Introduction to human resource management

Human resource management is the strategic management of an organisation's people — recruiting, developing, deploying and looking after employees — so that the workforce helps the business achieve its objectives. It treats staff as a resource to be planned for and invested in, not simply a cost.

Human resource planning is the process of forecasting an organisation's future workforce needs — how many workers, with which skills — and comparing this demand with the supply of labour available, so the right people are in place when needed.

On-the-job training takes place at the workplace while the employee does the actual job — for example shadowing or mentoring — so it is cheap and directly relevant. Off-the-job training takes place away from the workplace, such as an external course or college, and brings broader, expert skills but is more costly and less specific to the firm. The key distinction is location and focus: on-the-job is at work and job-specific; off-the-job is away from work and broader.

FreshMart's growth strategy increases its forecast DEMAND for labour, because each new store needs staff — checkout operators, shelf-stackers, managers and specialists — so total demand rises across roles. Workforce planning must forecast how many of each type are needed and by when, then compare this with SUPPLY: some roles can be filled internally by promoting or redeploying existing staff (e.g. training current supervisors into store managers), but the scale of expansion means FreshMart will also have to recruit heavily from the external labour market. Planning must also allow for replacing staff lost through normal turnover during the two years. In short, the growth strategy directly drives a larger and more skilled workforce demand, which HR planning must meet through a mix of internal promotion, external recruitment and training.

New technology — online banking, apps and AI chatbots — changes both the size and the skill mix of HSBC's workforce. First, it reduces the demand for some traditional labour: as customers bank digitally, fewer branch cashiers are needed, so HSBC may face a surplus of counter staff and consider branch closures and redundancies or redeployment. Second, it raises the demand for NEW skills: HSBC needs software developers, data analysts, cybersecurity specialists and staff who can support customers through digital channels — skills that may be scarce in the external labour market, forcing the bank to recruit competitively or retrain existing staff. Third, it changes training needs across the whole workforce, as remaining staff must learn the new systems (on-the-job and off-the-job training). The overall effect is not simply 'fewer jobs' but a SHIFT in the workforce toward fewer, more highly skilled and digitally capable employees, which HSBC's workforce planning must forecast and manage through recruitment, retraining and, where roles disappear, redeployment or redundancy.

Labour turnover = (number leaving / average number employed) x 100 = (110 / 500) x 100 = 22%. This is high, so more than a fifth of the firm's drivers must be replaced every year. For workforce planning this means the firm faces continual recruitment, selection and induction training, which is costly and time-consuming, and there is a persistent risk of driver shortages if replacements cannot be found quickly enough in the external labour market. Planning is therefore dominated by replacing leavers rather than developing a stable, experienced driver team, and the firm should investigate the causes (e.g. pay, hours) to bring the rate down.

Internal recruitment has strong attractions for a start-up. It is cheaper and faster, the candidate already understands the young firm's product, culture and customers, and promoting from within motivates and helps retain the talented staff a start-up cannot afford to lose. It also avoids the risk of a poor cultural fit, which matters intensely in a small team. However, a fast-growing start-up may simply not have anyone internally with senior marketing experience — early employees are often generalists — so promoting the best of a weak field could leave a critical function under-led just as the firm scales.

External recruitment addresses this by bringing proven senior expertise, fresh ideas and networks (a boost to creativity and to scaling), and a wider pool from the external labour market. The costs are real: recruitment is slower and more expensive, onboarding takes time the start-up may not have, there is a risk the outsider does not fit the culture, and internal candidates who are passed over may become demotivated or leave.

The right choice depends on the depth of internal talent relative to how fast the firm must scale. If a capable internal candidate exists, internal recruitment is preferable — it is cheaper, quicker and protects morale, all vital for a cash-constrained start-up. But if no internal candidate has the seniority the growth stage demands, the firm should recruit externally despite the cost, because a weak marketing lead would jeopardise the growth strategy itself, and the cost of getting a senior hire wrong is far greater than the recruitment spend. On balance, the decision should be led by whether internal talent can genuinely do the job at the required scale, not by the general rule that internal is cheaper.

Automation offers the manufacturer clear benefits. Machines can cut labour costs, work continuously, raise output and improve consistency and quality, strengthening competitiveness in a price-sensitive clothing market and supporting the firm's long-run survival — a sustainability argument. It also reduces reliance on scarce or costly labour and can create demand for higher-skilled technical roles to run and maintain the equipment.

Against this, the decision carries heavy costs and risks. The upfront investment in machinery is large and may take years to pay back, straining cash flow. Making 150 workers redundant harms those employees and their community, can severely damage the morale and productivity of remaining staff, and may hurt the firm's reputation as an employer — an ethical issue the course expects candidates to weigh. There is also a skills gap: the firm now needs technicians it may not have, requiring recruitment or retraining. If demand for its clothing is uncertain, the fixed cost of automation could become a burden.

Whether it should proceed depends on the balance of these factors and on how the change is managed. If the cost savings and quality gains are large and durable, and the firm mitigates the human impact — retraining and redeploying some of the 150 where possible, consulting openly and offering fair redundancy terms — automation is justified because failing to modernise could leave it uncompetitive and threaten ALL its jobs in the long run. But if the payback is slow, demand is uncertain, or the reputational and ethical costs are severe and unmanaged, it should delay or automate more gradually. On balance, automation is likely justified for long-run competitiveness PROVIDED the firm manages the workforce transition responsibly rather than treating the redundancies as a pure cost cut.

A 40% turnover means the call centre replaces two-fifths of its staff each year, generating heavy recruitment and induction costs, inconsistent service and lost expertise — a serious workforce-planning failure that also signals deep dissatisfaction. The firm has two broad responses.

One option is to treat the symptom: streamline and speed up recruitment and induction, or rely on temporary and part-time staff so vacancies are filled quickly. This limits short-run disruption and cost and is fast to implement, but it does nothing about WHY people leave, so the costs, poor service and low morale persist and the firm is trapped in a hiring treadmill.

The better option is to tackle the causes, which in call centres are typically low pay, high stress, rigid targets, weak management and little progression. The firm could review pay and conditions against rivals, improve management and support, set fairer targets, recognise good performance, and offer training and clear career progression so the job becomes worth staying in. This directly reduces turnover and, over time, cuts replacement costs and improves service quality and staff morale. Its drawbacks are a higher wage and training bill and a delay before turnover falls.

I would recommend that the call centre prioritise tackling the causes — improving pay, management and progression — while streamlining recruitment in the short term to cope during the transition. This is justified because the ongoing cost of 40% turnover (constant recruitment plus poor, inconsistent service) almost certainly exceeds the cost of improving retention, and because a stable, experienced team is what ultimately delivers the service quality the centre competes on. The judgement depends on the firm being able to fund the improvements, but doing nothing is the most expensive option of all.