2.5.3 - Business functions and responsibilities

Managing the workforce

Human resources coordinates the people-related work that helps a business obtain, develop and manage a suitable workforce.

Workforce planning considers how many employees and which skills the business will need, comparing this with the people currently available. If a growing repair business needs more technicians, human resources can plan whether to recruit or train existing employees. Recruitment attracts applicants; selection chooses suitable people. Training develops their knowledge and skills, including introducing new staff to the workplace.

Human resources helps organise health and safety, including relevant training and procedures, and staff welfare, such as support for wellbeing and work-related difficulties. It also deals with employment issues such as contracts, working arrangements, pay-related queries and absence, coordinating with managers and finance where necessary. Applicable employment rules differ between countries; the function must work with the requirements relevant to the business.

Industrial relations concerns relationships between employers and employees and their representatives, including trade unions. Discussion and negotiation can help resolve disagreements about pay or working conditions before they disrupt work. A disciplinary procedure addresses alleged employee misconduct or performance concerns through a stated process. A grievance procedure gives employees a route to raise complaints about work, such as unfair treatment. These are different directions of concern, and consistent procedures help establish facts rather than relying on rumour.

Dismissal ends an individual's employment at the employer's decision. Unfair dismissal concerns a dismissal that fails the applicable legal requirements for a fair reason or procedure; what qualifies depends on the jurisdiction. Redundancy arises when the business no longer needs a role or the required number of people in that role, for example after a site closure. It is different from dismissing someone for misconduct. Human resources can manage communication, documentation and relevant procedures; it does not have unrestricted permission to remove employees.

In an illustrative large appliance manufacturer in Poland, introducing new machinery may require new skills and fewer people in some roles. Human resources must connect retraining and workforce plans with staff welfare and proper employment procedures. A small shop may have its owner perform these activities rather than employ a separate department. The activities are still needed.

Managing money and records

Finance plans, records and monitors the business's money so that decisions can be funded and obligations paid.

Finance deals with wages and salaries, calculating and arranging payments from agreed employment and work records. Human resources supplies relevant information about employees and terms; managers may supply hours or performance data. Errors can damage trust and leave employees or the business with incorrect payments.

Cash-flow forecasting estimates cash coming into and leaving the business over future periods. It can warn managers when payments are due before enough customer money arrives, allowing them to adjust plans or arrange suitable funding. A budget sets a financial plan or limit for a period or activity. Comparing actual spending with the budget helps managers spot overspending and investigate it. Accounting records transactions and produces financial information so managers can understand costs, revenue, assets and performance. Cash availability and profit are different; recorded sales do not guarantee customers have already paid.

In an illustrative small furniture maker in Ghana, finance may notice that materials must be paid for before customers pay their invoices. The owner can then reconsider the timing of purchases. In a large business, specialist finance staff can compare departments' budgets, but the information still depends on accurate records from those departments. Finance cannot decide whether a product is desirable without marketing or whether it can be made efficiently without production.

Connecting products with customers

Marketing identifies customers' needs and coordinates how a business offers, communicates and delivers value to them.

Market research collects and analyses information about customers and markets. It informs product planning, which considers what products to offer and how they should meet customer needs. Pricing chooses the amounts customers pay, considering demand, competitors and business costs. These choices interact: a product designed for price-sensitive customers may need different features from one sold as a premium product.