Approaches to Human Resource Management (HRM)

Soft HRM is an approach that treats employees as a valued asset to be developed (1), investing in training, involvement and good conditions to gain motivated, committed and retained staff (1).

One feature of a zero-hours contract is that the worker has no guaranteed hours and is called in only when the employer needs them. Because the business pays only for the hours actually worked, it can match its labour costs closely to demand — useful where demand is unpredictable — but the worker has an insecure, variable income.

The first benefit is higher motivation and retention. By investing in training, involvement and good conditions, a soft HRM approach makes staff feel valued, so they work harder and are less likely to leave. This raises productivity and cuts the recruitment and training costs caused by high labour turnover.

The second benefit is better quality and customer service. Skilled, committed employees who are empowered to take responsibility tend to deliver higher-quality work and serve customers better. This can build the firm's reputation and competitive advantage, especially in skilled or customer-facing work.

Together, motivation/retention and quality make soft HRM worthwhile where staff add real value — though it does cost more than a hard approach.

Flexible working contracts — such as part-time, zero-hours, annualised hours and home working — let a business adjust how and when its people work rather than relying only on full-time, permanent staff.

The main benefit is lower, more variable labour costs and agility. The business can match staff to demand, calling in workers for peaks and avoiding paying wages in quiet periods. This protects cash flow and profit, particularly for firms with seasonal or unpredictable demand. Flexible contracts can also widen recruitment and aid motivation — flexi-time and home working attract parents, students and others, improving work-life balance and helping the firm retain valued staff (a soft-HRM benefit), while home working can also cut office overheads.

However, there are real drawbacks. Insecure arrangements like zero-hours or gig work can leave staff demotivated and disloyal, raising labour turnover and weakening commitment — which can harm productivity and quality. Coordination and communication become harder with part-time, home and job-share staff, and temporary or gig workers may be less engaged and harder to train. There are also ethical and reputational risks if the business is seen to exploit insecure workers, and tightening regulation in some countries.

Therefore flexible contracts are most beneficial where demand is variable and cost flexibility matters more than deep staff commitment — for example seasonal retail or hospitality. Where the work is skilled and depends on loyal, well-trained staff, heavy use of insecure contracts may cost the business more in turnover and quality than it saves, so the right mix depends on the firm's needs.

Switching to a soft HRM approach could directly tackle the manufacturer's problems. The firm currently treats workers as a cost to control, which may explain the high turnover and falling quality: poorly paid, tightly controlled, undertrained staff tend to be demotivated and to leave. Soft HRM — investing in training, better pay and conditions, communication and empowerment — would make staff feel valued, raising motivation and commitment. This should reduce labour turnover (cutting costly, disruptive recruitment) and improve quality, because skilled, engaged workers take more care and responsibility. In short, soft HRM addresses the apparent root cause of the firm's difficulties and could rebuild its workforce and reputation.

However, the switch has costs and risks. Soft HRM is more expensive — training, higher pay and better conditions all raise costs, which is significant for a manufacturer competing on price. The benefits are slow to appear and uncertain: motivation and quality may take time to improve, and not all the turnover may be caused by the HRM approach (it could be pay levels elsewhere, poor management, or the type of work). For very routine, easily replaced production work, a hard approach can be perfectly adequate and cheaper, and a full cultural change is hard to implement and may meet resistance from managers used to control.

Judgement (criterion). Whether to switch depends on why turnover and quality are poor and how much staff quality drives the firm's competitiveness. If the problems stem from demotivation and the work requires skilled, careful employees whose commitment affects quality, then soft HRM is likely to be worthwhile, because the higher cost is repaid through lower turnover, better quality and reputation. If the work is genuinely routine and the firm competes mainly on low cost, a full switch may not pay — a partial move (more training and communication without large pay rises) might be the better balance. On balance, given that the manufacturer's quality and turnover problems point to demotivation, a shift towards soft HRM is the stronger choice, provided management commits to it properly and accepts the higher short-term cost.

IT and AI now reach across HRM — recruitment, monitoring, training, workforce analytics and administration. They offer real gains, but how far a business should rely on them depends on what is being managed and the firm's circumstances.

The case for relying heavily on IT and AI. First, efficiency and cost: AI can screen thousands of applications, automate payroll and rotas, and run e-learning at scale, cutting HR time and cost and freeing staff for strategic work. Second, better decisions through data: workforce analytics can reveal patterns in turnover, absenteeism and skills gaps, helping the firm plan its workforce, predict who might leave and target training where it is most needed. Third, consistency and availability: chatbots and online systems work 24/7 and apply the same criteria to everyone. For large businesses handling huge volumes of people and data, technology can manage HR far more quickly and cheaply than humans alone, and can sharpen otherwise guess-based decisions.

The case against over-reliance. First, bias and fairness: AI trained on past data can entrench discrimination in hiring and make opaque decisions, risking unfairness, legal action and reputational damage. Second, privacy and trust: heavy monitoring can feel like surveillance, harming morale and the very engagement that good HRM is meant to build. Third, the loss of the human touch: sensitive HR work — handling grievances, supporting wellbeing, motivating and developing people, managing change — depends on empathy and relationships that algorithms cannot provide; this is the heart of soft HRM. Fourth, cost, security and over-reliance: systems are expensive, data can be breached, and a firm that depends too much on technology is vulnerable when it fails. So technology suits routine, high-volume, data-heavy tasks far better than sensitive, people-centred ones.

Weighing it up (criterion). How far a business should rely on IT and AI depends on the type of HR task and the firm's scale and strategy. For routine, high-volume, administrative or analytical tasks (screening, payroll, analytics), heavy reliance is justified because the gains in speed, cost and insight are large and the human downside is small. For sensitive, judgement-based, relationship-driven tasks (final selection, discipline, motivation, development), reliance should be limited and technology used only to support human decisions.

Judgement. A business should rely on IT and AI substantially but selectively. The right approach is to automate the routine and use AI for analysis and shortlisting, while keeping humans in charge of sensitive, people-centred decisions — a hybrid model. Full reliance is unwise because of bias, privacy and the loss of empathy that good HRM needs; no reliance wastes large efficiency and insight gains. So the extent of reliance should be high for routine/analytical HR work and low for relationship-based work — meaning IT and AI should augment, not replace, human HR judgement.