HRMT20024 - Strategic HRM: Managing Staff After Penalty Rate Cuts

This report examines the impact of reduced penalty rates on human resource management within a retail organization. It identifies the issues arising from these cuts, particularly concerning employee motivation, retention, and work-life balance. The report analyzes the problem using relevant theories such as strategic HRM, equity theory, and distributive fairness, highlighting the potential for increased employee turnover and decreased productivity. Furthermore, it discusses the importance of employee motivation, rewards, and compensation in maintaining a healthy work environment. The report concludes with recommendations for mitigating the negative impacts of penalty rate reductions and ensuring fair compensation and work-life balance for employees. Desklib provides this and other solved assignments to assist students in their studies.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author Note

1STRATEGIC MANAGEMENT
Executive Summary
Human resource Management in an area of management which is in place to properly handle the
human resources of a business in a way through organizational objective can be achieved. The
concept of HRM includes both leadership and strategy which is deployed together to generate the
best possible outcomes. The paper deals with issues which the HRM managers of an
organization have to address as a part of their role. The issue which has been selected for the
purpose of this report is of penalty rates. Penalty rates are a form of compensation which is
provided to the employees when the employees work on either Sundays or a public holiday.
These rates are provided in from of additional compensation for the purpose of ensuring that fair
compensation is provided in relation to the additional work done by the employees by sacrificing
their leisure and free time. The report initially identifies the problem which has arisen through
the reduction of penalty rates and then analyzes it based on relevant theories and literatures.
Subsequent to the analysis the report recommends appropriate solutions in relation to the
problem.

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Table of Contents
INTRODUCTION...........................................................................................................................2
THE ISSUE.....................................................................................................................................2
STRATEGIC HRM.........................................................................................................................3
EMPLOYEE TURNOVER AND RETENTION............................................................................4
MOTIVATION, REWARDS AND COMPENSATION................................................................5
DIVERSITY AND WORK LIFE BALANCE................................................................................6
RECOMMENDATIONS.................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

3STRATEGIC MANAGEMENT
INTRODUCTION
Penalty rates are a form of compensation which is provided to the employees when the
employees work on either Sundays or a public holiday. These rates are provided in from of
additional compensation for the purpose of ensuring that fair compensation is provided in
relation to the additional work done by the employees by sacrificing their leisure and free time
(Hill, Jones & Schilling, 2014). However the governments in Australia have taken a decision to
reduce the penalty rate to be provided to the employees. When the employee rates were double
the time for an employee working on a Sunday or a private holiday. However these payments in
relation to full time employees have been reduced to half and time and in relation to casual
employees it has been reduced to half and time.
The purpose of this report is to identify the problem as a consultant of an organization
operating in the retail industry which has been created through the deduction in penalty rates in
relation to various areas of human resource management in the organization. The report initially
identifies the problem and then analyze it based on relevant theories and literatures. Subsequent
to the analysis the report recommends appropriate solutions in relation to the problem.
THE ISSUE
As stated by ABC News (2018), the initiative taken by the government with respect to the
reduction in the penalty rates across Australia has not been very successful as there has been a
failure on the part of the strategy towards the creation of additional jobs and working hours. This
is the primary issue which has been identified as a consultant to the organization. This result has
been obtained through a survey which has been conducted by Macquarie University and

