2 tests workforce planning, recruitment and selection, training, motivation, leadership and employee relations. Effective practice requires precise use of labour metrics and the ability to explain why an HR practice fits a firm's product, labour market and budget.
Core rules
- Workforce planning compares future labour demand with internal supply and external availability, then closes the gap through recruitment, training, redeployment or redundancy.
- Labour turnover = leavers ÷ average number of employees × 100. Cohort retention = members of the starting employee cohort still employed at the end ÷ starting cohort × 100. It is not generally100 minus turnover, because turnover uses average headcount and can include replacement hires. Absenteeism = days lost ÷ possible working days × 100. Use average employees, not the closing figure.
- Recruitment follows job analysis → job description (duties) → person specification (qualities). Internal recruitment is cheaper and motivating but limits new ideas; external recruitment widens the field but raises cost and induction risk.
- Training may be induction, on-the-job or off-the-job. It raises productivity and quality but costs money and may increase poaching risk.
- Motivation theories include Taylor's scientific management, Maslow's hierarchy, Herzberg's hygiene factors and motivators, and Mayo's human-relations findings. Financial methods include piece rates and bonuses; non-financial methods include job enrichment and teamwork.
- Leadership may be autocratic, democratic, laissez-faire or paternalistic. Appraisal, redundancy, dismissal and collective bargaining are distinct processes.
Worked example
A factory employs 250 people on average, with 30 leavers a year: turnover = 30 ÷ 250 × 100 = 12%. Industry turnover is 18%, so the comparison concerns turnover rates, not independently measured cohort-retention rates. Each leaver costs $4,000 in recruitment and lost output, so 12% turnover costs 30 × $4,000 = $120,000. Cutting turnover to the industry average would mean 45 leavers and higher cost, so the comparison is wrong. A realistic target of 12% → 10% saves five leavers, or $20,000. A retention programme costing $12,000 therefore gives a net benefit of $8,000, before considering morale and customer service.
Traps
Do not divide leavers by the closing workforce, or absenteeism by days worked rather than days possible. High pay is not automatically motivating. In this teaching distinction, redundancy concerns a role no longer being required, while conduct or capability concerns the individual. The legal classification and process must be checked locally. A job description describes the job, not the ideal person. Internal recruitment is not always cheaper once training and vacancy cover are counted.