Human resources (HR)
Human resources are usually the biggest cost of business. For example, the wage bill of the National Health Service, the United Kingdom's largest employer, stood at £71.1bn in 2022/23 – more than 45% of its total budget.
Staff requirements for efficiency
As we have seen, human resources can be expensive, so businesses must make decisions about how many staff to employ, their working hours and how to pay them to ensure they work efficiently.
Payment methods
Businesses will need to make decisions about how to pay staff. Paying staff according to the time they work, e.g. hourly pay, works for some businesses like retail, while paying by the amount produced is suitable for others, e.g. manufacturing businesses. Salaries are paid per year, based on the contracted hours/days per week/year e.g. teachers are paid a yearly salary for 195 contracted teaching days.
Full-time/part-time contracts
A business will need to decide whether to employ full-time, part-time or a mixture of staff.
Principles of management - The need for workforce flexibility
The recruitment process
A number of decisions need to be made during the recruitment process, e.g. which role to recruit for, where to advertise, choosing a shortlist, choosing who to employ. Remind yourself of the process:
Principles of management - Techniques to meet skills requirements
Training requirements and training costs
Training can be a significant cost, especially if it is provided by an external organisation. In-house training will be much more cost effective but the business may not have the necessary expertise, e.g. if a business invests in new technology.