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University of Wollongong upon 1351 workers. It has been conducted through the research that
no additional working hour has resulted out of the cutting strategy. The decision of cutting the
penalty rates was attempted to be justified by the government by stating that the strategy is set to
enhance the extent of services offered by the employees along with increase in additional
working hours. The research has to the contrary made a finding that the working hours of the
employees in the retail sector on Sunday have been decreased by up to 9% after the new
decreased rates have been implemented. In addition there has also been a significant decrease in
the percentage of employees who work on Sundays. This has mainly been due to the decision of
the employees of not working on Sundays where a lower penalty rate is provided to them. This
issue may have a considerable impact of a few areas of HRM which are discussed in the report in
the light of relevant theories and literature.
STRATEGIC HRM
The organization must have the knowledge that Strategic HRM refers to typical
components of HR such as hiring, payroll and discipline. The process incorporates the working
of the employees in a collaborative way so that a boost in relation to quality, mutual benefit and
retention of the employees can be achieved (Barney, 2014). According to the behavioral
perspective in relation to strategic HRM there has been in order to get the best out of the
employees their behavior in relation to elements like Motivation, expectations, conflicts. When
the employees have proper motivation, their expectations in relation to their employment are met
and there is minimum conflict which arise out of the workplace they automatically tend to
provide more effort towards the organization. It has also been argued by Wheelen et al. (2017)
that the satisfaction of employees in relation to the workplace has a significant impact on

5STRATEGIC MANAGEMENT
productivity of the organization. This is because when the employees are satisfied they are able
to concentrate on their role within the organization in a much better way.
In the present situation where the employees have been imposed with penalty rates which
are less than what they use to receive. The primary purpose of a holiday penalties is to provide
motivation to the employees to do additional work in a time which has been provided to them for
personal use. Therefore it can be evidently stated that as the penalty rates have been reduced the
motivation which the employees have to work in the given situation has reduced and the
employer are not able to meet the expectation of the employees giving rise to conflict and
subsequently low turnout of work of holidays. This statement can further be provided support
through the results of the research conducted by Macquarie University and University of
Wollongong where the same situation has been depicted through the research.
EMPLOYEE TURNOVER AND RETENTION
It is the duty of the consultant to discuss the impact of penalty rates on employee turnover
and retention. One of the most significant challenges which are faced by the HR managers is in
relation to their role in the organization is that of employee retention. Retaining employees is of
significant importance to the organization (Albers et al., 2017). This is because when the
organization is not able to retain employees it has to bear an additional cost in relation to the
process of recruitment. In addition where the retrenchment rate of the organization is high the
potential employees believe that there is something not right with the management within the
organization and therefore refrain from applying in such companies. Out of the two types of
turnover (voluntary and involuntary turnover) the one which is a more significant threat to the
organization is the voluntary turnover. This is the kind of turnover which is initiated by the

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employees themselves and takes place in a situation where the organization wants the employees
to be a part of it. There are various reasons why employee turnover takes place. These includes
getting better opportunity, not able to maintain a proper work life balance, poor management,
conflict within the workplace and payment and compensation system and an overall unhealthy
working environment (Slack, 2015).
There are a few theoretical perspectives which have been provided in relation to the
element of retention and turnover. One of such perspectives is in relation to the theory of
distributive fairness. The theory is in relation to the decision taken by people based of the made
contribution and the outcome received through it. Employees in the same way also consider the
amount of contribution which has been made by them and the amount if compensation which is
received in relation to the contribution to determine the feasibility of working with the employer
in future. In situation where the penalty rates have been decreased by the government it is
evident that the voluntary turnover of the employee would increase (Barney & Hesterly, 2015).
This is because in addition to the lack of motivation in the employees it can be stated that the
employees have will have the view that the amount of additional effort they are providing is
much more than the compensation which is being provided to them. Sacrificing personal time to
work for the organization would be considered as a significant contribution and the lower penalty
rates would be considered as a less compensation against the contribution (Rothaermel, 2015).
MOTIVATION, REWARDS AND COMPENSATION
A consultant has the duty to inform the organization about the importance of motivation,
rewards and compensation. According to the equity theory a person in order to analyze whether
the situation he or she is in is fair or not compares the situation which are faced by others. Thus

7STRATEGIC MANAGEMENT
as per the principles of this theory the ratio of perceived outcome such as working conditions or
penalty rates is compared by a person with perceived input such as effort to the same ratio as
others. Whether equity is perceived or not determines the consequences of the actions of the
individuals. Where the person is able to perceive equity there is no change and where the person
is not able to perceive equity there is going to be a change within the behavior and attitude of the
person (Morschett, Schramm-Klein & Zentes, 2015).
When it comes to payment of penalty rates, external equity is taken into consideration by
the employees. This means that the employees will tend to compare the penalty rate which they
use to receive or what others are receiving in some other industry to perceive equity. In the given
situation where penalty rates are different for specific industry employees working in sectors
having a low penalty rate will not be able to perceive equity and there will be an evident change
in their behavior. In addition it has been argued by Frynas and Mellahi, (2015) that a payment
structure which is based on jobs may not result in a behavior which is desired, specifically in an
environment which is changing rapidly. Thus penalty rate based on the kind of industry and the
type of employment a person is engaged in would also not be suitable to derive the desired
behavior from the employees.
DIVERSITY AND WORK LIFE BALANCE
The organization has to consider the importance of diversity and work life balance in
relation to the management of employees. It has been argued by Morden (2016) that providing
addition compensation the employees to work on those days which are reserved for their
personal use is unethical in nature and also not very effective in the long run as it disturbs the
work life balance of the employees. Thus this argument can be taken in favor of the decrease in

8STRATEGIC MANAGEMENT
penalty rates for working on holidays. In addition a holiday on Sunday is a culture in Australia
which is only for the purpose of relaxing and indulging into personal work. Allocating work on a
holiday to the employer would lead to the operating against such culture. However these
practices are totally legal in Australia as they are done for the betterment of market and smooth
functioning of trade. In this situation it can be provided that penalty rates have been decreased
for the purpose of ensuring that a pooper work life balance is established. However it has also
been provided that the sending on consumer products has considerably decreased from the time
there has been a reduction in the rates. This evidently provides that the employees are not able to
maintain proper life-style due to the less compensation received by them. The situation will
therefore have an adverse impact on their work-life balance (Goetsch & Davis, 2014).
RECOMMENDATIONS
As a consultant it would be suggested that a an equal penalty rate opportunity program
has to be initiated for the purpose of addressing the issue in relation to the different penalty rates.
This program can function in from of an Equal Employment Opportunity plan through which the
employees would be able to perceive equality (Hitt, Ireland & Hoskisson, 2015).
The employers have to observe distributive as well as procedural fairness while dealing
with those employees who seek to work on Sundays and public holidays. In relation to such
fairness the employees may provide the employees some form of fringe benefits in situation
where the penalty rates have been reduced.
The motivation of the employees to work on holidays has to be enhanced by employers.
A lack of motivation is a serious problem which has been indentified in relation to the reduction

9STRATEGIC MANAGEMENT
of penalty rates. Motivation can be enhanced by providing lesser work on holidays where there
has been a reduction in penalty rates.
The employers have to ensure that the work-life balance of the employees is maintained
so that they can contribute fairly towards their role in the organization. Satisfied employees tend
to provide more productivity. Work-life balance of the employees can be improved by given
them flexible working hours.
CONCLUSION
Employment relationship is the core to the success of any organization. As a consultant to
the organization it would be stated by me that the organization has to enhance employment
relation which can be done through providing employee satisfaction. The organization has to
incorporate strategic HRM in order to effectively manage its employees and increase
productivity. The lower penalty rates have de motivated the employees to work effectively. Thus
the organization needs to address the issue by provided adequate compensation and rewards to
the employees as well as a healthy working environment which is inclusive in nature.

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REFERENCES
Albers, S., Baum, H., Auerbach, S., & Delfmann, W. (Eds.). (2017). Strategic Management in
the Aviation Industry. Taylor & Francis.
Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson higher ed.
Barney, J. B., & Hesterly, W. (2015). Strategic management and competitive advantage concepts
and cases. Pearson.
Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press,
USA.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2015). Strategic management: Concepts:
Competitiveness and globalization, chapter 3-The internal organization: Resources,
capabilities, core competencies and competitive advantages. South Melbourne: South-
Western Cengage Learning.
Morden, T. (2016). Principles of strategic management. Routledge.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management (pp.
978-3658078836). Springer.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management
and business policy. pearson.